Louisiana Doctor Sentenced to Prison for Money Laundering, Obtaining Over $889,000 Through Fraud in Connection with Religious Organization

Share This:[Sassy_Social_Share]

Published March 01, 2023

Louisiana Doctor Sentenced to Prison for Money Laundering, Obtaining Over $889,000 Through Fraud in Connection with Religious Organization

New Orleans, Louisiana – A Louisiana doctor has been sentenced to prison for money laundering and obtaining over $889,000 through fraud in connection with a religious organization.

On Tuesday, February 28, 2023, U.S. Attorney Duane A. Evans announced that Dr. Charles J. Southall, III, age 65, was sentenced by United States District Judge Jay Zainey to 60 months in prison, followed by a 3-year term of supervised release, after Southall previously pleaded guilty to laundering proceeds unlawfully obtained from a wire fraud scheme, in violation of Title 18, United States Code, Sections 1957 and 2. Additionally, Judge Zainey ordered Southall to pay $889,565.86 in restitution to the victims of his offenses and a mandatory $100 special assessment fee.

Southall has been the Executive Pastor of First Emanuel Baptist Church (FEBC) since around 1989, according to court filings. FEBC maintained houses of worship in New Orleans and Baton Rouge, Louisiana, owned multiple parcels of real estate in New Orleans, and established housing ministry entities to provide affordable housing to low-income New Orleans residents while earning income from renting some of the properties owned by FEBC. As Executive Pastor, Southall led and counseled the FEBC congregation, assisted in the administration and operation of FEBC-affiliated charitable organizations, including its housing ministries, and solicited donations ostensibly for specific repair, development, and charitable projects, as well as tithes in support of FEBC and its mission. Southall was paid according to his work contract, as well as monetary offerings from the FEBC congregation throughout the year.

Southall used his position as Executive Pastor to deceive FEBC and some of its members in a variety of ways. Southall first sought tithes and donations from several members before inappropriately diverting the funds to his personal use. In July 2019, Southall, for example, sought a $10,000 tithe from Victim A, the profits of which he placed into his own financial accounts and used to pay for personal expenses. Southall requested repeated payments from Victim B between August 2016 and July 2020, ostensibly for various philanthropic purposes and the renovation of FEBC’s New Orleans headquarters. Without Victim B’s knowledge or authorization, Southall wrongfully diverted approximately $106,408.38 of the monies Victim B provided to FEBC to financial accounts under Southall’s personal control and to pay for Southall’s personal expenses unrelated to FEBC or its goal.

Second, without the knowledge or authority of FEBC, Southall transferred roughly $150,000 of income generated by the rental of properties owned by FEBC and its affiliated housing ministries to his personal use and benefit.

Third, Southall devised and carried out a scheme to defraud FEBC by selling FEBC-owned real estate and diverting a portion of the proceeds to and for Southall’s personal advantage without the knowledge or authorization of FEBC or the FEBC Board of Trustees. In sum, Southall improperly diverted about $537,805.51 in profit from the sale of FEBC-owned real estate located on Amelia Street, Fourth Street, and Baronne Street to Southall’s own benefit without authority.

Southall and others also founded the Spirit of Excellence Academy with the intention of running a charter school in New Orleans. About 2013, Southall obtained money to establish an affiliated school in Baton Rouge. Despite receiving grants and loans, the Spirit of Excellence school in Baton Rouge never opened. Board Members of charter schools were barred from obtaining pay for providing services to the school other than reimbursement of real expenses, according to guidelines published by the State of Louisiana. Southall, as President of Spirit of Excellence Academy’s Board of Directors, filed financial papers indicating that he had no personal or financial interest in Spirit of Excellence Academy.

Despite these assurances, Southall hired Person A in September 2013 to be employed and reimbursed by Spirit of Excellence Academy for consultancy services relating to the establishment of Spirit of Excellence Academy – Baton Rouge. Spirit of Excellence Academy paid Person A approximately $220,600 between September 2013 and September 2017, all of which was put into a financial account jointly controlled by Southall and Person A. Southall routinely diverted a portion of the funds paid to Person A to Southall’s personal use, including transferring funds from one or more of the accounts he shared with Person A to other financial accounts under Southall’s control or directing the funds to be used to pay Southall’s personal credit card bills. Between about September 2013 and September 2017, Southall improperly diverted approximately $85,351.97 of the funds given to Person A by Spirit of Excellence Academy to Southall’s own advantage and use in the manner indicated above.

Southall collected a total of $889,565.86 through his fraudulent operations. Southall then engaged in a series of financial transactions with the proceeds of the criminally derived proceeds he obtained, including negotiating a check for $11,841 to purchase tickets, using $100,000 from the sale of the Fourth Street property to open and fund a JPMC individual investment account for himself; negotiating a cashier’s check for $95,000 to purchase a vehicle; and negotiating a cashier’s check for $95,000 to purchase a vehicle.

In this case, U.S. Attorney Evans lauded the Federal Bureau of Investigation and Forensic Accountant Josephine M. Beninati, CPA, CFE. The prosecution was led by Assistant United States Attorneys Jordan Ginsberg, Chief of the Public Corruption Unit, and Alexandra Giavotella, Monetary Penalty, and Asset Recovery Unit Asset Forfeiture Coordinator.