No person should be able to convert money to personal use with impunity, whether the funds belong to a secular corporation or a church; however, merely to affirm that church officials who misappropriate funds should be punished would gloss over important issues. What kinds of sanctions and who should be responsible for imposing those sanctions are the most important issues that legislators or State officials will have to confront. Religious officials who misuse church monies can be criminally or civilly liable only so long as State or Federal officials have the authority to take legal action in this area; courts can adjudicate the conflict; and religious freedom is not unconstitutionally infringed in the process. It is also possible for church members to detect financial wrongdoing by church leaders and institute a civil action to recover the diverted funds. The Federal Government can directly impose sanctions against church officials who misappropriate funds where the mails have been fraudulently used to solicit funds or tax laws have been violated. Action against a church organization can be taken by revoking tax exempt status. Because there is an interrelationship between sincerely held religious beliefs and the use of church finances, the state cannot interfere with the financial decisionmaking process of church officials unless a constitutionally permissible categorical exception is established or no vital link between religious beliefs and financial activities is demonstrated. The categorical exception must be susceptible of being defined as an area that does not involve a question that church officials properly should resolve. Once State officials have cause to suspect fraud or corruption in a church, a properly narrowed summons could be issued to obtain necessary information from church records. Church leaders basking in luxury should raise suspicions, at least in those churches where church leaders are expected not to profit unduly from religious service. A total of 146 footnotes are provided.