Former NC lawmaker indicted, accused of embezzling from homeless shelter

A federal indictment alleges that Derwin Montgomery, former Winston-Salem council member and state House representative, used his position as executive director of the Bethesda Center for the Homeless to take trips to Cancun, Mexico, stay at luxury hotels in Los Angeles and other larger cities and charge the nonprofit for services from his own media company.

Montgomery, who is pastor of First Calvary Baptist Church, also is accused of spending money at a strip club in Las Vegas.

Montgomery, 33, faces a federal charge of wire fraud based on allegations that he embezzled nearly $24,000 from Bethesda Center for the Homeless between 2018 and 2020, according to an indictment a federal grand jury handed down Monday in U.S. District Court in the Middle District of North Carolina.

Montgomery, who recently worked as government relations director for the American Cancer Society’s Cancer Action Network, did not respond to a voice message left on one of his phone numbers. He did not answer another phone associated with him and that phone’s voice mail message box was full.

The American Cancer Society Cancer Action Network said in a statement that Montgomery has been put on paid administrative leave and has initiated an investigation to determine if there is any impact to its own organization.

Montgomery was executive director of Bethesda for more than six years, taking the leadership role in 2014. Montgomery had an annual salary of $73,600, according to Bethesda’s 2020 990 tax forms. He resigned in December 2020, and Linda Jackson Barnes, the chairwoman of the board of directors, announced the resignation in January 2021.

“We appreciate his work and leadership over the past six years on behalf of the Bethesda Center for the Homeless,” Barnes said, who added that Montgomery had resigned to focus on other commitments and opportunities.

Barnes issued a statement Thursday.

“Bethesda expresses its appreciation for the work by the U.S. Attorney’s Office for the Middle District of North Carolina and the Federal Bureau of Investigation on this matter and looks forward to a resolution of the charges set forth in the indictment,” she said in the statement.

Barnes said in the statement that Bethesda has “enhanced its reimbursement policies and internal controls concerning claimed business-related expenses.” The nonprofit also hired an outside accounting firm to manage all of the agency’s financial operations, including grants, expense reimbursement, credit card payments and payroll.

Barnes said she stood by the statement she made in January 2021 and was not aware of the investigation at the time she announced Montgomery’s resignation.

The indictment alleges that starting in 2018, Montgomery “did devise, and intend to devise, a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations, and promises.” That scheme continued through 2020, the indictment alleges.

According to the indictment, Montgomery charged Bethesda for certain expenses that were either associated with his work as a member of Winston-Salem City Council or for personal reasons. Montgomery served as city council representing the East Ward from 2009 to 2018.

Montgomery would justify the expenses as being for “staff training,” the indictment said.

Those expenses included a vacation to Cancun, Mexico, with a romantic partner and stays at luxury hotels in Los Angeles; Charleston, South Carolina; Washington, D.C., and other cities. A hotel stay in Los Angeles cost $1,076 in November 2018, according to the indictment.

On March 19, 2019, Montgomery charged Bethesda’s credit card $260 for expenses incurred at Sapphire Las Vegas Gentlemen’s Club.

The indictment lists $23,940 in expenses. The indictment also said he charged Bethesda for the personal use of a 2020 Yukon Denali, an SUV, that is valued at $54,865.75. He told Bethesda that he was using the vehicle for “shelter operations,” according to the indictment.

The indictment alleges that Montgomery ignored certain policies that the Bethesda Center had, including that all expenses over $5,000 had to be approved by a board member. The indictment said Montgomery intentionally charged expenses less than $5,000 to avoid breaking that rule.

The indictment specifically lists $21,250 that he charged Bethesda for alleged services from his company, Uplift Media LLC.

According to the indictment, Bethesda had a contract with the Winston-Salem Journal for print advertising, and an unidentified Bethesda board member had a business that provided marketing, audio/video contracting and other media services for free as a charitable organization.

Yet, the indictment alleges, Montgomery charged more than $20,000 for the same services from his company. And either the company never performed those media services for Bethesda or Montgomery charged exorbitant amounts for such services, the indictment said.

The indictment said in using his company, Montgomery ignored Bethesda’s policy, which prohibits employees from having “employment with any person, firm, contractor, or other organization that receives monies or other remuneration from BCH.”

Montgomery started Uplift Media in 2008 but the company was dissolved in 2010 for failure to file annual reports, according to the N.C. Secretary of State. Montgomery started the company again in 2016, but it dissolved in 2018 for the same reason.

Montgomery, a Democrat, was elected to represent the East Ward on the Winston-Salem City Council in 2009 when he was just a 21-year-old senior at Winston-Salem State University. He gathered almost 60% of the vote against incumbent Joycelyn Johnson in the Sept. 15 Democratic primary and then went on to win the seat without opposition in the fall.

Montgomery was reelected in 2013 after Johnson failed in her attempt to unseat him in that year’s Democratic primary, and won a third term in 2016 without opposition. Johnson died in June.

When N.C. Rep. Ed Hanes resigned from the General Assembly in 2018, Montgomery was picked as his replacement. He defeated Republican Reginald Reid in that fall’s election.

Montgomery tried to gain his party’s nomination for the 6th Congressional District in 2020, but he came in fourth place with 12% of the vote in a contest that was won by Kathy Manning, who currently holds the seat.

In 2017, Montgomery and James Taylor, who is still a council member, announced they were buying the Winston-Salem Chronicle, a weekly newspaper that serves the Black community. Montgomery and Taylor were the managing directors of Chronicle Media Group LLC, but it is unclear if Montgomery is still a part of that company.

Federal prosecutors have issued an arrest warrant, calling for bail to be set at $100,000. Montgomery just has to pay 10% of that to get released from custody. He also has to surrender his passport and not have contact with 11 people, including Barnes. No hearing has yet been set for Montgomery to appear in federal court.

Journal reporter Wesley Young contributed to this report.