Harvest Bible Chapel released its financial audit on November 21, 2019. This post is an analysis of the audit. From IRS law that was broken to the question if money laundering took place at Harvest Bible Chapel. This is a disturbing report that could possibly be much stronger when you see the issues this blog raises about Wagenmaker & Oberly. In the end because of the current political climate that white evangelicals helped create, the IRS will not take any action and James MacDonald will walk and get away with these alleged financial crimes.
“All religion, my friend, is simply evolved out of fraud, fear, greed, imagination, and poetry.”
Edgar Allen Poe
“Rather fail with honor than succeed by fraud.“
When Jesus spoke again to the people, he said, “I am the light of the world. Whoever follows me will never walk in darkness, but will have the light of life.”
John 8:12 NIV
Before this post starts to look at the Harvest Bible Chapel financial audit I want to remind you of something that many mega church pastors frequently say. Its all about Jesus..it’s all about Jesus! The Harvest Bible Chapel financial audit is finally out. This blog has been a couple of days behind because there were a couple of other posts about Harvest that this blog wanted to get published. This report was released on November 21, 2019. They held a special meeting that originally was for members only. But when Jessica Hocket and Julie Roys and a couple of others showed up they were not thrown out. The report was done by Wagenmaker & Oberly which does legal work for churches, non-profits and more. Wagenmaker is located both in Chicago, Illinois and Charleston, South Carolina. Also involved is Schechter Dokken Kanter (SDK) which is a financial firm based in Minneapolis, Minnesota. There is much to say so let’s do a deep dive into this financial report.
Summary of the Harvest Bible Chapel Financial Report
The audit which comes from two organizations comes out to a total of 24 pages. You can access the audit in, “Preserving the Financial Audit for Harvest Bible Chapel by Wagenmaker & Oberly and SDK CPA.” The audit starts out by discussing James MacDonald’s abuse of power, and his controlling leadership style. The report then goes on and claims that MacDonald apparently misused Harvest’s financial resources for improper financial benefit. Harvest Bible Chapel experienced systemic failure and that is most revealed by the current financial situation. Lack of proper oversight, and financial control issues existed with Walk in the Word (WITW) and Harvest Bible Fellowship. There was questionable transfer of money from Walk in the Word to Harvest Bible Chapel after the implosion of Harvest Bible Fellowship. There were also two accounts related to an executive account and WITW which were not available to accounting staff. There was another secret account called Vanilla Bean that consisted of a private checking account and credit card that existed only for James MacDonald.
When it came to James MacDonald’s salary it kept going up from 2015 through 2017. It started at $1,240,000 went up to $1,387,500 and then was planned for $1,270,000 for 2019. MacDonald’s compensation came from Harvest Bible, WITW, family travel bonus , deferred compensation, other retirement benefits, health insurance, “Teacher License Agreement” and “Short Term Incentive Program.” Wagenmaker Law stated that there was no independence, or due diligence that took place at Harvest. James MacDonald was involved in many areas where he should not have been privy. James MacDonald owned intellectual property and Wagenmaker could not find corporate board minutes that reflected due diligence in this manner. Its a problem because James has already been paid and the relinquishing of charitable assets is a concern. The report also looks at MacDonald’s conflict of interest and governmental issues at Harvest Bible Chapel. MacDonald’s decision making process was always to benefit him. He had extravagant personal financial benefits, avoided accountability from any governing board due to his leadership style and head handed bullying. The report also states that Harvest Bible Chapel’s new Elder Board has addressed some of these issues.
The report documented the federal tax issues that also came about due to MacDonald’s abuse of power. It appears as if federal tax law and non-profit law were violated. Harvest violated its 501(c)(3) status and inurement took place because while James should not have had the power he did, he had excessive substantial transactions between one of the insiders and the tax-exempt organization itself. Inurement can be read about in more detail here. Excessive benefit transactions occurred because inurement occurred at Harvest Bible Chapel. James MacDonald actually owes repayment for violating this excessive benefit. Automated excess benefit transactions (AEBT) took place as well. This is due to the excessive living and waste that took place in a 501(c)(3) if I am interpreting this correctly. What could warrant is excessive credit card transactions, house security improvements, lavish gift giving, etc… And while James MacDonald could argue that sports tickets, travel, commensurate with the context others would disagree. The last major issue addressed by the report is the intellectual property issue. In a 501(c)(3) status major copyright law prevents an individual benefiting from such works that come from a charitable asset. Due to the arrangement that existed MacDonald had unfettered control and ownership of his copyrights to works that he was paid to create as an employee of Harvest Bible.
Schechter Dokken Kanter (SDK) got into the financials and the numbers. But even SDK struggled as some of the documentation did not exist. The report documented spending from January 1, 2016 until February 14, 2019. Approximately $3.1 million was spent through private accounts which were controlled by James MacDonald and close associates. $1.2 million was used to fund deferred compensation plans all to benefit James MacDonald. $1.9 million was used for other spending at James MacDonald’s discretion. The private accounts lacked financial controls or independent oversight. James MacDonald and his family members received direct payments from private checking accounts. The aggregated amount is $286,096. $142,058 was paid directly to James MacDonald for personal expenses, of which $48,127 went to his W2 for additional compensation. James also benefited in other ways which include the following.
- $416,139 on travel of which $94,046 was added to his W2.
- $170, 851 was spent on hunting and fishing trips. Included were airfare, lodging. gas, food, guns, and taxidermy.
- $139,502 on meals and entertainment included his golf game, country club dues, and other events.
- $94,017 was spent on clothing and glasses. Of that amount $17,277 went to MacDonald’s W2.
In addition there were other expenses as as well to include $247,858 for gifts, donations, or benevolence. $71,750 went to the deer herd at Camp Harvest, and $114,159 went to “refreshment” expenses to the Senior Leadership Team at Harvest Bible Chapel. Harvest also had an incentive program called the Short-Term Incentive Compensation Plan for members of his Executive Leadership Team. They got bonuses for growing the church. James MacDonald also received bonuses as well.
Concern About Wagenmaker & Oberly
SDK looks like it is a secular organization so that gives their work strong credibility. They are not going to be as biased about evangelical issues. Its important to recall that Capin Crouse and the Evangelical Council of Financial Accountability (ECFA) had systemic issues. This audit is a damning indictment on Capin Crouse and ECFA. However this blog has some concerns about Wagenmaker. This blog would like to ask the question was Wagenmaker already biased before taking on this audit? A couple of sentences grabbed my attention. Those sentences are as follows and pay attention to the sections underlined. “Such responsibility is grounded in a nonprofit governing leader’s legal obligation to take care of the organization’s well-being in furtherance of its religious tax-exempt purposes. This responsibility is also consistent with Biblical standards of integrity and stewardship for church leaders.” Later on in the report it states the following. “We affirm these corrective and improved governance measures, along with the Elder Board’s continue accountability to HBC membership, mindful of each Elder’s tremendous stewardship responsibilities. We deeply appreciate the opportunity to come alongside you and HBC in this tremendously pivotal juncture, for HBC’s future and for the glory of God as paramount above all.” When you go to the website of Wagenmaker you learn more about their mission. This is an organization that also gets involved in the evangelical culture wars. Consider some of the issues they are writing about on the firm’s blog. Here they get into conversion therapy bans, whereas here they address issues of clergy being mandated reporters and seems to push back on that topic a little. Then here they get into clergy housing issues and the last example I am going to use deals with free speech issues. So here is the question that I want to ask. Did Harvest get a Capin Crouse 2.0 that is involved in the evangelical culture wars which put together a report that could be considered a puff piece? If Harvest Bible Chapel had a more secular organization that did a report would it be far more damning than what you see in this report? Given Harvest’s policy of secrecy I also wonder if Wagenmaker produced a classified more sensitive version that is available only to a few people in the church. What Harvest should have done is get an organization that works with non-profits such as the American Cancer Society, United Way, or American Heart Association. Would you have had a report that could be deeper in depth and more forthcoming?
Is Vanilla Bean LLC the Infamous Black Budget?
Don’t forget its all about Jesus! On page three, paragraph three of the Wagenmaker report it discusses the Vanilla Bean LLC that James MacDonald had exclusive control over. This blog would like to ask the question, is this the infamous black budget that this blog broke in the following story last year? “Walk in the Word, a Black Budget at Harvest Bible Chapel and Finances that Resemble a Criminal Syndicate More Than a Ministry.” This appears to be the only budget that James had all to himself and was not subjected to scrutiny. The information in Vanilla Bean LLC needs to be obtained and accessed. Only when that information is opened up can we say that due diligence has taken place. Its this blog’s belief that financial transactions that bribed, and purchased people’s silence, covered up allegations of sexual abuse and more most likely came out of Vanilla Bean. If I am reading the report correctly we still do not know how much money went into Vanilla Bean. What most likely happened is that Fred Adams regularly and frequently deposited money in Vanilla Bean for James MacDonald to use as he will. This is corruption in its most heinous form.
Did Money Laundering Take Place at Harvest?
Remember its all about Jesus. There was one aspect of the report that stood out to me as I read and analyzed it. Let me lift from Wagenmaker’s report.
“Additionally, per available HBC corporate minutes, when MacDonald ended HBC’s
relationship with HBF, the Elders authorized a “loan from WITW” in the amount of
$1,500,000 to HBC. In doing so, the Elder Board reallocated its own funds, but given the confusion concerning ownership and legal status of WITW, the loan made it appear as though the Church was incurring a large debt to “James’ ministry.” Then, on November 9, 2017, the Finance Committee reported that WITW “is reducing loan balance by $1 million as a gift to HBC. Committee and staff expressed gratitude to WITW for this gift.” This “unconditional gift” from the church back to itself was treated as a gracious gesture, as if two separate entities had come to a well-intentioned understanding, when in fact the payment was merely a moving of the Church’s money from one of its accounts to another.”
When I read how money was moved from one part of the organization to another and then decreased by over $1 million it made me ask the question in my mind. Did money laundering take place at Harvest Bible Chapel? The amount of money that was moved and the confusion that exists and the difficulty in tracking it leaves that question for me. One other aspect to consider is that following. In banking after the September 11, 2001 attacks financial reforms took place. Anti-money laundering reforms took place and were expanded. Deposits that exceeded $10,000 generated Suspicious Activities Reports (SAR). Were any SAR’s crated due to the massive amounts of money that was being moved around from Harvest and then deposited and more. That is a question this blog has about Harvest Bible Chapels’ financials.
The Short Term Incentive Compensation Plan
There was one aspect of the report that troubled me. And the topic is going to have a dedicated blog post to go more into the weeds. Harvest had a program called Short Term Incentive Compensation Plan that gave bonuses to the XLT. Read how its described in the SDK report.
“There was a Short-Term Incentive Program available for members of the Executive Leadership Team (XLT). Schedules contained in the available archived emails indicate that the STIP for “Senior” XLT members was an incentive compensation plan based on the achievement of three metrics at HBC: (1) actual net surplus exceeds targeted net surplus, (2) actual attendance growth exceeds targeted attendance growth, and (3) actual major gifts exceed targeted major gifts. The current Elder Board has questioned whether the STIP (coupled with use of the Private Accounts) may have generated motivation to incur donor development expenses in hopes of reaping personal financial reward from the result of such efforts.”
What you had was a program focused on church growth for the sake of church growth. Bonuses were given out when the church grew. Not only was Harvest Bible Chapel a cult. It was also a business that measured success in the same way that corporations measure growth and success. If you recall in the Dean Butter letter which this blog published it talked about unhealthy ways in which people were looped into Harvest. How they were to be showered with extra affection and that it was done so that more people would give money. Well if you connect the dots when more people were brought in it was to get bonuses and more money. This is the first time I have seen a program that basically admitted that the mega church model is a business. Its modus operandi is not different than Target, Wall Mart, Macys except that you can’t call those businesses a cult.
What the Report Leaves Out
The report leaves out some detail some of which I have already asked about. Is the Vanilla Bean LLC the infamous black budget? What about the more specific spending can that be released or documented? The people of Harvest Bible Chapel need to know if James MacDonald went to 5 star hotels had meals that were beyond extravagant of rare bird and game and more. What about the MacDonald family? Kathy MacDonald is well known for her shopping sprees at Target in Elgin. What about her spending habits and the details of her financial transactions? There is a lot of information that was left out of this report that still needs to be accounted for. If the Vanilla Bean LLC is the infamous black budget, well if that can be opened you can also find out how much child sex abuse happened at Harvest and how many families were paid to be silent. This report leaves me with a wanting to know more information.
The Waste is Obscene and Even More Disturbing in Light of the 5G and Closer Campaigns
I read this report at least three times and thought about it for a day. This is one of the most perverse and wasteful financial reports this blog has ever seen. What makes it even sicker is the stories this blog has heard that about what some families in the Chicago area sacrificed in financial giving. Think of this report in the context of Harvest’s financial campaigns. The 5G and Closer campaign. In the end people were giving money to subsidize James MacDonald’s extravagant lifestyle. Those who attended Harvest were conned and had. You might as well have bought a rapture survival kit from James Baker on cable when you consider the financial campaigns that took place.
James MacDonald Allegedly Broke IRS Law and Harvest 501 (c)(3) Status, and in the Current Political Climate he Will Get Away with Fraud
As this post comes to its final section there is another point I want to hammer home. After reading this report its quite clear that James MacDonald broke 501(c)(3) rules and tax law in his reckless and wasteful spending. Many people want the IRS to go after him and law enforcement to step into this mess. This blog is going to tell you that in today’s political climate that will not happen. The IRS is not going to go after James MacDonald for his alleged financial crimes or more. The IRS is understaffed and under-resourced and also its under political heat. From 2016 until 2020 or possible 2024 evangelical Christians have free reign to commit fraud, commit crimes and more. In a Donald Trump administration the IRS is not going to go after James MacDonald or any church for that matter. And this brings this audit story to a close and a bitter pill for many people from Harvest to swallow. Some people from Harvest are sadly more caught up into tribalism than fact. In a situation where people are blindly supporting tribalism that creates a situation where James MacDonald will be able to get away with fraud. As government is malfunctioning in my backyard of Washington, D.C. those evangelicals from Harvest who blindly support Trump have taken a shotgun and aimed directly at their foot. James MacDonald will walk away and get away with these allegations of financial crimes. The only legitimate option is if the state government in Illinois will take any action. Perhaps this situation will get some people from Harvest to step back from tribalism and realize how they hurt themselves in the end. That is going to be a exceedingly bitter pill to swallow and its hard to face the ramifications from one’s mistakes, but that still needs to happen. There are some other posts that will come forward off this Harvest Bible Chapel audit in the next few days. But remember its all about Jesus!