RALEIGH, N.C. (AP) — A member of a secretive North Carolina church pleaded guilty Friday to taking part in an unemployment fraud scheme benefiting businesses with ties to the congregation.
Diane McKinny appeared before a federal judge and admitted to a count of making a fraudulent claim for unemployment benefits, according to court filings. The charge carries a maximum sentence of five years in prison. The online docket didn’t immediately list a date for sentencing.
McKinny was the fourth person to plead guilty as part of an investigation into the scheme involving multiple businesses linked to Word of Faith Fellowship in Spindale.
Her employer Kent Covington, who was also a Word of Faith minister, was sentenced last month to 34 months in prison on a charge of conspiracy to commit mail fraud. Two others listed on a church website as ministers have been sentenced to probation after admitting fraud at a podiatry clinic.
Prosecutors have said Covington’s business, Diverse Corporate Technologies, laid off employees in 2008 so they could collect unemployment benefits. But the employees continued to work at the company, with government money replacing their salaries and essentially giving the business “free labor,” according to court documents.
Covington used his position as a church leader to coerce employees, many of whom were members of the congregation, to comply, prosecutors say.
McKinny used tax reporting software to help prepare the workers’ unemployment claims while she was corporate secretary for the business, according to court documents. Prosecutors wrote earlier this week that government officials, relying on claims submitted by McKinny, paid “substantial benefits to which the claimants were not, in fact, entitled.”
McKinny didn’t file a claim for herself or benefit financially from the fraud, according to a document prepared by prosecutors and signed by her attorney as part of the plea deal.
“Her primary motivation appears to have been loyalty to her employer, rather than personal pecuniary gain,” prosecutors wrote.
Prosecutors wrote in court documents this week that Covington and McKinny also encouraged other businesses owned or managed by church members to manipulate unemployment benefits in a similar way, costing the government hundreds of thousands of dollars.
McKinny’s attorney didn’t immediately respond to an email seeking comment Friday.
The court cases are the latest developments in the investigation by The Associated Press that, beginning in 2017, documented claims of physical and emotional abuse at the church. AP also reported that authorities were looking into the unemployment claims of congregants and their businesses.
Former members have told AP that congregation leaders encouraged the schemes to help the businesses survive the economic downturn and keep money coming into the church.