A New York state court ruled that a church's books and records were subject to government inspection as part of an investigation into alleged wrongdoing in soliciting contributions.
The state attorney general received reports that the church forced residents of its homeless shelter to "panhandle" contributions on the streets in exchange for room, board and 25% of the moneys collected. There also were allegations that most of the contributions were appropriated for the personal benefit of the church's founder. Accordingly, the attorney general issued a subpoena to the church, directing it to make available for inspection its
- books and records,
- leases and deeds,
- minutes of its governing body and the names and addresses of all directors, officers, and trustees, and
- copies of all materials used to solicit contributions. The church refused to respond to this subpoena on the ground that it violated its "religious rights."
In rejecting the church's claim, the court observed:
There is no doubt that the attorney general has a right to conduct investigations to determine if charitable solicitations are free from fraud and whether charitable assets are being properly used for the benefit of intended beneficiaries.
It makes no difference whether or not the organization soliciting the donations is a church or other religious organization, since
religious corporations … are still within the attorney general's subpoena power, and investigations by the attorney general of alleged fraudulent behavior may proceed based upon law and the public interest against fraudulent solicitations by so-called religious groups.
The court emphasized that the attorney general's investigation did not prevent the church or its members "from practicing their religious activity, nor is it disruptive to such activity."
The court concluded:
"At a time when there is acute sensitivity to the plight of the homeless, the public, the press and the courts must be acutely aware of the possibility that the unscrupulous might prey on the warm heartedness and generosity of the community, and attempt to profit from human misery. At the very least, when such allegations exist and have some degree of evidentiary support, we cannot close our eyes to the possibilities of abuse. The mere fact that a charitable group claims first amendment privileges cannot shield that group from the scrutiny of the attorney general." Abrams v. Temple of the Lost Sheep, Inc., 562 N.Y.S.2d 322 (Sup. Ct. 1990), Abrams v. New York Foundation for the Homeless, Inc., 562 N.Y.S.2d 325 (Sup. Ct. 1990).