Church business practices questioned

Birmingham News/June 11, 2000
By Robin DeMonia

EMELLE - Call it the church version of Who Wants to be a Millionaire. The question: How did one small Pentecostal church with a congregation on welfare build a multimillion-dollar empire?

A. Sell food to the church members and collect their food stamps.

B. Buy businesses and run them with church members' free labor.

C. Go across the country soliciting money for "abused kids."

D. File for bankruptcy to avoid paying large lawsuit judgments.

E. All of the above

The final answer is E. The strategy paid off handsomely for Christ Temple Church, a Mississippi congregation that spawned the Holyland commune in West Alabama.

The group now has assets worth at least $10.6 million.

The Holyland's leader, Bishop Luke Edwards, said wealth is beside the point in his empire. He said his aim is to keep his parishioners off welfare and train them to work for themselves.

"What we are trying to do is create jobs for our people," he said. "To make our people understand you can do something for yourselves, we go into business. It isn't always how much money we make. We try to create an opportunity."

But his methods have raised questions.

? The storefront solicitations are represented as being for "abused kids." But the Holyland doesn't take in many outside children, as it once did.

Moreover, the donations don't go into the group's tax-exempt charity set up to help abused children. The money goes to the same pot that pays commune expenses, buys new businesses and covers other operating costs, said Zora Meyers, an Atlanta accountant.

? Part of the group's prosperity has come at the expense of others. In one case, a Holyland business defaulted on payments for a 322-acre hog farm in Mississippi and filed for bankruptcy when the seller got a court judgment for the debt. Reach Inc. got the farm for less than half the original price of $650,000, seller Tommy H. Graham said.

? At one point, Christ Temple, one of its for-profit subsidiaries and their umbrella organization, the Apostolic Assemblies Association, were all in bankruptcy. Only the subsidiary remains in bankruptcy now, partly because it is fighting a $650,000 debt to a former secretary who successfully sued Edwards for alleged sexual misconduct and mind control.

Those kinds of controversies point out the hazards of church spun business enterprises, said Tuscaloosa accountant Steve Richardson, whose book The Eagle's Claw deals partly with churches and taxes.

"I'm really kind of uncomfortable with religious organizations using their faith as a launching pad for a business enterprise. I see that as a real conflict," Richardson said. "Most churches wouldn't go there."

Richardson said the Holyland's scope is akin to that of the Rev. Sun Young Moon's Unification Church, which owns a wide range of businesses.

Edwards said his use of church resources beats what he sees other preachers doing. "Most churches collect and never do anything for parishioners," he said. "We have the great big churches, stained windows ... and the people inside on welfare. Something's wrong with that."

Most of Edwards' Christ Temple congregation was receiving government aid when he started building its business empire in 1977. He got seed money by selling food to his parishioners, collecting their food stamps and using the profits to expand into other businesses.

Now, instead of drawing welfare, his parishioners work on Holyland farms or its businesses, he said. Instead of a paycheck, they are furnished food, shelter and clothes.

The businesses make money, he said. But the balance sheets would shift greatly without donations the group gets in full time fund-raising at storefronts across the country, he said.

Edwards said he doesn't know how much money is raised in the buckets outside post offices and discount stores. But former residents who once worked on the fund-raising route said the loose change adds up into tens of thousands of dollars. Ledgers from 1992 show the teams grossed between $22,000 and $35,000 per month from May to August, according to former Holyland resident Gail Walker.

Yet the group's tax-exempt charity for abused children - Citizens for Research, Education and Community Hope Inc. - reported only $10,194 in income for all of 1999, according to its report to the Internal Revenue Service.

Although the report says the tax-exempt group provides food, shelter, clothes and medical care to the needy, Ms. Meyers said the charity's only work is a farm research project that is not funded by the storefront solicitations.

The donations are collected in the company name Reach, which stands for Research, Education and Community Hope but is a for-profit subsidiary of the church, Ms. Meyers said.

The money donated to Reach is pooled with almost all other church income and accounted for in a partnership tax return, Ms. Meyers said. The profits are calculated and taxed per church member, but aren't distributed. Instead, earnings go back into the group's coffers to pay for a range of commune or business expenses. "It's all perfectly legal," she said.

Ms. Meyers said the group wants someday to resume its work with "abused kids."

In the meantime, Edwards said, the Holyland is engaged in other charitable works. It gives away several truckloads of food each month, treats senior citizens to a free meal once a year, helps people pay utilities, and lets poor people stay in its hotels for nothing. "What we give away, you'll never know," he said. "Anything we take in, it goes toward helping people."

Holyland's wealth is contained in a dizzying matrix of organizations and companies in the names of various church leaders. It doesn't readily provide information to outsiders, including the tax-exempt filings that the IRS requires be made public.

If there's external confusion, Ms. Meyers said, it's not mirrored inside the Holyland organization. "They know precisely where every penny goes," she said. "They keep meticulous records."

But Edwards said his group isn't hung up on the numbers. He said he considers the Holyland businesses to be an arm of the church, just like Sunday School. He said the church owns everything and he gets nothing more than other Holyland residents, not even a salary as pastor.

"My whole life's been in this," he said. "I'm a leader of my people. I show them how to work. I teach them what to do with money. Do something constructive. And that's what we've done."