OAKLAND (CBS SF) — A former bishop of the African Methodist Episcopal Church of Zion was arrested along with his alleged co-conspirator Tuesday by federal authorities in connection with a fraud scheme that has left congregations in Oakland, of San Jose and Palo Alto weighed down by massive mortgage debts.

US Attorney Stephanie M. Hinds and FBI Special Agent in Charge Craig D. Fair said Staccato Powell and Sheila Quintana appeared in federal court for the first time after their arrest on Tuesday for conspiracy, wire fraud and postal fraud.

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According to the unsealed federal indictment Tuesday, Powell, 62, of Wake Forest, North Carolina, and Quintana, 67, a Vallejo resident, were officers of the Western Episcopal District, Inc., an entity formed by Powell. and Quintana in 2016 after Powell was selected as bishop of the Western Episcopal District of the African Methodist Episcopal Church of Zion.

The indictment alleges that Powell and Quintana conspired to defraud AME Zion Church congregations in Oakland, San Jose, Palo Alto and Los Angeles by illegally re-deceasing the properties of local congregations.

Prior to Powell and Quintana’s actions, federal prosecutors said, congregations had little to no mortgage debt on their local church properties, including shrines, pastoral staff residences and other structures. In some cases, congregations had paid off their mortgages years ago.

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The indictment further alleges that, through the Western Episcopal District, Inc., Powell and Quintana conspired – along with others not named in the indictment – ​​to extract cash proceeds from using false documents to obtain mortgages from private lenders, usually on unfavorable terms. borrower.

Powell, Quintana and others used real estate as collateral to secure high-interest loans exceeding $14 million in net proceeds.

Federal prosecutors said the couple misappropriated funds from the loans for their benefit, including the acquisition of properties in the North and cash payments to Quintana’s spouse.

On July 30, 2020, WED, Inc. filed for Chapter 11 bankruptcy protection and listed eleven churches in California, Arizona and Colorado among its assets.

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Powell was arrested Tuesday in Wake Forest, North Carolina, and made his first appearance in federal court in the Eastern District of North Carolina. Quintana was arrested in Vallejo and made her first appearance in Sacramento.