Let Us Prey

One Church in the HUD Rehab-Loan Scandal Says It Was a Lamb Led to the Slaughter

Pastor Gaspar Anastasi preaches that the blood of Jesus washes away sin. His church, Word of Life Ministries, is so deeply implicated by prosecutors in the monumental Harlem-Brooklyn rehab-loan scandal that he may need several thousand gallons of the stuff. "The blood of Jesus has power!" Anastasi thunders at several hundred of his congregants during a January 14 service at his Freeport, Long Island, church. "Think about the price he paid—and how he sealed it all with the guarantee of his precious blood! It's not a 30-day guarantee, a six-month guarantee, a year guarantee. It's an eternal guarantee. The blood of Jesus guarantees the guarantee!"

And that's what the multimillion-dollar scam against the U.S. Department of Housing and Development was all about. Prosecutors have arrested and charged 16 people, accusing them of cooking up a clever scheme to illegally obtain federally guaranteed 203(k) loans by using nonprofit organizations as fronts to inflate prices and purchase as many as 450 brownstones, most of them in Harlem and Brooklyn.

Among the prominent nonprofits in the scam, prosecutors contend, was Word of Life Ministries. No one connected with the church has been charged, but court documents allege that Word of Life received kickbacks of up to $10,000 per building from secret investors who illegally wound up with the proceeds of the taxpayer-backed loans.

Nowhere in the lengthy court filings do prosecutors from either the Manhattan D.A.'s office or the Eastern District U.S. Attorney's office mince words. Nowhere do they say Word of Life was an innocent pawn in the scheme.

Anastasi declined to be interviewed by the Voice, but his attorney, Lee Hymowitz, insists that the church was hoodwinked by attorney Andrew "Drew" Graynor and mortgage banker Michael Fox, two Long Islanders who prosecutors say were at the very center of the scam. Fox has been charged; Graynor hasn't.

"Trust me. It was a grueling process. They had the intention of prosecuting us. It wasn't a flip decision."

"Involved we were," Hymowitz says of Word of Life. "We obviously bought the properties. Unfortunately, the church was duped by its previous attorney and by the mortgage banker."

Hymowitz argues that Word of Life "unfortunately was hooked into this. It's terrible, but it's not anything we intended to cause trouble with."

Trouble, however, was caused. The 203(k) program is designed to help people on the lower end of the income scale—either by themselves or with the aid of nonprofit groups—become homeowners in their neighborhoods.

But the scam has hurt the very neighborhoods that the program intended to help. Among the buildings that HUD says are in default because of the scam, 19 in Harlem are owned by Word of Life.

The crafty property flips among the nonprofits, including Word of Life and investors such as Long Islander Frank Boccagna, grossly inflated the real value of the buildings and put them farther out of reach of ordinary people. In many cases, tenants in buildings taken over by the scamsters found that rehab was the last thing on the mind of the schemers. Part of the scheme was for the investors to take responsibility for managing the properties, but many of the tenants in the buildings say they have suffered without basics like heat and hot water.

Mortgage banks that bought the allegedly illegal loans are claiming their federally insured money. HUD and city officials have vowed to reclaim the buildings from the scrap heap and redo them into legitimate deals.

Hymowitz insists that Word of Life will clean up its own mess. "Part of the whole scam was the management of the buildings," he says. "Boccagna was the management company. We have a new management company and we've been dealing with them to straighten things out."

As for the vow by HUD, and powerful nonprofit groups like the Reverend Calvin Butts's Abyssinian Development Company, to take over all the buildings as they emerge from foreclosure, Hymowitz says that won't happen with Word of Life's buildings. "With most of our properties," he says, "we've worked out a separate deal with the banks, like M&T Mortgage."

Word of Life's buildings won't wind up in default, he says.

Prosecutors say their investigation is continuing and more arrests are expected, but neither leader of the two most prominent legitimate church groups in the scam has been charged. Only Gennie Phillips of Helpline Soul Rescue Ministry is completely in the clear: She died in the middle of the probe.

Anastasi, however, is alive, and Word of Life, says Hymowitz, has not been given what he calls a "clean bill of health" by prosecutors.

"After all their investigation, they've elected not to prosecute," he says. "Allegations may be one thing, but the ability to prosecute is something else. At this particular point, they don't have any specific evidence.

"Trust me. It was a grueling process. They had the intention of prosecuting us. It wasn't a flip decision. There just was not enough to prosecute."

And Anastasi, a stocky fellow whose looks and voice could get him work on The Sopranos, still has his day job, preaching a version of the prosperity gospel to his congregation—a group that reflects Freeport's diversity: about two-thirds African American or Hispanic and one-third non-Hispanic white.

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