Mount Zion Baptist Church in Nashville has agreed to repay the federal government more than $70,000 to settle allegations of misused paycheck protection program, or PPP, loans.

The church was approved for $967,600 in PPP loans in April 2020. The loans were forgiven in the amount of $978,029 on May 17, 2021, according to filings in federal court.

The settlement is not "an admission of liability" by the church, the filings said.

Messages seeking comment from Mt. Zion and attorneys representing the church in the settlement were not immediately returned Thursday.

Mt. Zion, founded in Nashville in 1866, has four campuses, several thousand members and grows by about 1,800 people per year, according to its website.

During the pandemic, PPP loans offered small businesses with less than 500 employees forgivable loans up to $10 million to cover payroll costs, rent, mortgage interest, utilities and other overhead expenses.

Despite one of the intents of the loan being employee retention, the church reduced a full-time employee, who has a child with a debilitating illness and was hospitalized in December 2020, to part-time upon her return from the holidays. The change, she was told, was due to budget constraints, and it cut off access to her health benefits, the civil complaint filed in federal court said.

The employee filed the lawsuit against the church for misuse of the PPP funds under the false claims act.

For her successful lawsuit, the government paid her more than $10,000.

Under the act, PPP fraud whistleblowers are eligible for a reward of between 15% to 30% of the funds collected by the government.

But the settlement against Mt. Zion came not from the employee retention issues, but from payments made on the principal mortgage balance for one of the church's four properties.

Weekly services at Mt. Zion are held at four main campuses: Brentwood, Antioch, Jefferson Street and Old Hickory Boulevard. In person and online opportunities are offered.

Details were available online about two of the four campuses.

The church's largest location, on Old Hickory Boulevard, has seating for 5,000 people and was completed in 2001 at a cost of $17 million. The Antioch location was completed two years later at a cost of $7 million and includes seating for 2,000 plus a children's wing, according to the church's website.

In May 2020, the church made two separate mortgage principal payments — $13,175.01 and $57,289.38 — in violation of the terms of the loan, court filings say. In the settlement, the church agreed to repay the $70,464 in principal payments.

In its complaint, the government said the church also misrepresented the number of employees it had as well as its payroll expenses. The church, on paper, claimed it had 223 employees. At the time, 54 people worked for the church.

The church also fired two employees between June 2020 and July 2020, and staff were told that the firings were due to budget cuts, the complaint said.

"MZB did not need a PPP loan to ensure its ongoing operations," the complaint said.

In the same meeting where the CEO informed employees of the PPP loan, she also "reported that giving to the Church had increased from approximately $1.3 million per month to approximately $1.5-1.8 million per month," the complaint said. It also detailed how the church's pastor, Bishop Joseph Walker III, was making about $2.5 million per year and the church provided lavish perks like a personal chef every Sunday, to the cost of $1,000 to $3,000, a parsonage allowance to cover the majority of his estimated $5 million home and periodic access to a private jet.

"The circumstances surrounding MZB mortgage debt and the forgiveness of its PPP loan further demonstrate that the Church did not need the loan funds to support ongoing operations," the complaint said.

In 2020, the church owed about $1.8 million for a mortgage on its Old Hickory Boulevard property. In August 2021, about three months after the church was granted forgiveness on the PPP loan, they reopened for services and announced they had "paid off its remaining mortgage obligations, including all outstanding principal," the complaint said.

News Source : https://www.tennessean.com/story/news/crime/2024/06/06/nashville-baptist-church-federal-settlement-covid-loan-improper-use/73995849007/