Within five years, a businessman tithed about $300,000 to a Michigan megachurch. But after a grand jury indicted David McQueen in 2012 for running a $46.5 million Ponzi scheme, the federal government asked Resurrection Life Church for the money back.
In February, the 8,000-member congregation in suburban Grand Rapids said no. “[We] had no knowledge of the source of the funds,” finance pastor Bernard Blauwkamp wrote to the US Attorneys Office. Regardless, the money—donated from 2005 to 2009—was spent, he said.
Cases like this arise every year, said attorney Bruce Van Heukelem. He defended a Christian camp in Wisconsin that, along with World Vision and Trinity Evangelical Divinity School, argued against such repayments before a federal appeals court in 1995 and lost.
Given that precedent, ministries don’t have much of a choice but to reimburse the feds.
Receivers—those appointed by courts to collect the stolen funds—begin by asking for the money back. If the church or charity declines, the receiver can come back with a lawsuit.
Some states offer exemptions on so-called “clawbacks.” After Tom Petters’s $3.7 billion Ponzi scheme was exposed in Minnesota, the state passed a 2012 law that put a two-year statute of limitations on donations—essentially exempting nonprofits from returning the money.
That didn’t stop a judge from ruling in June that the University of Northwestern in St. Paul had to return about $5 million it received from Petters’s partner. But the Council for Christian Colleges and Universities member school no longer has the money, having given the funds to charities.
If higher courts agree that Northwestern needs to repay ...1