Ex-church leaders charged in $14M fraud

Prosecutors say pair lied to get big loans for personal expenses

OAKLAND >> A former bishop and lay leader of an historically African American church have been charged in a scheme to defraud Bay Area congregations by obtaining $14 million in loans and mortgaging the properties for personal expenses, according to authorities.

Staccato Powell, 62 of Wake Forest, North Carolina, and Sheila Quintana, 67, of Vallejo were accused of conspiracy and wire fraud in an federal indictment unsealed Tuesday, with Powell also being charged with mail fraud, according to the U.S. Attorney’s Office for the Northern District of California.

Both were arrested Tuesday and appeared in courts in Sacramento

and North Carolina, prosecutors said. It wasn’t immediately known if they had attorneys.

Powell was selected as a bishop in 2016 for the African Methodist Episcopal Zion Church, which has around 1.4 million members worldwide and dates to 1796, according to authorities. Powell was previously a pastor in the AME Zion Church for around 30 years. After his selection as bishop, prosecutors say, Powell and Quintana formed the Western Episcopal District and conspired to defraud congregations’ properties in San Jose, Oakland, Palo Alto and Los Angeles by redeeding the properties under the name of WED.

Powell used the loans for personal benefits, including adding land to his family farm in North Carolina and paying off $14,000 in mortgage debt on his home, according to prosecutors. Quintana also used the money for herself and her husband, who didn’t work for WED, authorities said.

Western Episcopal District Inc. filed for Chapter 11 bankruptcy July 30, 2020, according to the indictment. The corporation claimed to own 11 churches, Powell’s official home and a parsonage. The filings showed debts of more than $12 million and stated that the properties were worth around $26 million. On March 1, 2021, a Chapter 11 trustee was appointed and now controls the assets.

‘Pressure and misinformation’

Prosecutors said the pair used “a campaign of pressure and misinformation” to acquire the church properties and changed deeds under false pretenses by “using forged signatures” and other means. Powell and Quintana then would use the properties as collateral to get loans not sanctioned by the churches.

Powell also didn’t tell congregations that their properties would be used as collateral for high-interest loans that they wouldn’t be able to repay, authorities said. In cases in which Powell said the properties may be used as collateral, he told them the loans would be “small and manageable debt.”

After being selected as bishop, Powell bought an episcopal property in Granite Bay, which he used as his personal home, according to prosecutors. He and Quintana used the Kyles Temple AME Zion Church of Vallejo as collateral for a loan. Powell told the pastor of Kyles Temple that he wanted to use the property as collateral and the pastor asked him to write a proposal.

Powell’s assistant then lied and said she was the secretary of Kyles Temple and wrote a resolution from the church, giving Quintana the authority to negotiate with lenders and get the loan, according to the indictment. Quintana used Kyles Temple as collateral and borrowed $500,000 on March 23, 2017. The pastor of Kyles Temple told the congregation that he didn’t know about the loan and didn’t approve it. Powell then removed the pastor from the church, who moved to a different congregation in Pennsylvania.

After the First AME Zion Church of San Jose refused to transfer the church’s property to the WED, Quintana also wrote a fraudulent resolution saying a congregation vote had authorized the church’s pastor to sign the transfer of property, even though a vote never took place, prosecutors said. The two used the property as collateral to obtain millions of dollars in loans.

Powell and Quintana also told the pastor of University AME Zion Church in Palo Alto that the church’s property would be used as collateral to settle the debt of another AME Zion church in Sacramento, according to the indictment. They lied and told the pastor that the loan wouldn’t be more than $200,000 and used the property as collateral to get more than $3 million in loans. The pair also told the pastor of Greater Cooper AME Zion Church in Oakland that he had to sign over the deed to the church to them due to church policy and didn’t tell the pastor the properties would be used for collateral for more than $2 million in loans.

The church congregations got notice in 2019 that loans were in default, prosecutors said. The denomination voted to oust Powell from his position of administrative and financial authority in August 2020. He was stripped of his title of bishop July 29, 2021.

“The unsealed federal indictment in the United States District Court for the Northern District of California is a recognition of the material harm that the actions of former Bishop Staccato Powell have caused our client, University AME Zion Church, as well as the other congregants of the AME Zion Western Episcopal District,” Monique Mulcare, one of the attorneys representing the church, said in a statement.

“University AME Zion is the victim of a fraudulent scheme that threatens the church’s ownership of its prized campus in the heart of Palo Alto,” she continued.