Dr. H. Kelly McKnight Jr., the senior pastor of Bible Deliverance Temple on Fenwick Street in Harrisburg neighborhood, broke into tears as he told a U.S. District Court judge about the scheme, for which he was charged with one count of wire fraud.
The hearing came just over an hour from when officials officially charged McKnight. The pastor chose to waive his right to be indicted by a grand jury and told the judge he wanted to plead guilty.
As his wife, Chastity, sat crying in the courtroom, McKnight, 59, said he planned to use the money to fund Another Chance Ministries, which he serves as CEO. He lamented the damage he had done to his father's, his wife's and the church's reputations.
"I apologize to this court and this city," he said. "I've already apologized to my church."
According to court documents and property records, McKnight's father, H.K. McKnight, bought a house at 1303 Hickman Road in January 2007 for $225,000 with a loan from Wachovia.
Earlier that month, the same property had been purchased by the pastor through Another Chance Ministries for $150,000.
"Kelly realized he could get a higher rate on the mortgage by having his father fill out the loan," FBI special agent Jason Gustin testified at McKnight's sentencing.
McKnight admitted to writing fraudulent information on the loan application on his father's behalf. He inflated his father's retirement salary by about $15,000 a year, told the bank his father would live in the house when in fact the pastor was renting out the property, and falsely listed his father as being senior pastor of the church.
"The money went into a bank account that was opened just prior to the closing," Gustin said. That account was under Another Chance Ministries.
The bank foreclosed on the house in July 2009, losing $163,000 on the deal. The property was sold on the courthouse steps for $35,500, despite an estimated value of $260,113, property records show.
It is now owned by a limited liability company called Cape Cod Boys, formed by Paul G. King and Donald A. Boynton.
Speaking to the judge, McKnight said he had been desperate to fund the ministry and made bad decisions. He had his father submit the fraudulent loan application at the suggestion of an old church friend who was now a mortgage officer, he said.
"My error was that I was intelligent enough to investigate it more thoroughly and I did not," he said. "If I were not in such a desperate position, I would have made a better decision."
Last Jan. 29, a Wachovia Bank in Charlotte, N.C., transferred $220,017 for the loan -- which led to the charge of wire fraud.
Judge J. Randall Hall released McKnight on a $10,000 bond pending his sentencing hearing. In addition to 20 years in prison, McKnight faces a $250,000 fine.