State v. Burckhard, 579 N.W.2d 194 (N.D. 1998)
• Keypoint 4-09. Clergy who divert church funds to their personal use face possible criminal and civil liability.
The Supreme Court of North Dakota ruled that the first amendment did not prevent a priest from being prosecuted for embezzlement of church funds. The priest served as pastor of a local Roman Catholic church. The state charged that he "knowingly took and exercised unauthorized control over money in excess of $100,000" belonging to the church and spent the money on personal items such as the payment of personal credit cards, payments to personal stock brokers, payments for unauthorized personal bills, payments for sporting equipment, payments to relatives, and payments for fishing trips, all with intent to deprive his church of the money. The priest asked the court to dismiss the case on the ground that it would involve "excessive entanglement" in religious affairs in violation of the first amendment's nonestablishment of religion clause. A trial court agreed with the priest, and dismissed the case. It concluded that finding the priest guilty of embezzlement would require a probing investigation into his authority over church funds, which would constitute prohibited "excessive entanglement" between church and state. The state supreme court reversed this ruling, and ruled that the prosecution of the priest for embezzlement would not violate the first amendment. The court conceded that the civil courts cannot resolve church disputes involving matters of doctrine or polity, and quoted from a number of United States Supreme Court rulings, including the following:
[W]e think the rule of action which should govern the civil courts, founded in a broad and sound view of the relations of church and state under our system of laws, and supported by a preponderating weight of judicial authority is, that, whenever the questions of discipline, or of faith, or ecclesiastical rule, custom, or law have been decided by the highest of these church judicatories to which the matter has been carried, the legal tribunals must accept such decisions as final, and as binding on them, in their application to the case before them. Watson v. Jones, 80 U.S. (13 Wall.) 679 (1871).
The priest insisted that any attempt by the state to prosecute him for embezzling church funds would require an analysis of his authority over church funds which would "directly interject the court into a resolution of the polity of the Holy Roman Catholic Church" in violation of the first amendment. The court disagreed. It acknowledged that the first amendment's nonestablishment of religion clause "forbids courts from second-guessing the church's rulings on internal matters of policy and doctrine, because the process of second-guessing would require excessive government entanglement in church affairs." However, the civil courts are not deprived of jurisdiction "if the case can be resolved without court interference in church policy and doctrine."
The court pointed to numerous cases in which clergy were prosecuted for various crimes despite their first amendment defense. These cases included the following:
(1) United States v. Rasheed, 663 F.2d 843 (9th Cir.1981). The founder of a church and his associate minister were convicted of fraudulently and deceitfully conducting a church donation program. On appeal, the defendants claimed the first amendment barred their convictions because their program constituted a "religious tenet" and the first amendment prevented the government from proving the falsity of the program. A federal appeals court rejected the ministers' arguments, concluding that "the first amendment does not protect fraudulent activity performed in the name of religion."
(2) United States v. Snowden, 770 F.2d 393 (4th Cir. 1985). A minister of a local church was convicted of mail fraud and tax evasion. The church retained a company to supervise the construction of a church building. The owners of the supervising company paid the pastor about $80,000 in kickbacks, which he deposited into his personal checking account. On appeal from his conviction, the pastor asserted the charges should have been dismissed on first amendment grounds, because they posed an impermissible risk of entangling the government in internal church affairs. A federal appeals court rejected the pastor's argument, and noted that "the defendants seek to use the clause as a sword against the victim, the church … [t]he first amendment rights of these defendants are not involved in this case."
(3) United States v. Lilly, 37 F.3d 1222 (7th Cir.1994). This case involved the prosecution of the pastor of a local church for securities fraud and income tax evasion. The church sold "certificates of deposit" to members through its pastor, who made false and fraudulent representations in making the sales. He then converted about $900,000 of the funds for his personal benefit. A federal appeals court rejected the pastor's first amendment defense: "[W]e stress that [the pastor] does not maintain that the tenets of his religion require him to undertake securities fraud …. Instead, he asserts that '[t]he ability to determine what is an appropriate use of church money is at the heart of the charges brought against' him and that '[a]llowing the court, or a branch of the United States government, to make that determination violated [his constitutionally protected free exercise of religion' …. The district court's determination of the pastor's guilt had absolutely nothing to do with reviewing the church's internal allocation of funds, nor did it implicate any issue of religious polity … [and did not require] any governmental foray into the realm of religious law or any repudiation of an ecclesiastical tribunal's decision. Because [the pastor] was the church's financial decisionmaker, church-member investors and church personnel trusted him to be the sole, unsupervised manager of the church's finances. This position of trust allowed the pastor to control the church's bank accounts and misapply the certificate funds clandestinely …. The district court therefore correctly determined that [the pastor] occupied and abused a position of trust."
The North Dakota Supreme Court noted that the priest in this case used church funds for personal purposes, entirely unrelated to the church's business or mission. It concluded that his prosecution for embezzlement does not require the court "to interpret or review church doctrine, policy, or laws. As in any theft case involving allegations the defendant misused funds entrusted to him, the state will need to produce evidence, through testimony of church officials or other appropriate means, of the authority entrusted to the defendant and conduct outside that authority. It is for the [jury] to decide whether the priest made unauthorized expenditures of church funds. The mere fact a church official's wrongful conduct may violate church policy or canon law in no way precludes the same conduct from also violating and being prosecuted under secular criminal laws." The court noted that "[t]his is not a case involving complicated questions of ecclesiastical policy or church doctrine. The question, simply put, is whether the church authorized [the priest] to expend church funds on himself and others in the manner the complaint alleges he spent those funds.
The court also rejected the priest's claim that he could not be guilty of embezzlement since he had "legal authority" over the church funds and therefore could not have spent them without authority. The court expressed doubt that the priest "had absolute or unlimited authority to expend church funds." In any event, it was up to a jury to make this determination.
What this means for churches
This case illustrates the important principle that the civil courts can resolve disputes involving churches and clergy so long as they can do so without delving into religious doctrine, discipline, or polity. Criminal prosecutions of clergy for embezzlement or other criminal behavior rarely will implicate such matters, and as a result are not necessarily beyond the reach of the civil courts. Diversion of Church Funds
