San Diego Forgive us our debts? For more than three years, William (Bill) Newsome, a member of San Diego's widely publicized Community Bible Church, has peppered the pastors and elders with questions about the church's debt and financial entanglements. He has not received the documents he requested. The church rebuts that he didn't attend the meetings at which members got the information he seeks. Some ambiguous communications suggest the church may have financial strains, but officials say it's in good fiscal shape; its only problem is that it doesn't have the funds to expand as quickly as desired.
Late last year, Newsome was suspended from the Mira Mesa church, partly for describing a letter by the head pastor as "crap." At one point, a church official called the cops on him. Newsome recently confessed that his deportment was inappropriate. But he is barred from contacting the head pastor, according to the pastor's lawyer, and congregation members are told not to talk to Newsome. The ice may thaw after meetings next week, but Newsome still wants answers to his financial questions.
In his confession late last month, Newsome acknowledged his own "spirit of bitterness" and "envy." Maybe that is one key to this imbroglio: both Newsome and the church's senior pastor, Barry Minkow, have become known for fraud busting. Minkow is one of the nation's most celebrated fraud busters -- and fraud concocters. He is revered in the press and appears on TV programs such as 60 Minutes.
Minkow's life is a made-for-TV story. While still a teenager, he created a multimillion-dollar stock market fraud, ZZZZ Best, supposedly a carpet-cleaning firm. Actually, ZZZZ Best was cleaning out stockholders and Wall Street gurus while hoodwinking accountants and regulators. Ninety percent of the sales were phony. In 1987, at age 23, Minkow was sentenced to 25 years in prison. While there, he converted to Christianity and got two divinity degrees. He was sprung in 7 years. In 1997 he became senior pastor at Community Bible Church. He spends about 40 percent of his time on Fraud Discovery Institute, a for-profit operation that smells out white-collar crime. When sentenced, he was supposed to pay victims $26 million. But the judge who sentenced him later proclaimed that Minkow has uncovered hundreds of millions of dollars in fraud. He no longer has to cough up, although he is still paying off $7 million he owes Union Bank, partly from what he makes on speeches, training seminars, and books.
Newsome has had his time in the spotlight too, but only locally. In late 2004, Newsome, then a lawyer with 22 years in the city attorney's office, informed local law enforcement that during the Casey Gwinn regime, attorneys were billing the Water Department for work that was not related to that entity. It was one more piece of evidence that the City was plundering Water and Wastewater to bolster the general fund. Shortly after this revelation, Newsome was fired. He went to small-claims court with a whistleblower suit. His antagonists in the city attorney's office said that "I was nuts and/or dangerous," says Newsome. That wasn't proved in court, and he was awarded $5000 but was not reinstated in his job. He is still protesting the firing and at age 51 is not employed.
Newsome has three major concerns. The first is about debt. On October 17 of last year, Senior Pastor Minkow wrote church members, explaining that the congregation had approved $500,000 in debt for multi-venue equipment so that services can be shown at remote locations via video. Minkow implored members to "help us eliminate the debt and become obedient in the area of tithing." In closing, he alluded to "this critical time in our church's history." Newsome's response in an e-mail to another member: "crap." Newsome has since tried unsuccessfully to get details on the interest rate and maturity of the loan and how much has been paid off.
Second, Newsome has questions about Minkow's for-profit enterprise (Fraud Discovery Institute) being located on the premises of the nonprofit church. He asks if the institute properly reimburses the church for the space, equipment, and labor. In effect, members' tax-free donations may be subsidizing a profit-making enterprise. He has taken his concerns to the Internal Revenue Service but has no idea if it will do anything. Newsome worries that Fraud Discovery Institute will be sued, "and the first thing a lawyer will do is look for assets -- look for a codefendant, and there is no question it will be the church."
Third, Newsome frowns on a $100,000 gift that Fraud Discovery Institute received late last year; it should have gone to the church, Newsome believes.
"We're at a critical point in our church history but not a critical financial situation," says Tony Nevarez, an elder who is in charge of finances. "The critical situation is our ability to expand," as membership continues to burgeon (up 1000 percent to 1400 adults since 1997).
The church isn't talking officially, but it appears that about one-third of that debt has been paid off. The Elder Board hired a law firm to study the lease and labor relationship of the institute and the church. It is "nothing more than that of landlord and tenant. Everything is on the up-and-up," says William Bramley, Minkow's lawyer. The institute has a $1 million policy covering errors and omissions. "Coverage meets or exceeds" coverage for similar institutions and is sufficient, says Bill Ritman, the church's insurance agent. However, Minkow concedes that it is "plausible" that lawyers could name the church as a codefendant, causing trouble.
The $100,000 gift came from someone who, like Minkow, is an ex-con, and it was specifically directed to the institute and disclosed to the congregation.
Two years ago, Newsome wrote the Federal Bureau of Investigation complaining that Fraud Discovery Institute was not properly licensed. Peter H. Norell, special agent, replied that according to the California Department of Corporations, Minkow "is operating within their licensing requirements." In an interview, Norell says, "Barry has been a tremendous asset to the bureau in detecting and reporting fraud cases."