The Windfall Prophet: Did Chattanooga businessman Michael Chitwood bluff the state at his former Circuit City stuffed with Bibles?

Note: This is the second of two parts. Read part one here. 

There are one hundred Bibles in this sidewalk, H. Michael Chitwood says in the opening moments of the video.

The multimillionaire Chattanooga businessman places one foot on the step leading to his building, then hops back as if the concrete is scorching hot.

"Oh, I felt it right there, didn't you? I felt the power of God right there," Chitwood says. He then turns to speak directly to the camera. "Listen, when you step up onto the property here, there's a hundred Bibles outside and then on the inside, over there, we have one thousand in the walls and in the floors."

Chitwood tells those watching to send him 100 Bibles or a contribution of $200 so he can buy Bibles to put in the walls and floors to finish his new 1,500-seat sanctuary in Chattanooga on Lee Highway near the interchange with Highway 153.

Attached to Chitwood's pressed black suit is one of his $40 lapel pins he sells as "succesessories" among his other wealth building materials, such as his "Certified Master Life Coaching System" that sells for $15,500.

"I want to put a Bible in every wall, under the platform, in the bathroom!" Chitwood says in the video, before moving even closer to the camera. "Listen, when you go to the bathroom here, you're going to feel the power of God. That's for sure."

Before the video fades, Chitwood reminds viewers for the third time in 30 seconds to send him $200 to build his International Congress of Churches and Ministers headquarters.

"I'll see you soon. Send me that $200 so I can buy the Bibles for you, that way you don't have to mail them to me," Chitwood says. "This is Michael Chitwood. You're right here at the ICCM headquarters, and we have the holy word of God in our hand, and we walk by faith."

A month later, the amount went up. In another video, Chitwood asked people to send him $250 for the Bibles.

In June 2012, Chitwood bought the old Circuit City where he later stood for the promotional video. He told the Times Free Press at the time that the project - including putting Bibles in the walls and floors - cost $8.5 million. Today, the nearly 37,000-square-foot complex is home to Chitwood's International Congress of Churches and Ministers headquarters and Celebration Church.

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The building is part of Chitwood's financial and ministerial empire, made up of various businesses, as well as some nonprofits that have faced accusations of being run for his private benefit.

Chitwood's nonprofit Church Management and Tax Conference, which runs educational seminars on church tax law, has been accused of providing misleading information to scare clients and create business for his accounting service, which has been fined for misleading the public about its credentials.

His building on Lee Highway has also faced scrutiny. What the building was originally intended for was at the center of a dispute with the state of Tennessee worth hundreds of thousands of dollars. Documents and recordings of internal conversations obtained by the Times Free Press suggest Chitwood may have spent years misleading the government to avoid paying hundreds of thousands of dollars in taxes.

Chitwood and his lawyers denied these claims. They argue the entire yearslong controversy was created by a former Chitwood employee acting without Chitwood's knowledge.

'LUCRATIVE SEMINARS'

Documents obtained by the Times Free Press under the Tennessee Public Records Act suggest the building was intended to be a conference center, a place Chitwood could rent out for profit, for weddings, parties, fundraisers and other events. The building's marketing materials detailed it as "Celebration! The most unique conference and event facility in the South."

In the summer of 2014, Chitwood hired Meredith Leastman to be an event planner. A few weeks into her employment, Chitwood told her to attend a bridal fair to begin booking events, according to internal emails.

"The bridal show I think you should go," Chitwood wrote in a July 2014 email to Leastman. "Let me know what you need to have a presentable exhibit space. Let me know what you need and the payment method."

The event planner was given photos of the building's exterior to show - some including the large white cross behind the building and one with the cross photoshopped out, offering flexibility depending on a potential customer's religious orientation.

Marketing materials for the space from 2014 said it was "perfectly suited" for weddings, corporate events, beauty pageants, sweet 16 birthday parties, business conventions, gymnastic competitions, retail sales events and political events, among other things.

    Screenshot of H. Michael Chitwood's Celebration conference center and event facility website. The website has since been removed and is no longer searchable on the internet.
  

However, Chitwood's lawyers told the state of Tennessee the building on Lee Highway was hosting regular church services and was used "purely and exclusively for religious and church services," according to a 2013 letter sent to the state asking for a religious tax exemption.

The state rejected the application, pointing out that the identified pastor of the church was being paid nothing and the mission of Chitwood's nonprofit was closely linked to his accounting firm.

"Whether or not this church was conceived in an effort to bolster CMTC/ICCM's previously rejected claim of being a 'religious' institution, the presentation of lucrative seminars and conferences around the country unmistakably remains the lifeblood of the organization," reads an order from an administrative judge in December 2013.

Chitwood's legal team spent the next year appealing the decision.

In November 2014, state inspectors scheduled a site visit to review the possible exemption.

Two days before the inspection, staff at the conference center were directed to create marketing materials for "Celebration Church," according to an email obtained by the Times Free Press.

In the emails, staff were told to hang church banners and change their computer desktops to the newly created "Celebration Church" logo. People connected to Chitwood's organizations were asked to add their names to the church's "membership list," according to the emails.

Parts of the conference center were converted to appear like a church. For example, the event planner's office was moved and redecorated for Shannon Cook, a friend of Chitwood who was said to be the lead pastor. The bridal suite was converted into a children's ministry room.

In an email sent two days before the inspection, Kammy Coontz, Chitwood's ex-daughter-in-law and then International Congress of Churches and Ministers executive director, told Leastman to place snacks in the children's room.

"Can we get some kids snacks for the childrens church room. Maybe put some little juice box drinks and some gold fish crackers. Some little gummy packs too," Coontz wrote in the email to Leastman.

On the day of the inspection, Nov. 13, 2014, the state inspectors were shown around the building, including the children's room and pastor's office. According to an affidavit from Leastman, people were brought in to act as a church choir rehearsing.

Chitwood, while testifying under oath at the Sept. 9 hearing, said people were directed on a weekday to set up the building to look the way it normally looked on a Sunday morning when it would function as a church.

Months after the visit, in the spring of 2015, the state inspectors came across a brochure advertising Chitwood's conference center as available for rent, something the inspectors were not told about, according to emails among state employees. The state then requested more documentation from Chitwood to prove just how the building was being used.

"This is exactly what I was concerned about when I recommended against this type activity pending the tax exemption," Chitwood's lawyer R. Wayne Peters then wrote in an email to Chitwood. "We need to develop a good response and see if we can get this back on track."

Chitwood's lawyers successfully argued to have Peters' email removed from the Sept. 9 hearing, arguing it fell under attorney-client privilege and could not be used as evidence against Chitwood.

'ONLY THE CHURCH'

Among the new documents the state requested in March 2015 for its investigation into the use of the property was a list of the building's rental history over the past 12 months and scheduled rental uses on the building for the upcoming 12 months.

When Chitwood's event planner created the list, Chitwood directed her to remove weddings and other private events from the list, according to an affidavit she gave to the state. In an April 2015 voice memo, Chitwood told her to alter the remaining names and nature of events, including adding "Christian" and "church" to event names and removing all mentions of "fundraising" or "fundraiser" from events.

"And, of course, get the price off of there of $92,000 for the Seventh-day Adventist," Chitwood said in the voice memo obtained by the Times Free Press.

In the documents submitted to the state in April 2015, including the events schedule Chitwood had modified, Chitwood's attorney wrote, "There is no conference or event center - only the church."

At that time, the event planner signed a statement saying she created all the marketing materials herself and was hosting events at the conference center without Chitwood's knowledge.

During the Sept. 9 hearing, Chitwood said it was his voice on the recording but he had no recollection of the message. He said he was correcting the list. The state did not ask any further questions about the recording.

In an interview with the Times Free Press, Chitwood and his attorneys said the event planner was advertising, booking and hosting large-scale events at the building Chitwood owned without his knowledge and despite being warned against it. They said the event planner used brochures that Chitwood did not approve to promote the building.

They claim she was pocketing the extra money, meaning, in part, large scale events were occurring without Chitwood's knowledge while Chitwood was allegedly hosting church services in the same building several times a week. This is why the event planner was let go, Chitwood said.

Leastman told the Times Free Press the allegations are untrue.

"I vehemently deny the completely false claims made by my former employer, [Chitwood]," Leastman said in a statement. "His absurd allegations are clearly fabricated and are contrary to easily confirmed facts."

Chitwood repeated his argument while under oath during the Sept. 9 hearing. He said he was not aware of the events Leastman planned at his building.

"I had no knowledge of any weddings," Chitwood said.

In a recorded phone call from 2015 obtained by the Times Free Press, Chitwood discussed a wedding booked at his "Celebration ballroom." In the call, Chitwood, who referred to himself in the third person, attempted to convince the bridal party to move their August wedding to a different location because it was scheduled close to the dates of his annual conference that uses the same building.

In a separate recorded conversation from August 2015 obtained by the Times Free Press, Chitwood asked the event planner whether she took down the conference center's Facebook page and website. The event planner responded that she had removed the Facebook page and the website for renting the facility - which advertises the facility as perfect for weddings, high school proms and investor meetings - had been made unsearchable on the internet for about a year.

"We are hoping to have this resolved, with our real estate tax exemption approval, we're hoping to have this approved the latter part of this year or the first part of next year," Chitwood responded in the recording. "We're hoping to have it approved."

The rest of the conversation between Chitwood and the event planner mostly focused on getting more customers, ending any discounts for nonprofits and increasing rental prices at the facility, such as the flat fee of $5,000 to use the facility for four hours on weekend evenings.

Chitwood was approved for the tax exemption in 2015, retroactive to when he bought the property in June 2012. In total, the exemption has allowed Chitwood to avoid paying around $480,000 in taxes, according to an estimate stated during the Sept. 9 hearing.

In May 2016, the event planner recanted her previous statement, the one stating she used the building without Chitwood's knowledge for her own benefit. She then signed a new affidavit before the state Board of Equalization. This prompted the state to notify Chitwood it has probable cause to revoke the exemption.

The second affidavit said the "Celebration Church" banners and materials that were allegedly put up before the state inspection were taken down soon after. It also states Chitwood brought in Andrew Towe, a pastor in Chattanooga, to lead church services for several months in 2015.

Chitwood said Towe would back up everything that Chitwood claimed, including the event planner allegedly misusing Chitwood's property for her benefit. In an affidavit before the state Board of Equalization in June 2016, Towe said the building was used for private events and he worked alongside the event planner to avoid scheduling conflicts. In the affidavit, Towe said his position as pastor was terminated in August 2015.

Towe declined to answer questions from the Times Free Press. He said he is trying to move on from a bad experience.

Leastman said in her new affidavit she was forced to sign the first affidavit and lie out of fear for her job.

'NOW, LET'S PRAY'

Chitwood has sued former employees and business partners, claiming a breach of contract or damage caused by the employee. The targets of some of these lawsuits, who fear speaking publicly because of the threat of further legal action, said Chitwood uses his wealth to drag out the lawsuits, racking up attorney fees they cannot afford. At least one was forced into bankruptcy.

Chitwood's legal team has filed two lawsuits against Leastman alleging, in part, that she was stealing money and charged her with conspiracy against ICCM. Both lawsuits were dismissed.

Chitwood is also involved in legal battles with some of the people he hires to build his businesses or renovate his homes. He allegedly owes hundreds of thousands of dollars to contractors who he has refused to pay, citing substandard work or a breach of contract.

During a 2013 lawsuit between Chitwood and the Raines Brothers construction firm for alleged failure to pay more than $66,000, Chitwood's former accountant testified that Chitwood told him "Chitwood doesn't pay finance charges or late charges."

Chitwood's attorney, Gary Henry, denied any pattern in the multiple lawsuits. Henry said people target Chitwood because of his financial status. The attorney suggested the Times Free Press was doing something similar by questioning Chitwood's business dealings.

"What these folks like to do is use Dr. Chitwood's status as financial adviser to churches and they try to bring up scurrilous, unfounded claims," Henry said.

Scott Oliver, owner of Centerline Audio Visual, said Chitwood owes him around $223,000 and about four years interest for work installing the audio and visual equipment at Chitwood's ICCM building on Lee Highway. Oliver and his crew revamped the building in the summer of 2014 in a project costing more than $1 million, he said.

Chitwood paid for the equipment, so it could not be repossessed, but refused to pay for the installation labor, Oliver said. When Oliver sent him an invoice, Chitwood yelled at him over the phone, he said.

"It would make Satan blush, the stuff that man said," Oliver said. " After he cussed me out over the phone, he said, 'OK, now, let's pray.'"

Oliver said Chitwood tried to claim the equipment was installed incorrectly or did not work. When Oliver took a cellphone video showing how Chitwood was wrong, Oliver said he was offered $23,000 to settle instead of bringing a lawsuit. Oliver said he declined.

"He tried to punch holes in everything that we did. He even tried to turn other contractors against us," Oliver said.

Oliver, along with his project manager Greg McDougald, who claims to be owed around $80,000, did not file a lawsuit. They say Chitwood prolonged judgments in other similar cases until the contractors ran out of money and had to settle for a tiny fraction of what they were owed.

"It's kind of like you're his best friend until the very end, then he's ready to throw you under the bus," McDougald said. " He runs by a pretty well-rehearsed script to get what he wants."

Chitwood's lawyer, Henry, said the contractors were paid for things Chitwood agreed to but were trying to charge extra fees. Chitwood and Henry say the sound system did not work.

"We had legitimate reasons to dispute their bill over the sound," Henry said.

ATTORNEY-CLIENT PRIVILEGE

In an August tweet, Chitwood wrote, "The fastest car in the world, Bugatti Chiron Super Sport, can reach a top speed of 310 miles per hour and go from 0 to 60 in 2.3 seconds. You can pick one up for just under $3 million dollars. I'll explain why success loves speed in our Elite Millionaire Expo."

He is more circumspect about wealth when dealing with state regulators. Chitwood and his lawyers have fought requests from the state to turn over financial documents, lists of assets and business transactions related to Chitwood's organizations as part of the state's inquiry into the ICCM building. His legal team argued successfully that such documents were not relevant to the case and would not be included.

Under oath during the Sept. 9 hearing, Chitwood said his Celebration Church does "not really" have a budget.

The lawyers have argued Chitwood should not have to give the state information about the November 2014 site visit, including which people were notified and any conversations that happened about the visit, such as preparations to be taken. Chitwood's legal team successfully argued that lawyers were "present for all communications regarding the site visit" and therefore none of it should be made public because of the attorney-client privilege.

During the Sept. 9 hearing, Chitwood said he did not want to give the state a list of names of people who volunteer at his church because he was "very concerned about it because of leaks."

The state did not call any witnesses to testify against Chitwood.

Recordings obtained by the Times Free Press - such as the recording of Chitwood discussing a wedding he denies knowing about or the recording in which he asks the event planner whether his building's website would remain unsearchable until after the approval - were not presented as evidence during the hearing about the property. With the recording of the modified event schedule, which the state did present, the attorney for the state did not ask Chitwood why he directed a rental price to be removed from the list.

Some documents obtained by the Times Free Press were not presented as evidence against Chitwood. At the same time, Chitwood's lawyers successfully removed other documents from being brought as evidence.

On Dec. 11, the administrative judge for the state ruled Chitwood would keep his exemption and not pay taxes on his building.

The Hamilton County Assessor of Property's office has 30 days from that date if it chooses to initiate an appeal with the Tennessee Assessment Appeals Commission.

Read the first installment of The Windfall Prophet: Inside Michael Chitwood's Chattanooga empire of nonprofits, churches and promises of prosperity

Contact Wyatt Massey at wmassey@timesfree press.com or 423-757-6249. Follow him on Twitter @news4mass.