Former Grandview mayor pleads guilty to wire fraud
02/11/2014 11:02 PM
02/11/2014 11:02 PM
Stephen Dennis, Grandview’s former mayor, admitted Tuesday that he defrauded $35,000 from the International House of Prayer by misrepresenting that his own nonprofit company was a tax-exempt charity.
Dennis pleaded guilty to wire fraud in Kansas City federal court and faces up to 20 years in federal prison, though a prosecutor and his defense lawyer agreed to make a nonbinding recommendation to the judge for a sentence of a year and a day behind bars.
Under questioning by Assistant U.S. Attorney Roseann Ketchmark, Dennis acknowledged transferring $34,000 of the prayer ministry’s donation to his personal bank account, even though it was intended to provide relief for the poor and elderly in Grandview.
Dennis’ company, Matters of the Heart, was not incorporated properly in Missouri and never sought legal tax-exempt status from the Internal Revenue Service, Ketchmark said during the plea hearing.
“He made representations to the International House of Prayer that (Matters of the Heart) was tax exempt and was in good standing with the Missouri secretary of state,” Ketchmark said.
Visibly shaken, Dennis declined to comment after the hearing. His lawyer, William Lentz, issued a written statement.
“Because of the sensitive nature of the legal issues involved at this stage of the proceedings, Mr. Dennis regrets that he cannot offer any statements concerning the case,” it read.
Before the plea hearing, a magistrate judge released Dennis on his own recognizance. Senior U.S. District Judge Howard Sachs did not set a sentencing date Tuesday.
In a prepared statement, the International House of Prayer said its prayers are with Dennis and his family.
“For many years we have esteemed Steve Dennis as a man of integrity — he has a proven track record,” the statement said. “We are grateful for the excellent way he has served Grandview for many years.”
Dennis resigned suddenly Jan. 9 in the middle of his second term, surprising city officials. Attention focused instantly on Matters of the Heart, which Dennis founded in December 2011 under Missouri’s nonprofit laws.
At that time, Dennis also received legal advice about obtaining formal tax-exempt — or 501(c)(3) — status from the Internal Revenue Service, but never followed up, court records said.
In September 2012, he accepted a $10,000 check from the International House of Prayer, a large Southland church and prayer ministry, and deposited the money into a Matters of the Heart bank account.
As the Missouri secretary of state’s office threatened to dissolve Matters of the Heart because Dennis had not filed the required annual report, he accepted another check, for $25,000, from the prayer ministry in December 2012.
In court filings and admissions in court, Dennis acknowledged that more than 97 percent of the money went to pay his family’s bills, rather than for any legitimate charitable purpose.
The secretary of state’s office administratively dissolved Matters of the Heart in December 2012.
Other problems with the nonprofit quickly emerged.
In April, two Grandview aldermen learned that Dennis had listed them, without their knowledge, as directors of the charity. They demanded to be removed, and they later spoke with FBI investigators.
Re-elected to a second term last year, Dennis appeared proud of his work with the nonprofit. On his election information, he listed himself as executive director of Matters of the Heart. The company was set up to “be a local community outreach to the poor and disadvantaged through direct volunteer involvement in education, literacy programs, entrepreneurial training and business mentoring,” according to state filings.
The Grandview mayor is paid $16,229 a year as a part-time job.
His resignation letter in January mirrored the apparent anguish he displayed in his court appearance Tuesday.
“This is, by far, the most difficult decision that I have ever had to make and the most difficult letter that I have ever had to compose, as I have lived my entire life in this city and have served over 13 years in elected office, the last three as mayor,” he wrote.