RUTHERFORDTON, NC (Michael Gordon and Joe Marusak/The Charlotte Observer) - A prominent leader of a controversial Western North Carolina church is accused of devising a scheme that cheated taxpayers out of tens of thousands of dollars in unemployment benefits.
Kent Covington of Rutherfordton, a top minister in the Word of Faith Fellowship church, was indicted Thursday by a federal grand jury on a charge of conspiracy to commit wire fraud.
Over five years, according to the indictment, Covington and "co-conspirators" filed more than $250,000 in phony unemployment claims for employees who kept working for companies owned by Word of Faith members.
Starting in 2008, the indictment said, Covington masterminded a scheme to help his plastics manufacturing company survive the recession by laying off his work force, applying for unemployment benefits for his employees, then forcing them to keep working.
For the next five years, taxpayers and not Covington paid the employees' salaries, according top the indictment.
The indictment also accuses Covington of using his influence as a Word of Faith leader to force the other church members who worked for his Diverse Corporate Technologies Inc., to participate in the conspiracy.
Diane McKinny, a Covington employee and fellow Word of Faith member, also was named in the indictment and accused of filing fraudulent paperwork to support the unemployment claims.
According to the indictment, Covington and McKinny obtained more than six months of free labor for Covington's company, paid for by the government instead of the business.
The 63-year-old Covington also is accused of passing on the blueprint of his scheme to other church members who owned companies struggling through the recession. T
Two church members who implemented the scheme were the father-and-son podiatry team of Jason and Jerry Gross, who began laying off employees at Foot & Ankle Center of the Carolinas in 2009, prosecutors said.
Both pleaded guilty to wire fraud charges in Asheville federal court last month, the Associated Press reported.
According to Thursday's indictment, between 2009 and 2011, versions of the unemployment benefits scheme were used at a church member-owned contracting business and two more of Covington's companies.
The legal problems of the Covington family continue to mount.
Brooke Covington, another top Word of Faith leader, and four other church members are scheduled to stand trial on accusations that they repeatedly beat a former congregant to drive the "gay demon" out of him, the (Asheville) Citizen Times reported.
Word of Faith also is at the center of investigations here and in Brazil on whether the church set up a human pipeline with its Brazilian missions to come up with cheap or free employees for the businesses of church members.
In the Kent Covington case, prosecutors with the U.S. Attorney's Office said they are seeking almost $310,000 in forfeitures from the defendants, according to Thursday's indictment.
Kent Covington and the 65-year-old McKinny are scheduled to appear in court on June 18.
"We take these accusations very seriously and are conducting our own investigation," Stephen Cash, an Asheville lawyer for the church, said in a statement to the Observer on Thursday night. "We intend to respond to the indictment in the near future."