The case is unique because the Diocese of Jackson, Mississippi had itself faced criminal charges over the alleged fraud of laicized priest Lenin Vargas, but in 2020 entered into a deferred prosecution agreement to avoid criminal penalty.
The Diocese of Jackson, Mississippi announced Monday that it had received notification that Lenin Vargas, 53, a former priest in the diocese, had died April 1 in Mexico.
Vargas in 2018 fled from the United States to Mexico, his home country, after he was dismissed from his parish amidst a federal wire fraud investigation.
The priest had been indicted on April 26, 2020 on 10 counts of wire fraud, facing a maximum penalty of 20 years in prison after he allegedly solicited nearly $200,000 over a three-year period from parishioners.
A few months later, the Diocese of Jackson was itself charged with concealment of a felony over officials’ knowledge of Vargas’ fraudulent activity. The diocese entered into a deferred prosecution agreement to settle the charges, telling prosecutors they would develop robust internal financial controls.
Reports of the priest’s death were shared by the Diocese of Jackson, the Funeraria Serenidad funeral home in Michoacan De Ocampo, Mexico and the Instituto Educativo en Formación de Paramédicos.
But Scott Leary, the Assistant U.S. District Attorney assigned to Vargas’ case, told The Pillar this week that while he had heard of Vargas' death, he was waiting to confirm with the U.S. Marshal Service before closing the case.
Leary said that he hoped to confirm with the U.S. Marshal Service within the coming days, seeing the case officially closed.
Vargas, ordained a diocesan priest in 2006, served as the pastor at St. Joseph Parish in Starkville and at Corpus Christi Mission in Macon between 2013 and his removal from active ministry in the fall of 2018.
In September 2014, Vargas was hospitalized for multiple days with “breathing difficulties,” according to a 2020 indictment. While he was there, doctors suggested that he take an HIV test. A few years later, during an unrelated medical appointment, he disclosed that he had an HIV diagnosis.
After returning from his 2014 hospitalization, Vargas told parishioners that he had been diagnosed with non-Hodgkin lymphoma cancer and began asking for donations to help offset medical costs, the indictment said. He set up a Go Fund Me account, seemingly to support his medical expenses, and received more than $8,000 from some 50 donors.
Court documents noted that the Diocese of Jackson provides priests with generous medical insurance coverage, which “covered all Vargas’ medical expenses; he was not required to pay out of pocket expenses related to his HIV treatment.”
Between January 2015 and September 2018, the indictment said, parishioners gave Vargas an estimated $200,000, with the belief that they were supporting Vargas’ healthcare expenses, or helping with charitable projects that Vargas frequently promoted, including an orphanage in Mexico.
Vargas would deposit donations in a personal bank account or wire transfer various amounts to two accounts in Mexico - one in his name or one held by Sergio Picon, a Mexican resident who had a close personal relationship with Vargas, according to court documents.
“The scheme to defraud was an ongoing fraudulent venture involving a series of continual frauds, not a one time deception. The goal of the scheme was to defraud parishioners of money and send parishioner donations to Mexico in order for Father Lenin Vargas and Sergio Picon to unlawfully enrich themselves,” the indictment stated.
In January 2015, Bishop Joseph Kopacz of Jackson learned that Vargas had been diagnosed with HIV. Two months later, priests informed Kopacz that Vargas had been asking parishioners for money to cover his “cancer” treatments, court documents said.
The diocese decided to send Vargas to a 14-week program at a Canadian treatment facility, which aims to assist clerics with mental health and sexual addiction issues.
However, Vargas informed parishioners at Mass that he would be traveling to Canada to receive “specialized cancer treatment” that was only available in Canada. He collected more than $20,000 in medical donations from parishioners, both before and after he attended the treatment program.
In November 2015, Vargas began asking parishioners to financially support an orphanage and chapel in Mexico.
One elderly parishioner donated approximately $40,000 to Vargas, including $20,000 for the chapel in June 2018, which Vargas used for personal expenses, according to the indictment.
In fall 2018, a diocesan priest notified law enforcement officers with the Department of Homeland Security of the likely fraudulent activity. Officials opened an investigation and executed a search warrant both at Vargas’ parish and at the Diocese of Jackson chancery offices.
Vargas was relieved of his parish assignment in the fall of 2018 and left the country shortly thereafter.
Two years later, both the diocese and Vargas were indicted.
A criminal complaint filed against the Diocese of Jackson in July 2020 alleged that the diocese knew that Vargas had contracted HIV and was continuing to lie to parishioners about having cancer as he sought monetary donations, and charged the diocese with misprision – or intentional concealment - of a felony.
“By March of 2015, the diocese knew that Vargas had represented to parishioners (that) he suffered from cancer and sought monetary contributions based on that representation. … diocesean representatives concealed the truth from some parishioners by providing incomplete and misleading responses and information,” the July 2020 criminal complaint against the diocese charged.
Court documents suggested a pattern of cover-up by diocesan officials, including Bishop Kopacz.
They presented numerous instances in 2015 in which questions about Vargas’ medical fundraising were raised to Kopacz or other diocesan officials, but without action by the bishop.
The criminal complaint said that when the bishop visited Corpus Christi parish to announce Vargas’ temporary departure in late March 2015, a parishioner asked him why parishioners had to donate to cover Vargas’ supposed cancer-related bills.
The court documents allege that Kopacz responded by saying, “that is just the way the Church is set up.”
The complaint further stated the diocesan newspaper, the Mississippi Catholic, wrote an article about Vargas’ condition prior to his treatment at the Canadian facility, requesting prayers for the priest “as he undergoes treatment for cancer.”
The criminal complaint stated that the Diocese of Jackson never corrected the Mississippi Catholic article, rather the scheme “continued for years.”
In April 2015, another parishioner emailed the diocese, inquiring whether the local Knights of Columbus chapter should host a fundraiser to help Vargas raise $20,000 that he recently asked for to help cover medical expenses.
Father Elvin Sunds, writing on behalf of Bishop Kopacz, replied that, “He (Vargas) has no out of pocket medical expenses whatsoever. The diocese even pays for travel expenses if the priest needs to travel somewhere for medical treatment.”
However, despite Sunds’ acknowledgement that Vargas did not need money to cover the medical expenses for which he was fundraising, documents indicate that the diocese did not investigate or take action for three more years.
In December 2015, another St. Joseph parishioner sent Kopacz an email stating that Vargas was continuing to solicit donations for his cancer treatment long after he had returned from the Canadian treatment facility, and that the parishioner suspected Vargas of fraud.
“It is very difficult to be a parishioner at a church when one does not trust the priest,” the parishioner wrote. “I do not expect the parish priest to be a saint; we all have faults and we are all sinners. But fraud is another thing; it's borderline criminal.”
According to the indictment the parishioner then explained Vargas’ appeal for donations for the orphanage in Mexico, stating that “he was again very sketchy about the details.”
But according to the indictment, the diocese failed to take action.
In 2016, Father Rusty Vincent was appointed associate pastor at St. Joseph and Corpus Christi. A year later, Vincent and a deacon met with Kopacz and vicar general Father Kevin Slattery to address their concerns about Vargas’ personal fundraising habits.
Following the meeting, the diocese conducted an audit in early 2018 of St. Joseph and Corpus Christi parishes and found that Vargas had engaged in significant cancer fundraising even though all medical expenses had been paid for by the diocese.
In the summer of 2018, just before Vargas was removed as pastor, Slattley informed Vincent that Vargas had solicited approximately $200,000 from parishioners between 2015 and 2018.
On July 15, 2020, the diocese entered into a deferred prosecution agreement to settle the charges against it. The agreement allows a prosecutor to postpone criminal charges – with the expectation of the charges eventually being dismissed - if a defendant agrees to fulfill certain obligations.
Under the agreement, the diocese would have to follow certain terms outlined by the court for a year and be subjected to regular reviews. The agreement noted that the diocese had repaid any of Vargas’ victims who had requested to be reimbursed. The court also noted that the diocese had already made a “robust response” to ensure that fraud would not occur again following the beginning of the investigation.
But the agreement required the diocese to implement new protocols for annual internal audits at all parishes to review donations and priests’ spending. It also required the diocese to create a new Code of Ethical Conduct Review Board tasked with investigating instances of financial, emotional or physical misconduct of elderly or vulnerable adults.
In addition, the diocese had to create a fraud prevention hotline, which remains listed on the diocese homepage. It also required that any funds collected for international organizations must be sent to the Diocesan Director of Temporal Affairs before being sent to aid organizations.
Last, the agreement required the diocese to seek Vargas’ laicization. It reported that after Vargas fled the country, Kopacz informed the Archbishop of Vargas’ home diocese in Mexico that the Diocese of Jackson had revoked his priestly faculties. Subsequently, the Mexican Conference of Catholic Bishops informed all dioceses that Vargas does not have faculties.
It is unclear when Vargas was formally laicized, though the Diocese of Jackson has since represented him as a laicized priest.
After 12 months, the U.S. Attorney’s office dismissed the charges. While the agreement was only in effect for a year, the diocese has said that it retains many of the stipulations outlined in the agreement.
“The diocese regrets the following measures and programs were not in place three years ago. We are confident if they had been in place, we would have been more effective in dealing with the complaints made about Rev. Vargas,” a 2021 statement from the diocese said.
The case of Fr. Vargas is one of the few instances in which a U.S. diocese has entered into a deferred prosecution agreement to settle criminal charges regarding financial misconduct.
Robert Warren, a retired IRS investigator and associate professor of accounting at Radford University, told The Pillar that the story is a warning to other Church leaders.
“The case of former Father Vargas is a cautionary tale for lay parishioners, parochial vicars, pastors, bishops and even Vatican bureaucrats,” Warren told The Pillar.
“This case should remind pastors that the financial patrimony of a parish belongs to the parish, and they cannot use this financial patrimony to fund illicit relationships or personal Ebay purchases. The case his case should be especially cautionary to pastors not to lie to their parishioners,” he said.
“If a pastor cannot observe their priestly promises, they should seek laicization and go on their way as private citizens. In this case, Father Vargas was reportedly an emergency room physician before he became a priest, so he had a viable alternative profession through which to earn his daily bread.”
Warren said the case should also “remind bishops that they are to protect their flock from being fleeced. Parishioners should make sure that their parish has proper internal controls, and donate only to the parish, and not the off-the-books pet projects of the pastor,” he continued.
“Finally, Vatican officials should review their role, or non-role, in this matter. When a diocese has to sign a plea agreement in order to avoid prosecution, that should trigger a visit from the bureaucrats at the Vatican.”
Speaking of other U.S. bishops who have seen Vatican visitations over alleged governance issues, Warren told The Pillar that: “What is good enough for Bishop Strickland should be good enough for bishops facing criminal prosecution.”
In particular, Warren said, this case demonstrates that bishops have an outsized role in preventing fraud within their diocese and must be vigilant and willing to call out financial malpractice.
“The bishop had a fiduciary duty to follow up on the whistleblower allegations made by Father Rusty, and to protect the parishioners from the false and misleading fundraising claims made by Vargas,” he said.
“As a result of what the bishop did and failed to do, the Diocese of Jackson was forced into entering into a Deferred Prosecution Agreement with the U.S. Department of Justice. Had it not done so, the Diocese of Jackson could have faced a felony conviction, which may have endangered its tax exempt status.”
“Bishops should be very careful to do nothing that would endanger the tax-exempt status,” he said.
As a former law enforcement officer, Warren also noted that the case will likely remain open until federal investigators can be certain of Vargas’ death.
“Until I actually put my hands on the death certificate, I’m going to play the role of Doubting Thomas as to Father Vargas' departure from this world,” he said.
Noting that “a couple of Facebook quotes just isn't sufficient evidence,” Warren emphasized that “the U.S. Attorney's Office has yet to move for dismissal of the case based on the death of Father Vargas, and no one has produced a certified death certificate translated into English.”