Nov 12, 2016

Attorney general's lawsuit targets Albany pastor, wife


Petition seeks to remove pastor from charity organization and recoup $103,000

Times Union

By Brendan J. Lyons | November 10, 2016

Albany

The state Attorney General's Office obtained a court order this week that will restrict a longtime Albany pastor's access to the bank accounts of a charitable community organization that was allegedly pilfered by the pastor and his wife.

The temporary restraining order obtained by the office of Attorney General Eric Schneiderman on Wednesday targets both Pastor Edward Smart, 67, and his wife, Marion, 52. Edward Smart has been the pastor at the historic First Israel African Methodist Episcopal Church on Hamilton Street since 2004.

In a related court action, Schneiderman's office filed a petition asking for the Smarts to be removed from the board of directors overseeing a childcare program run by a church-sponsored charity — Israel Community Service Program, Inc. — that's headquartered in the former YMCA building on Washington Avenue. The ICSP also offers services ranging from employment assistance to youth mentoring.

The attorney general's investigation of financial misconduct in Smart's church and charity organizations began in August when the office received a complaint that alleged Smart misclassified employees at ICSP as independent contractors and wrote himself a series of checks from the organization's account totaling more than $30,000.

"Edward and Marion Smart have breached their fiduciary duties to ICSP by engaging in related party transactions in which funds held by ICSP for its charitable mission have been diverted to Edward and Marion Smart," states a petition filed in state Supreme Court by the Attorney General's Office.

The petition states that between January 2014 and May 2016, Smart transferred $103,192 from ICSP bank accounts to himself and his wife.

Last month, the Times Union first reported that Smart and his wife were the targets of a multi-agency investigation of their alleged improper receipt of Medicaid benefits and income they were receiving from the ICSP without authorization from the board of directors.

In March, after board members raised questions about checks they discovered that Smart had written to himself, the pastor removed some board members and replaced them with people who are close to him.

Maurice Drown, a retired Methodist pastor from Albany, was one of the board members who raised questions about the expenditures and was removed by Smart. The court petition filed by the Attorney's General's Office relies, in part, on Drown's statements about the questionable bank activity.

"The transactions were unrelated to expenses of the organization, made without documented board approval of compensation to either individual, and contradict documents filed with the IRS and the Office of the Attorney General's Charities Bureau, certified under penalties of perjury, verifying that Edward and Marion Smart receive no compensation," states a memorandum filed with the Attorney General's petition.

In an unrelated application for Medicaid benefits, Smart listed his and his wife's annual income at $5,000, but records indicate the couple controlled numerous bank accounts from multiple charity and nonprofit organizations — including their church — that paid them more than $150,000 a year, according to information compiled during a criminal investigation of their personal finances.

Smart and his wife were arrested two weeks ago on felony charges accusing them of improperly receiving $12,350 in Medicaid benefits from the Albany County Department of Social Services between January 2015 and June 2016, when Albany County opened its investigation after receiving a complaint about the pastor's alleged misuse of funds.

The ensuing examination of the couple's personal finances, including a review of bank and real estate records, found they may have concealed or improperly paid themselves tens of thousands of dollars from charity organizations they controlled. They also received a $450 monthly reimbursement from their church for health insurance although they were receiving Medicaid benefits, according to the county's investigation.

The separate investigation by the Attorney General's office is ongoing.

"Charitable assets should not personally benefit those charged with their management," Schneiderman said in a statement Thursday.

Records shared with the Times Union last month indicate that Edward Smart held the checkbooks for his church, as well as for multiple charity organizations he and his wife control. The pastor's personal use of the checking accounts, including writing checks to himself for thousands of dollars, was unusual. At many churches and charity organizations, treasurers normally control the finances and banking accounts, according to former board members who served on some of the charity organizations run by Smart.

Although the couple did not claim any income from their work with the ICSP, the Attorney General's office said they both received regular payments from the organization's bank accounts.

Records show Smart's checking account in some instances had a monthly income in excess of $10,000, not including money in the dozen or so bank accounts that Smart controlled from the nonprofit organizations he oversees.

On the couple's application for public benefits, they allegedly listed only the $5,000 in annual income that Smart is paid for serving as vice chairman of the city of Albany's Municipal Water Finance Authority. The authority's five-member board helps manage city water projects and finances, and met once this year in February, according public records.

But records from the investigation indicate Smart was paid up to $80,000 a year in base salary — sometimes $1,550 a week — as pastor of the historic church. In a financial application for a vehicle leased by Smart — a 2015 Ford pickup truck — he listed his annual income at $144,000.

It's unclear if the pastor's stated annual income included more than $28,000 — $550 per week — that Marion Smart was paid as director of the God With Us childcare center on Washington Avenue, according to records in the case.

Investigators said that Smart drives a 2015 Cadillac Escalade and the couple purchased their residence on South Main Avenue in February 2014 for $265,000, mortgaging $212,000 of that amount. In early August, Albany County welfare-fraud investigators completed their review and determined the couple committed probable fraud. The office forwarded the case to the Albany County district attorney's office, which assisted the Attorney General's probe.

E. Stewart Jones, an attorney for the couple, has declined to comment on the case.

For many years, Pastor Smart has been a leader in the city's inner-city neighborhoods and embraced by top city officials as a conduit to the minority community. Smart previously served as chairman of the Albany Citizens Police Review Board and vice chairman of the city's Gun Violence Task Force.

"I have done all those things to get guns off the street just to make life better for people," Smart said during an interview at his residence prior to his arrest two weeks ago. "I know some things will not come out the same way. ... The only thing I have is my reputation, and when somebody attacks your reputation they do it for a reason, and they drag down innocent men and women. We're trying to keep them (people in the church-run programs) off the welfare lists ... to help them have a better life."

Three weeks ago, six people who work for the ICSP were arrested on similar charges of welfare fraud and grand larceny. They were also accused of not listing income they received from the charity program on their applications for Social Services benefits.

blyons@timesunion.com  518-454-5547  @brendan_lyonstu

http://m.timesunion.com/local/article/Attorney-General-s-lawsuit-targets-Albany-pastor-10606229.php

 

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