EagleTribune.com, North Andover, MA

September 23, 2012

Helping himself

Tragedy meant big money for NY minister

By Brett J. BlackledgeAssociated Press,
The Eagle-Tribune

---- — NEW YORK — Before the Sept. 11 attacks, the Rev. Carl Keyes was a little-known pastor of a small New York City congregation searching for members and money.

When the twin towers fell, his fortunes changed.

Donors poured $2.5 million into the minister’s charity to help 9/11 victims. Later, he would collect at least another $2.3 million more for relief efforts along the hurricane-ravaged Gulf Coast, in the poorest corners of West Virginia and Tennessee, and even in remote African villages. Tens of millions more flowed through his fingers from the sale of church properties.

But Keyes, a one-time construction worker, did more than help the needy with the millions donated — he helped himself.

According to financial records, internal correspondence and interviews with former employees conducted by The Associated Press, Keyes blurred the lines between his two charities, his ministry and his personal finances while promoting himself as an international humanitarian:

Keyes diverted large sums donated for 9/11 and Hurricane Katrina into his cash-starved church, and then used charity and church money to pay hundreds of thousands of dollars in personal credit card bills and other debts, documents show.

He failed for years to file required federal and state reports showing how much money his charities received and spent.

The minister used a big donation meant for one of his charities to clear a mortgage on his family’s house, according to an accountant who told Keyes he was quitting, in part because of the transaction.

And, when his congregation sold its 19th-century church in midtown Manhattan for $31 million, he and his friends benefited. For example, $950,000 of the proceeds was used to buy his family a country home near the Delaware River in New Jersey. Another $1 million went to support one of his charities, which spent more on failed, lavish fundraisers than on promised programs in Africa.

The AP first wrote about Keyes and his charities last year, and as the AP expanded its investigation into the minister’s operation, the New York attorney general’s office opened its own probe. In a recent legal filing, the attorney general’s office said it had concerns about the church’s ability to properly oversee its financial affairs and was investigating how it had used its assets. The church, Glad Tidings Tabernacle, has agreed to cooperate with the state investigation.

Relatively few people know of Keyes’ charities — Urban Life Ministries and Aid for the World. But his story offers a disturbing glimpse into how some nonprofits manage to largely avoid scrutiny and keep finances secret, even while raising substantial amounts of money in the name of tragedy. It’s also a story about what can happen to the money of well-meaning donors eager to open their hearts and wallets in the wake of devastation.

Keyes and his lawyer say all payments by his church and charities were proper.

Th

ere is no question that Keyes threw himself into relief work.

Yet he also embellished his accomplishments, according to several people who worked on relief efforts in lower Manhattan. A priest said he didn’t believe Keyes’ colorful stories about breaking into locked ground zero churches on 9/11. And in response to the AP’s questions about a claim that his ground zero soup kitchen had attracted celebrity volunteers like Jerry Seinfeld and actress Susan Sarandon, Keyes acknowledged that they never worked with him.

When Hurricane Katrina struck, Keyes drove to Mississippi to set up a massive volunteer operation and help distribute supplies. But he has yet to account for how his organization raised and spent money on the Gulf Coast.

His Urban Life Ministries charity went a decade without filing the required state and federal reports showing how much money it received and spent. The IRS last year stripped the charity of its tax-exempt status because Keyes failed to submit annual financial disclosures. He operated Aid for the World, which boasted of operating anti-poverty programs on several continents, for more than three years without disclosing its finances.

Keyes still has plenty of supporters. “He was and remains a tremendous source of strength for those in need,” Mike Martelli, a retired New York City police officer, wrote in a letter vouching for Keyes. But it is the way Keyes has handled millions of dollars entrusted to him that has led his own accountants and others to repeatedly accuse him of self-dealing.

After spending his youth in New Jersey’s middle-class neighborhoods, Keyes went to work in 1989 for a church in Brooklyn’s impoverished Bushwick neighborhood. But when he split from that ministry in 1997, he was accused in a lawsuit of trying to loot assets on his way out, including a house in Pennsylvania’s Poconos that the church had purchased two years earlier for $89,500.

Records show that Keyes transferred ownership of the house to himself, then used the property as collateral for a $70,343 personal loan. In court, he claimed he was entitled to the house because the church bought it for his family and he had been making monthly reimbursement payments. The church said in a lawsuit that Keyes stole the house, and a Brooklyn judge ordered the property returned.

Keyes was hired that same year as pastor of Glad Tidings Tabernacle, a nearly century-old Assemblies of God congregation in Manhattan.

The church struggled financially, but after 9/11 a nonprofit group Keyes controlled, Urban Life Ministries, found itself acting as the conduit for $2.5 million donated by people looking to help the city recover from the attacks. The charity spent much of its windfall on things like water, food and a counseling center for ground zero workers, according to financial records obtained by the AP. It also staged two concerts honoring first responders and U.S. troops.

But financial records show it also spent money on things that had nothing to do with the tragedy, including monthly payments of $734.99 on the personal loan Keyes owed on the house in Pennsylvania and nearly $33,000 for an architect working on church renovations that would include a new living space for his family.

Charities generally must use donations for the purpose stated when the money is raised. And charity operators must avoid using money to help themselves or causes that are not related to their mission.

Keyes, through his lawyer, said the payments were proper and the rent reasonable.

SUBHEAD: Accountants complain

Some of the most serious complaints about Keyes’ financial practices come from his former accountants.

One, Bruce Kowal, filed complaints in 2008 with New York state officials accusing Keyes of misusing Urban Life Ministries money meant to help Hurricane Katrina victims. “Not only was this (nonprofit) plundered to fund the operating deficits of the church, the amounts were spent on personal items of the pastor’s family, and thus were items of taxable income,” Kowal wrote.

He attached bank records to the complaint that he said showed Urban Life Ministries paid some of Keyes’ personal expenses, including his American Express bills, a monthly lease on a car his sons used while attending a private college in Florida, and payments toward the personal loan Keyes owed on the Pennsylvania property.

Kowal’s complaint, obtained by the AP, said Glad Tidings church money was used to pay more than $73,000 in Keyes’ credit card bills, without the minister ever providing proof that they were legitimate church expenses.

The New York attorney general’s office declined to comment on what happened to Kowal’s complaint.

Keyes referred questions to his lawyer, Polovetsky, who said all of the charity’s expenditures were legitimate. She said a newly hired accountant had reviewed the transactions and that “any required taxes were paid.”