Husband-and-wife pastors Carl and Donna Keyes, charged with taking out illegal loans against Glad Tidings Tabernacle Inc., their Manhattan-based church, must return more than $1.2 million to the church, according to a settlement announced Thursday by New York Attorney General Eric T. Schneiderman's office.

The couple, who served as co-senior pastors and chairs of the board of trustees, allegedly used the money to fund their lifestyles, including buying a house in Stockton, N.J. Under New York law, it is illegal for officers and directors of a not-for-profit or religious corporation to take a loan from the entity they serve.

Former Executive Pastor Mark Costantin also was ordered to pay back more than $480,000 that he illegally borrowed from the tabernacle.

An investigation by the Attorney General’s Charities Bureau found that, starting in 2008, Donna Keyes, 56, Carl Keyes, 57, and Costantin, 45, made several illegal loans to themselves. The investigation further determined that Glad Tidings' board of directors breached its fiduciary duties when it allowed these loans. As such, three members of Glad Tidings’ former board will pay a total of $50,000 to help pay for the cost of the investigation.

The settlement bars the couple and Costantin from serving as fiduciaries of any religious or not-for-profit corporation in New York. The tabernacle will be governed for at least two years by an interim board appointed by the Assemblies of God New York District. The temporary board is designed to restore Glad Tidings to its independent status as an operationally and financially sound institution.

In 2008, the investigation revealed that Donna and Carl Keyes had borrowed nearly $1 million in a series of three loans from Glad Tidings and used the money to buy a house. The loan came after the 2007 sale of the Glad Tidings Tabernacle's former house of worship in New York City. That sale generated a multimillion-dollar gain for the organization.

The couple failed to make a single loan payment. Instead, they arranged to have Costantin, the tabernacle’s former executive pastor and executive director, give up Glad Tidings’ ability to foreclose on the home to enable them to take out an approximately $512,000 bank loan on their home.

Rather than use the proceeds from the new loan to pay off their debt to Glad Tidings, they arranged for the church to make payments on their new mortgage. When the couple sold this property in 2013, they used a portion of their proceeds to pay off the bank loan and pocketed the rest.

"Carl and Donna Keyes and Mark Costantin abused the trust of their congregants and used Glad Tidings Tabernacle as their personal bank," Attorney General Schneiderman said. 'As with any not-for-profit entity, those who run religious organizations are bound by the requirements of New York law governing the administration of charitable assets. The law forbids officers and directors, and that includes ministers, from taking any loans from the entity they serve - much less loans to finance personal expenses and lifestyle choices."

The investigation further found that Costantin received improper financial benefits from Glad Tidings, arranged by Carl and Donna Keyes.

In February 2009, the couple authorized a $755,000 loan from Glad Tidings to Costantin for the refinancing of his home in Chester, N.Y. In September 2010, Costantin had Carl Keyes execute a “Satisfaction of Mortgage,” which ended Glad Tidings’ ability to foreclose on the property and enabled Costantin to obtain another mortgage on his property and more cash.

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