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Pastor of Louisiana Church Pleads Guilty to Money Laundering and Admits to Obtaining Over $889,000 Through Fraud

Louisiana – U.S. Attorney Duane A. Evans announced that Dr. Charles J. Southall, III, age 64, pleaded guilty in a federal court in Louisiana on October 18, 2022, before United States District Judge Jay Zainey after previously being charged in a one-count bill of information with laundering proceeds unlawfully obtained from a wire fraud scheme, in violation of Title 18, United States Code, Sections 1957 and 2.

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 also 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 charitable 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. Around 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, around September 2013, Southall hired Person A to be employed and reimbursed by Spirit of Excellence Academy for consultancy services relating to the establishment of Spirit of Excellence Academy – Baton Rouge. Between roughly September 2013 and September 2017, Spirit of Excellence Academy paid Person A approximately $220,600, all of which was placed into a financial account jointly owned 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 sole 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 funds from the sale of the Fourth Street property in the amount of $100,000 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.

As part of his guilty plea, Southall agreed to pay $85,351.97 in restitution to Spirit of Excellence Academy or its designee, $687,805.51 to FEBC, $10,000 to Victim A, and $106,408.38 to Victim B.

Southall faces a maximum sentence of ten years in prison, three years of supervised release, a $250,000 fine, and a $100 obligatory special assessment charge. The sentencing hearing before Judge Zainey has been set for January 17, 2023 at 10:00 a.m.

In this case, U.S. Attorney Evans applauded the work of the Federal Bureau of Investigation and United States Attorney’s Office, EDLA Forensic Accountant Josephine M. Beninati, CPA, CFE. The prosecution is led by Assistant United States Attorneys Jordan Ginsberg, Chief of the Public Corruption Unit, and Asset Forfeiture Coordinator Alexandra Giavotella.

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