Ousted bishop who defrauded West Coast churches avoids jail time

OAKLAND, Calif. (CN) — A federal judge Tuesday sentenced a former bishop to time served and home confinement, after he pleaded guilty to four felonies and agreed to provide restitution to the African Methodist Episcopal Zion Church and local affiliates.

Former Bishop Staccato Powell, 65, diverted millions in loans obtained by fraudulently mortgaging church properties, using some for his personal benefit.

In an Oakland federal courthouse Tuesday, U.S District Judge Jeffrey White, a George W. Bush appointee, sentenced Powell to three years of supervised release for each felony charge, which included mail fraud, wire fraud, and conspiracy to commit both. He was also sentenced to 18 months of home confinement, with stipulations to forfeit the deeds to church properties, not open any new lines of credit, and be subject to search at any time.

“I regret and have remorse for my actions and behavior and do not take lightly that I defrauded and shamed the church of my birth,” Powell said when White asked him if he had anything to say.

The July plea agreement also allows Powell to continue a ministry through his business entity New Church Believers LLC, which prosecutors and the judge agreed to in order to allow Powell to make restitution payments.

Rather than jail time, prosecutors pushed for monetary restitution for AME Zion and its churches so that the victims could be made whole as soon as possible, Assistant U.S. Attorney Jonathan Unruh Lee said, adding that restitution would do the “most reparative good.”

A hearing to settle the final amount of restitution is scheduled for October.

Per his plea agreement, Powell is contracted to pay between $3 million and just under $12.5 million in restitution.

White said that although paying such restitution would not be possible for most defendants, Powell’s situation is different. Even as his criminal case was ongoing, Powell earned $96,000 in the last 12 months, mostly through internet channels “without trying very hard,” according to the judge. But White was hesitant to accept that Powell should avoid jail.

“The court struggled mightily with this,” White said. “It’s hard to describe a case more serious than defrauding a church.”

White said he found it troubling that Powell’s position of trust in a ministry makes it possible for him to make restitution payments and said some would see this as “a get out of jail free card.”

“We came for justice to be done, and we have to trust the justice system," Bishop Brian Thompson, of the AME Zion Church, said after the sentencing hearing.

“There are no excuses for his egregious acts,” he continued.

Shortly after being elected bishop in 2016, Powell formed a business entity called Western Episcopal District, Inc. of which he was the CEO. In 2017, he began instructing his co-conspirators to execute loans to fund WED Inc., using the deeds of several church properties as collateral for the loans.

The properties, located in Oakland, San Jose, Palo Alto and Los Angeles, among other areas, were redeeded without their congregations’ knowledge.

Powell then diverted some of the funds borrowed by WED Inc. for his personal benefit, including the purchase of property in North Carolina for two of his children and a $14,000 payment for mortgage debt that he owed on a residence in North Carolina.

Cleo Nelson, 87, an AME Zion congregant, was in the courtroom to hear Powell’s sentencing. Nelson believed Powell deserved jail time. “In order to have justice it needs to be justified,” he said. “Justice didn’t happen today.”

According to Justice Department officials, WED Inc. listed 11 churches in California, Arizona and Colorado among its assets when it filed for Chapter 11 bankruptcy in 2020, as well as a parsonage and Powell’s official residence. The petition stated that WED, Inc.’s real property was worth over $26 million.

AME Zion Church traces its history to 1796 and has about 1.4 million members worldwide.