US ex-minister to Iglesia: Stop tax fraud

MANILA, Philippines – An expelled Iglesia ni Cristo (INC) minister based in North Virginia is asking finance officers of hundreds of INC congregations in the US to stop their “illegal” practice of converting church offerings into $100-bills and taking them off the books.

Easily “millions of US dollars” in church funds have disappeared, according to American Vincent Florida, a former minister of the Iglesia.

Ordained minister in 1988 and expelled for having resigned on July 30, 2015, Florida told Rappler in a phone interview on December 1 he wants the church’s corporate officers to “declare the money they received as income and pay the appropriate taxes and penalties.”

Otherwise, the Iglesia, which is registered as a church in the US, will lose its “nonprofit status."

The US is home to the most number of Iglesia congregations at 240, located in 45 states, plus the District of Columbia.

Churches like the INC are granted tax-exempt status because they provide “community service for the stability of the communities.” Once funds go to private individuals instead of communities, churches lose their tax-exempt status.

Florida – who has filed a report with the US Internal Revenue Service (IRS), the US tax collection agency – said the 5 or 6 individuals in each of the Iglesia congregations in the US “could be implicated in [the] diversion of funds” once the IRS begins its probe.

“We’re talking about people of the faith, responsible people, people with families, and people with their own houses, with their own jobs here in the United States, in the various congregations, who would be the ones who would be, first and foremost, investigated when it comes to the cash that is being removed from the congregations,” Florida said.

Churches and religious organizations in the US are exempt from paying taxes, but the IRS is specific in referring to rules for 501(c)(3) or tax-exempt organizations: “The organization must not be organized or operated for the benefit of private interests, and no part of a Section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual.”

Florida filed a tax fraud report against the INC including its executive minister, Eduardo Manalo, and its auditor, Glicerio Santos Jr, according to the Philippine Daily Inquirer. He said the INC failed to pay the appropriate taxes in August this year.

Florida, a former Catholic who holds an accounting degree, and who once studied to be an agent of the IRS, defended his decision to report the INC for alleged tax fraud in the US.

“This is to protect the local officers of every congregation and to protect the church. These things, I did out of love, not out of hate.”

Florida used Form 3949-A to report suspected tax fraud activities. It also allows the IRS to “start [its] own investigation into alleged wrongdoings,” he explained.

He said he did not opt to use Form 211 for a “whistleblower award” that would have allowed him to collect up to 30% of the additional tax, penalties, and other amounts collected by the IRS using information provided by him as the whistleblower. This option would have also put the burden of proof on him.

Proof?

In his interview with Rappler, Florida said ministers were instructed to “remove the cash from the offerings, deposit the checks – which the brethren would write as offering – to the bank accounts, because each congregation has an individual bank account, and the cash would then be put together in hundred-dollar increments. This then would be given to the district auditor.”

He said the “removals” from the offerings of the church are not something that should be done by any non-profit organization like the Iglesia because there must be “strict accountability of funds.” 

Asked how he knew about the alleged illegal practices, Florida said that he (and other ministers like him) “remitted that money to the district auditor” who, in turn, would remit the funds to the Central officers during their visits to the US.

The instructions to convert offerings to $100-bills often came, he said, “prior to a visitation” of the INC executive staff to the US.

Ministers knew when the Manila visitors were coming because they received emails from the district staff. They knew that instructions came from the US main office (USMO) of the church in Burlingame, which is the repository of all offerings of the Iglesia congregations in the US.

Florida said ministers were first told to do this in 2012, the same year that Hurricane Sandy hit the East Coast. “I informed the district auditor at that time that these actions that we’re doing – converting the offerings to cash and not depositing them – is a violation of the IRS code,” Florida recalled.

Brought to where?

Isaias Samson Jr, another expelled INC minister, said there had been reports of this malpractice even as early as 2011, just two years after the death of Eraño Manalo, the father of current executive minister Eduardo.

“I was bothered by this. Di ako makatulog (I couldn’t sleep). I was trying to find a reason, to justify why they were doing that,” he told Rappler. He said the practice continued until 2014, possibly till 2015.

Florida said there had been reports of the money being transported to the Cayman Islands, a known tax haven, via the Airbus 330 often used by Iglesia ranking officials.

“The only reason why they would go [there]…would be for the purposes of taking the cash and then putting it into…banking institutions there, which the United States cannot be able to look into,” Florida said.

He added, “Why would they go to the Cayman Islands, other than to bring cash there,” especially since there are no INC congregations there?

Criticizing this practice, Florida pointed out, “There’s no accountability, no traceability, when it comes the cash.”

'United in faith'

INC spokesman Edwil Zabala, for his part, refused to comment on Florida's claims about tax fraud and hidden cash in the Caymans.

Zabala said in a text message Friday, December 4: “The leadership shall respond to the allegations of Mr Florida in due time and in the proper forum. As of this moment, we have not received a copy of the supposed complaint.”

He added: “We do not wish to speculate either on its content or the motive behind it. United in our faith in the Almighty and in the fairness of the justice system, we assure the public that we will cooperate with the proper authorities. We are one with you in the desire for truth.”

Zabala then urged INC members “to continue praying for the enlightenment of non-members who wish to create division within the Church.”

“We likewise appeal to the public for restraint and circumspection. Lastly, we urge everyone to resist the temptation for speculation, as it will serve no higher purpose than fuel hatred and division,” he added.

Florida, who joined the INC in 1978 due to its "purity of doctrines," said he filed the report with the IRS not to try to convict or hurt anyone. “I’m asking them to fix it, stop it, and fix it, because of the love I have for the church.” with Chay F. Hofileña/Rappler.com

Paterno R. Esmaquel II

Paterno R. Esmaquel II is a senior reporter leading Rappler’s coverage of religion and foreign affairs. He finished MA Journalism in Ateneo and MSc Asian Studies (Religions in Plural Societies) at RSIS, Singapore. For story ideas or feedback, email him at pat.esmaquel@rappler.com.

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