6 Megachurches Face Inquiries Sparking Church-State Showdown

The New Testament reports that Jesus rarely used fancy modes of transportation to get around. He walked most of the time, although Matthew and other gospels mention that he once rode a borrowed donkey into Jerusalem, where he burst into the Temple and tossed out the money changers.

Nearly 2,000 years later, some who claim to speak in Jesus' name are taking a different view. Consider Bishop Eddie Long, who pastors a megachurch in Lithonia, Ga. With a salary approaching $1 million a year and a nine-bathroom mansion situated on 20 acres, Long's choice of vehicles reflects his opulent lifestyle: He drives a $350,000 Bentley.

Far from casting out money changers, Long is likely to join them. In a 2005 profile in the Atlanta Journal-Constitution, he defended his high-flying ways, insisting, "I pastor a multimillion dollar congregation. You've got to put me on a different scale than the little black preacher sitting over there that's supposed to be just getting by because the people are suffering."

Long's lack of humility has probably done him no favors. At the time, U.S. Sen. Charles E. Grassley (R-Iowa), expressed dismay.

"When I hear about leaders of charities being provided a $300,000 Bentley to drive around in, my fear is that it's the taxpayers who subsidize this charity who are really being taken for a ride," he quipped.

In November, Grassley, who serves as ranking minority member on the Senate Finance Committee, ramped things up a bit. He announced that he is seeking detailed financial information from six mega-ministries, Long's among them.

The move sent shock waves through the evangelical community. Grassley is a conservative Republican whose votes on social issues usually please the Religious Right. (His 2006 rating from the Family Research Council was 87 percent.) But the senator has long had an interest in preserving the integrity of the tax laws and has in the past complained about secular non-profits violating the law.

In 2005-06, Grassley held a series of hearings on Capitol Hill that included testimony from large non-profit groups such as the Smithsonian Institution and the Red Cross. Now he's turning his sights to the religious sector.

Grassley's investigation focuses on six ministries, all of which preach the "prosperity gospel" -- the theological assertion that wealth is a reward from God:

• Benny Hinn, a TV preacher who runs the World Healing Center Church in Grapevine, Texas. Hinn, who travels the globe conducting faith-healing revivals, lives in a seven-bathroom, eight-bedroom mansion overlooking the Pacific Ocean valued at $10 million. It is claimed as a parsonage.
• The Rev. Creflo Dollar's World Changers Church International in College Park, Ga. Dollar drives a Rolls Royce and has large homes in Georgia and New York. He is asked to provide a list of all vehicles provided for himself, his wife, board members and ministry employees.
• Paula and Randy White's Without Walls International Church in Tampa, Fla. In a letter to the ministry, Grassley asks the couple to provide a list of expense account items "including, but not limited to, clothing expenses and any cosmetic surgery for years 2004 to present."
• Joyce Meyer Ministries in Fenton, Mo. Grassley asks Meyer and her husband David to explain expenditures like a $23,000 commode with a marble top, a $30,000 conference table, an $11,000 French clock and a $19,000 pair of vases for the ministry headquarters.
• Kenneth Copeland Ministries in Newark, Texas. Copeland is asked to explain how cash offerings are handled during overseas crusades and to explain the use of a ministry jet for "layovers" in Maui, Fiji and Honolulu.
• Long's New Birth Missionary Baptist Church in Lithonia, Ga. Among other things, Long is asked to explain a church official's 2005 claim that Long no longer accepts a salary from the church but does take a "love offering."

In each case, Grassley is requesting detailed financial information. The ministries are asked to provide audited financial statements, lists of board members, employment contracts and other information.

Other requests are specific to certain ministries. It has been widely reported, for example, that Hinn often uses a ministry jet to travel to the crusades he holds. This jet often stops along the way for "layovers" at popular vacation spots.

Grassley asks Hinn to provide "a list of all layover trips taken in years 2001 to present" as well as "the number of ministry personnel who stayed during the layover (including name and addresses), the hotel name(s), the lodging costs, the food costs, salary expenses, aircraft costs, and all other layover expenses paid [by the ministry]."

Reacting to reports that David and Joyce Meyer have received gifts of cash and jewelry from donors, Grassley asks the ministry to explain its procedures for handling these gifts and a statement "indicating whether these gifts have been included in the income reported to the Internal Revenue Service for David Meyer and Joyce Meyer for years 2004 through 2006."

What led Grassley to take this step? The Iowa Republican told Church & State that he considers such oversight part of the Senate's responsibility.

"I started a broad-based review of these tax laws after 9-11 when questions were raised about how the American Red Cross used donations made to help victims and their families recover from the terrorist attacks," Grassley said. "Since then I've looked at a wide range of issues, including non-profit tax structures, land conservation, fine art donations, and nonprofit hospitals. This fall I expanded my review to include media-based ministries."

Continued Grassley, "The six ministries that received letters from me were chosen based upon reported allegations of wrongdoing reported by investigative journalists and brought to my attention by interested third parties, sometimes acting as whistleblowers. Some of the accounts were disturbing because of the lack of transparency regarding how these ministries spend millions of dollars, and as an industry, billions of dollars that have been exempt from federal tax."

The ministries were generally cagey in their replies. Hinn said he had referred the matter to his attorneys, an approach that Dollar, the Whites and Meyer also took. Copeland refused to talk to the media. Some also began complaining of government interference.

"Are we saying the First Amendment is null and void by allowing this to happen?" Dollar asked in the Journal-Constitution.

Long, in brief remarks before his congregation Nov. 11, called the Grassley request "an attack on our religious freedom and privacy rights."

Grassley says his inquiry is well within the scope of the law.

"My inquiry has nothing to do with doctrine," he said. "Rather it's about tax law. Is the tax exemption being used according to the law, and is the money that's donated under the tax exemption being used for non-profit purposes?

"It's not an attack on ministries in particular or tax-exempt groups in general," he continued. "The strong majority of non-profit groups, including churches, operate above-board and perform good works that make their tax exemption a bargain for the American people. Allegations have been raised about some ministries, and my inquiry gives them an opportunity to respond to those allegations."

On Dec. 6, the day of the deadline, Grassley's office reported that information had been received from Copeland and Meyer. Attorneys for the Whites indicated that they would contact Grassley's office shortly but gave no indication if they planned to comply. Long indicated he would comply but did not meet the deadline. Hinn requested more time.

Dollar was the only minister to openly defy the request for information. According to media accounts, Dollar's attorneys sent Grassley a letter telling him to either refer the matter to the IRS or issue a subpoena.

The ministries being investigated may have added to their problems by being secretive about their finances. None belong to the Evangelical Council for Financial Accountability, a voluntary oversight group that many Christian groups choose to join. They are not required to file financial documents like other non-profit groups nor make any financial information public.

Perhaps feeling some heat, Dollar prepared a brief financial statement that he showed to the Journal-Constitution. The document indicated that the church brought in $69 million in 2006. It did not list Dollar's salary, and he insisted he no longer accepts one from the church.

Dollar, who in the past has argued that Jesus was wealthy, also posted a statement on his ministry's Web site. The statement tells church members that they can see a financial report but treats the document like it's a state secret. Furthermore, the process is not exactly user friendly or convenient.

"Members of World Changers Church International can request to review the church's audited financial statements by contacting the ministry at 770-210-5700," reads the Web site. "Please be ready to give your name, member number, and phone number. Once your information has been verified you will be contacted to schedule an appointment to meet with a member of our accounting staff. Once the appointment is made, be prepared to present your photo I.D. for verification when you come."

The statement goes on to say that the statement can be viewed on Tuesday, Wednesday or Thursday from 10 a.m. until 11:30 a.m. and from 1 p.m. to 2:30 p.m. and that only last year's statement is available.

Meyer is taking a more proactive approach. Her ministry's Web site contains a section titled "Financial Transparency" that links to a lengthy annual report that concludes with a financial statement.

Says Meyer on the site, "Each year we conduct an independent financial and legal audit. This information, as well as our annual reports for 2003 through 2006, is available on our website. We encourage you to take a look."

On Nov. 28, Meyer's ministry issued a press release pledging to provide "the requested documents for presentation to the senator's office - on time (by December 6, 2007) and in full detail."

The press release also includes a fact sheet responding to specific points raised in Grassley's letter. It asserts, for example, that the $23,000 price tag for the commode (an antique chest of drawers, not a toilet) was an error from the furniture seller. The item, the Meyer ministry says, was purchased along with 67 other pieces of furniture for a total cost of $261,498.21.

But critics say self-generated financial statements are often of limited value. Ole Anthony, head of the Texas-based Trinity Foundation, an evangelical group that for years has spoken out against the excesses of television evangelists, told Church & State that these statements do not guarantee accountability.

"The public has no idea," Anthony said. "The ministries say we have an audited financial statement. But it's a very friendly auditor." In the case of many mega-ministries, Anthony said, church accounting is "woefully lacking."

Added Anthony, "I wish the legitimate church would demand that there be some accountability. These [megachurch] organizations, for the most part their accountability is a relative or just yes men - and if anyone disagrees with them, they're touching the anointed of God or some other B.S."

The legality of Grassley's overture has sparked a spirited debate. Experts at Americans United for Separation of Church and State note that tax-exempt status is granted with the understanding that organizations will work for the public good, not to enrich individuals. Since investigating allegations of fraud should not require the government to make theological judgments, AU attorneys say, mere requests for information are unlikely to be considered a violation of the First Amendment.

Douglas Laycock, an expert on church-state relations who teaches at the University of Michigan Law School, said tax exemption does not mean that religious groups surrender their constitutional rights. But, he added, government must have the power to investigate allegations of fraud.

"As I understand it, the allegations here are that money is being diverted from the exempt charitable purpose to the personal benefit of individuals," Laycock told Church & State. "That is simply tax fraud, if done knowingly. The government has to be able to police that; otherwise, tax exemptions would be so easily abused it couldn't grant them to anybody."

Concluded Laycock, "I have no idea whether the allegations are true in these cases, but the government has to be able to investigate enough to find out."

Other observers note that secular non-profits are closely monitored to make certain they do not violate the law and that religious groups should not expect a free ride.

"There is no free exercise right to tax exemption, and the First Amendment doesn't shield religious organizations from government scrutiny to make sure the tax laws are being complied with," said J. Brent Walker, executive director of the Baptist Joint Committee for Religious Liberty.

Walker added, "That said, I would expect that Sen. Grassley and the committee will proceed carefully with an eye toward potential church autonomy rights and religious freedom issues that could be implicated."

Many evangelical religious broadcasters are watching developments with some unease.

"[W]hen I see a senator charging into organizations, wielding this kind of budget ax and laying bare religious figures and expenditures, huge constitutional questions are being raised," said Gary McCaleb, senior counsel at the Alliance Defense Fund, a large, well-funded Religious Right legal group founded by wealthy religious broadcasters.

Although none of the targeted ministries is a member of the National Religious Broadcasters (NRB), the organization sent a letter to Grassley asserting that the probe may be unconstitutional.

The NRB, which is composed of many fundamentalist-oriented non-profit and for-profit entities, issued a press release quoting Craig Parshall, its general counsel, who said Grassley's "overly broad" approach uses "an axe rather than a scalpel."

"We hope this is not a prelude to congressional hearings and possible legislation that would erode the cherished protections that religious ministries enjoy under the First Amendment," Parshall added.

If the ministries are determined to have violated the law, the penalties can be severe. Not only could these groups lose their tax-exempt status, but they could also be fined or their leaders held liable.

The directors of some secular non-profits have learned the hard way that it doesn't pay to violate federal tax law. In 1995, the former head of United Way, William Aramony, was found guilty of using charity funds to finance personal overseas trips and affairs with young women. He was sentenced to seven years in prison.

In 2004, Oral Suer, chairman of the United Way of Washington, D.C., was sentenced to 27 months in prison after he was found guilty of receiving excessive pension payments, misusing leave to boost his salary and billing private travel and personal expenses to the charity.

No one is suggesting that the ministers could end up in jail. And if Grassley proceeds with the investigation, he may have to navigate some treacherous waters. A 1984 law requires the Internal Revenue Service to meet several conditions before a church can be audited. A regional IRS commissioner must approve the inquiry, and the church must be given the option of a pre-examination meeting with the IRS, among other conditions.

But two wrinkles in the law may cut in Grassley's favor: Some of these ministries may not meet the IRS's definition of a church, and the law does not apply in cases of criminal investigations.

What's likely to happen next? The Senate Finance Committee has subpoena power, and as long as Committee Chairman Max Baucus (D-Mont.) agrees, officials with the ministries could be summoned to testify under oath.

Grassley told Church & State that his staff will review the documents, look for possible violations and forward relevant material to "the appropriate enforcement agency."

He added, "This committee staff also will consider whether any of the organizations have taken actions that may go against the spirit and intent of the law. It's often the case that such investigations yield actions that are perfectly legal but shock the conscience and thereby highlight shortcomings in current law or in the enforcement of that law. That said, it's also been my experience more often than not that public scrutiny leads to necessary and credible self correction."

If the investigation deepens, the Trinity Foundation's Anthony is hoping it becomes an opportunity for changing the status quo. He said his group supports laws similar to those in England, where any claim made over the air for the purpose of raising money must be verifiable.

Anthony also said he regrets that Congress has had to get involved. He'd prefer that other religious leaders would counter the "prosperity" TV preachers and mega-evangelists who use their positions to finance extravagant lifestyles.

"For 20 years I've been hoping that the leaders of the legitimate church would stand up and say, 'this is enough,' but they haven't," Anthony said. "It breaks my heart that we have to do this but no one else will."

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