EMBEZZLEMENT BY PASTOR

 

The United States Bankruptcy Court for the Southern District of Mississippi, as well as a Mississippi county court were not fooled by the machinations of a rogue Pastor.  In, Cross Point Church v Andrews (In Re Andrews), Slip Op. 2016, the Pastor tried to withdraw the church from the denomination.  The denomination removed him from the pastorate of the church.  A part of the church board tried to support the Pastor by entering into an Employment Agreement with him after he had removed, but the Employment Agreement was not submitted to the congregation for a vote and the agreement did not specify the amount of compensation.  Arguing that he was acting innocently under the Employment Agreement, the Pastor and a church treasurer withdrew a year’s salary from the church bank account and deposited the proceeds in the Pastor’s personal checking account.  The Pastor lived on that money for a year while he founded a new church.  The Pastor and the rump of the board locked out the other members from the church and it took them six weeks to regain control and to assist in the installation of the new pastor assigned by the denomination.

 

 The church sued the Pastor in a state trial court and took a judgment for the amount of money withdrawn from the church bank account.  The Pastor sought bankruptcy protection but the church initiated an adversary proceeding.  The bankruptcy court found it did not have authority to revisit the removal of the Pastor under the Ecclesiastical Abstention Doctrine.

 

 Also, the Pastor admitted that as pastor, church officer, and board member, he owed a fiduciary duty to the church to safeguard its funds.  As a corporate officer, that duty was also imposed by statute.  The Pastor was a signatory, two were required but his was often affixed by stamp, to the church bank accounts.  The bankruptcy court found that taking the money was a breach of fiduciary duty.  The Employment Agreement was ignored by the court because the Pastor had been defrocked by the denomination and could not perform as Pastor under the agreement.  Also, the putative church board did not have authority to override the denomination.  For those reasons, the Pastor’s claim that he believed he could scarf up the cash was deemed not reasonable.  The debt to the church for the funds taken was excepted from the bankruptcy.

 

 The lessons in this matter about denominational authority under the controlling foundational documents are routine.  An outright finding that a Pastor exercising control over church assets and funds has a fiduciary duty, the highest duty in the law, to safeguard them should nearly always be considered the norm.  Few Pastors will be sufficiently remote from control of the assets and funds to avoid such a finding.

 

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