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2 members of secretive North Carolina church plead guilty to fraud charges

Dr. Jerry Gross pleads guilty to one count of wire fraud in Asheville, North Carolina, on May 25, 2018. (Photo credit: WLOS Staff)

A father and son who belong to a secretive evangelical church in North Carolina pleaded guilty Friday to federal criminal charges in an unemployment benefits scheme that former congregants have said was part of a plan to keep money flowing into the church.

As part of an ongoing investigation into physical and emotional abuse at the Word of Faith Fellowship Church in Spindale, North Carolina, The Associated Press reported in September that authorities were looking into the unemployment dealings of congregants and their businesses.

Dr. Jerry Gross, 72, and his son, Jason Lee Gross, 51, pleaded guilty to one count each of wire fraud, which carries a maximum penalty of 20 years in prison and a $250,000 fine. They were charged earlier in May. Both men are pictured on the Word of Faith Fellowship's website under a section for pastors and ministers, though the church was not mentioned during the hearing.

Other than the men's spouses, no church members attended Friday's hearing in federal court in Asheville.

Jerry Gross owned the Foot & Ankle Center of the Carolinas in Forest City, North Carolina. His son worked there, managing business operations, including payroll and personnel decisions, according to court records.

As part of his plea deal, Gross agreed to cooperate with the government. The criminal investigation into Word of Faith is ongoing.

The U.S attorney's office said the Grosses' scheme netted nearly $150,000 for which employees were not entitled from September 2009 to March 2013. The two made it appear that they had laid off employees, including themselves, making them eligible for unemployment benefits. But prosecutors said the workers remained on the job.

"The scheme enabled Foot & Ankle Center to survive the economic downturn during those years by creating a free labor force — one paid for by the government, not the business itself," court records said.

Both men were released on $200,000 unsecured bonds. Jerry Gross was ordered to forfeit $43,036 that prosecutors said was obtained illegally, while his son agreed to forfeit $38,034. They surrendered their passports and were ordered to give up any guns they have. They also were instructed not to discuss the case.

AP cited 11 former congregants in September who said dozens of church members filed bogus claims at various times at the direction of church leaders.

One of those former members, Randy Fields, had told the AP that his construction company faced potential ruin during the struggling economy, so he pleaded with church leaders to reduce the amount of money he was required to contribute every week.

Fields said church founder Jane Whaley proposed a plan that would allow him to continue contributing at least 10 percent of his income to the church while helping his company survive: He would file fraudulent unemployment claims on behalf of his employees.

The unemployment allegations were uncovered as part of the AP's ongoing investigation into Word of Faith, which had about 750 congregants in rural North Carolina and a total of nearly 2,000 members in its branches in Brazil and Ghana and its affiliations in Sweden, Scotland and other countries.

In February 2017, the AP cited more than three dozen former Word of Faith Fellowship members who said congregants were regularly punched and choked in an effort to beat out devils. The AP also revealed how, over the course of two decades, followers were ordered by church leaders to lie to authorities investigating reports of abuse.

AP later outlined how Word of Faith created a pipeline of young laborers from its two Brazilian congregations who say they were brought to the U.S. and forced to work for little or no pay at multiple businesses owned by church leaders.

Those stories led to investigations in the U.S. and Brazil. In March, Brazilian labor prosecutors filed suit to shut down one of the church branches and its school in Sao Paulo, saying the church and its leaders "reduced people to a condition analogous to slavery."

As for the alleged unemployment scheme, interviews with former followers, along with documents reviewed by the AP, indicated at least six companies owned by church leaders were involved with filing fraudulent unemployment claims between 2008 and 2013. Most of those businesses' employees are congregants, the AP found.

The AP reviewed individual checking account records that showed unemployment benefits deposited by the state, along with income tax records summarizing how much money some of the former followers interviewed received annually in such payments.

In North Carolina, companies pay a quarterly unemployment tax based on the number of their workers, with the money going into a fund used to pay out claims, according to Larry Parker, spokesman for the Division of Employment Security, which oversees the program.

When a worker files for unemployment, the agency checks with the employer to learn the reason. If an employer says a worker was let go because of the poor economy, payments usually are approved quickly, Parker said.

During the recession, which started in 2007 and was driven by the housing meltdown, laid-off workers could receive state and federal extensions increasing unemployment to 99 weeks with a maximum weekly check of $535. But in 2013, North Carolina legislators tied benefits to the state's unemployment rate, limiting laid-off workers to 26 weeks of unemployment, with a maximum payment of $350 a week.

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