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Former Shiloh Ministries owner pleads guilty to tax evasion

June 04, 2009

BALTIMORE -- The former owner of a Hagerstown Christian retreat pleaded guilty Thursday to federal charges of tax evasion and subscribing to a false document, according to a news release from U.S. Attorney for the District of Maryland Rod J. Rosenstein.

Those charges against Otis Ray Hope, 53, of Aiken, S.C., and formerly of Hagerstown, were related to the filing of a federal tax exemption for Shiloh Ministries of Hagerstown, the release says.

He also pleaded guilty to a federal charge of conspiracy to commit bank fraud related to a $1.75 million loan he obtained on behalf of Shiloh Ministries, according to the release.

Shiloh Ministries operated the Shiloh Conference and Retreat Center, which hosted church groups on weekends. The facility, in the former YMCA building at 149 N. Potomac St. in Hagerstown, included a pool, rock-climbing walls and putting greens, The Herald-Mail has reported.

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Shiloh Ministries paid $500,000 in cash for the former YMCA building, The Herald-Mail reported in January 2002.

Before coming to Hagerstown, Hope was senior pastor at the Montrose Baptist Church in Rockville, Md., from 1996 until 2002. While there, he supervised the Montrose Christian School and another educational component of the parish called the English as a Second Language program (ESL), which taught English to foreign students, the release says.

In 2001, Hope told members of the Church Council that the ESL program could be more lucrative if it were expanded and operated as a separate corporate entity, the release says. The council took no action on that suggestion, and Hope formed a company on his own called the Maryland International Student Association (MISA), to take over the management of the ESL program, the release says.

MISA had no corporate minutes or general business ledgers, and it never filed a federal or state tax return, according to the release from Rosenstein.

Upon taking over the management of the ESL program, MISA increased the price of tuition from approximately $7,400 to $12,500, the release says.

From approximately June 2001 to December 2003, foreign students who were admitted into the ESL program at the Montrose Christian School wired approximately $1.35 million in tuition payments into MISA bank accounts, which Hope controlled, without the knowledge of the Montrose Church Council, the release says.

Little of the wired funds was used to pay the expenses of the foreign students or the ESL program, the release says. Instead, Hope spent the money on personal expenses for himself and members of his family, such as golf outings, a family vacation in Hawaii, meals at restaurants, plane tickets, car payments, renovations of family-owned real estate, and investments in Shiloh Ministries of Hagerstown Inc., the release says.

When members of the Montrose Church Council learned that ESL's expenses were not being paid in full, they confronted Hope at two Church Council meetings in September 2002, and after he admitted his conduct, accepted Hope's resignation, according to the release.

Hope filed joint tax returns in 2001, 2002 and 2003, in which he failed to report the expenditure of approximately $958,236 of MISA tuition receipts on personal and family expenses, resulting in the evasion of $287,131 in income taxes over those three years, the release says.

In addition, from August 2006 through March 2007, Hope was one of the trustees of the Shiloh Co. and at different times served as its president, according to the release.

The company renovated and maintained the Potomac Street building and leased the space to groups for conferences and retreats, the release says.

On Sept. 28, 2006, Hope and a co-conspirator applied for a commercial loan on behalf of the Shiloh Co., in the amount of $1.75 million to refinance the mortgage on the Shiloh Conference and Retreat Center, and to release $108,835 being held in escrow by the previous lender for renovations, restoration of the building after a fire on June 21, 2006, and for environmental remediation, the release says.

To obtain approval of the loan, the bank required submission of the company's past and current year's financial statements, minutes from the company's annual meetings and a corporate resolution authorizing the company to borrow the money, according to the release.

Hope and a co-conspirator falsely represented to the bank that the Shiloh Conference and Retreat Center had reopened for business after the 2006 fire, which it had not, and submitted fraudulent financial statements to the bank overstating the company's assets and monthly cash flow, the release says.

They also submitted a bogus corporate resolution and fraudulent minutes of corporate meetings that never took place, according to the release.

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