Before money laundering charge, controversy and investigations trailed New Orleans minister Courts

For more than three decades, the Rev. Charles Southall III has led a flock of hundreds of New Orleanians, preaching every Sunday behind the vibrant red doors of First Emanuel Baptist Church in Central City.

But in recent years, Southall’s business dealings have come under scrutiny, culminating last week in a money laundering charge from the US Attorney’s Office for the Eastern District of Louisiana.

Charging documents provided only the barest details, alleging Southall illegally moved $100,000 from a bank account into a personal investment account, without noting where the money came from.

Companies registered with the state by Southall at the church’s address have been tied to other recent controversies. In 2018, the Orleans Parish school district alerted the Orleans Parish District Attorney and the state legislative auditor about allegations that Southall had used funds from a charter school he oversaw as board chairman to pay church bills. The school soon lost its charter.

A 2019 lawsuit filed by the city of New Orleans alleged he breached contracts related to blight remediation. And documents show Southall had business relationships with Ashton Ryan Jr., the former CEO of First NBC Bank, which collapsed in 2017. Ryan is set to face federal bank fraud charges next year.

Reached by phone on Wednesday morning, Southall directed inquiries to his attorney, Clarence Roby Jr., who also declined to comment, saying doing so “would be quite premature.”

A US Attorney’s Office spokesperson declined to provide additional details on the federal charge, which was made in a bill of information that usually suggests someone may be cooperating with the authorities.

‘Never seen anything like this’

The bill of information contained scant information about what led to a charge against Southall, 64, who began serving as the head of First Emmanuel in 1989.

According to his biography on the website of the church, which also has a Baton Rouge location, Southall has served with numerous civic organizations around New Orleans, including the Delgado Foundation, the Central City Economic Development Partnership and the Greater New Orleans Faith Based Community Development. Corporation, a nonprofit that develops affordable housing. He was twice appointed chaplain for the New Orleans Police Department and delivered the blessing at former Mayor Mitch Landrieu’s first inauguration.

For years, Southall led the board at the Edgar P. Harney Spirit of Excellence Academy, a Central City charter school authorized in 2010 by the state Board of Elementary and Secondary Education.

In the school’s final years, it was subject to numerous warnings from the district about its financial management. Officials found the school was not properly paying into employees’ retirement contributions and that bank statements were sent to Southall’s church address on Carondelet Street rather than the school’s address on Willow Street.

At a community meeting in November 2018, then-Orleans Parish school district superintendent Henderson Lewis Jr. said he had “never seen anything like this,” referring to the D-rated school’s financial management, leadership instability and non-compliance issues. He asked the board to step down and they eventually voted to relinquish the school’s charter.

In a letter to the Orleans Parish District Attorney’s Office and state legislative auditor dated Nov. 5, 2018, Lewis said that the district had reason to believe Southall had used school funds to pay the utility bill for his church and that some of his family members received health insurance through the school, although neither he nor his family members were employed there. . (Board members are unpaid volunteers.)

The letter, which was sent to then-Orleans Parish District Attorney Leon Cannizzaro, Jr. did not result in charges. Cannizzaro did not respond to inquiries on Wednesday.

The letter centers on allegations raised by Ashonta Wyatt, who served as principal of the school for about four months in 2018. Wyatt said that she was fired after she inquired about checks that were sent to people who did not work at the school, including a secretary of the board who also worked at Southall’s church, according to court records.

In an interview on Tuesday, Wyatt said that Southall kept the school’s cash in a separate bank account and required her to email him for money for payroll and other necessary operations. It’s not clear if the federal charge against Southall is related to his oversight of the school. But Wyatt said she thought it felt like vindication for her firing.

“As principal I thought I was doing the right thing. I had no indication I was kicking the hornet’s nest,” she said.

City lawsuit

The Harney controversy was soon followed by a run-in with Mayor LaToya Cantrell’s administration. In 2019, the city of New Orleans sued Southall in Orleans Parish Civil District Court, alleging that he breached a $500,000 agreement signed in 2004 to create affordable housing for low-income residents.

The 15-year contract, according to the lawsuit, required Southall and two of the companies he owns — Greater New Orleans Rehabilitation Corporation and Carondelet Homes of New Orleans — to convert six blighted properties on Carondelet and Rampart streets into rental units.

The lawsuit alleges Southall failed to meet several of the conditions of his contract: to lease the apartments to low-income residents, maintain the properties and submit to city inspections. In one instance, the city claims Southall offered the units to residents who did not qualify as low income. In another, officials said they found one of the properties boarded up, uninhabited and left to go derelict.

Southall denied the allegations against him in a 2019 court filing, and a final ruling has yet to be made in the case. Attorneys representing Southall and the city did not return requests for comment on the lawsuit.

Southall has allowed other buildings under his care to become blighted, according to investigative outlet The Lens. In 2018, bulldozers ripped down Cornerstone Homes, a 30-unit residence for low-income tenants on Claiborne Avenue that Southall owned through 2017. According to The Lens, the building decayed over several years and had more than $100,000 in liens and penalties filed against it. the property.

In 2016, when another of Southall’s buildings collapsed, he sold it to First NBC Bank, according to The Lens.

Ties to First NBC

Southall had other ties with First NBC, the New Orleans bank that collapsed in 2017 and is now at the center of a 49-count federal indictment alleging its top officers and borrowers conspired to commit fraud. Southall is not named in that indictment.

According to Louisiana Secretary of State records, Southall was business partners with Ryan, the banks’ former CEO who has been charged with 43 counts of bank fraud, filing false reports and conspiracy related to the bank’s collapse.

In 2002, Southall and Ryan registered with the Louisiana Secretary of State a business named Comprehensive Central City Initiative of New Orleans Inc. Both Southall and Ryan are listed as the business’s directors. Its registered business address is the First Emanuel Baptist Church, according to state filings.

According to a 2021 court filing, Southall is also linked to a company that is connected to the larger allegations against Ryan and his co-defendants: Ryan, along with five others, owned Universal Pro-Vision.

One of those co-owners — a First NBC Bank borrower identified only as “Borrower L” — is described in the court filing as a “reverend.”

Universal Pro-Vision owned a building on Oretha Castle Haley Boulevard that housed Southall’s now defunct mortuary business.

Two sources close to the First NBC case against Ryan confirmed to The Times-Picayune that Borrower L is Southall. The court document claims that Ryan funneled money to Borrower L, as well as provided him with loans to settle financial disputes.

The sources told The Times-Picayune that Southall’s money laundering charge is unrelated to the First NBC matter, and Southall has not faced any other charges related to First NBC.

According to the bill of information for the money laundering charge, Southall will forfeit $100,000 and a 2017 Mercedes coupe to the government.

Southall is scheduled to be arraigned at US District Court on Oct. 5. If convicted, he faces up to 10 years in prison and a $250,000 fine.

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