Iowa Church That Intervened In Politics Files For Bankruptcy

An Iowa church that sparked controversy by intervening in judicial elections has filed for bankruptcy because it can’t pay for its building.

Cary K. Gordon, pastor of Cornerstone World Outreach in Sioux City, launched a church-based campaign to recall three Iowa Supreme Court justices last year. Gordon was angry that the three, who faced retention elections, had voted to legalize same-sex marriage. Gordon sent letters to churches across the state, asking them to help him defeat the judges.

The campaign, dubbed “Project Jeremiah,” was successful, and all three judges lost their seats. But Gordon’s overt intervention in electoral politics drew national attention. Americans United reported the church to the Internal Revenue Service, and many Iowans spoke out against Gordon’s actions.

The church has since been rocked by an ongoing dispute between Cornerstone officials and a construction firm that worked on the facility. The Sioux City Journal reported that Gordon’s church faced ending up on the auction block because the congregation owes a company called Cincinnati United Contractors more than $3.5 million for work done on the facility, which it apparently cannot pay.

It’s possible that the church’s political activities hindered its ability to get a loan. Gordon had hoped to borrow money to pay the church’s bills but was apparently unable to do so in part because of his church’s poor reputation and fears that it might be in trouble with the federal government.

The Journal reported that Cornerstone officials were warned that Project Jeremiah made it difficult for the church to get credit.

Doug Daniels, an associate pastor at the church, at one point drafted an affidavit about the matter. As the Journal reported, “Daniels’ draft affidavit also includes text of an e-mail urging church officials to issue a retraction and warned that an unnamed state agency had asked the Federal Deposit Insurance Corp. to investigate the church as a result of Project Jeremiah.” The e-mail was written by a loan broker.

As the Journal noted, the loan broker most likely confused the Federal Deposit Insurance Corporation with the IRS. The latter agency enforces tax law, including the requirement that non-profits refrain from endorsing or opposing candidates.

In November, a state judge ruled that Cornerstone had until Dec. 10 to pay Cincinnati United Contractors. The deadline passed without payment, and the judge then ordered the church to pay $3.65 million, plus interest and others costs. No money was forthcoming, and a mechanic’s lien was placed on the church.

Cornerstone was scheduled to go up for auction last month but filed for bankruptcy at the last minute, thus averting a sheriff’s sale.

The church issued a statement reading, “Due to obstacles encountered during construction; complications arising from an inability to achieve funding during the economic and political climate, and an unfortunate breakdown of ongoing negotiations between our church and Cincinnati United Contractors (CUC), Cornerstone World Outreach (CWO) is regretfully forced to seek the protection offered by Chapter 11 reorganization.”

Donald Molstad, a Sioux City attorney who represents Cornerstone, told the Journal the church filed for bankruptcy to protect its assets while its leaders restructure their debt.

Molstad said the church will likely meet with creditors this month to discuss the matter.