AP IMPACT: Tragedy meant big money for NY minister

Associated Press Modified: September 24, 2012 at 5:00 am •  Published: September 24, 2012
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NEW YORK (AP) — Before the Sept. 11 attacks, the Rev. Carl Keyes was a little-known pastor of a small New York City congregation searching for members and money.

When the twin towers fell, his fortunes changed.

Donors poured $2.5 million into the minister's charity to help 9/11 victims. More opportunities to raise relief money would come later, with at least another $2.3 million collected for efforts along the hurricane-ravaged Gulf Coast, in the poorest corners of West Virginia and Tennessee, and even in remote African villages.

Tens of millions more flowed through his fingers from the sale of church properties.

But Keyes, a one-time construction worker, did more than help the needy with the millions donated — he helped himself.

According to financial records, internal correspondence and interviews with former employees conducted by The Associated Press, Keyes blurred the lines between his charities, his ministry and his personal finances while promoting himself as an international humanitarian:

— Keyes diverted large sums donated for 9/11 and Hurricane Katrina into his cash-starved church, then used charity and church money to pay hundreds of thousands of dollars in personal credit card bills and other debts, documents show.

— He failed for years to file required federal and state reports showing how much money his charities received and spent.

— He used large church donations from a wealthy supporter to pay his sons' private college tuition.

— The minister used a big donation meant for one of his charities to clear a mortgage on his family's house, according to an accountant who told Keyes he was quitting, in part because of the transaction.

— And, when his congregation sold its 19th-century church in midtown Manhattan for $31 million, he and his friends benefited.

For example, $950,000 of the proceeds was used to buy his family a country home near the Delaware River in New Jersey. Another $1 million went to support one of his charities, which spent more on failed, lavish fundraisers than on promised programs in Africa.

After paying large debts and buying a building to convert into a new church, the congregation had $13.8 million in cash, according to a February 2008 financial document obtained by the AP. Three years later, it told a court it had to sell that building because only $180,486 remained in its bank account.

The AP first wrote about Keyes and his charities last year, and as the AP expanded its investigation into the minister's operation, the New York attorney general's office opened its own probe. In a recent legal filing, the attorney general's office said it was investigating how the church had used its assets, amid concerns about its "ability (to) properly ... oversee its financial affairs." The church, Glad Tidings Tabernacle, has agreed to cooperate with the state investigation triggered by AP's reporting.

Relatively few people know of Keyes' charities — Urban Life Ministries and Aid for the World. But his story offers a disturbing glimpse into how some nonprofits manage to largely avoid scrutiny and keep finances secret, even while raising substantial amounts of money in the name of tragedy. It's also a story about what can happen to the money of well-meaning donors eager to open their hearts and wallets in the wake of devastation.

Keyes and his lawyer say all payments by his church and charities were proper.

"Sorry that you don't have a real 'story' here, but the truth is actually quite boring since no one did anything wrong," his lawyer, Jennifer Polovetsky, said in an email to the AP on Aug. 22.

"It must be underscored that Carl Keyes is an internationally recognized humanitarian who has spent the past 30 years helping others in crisis," she wrote in an earlier letter. "He has worked with many presidents and prime ministers around the world to help ease the suffering of their people."

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RAISING DOLLARS AND DOUBTS

There is no question that Keyes has thrown himself into relief work.

Yet in promoting himself as a globe-trotting Samaritan, Keyes embellished his exploits and took credit for others' labor, according to several people who worked on relief efforts in lower Manhattan.

After 9/11, his charity provided food, water and counseling for recovery workers. But a priest disputed Keyes' colorful stories about breaking into locked churches for shelter near ground zero.

And in response to AP's questions about a claim that his ground zero soup kitchen had attracted celebrity volunteers like Jerry Seinfeld and actress Susan Sarandon, Keyes acknowledged that they never worked with him.

When Hurricane Katrina struck four years later, Keyes did drive to Mississippi to set up a massive volunteer operation and to help distribute supplies.

But Keyes has yet to account for how his organization raised and spent money on the Gulf Coast — more than $800,000 by one estimate.

For a decade, Keyes operated his Urban Life Ministries charity without filing the required state and federal reports showing how much money it received and spent, an AP examination of official records found. The IRS last year stripped the charity of its tax-exempt status because Keyes failed to submit annual financial disclosures to verify that the money had been used for charitable purposes.

Keyes ran Aid for the World, which boasted of operating anti-poverty programs in the U.S. and on several continents, for more than three years without disclosing its finances as required. That meant there was no accounting of the charity's biggest event, a black-tie fundraiser featuring former U.S. Secretary of State Colin Powell. The charity only recently recorded more than a half-million dollars in fundraising expenses for 2009; a significant portion of the money was spent on the Powell event.

Only after the AP contacted Keyes was an accountant hired to review his charities' finances over the past decade and to file all the required tax disclosure forms.

For Keyes, it's always been about the good works he can do through a selfless ministry, his supporters say.

"He was and remains a tremendous source of strength for those in need," Mike Martelli, a retired New York City police officer, wrote in a letter vouching for Keyes. Their 9/11 volunteer work was featured in a 2006 documentary, "The Cross and the Towers."

Good works aside, it is the way Keyes has handled millions of dollars entrusted to him and the benefits that he, his church and others received that has led his own accountants to accuse him of self-dealing and forgery — accusations that have followed him since his early days as an Assemblies of God minister.

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CONTINUING THE FIGHT

Before he became known for disaster relief, Keyes says he endured a troubled youth, struggling with an abusive father and his own violent nature.

"I have been looking for a fight my whole life," Keyes, a stout man with longish, graying hair, said in a December 2007 sermon. "People would give me a dollar just to see me punch some guy, and I would do it."

Born in 1956, Keyes spent much of his life in New Jersey's middle-class neighborhoods. By the late 1970s, he was organizing Ultimate Frisbee and other youth sports in a part-time job in Ocean City, a family-friendly Jersey beach town. That's where Keyes met Donna Jones, another recreation department employee who would marry him and later serve as his co-pastor.

Keyes also describes a dark side — drug use when he was still in Little League and a life of crime by his early 20s. Jesus came later, he says, after the threat of prison time.

In one essay, he wrote that he abruptly quit drugs in 1982 after a religious conversion during a trip to Maine. He says his brother was less fortunate, dying of a suspected drug overdose in Atlantic City.

Keyes left that life in 1989, he says, when he moved his wife and two infant sons to work for a church in Brooklyn's impoverished Bushwick neighborhood.

But when he split from that ministry in 1997, its leaders accused him in a lawsuit of trying to loot assets on the way out, including a house in Pennsylvania's Poconos that the church had purchased two years earlier for $89,500. Records show that Keyes transferred ownership of the house to himself, then used the property as collateral for a $70,343 personal loan. He later argued in court filings that the money covered expenses for his new ministry. He claimed he was entitled to the house because the church bought it for his family and he had been making monthly reimbursement payments.

The church said in a lawsuit that Keyes stole the house, and a Brooklyn judge gave it back to the church in October 1998.

That same year, Keyes was hired as pastor of Glad Tidings Tabernacle, a nearly century-old congregation housed in an even older brick church wedged between Manhattan high-rises.

Keyes' brought part of his old flock from Brooklyn with him, but the newly merged congregation struggled financially. In mid-2001, church leaders had to borrow $543,500 for repairs and renovations.

Then came 9/11 — and money would no longer be an issue. In just over a year, more than $2.5 million gushed into Keyes' church and a nonprofit organization he controlled, Urban Life Ministries.

After the terrorist attacks, Keyes applied for tax-exempt status for the charity, listing "relief programs in times of crises" as one of its purposes.

Urban Life Ministries spent much of its windfall on things like bottled water, food and a counseling center for ground zero workers, according to financial records obtained by the AP. The charity staged two concerts, including one honoring U.S. troops at the Yankees minor league ballpark on Staten Island. The nonprofit also provided apartments near ground zero for its workers, including Keyes and his family.

Financial records show that Keyes also spent money donated for 9/11 relief on expenses that had nothing to do with the tragedy — a series of monthly payments of $734.99 on the personal loan he owed on the Poconos house; $5,000 for a church organ; and nearly $33,000 for an architect working on church renovations that would include a new living space for his family.

Urban Life Ministries said in recently filed audited financial statements that it also paid as much as $235,600 in "rent" to the church in late 2001 and 2002. It also donated $70,000 to the church and lent it at least another $26,953, according to Urban Life Ministries accounting ledgers, obtained by the AP.

Charities generally must use donations for the purpose stated when the money is raised. And charity operators must avoid using money to help themselves or causes that are not related to their mission.

Keyes, through his lawyer, said the rent and other payments were proper.

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STORIES OF SUCCESS ABOUND

Keyes tells compelling stories about his charity's work, even if others say some of them are not true.

During a 2010 speech to the New Canaan Society, Keyes told how he had jumped into action after the 9/11 attacks: breaking into a closed Navy port on Staten Island to set up a site for relief supplies; obtaining phony security badges for volunteers so they could slip into the disaster zone with ease; and going door to door to rescue 600 pets stranded in Battery Park City apartments.

He described taking control of two Roman Catholic churches in lower Manhattan needed for shelters after the towers collapsed. "I couldn't find a Catholic anywhere. The churches were closed. So the doors miraculously opened after we prayed and hit it with a hammer," Keyes said.

Yet St. Peter's Church, one of the two Keyes cited, was open that day, made famous as the place where firefighters carried the body of the Rev. Mychal Judge, a Fire Department Catholic chaplain killed in the lobby of the north tower.

"I don't think it's true, this whole story," the Rev. Kevin Madigan, the church's senior priest, said of Keyes' version.

There was no break-in on Staten Island, either, said retired New York police Capt. Edward Reuss, who helped oversee staging of relief services there.

And 1,000 pets were rescued in Battery Park City, but that was handled by the city's parks department, according to representatives of several animal rescue groups involved. They said they never heard of Keyes.