WEST PALM BEACH, Fla. (CBS12) — Mega donation, megal dollars and a mega dilemma.
A real-life church versus state battle is brewing in federal court in West Palm Beach.
The local church got the donations from a member, who the government claims got it running a Ponzi scheme.
The details of the case are spelled out in a federal complaint.
The case pits the rights of the church versus rights of investors, who want their hard earned money back.
“Nobody at the church had any idea that he was involved in this Ponzi scheme," said Carl Schoeppl, attorney for Winners Church International.
When a wealthy church member at Winners Church International put money in the offering plate repeatedly over several years, the church was thankful for his generosity.
Now, the Securities and Exchange Commission (SEC) says that money was ill-gotten gains and came from a Ponzi scheme.
So the SEC wants that money back, saying it belongs to investors and the church, and Bishop Fred Shipman has to hand over $1.7 million dollars.
However, the church says no, it should be allowed to keep the cash.
“Each time somebody puts money into that church basket, whether it's ten dollars, a hundred or a thousand or more, those are blessings from God," said Carl Schoeppl, attorney for Winners Church International.
The attorney for the 2000-member church at 365 Jog Road in West Palm Beach says the money has been spent for all sorts of things, such as Thanksgiving Day meals for the less fortunate, missionary work in other countries and the church’s building fund.
"If a religious organization acted in good faith, which basically means they didn’t know of the fraud and they received the money, that’s a defense," Schoeppl said.
CBS12 News tried to reach the people who ran what the government says was a Ponzi scheme out of an office in Palm Beach, but no one answered the door.
"What would you say to all the investors who got ripped off here and want their money back?" CBS12 News asked.
"Well, we would say we’re sorry. We didn’t commit the fraud upon you and unfortunately the church doesn’t screen its applicants to see that they’re committing frauds or Ponzi schemes," Schoeppl said.
Bishop Shipman declined to comment for this story.
The attorney for Winners Church says this case is a first; he says nothing like this has ever come up in an SEC enforcement action.
Both sides have until June 3 to submit written arguments, then the court will decide.