The scam works like this: they mass mail the "prayer rugs" out to people. Some small percentage of people will reply and will be sent a "spiritual gift" along with a request for money to help save the church. This con artist is not affiliated with the Saint Matthews Church and is just raking in the money.
This is the same scam as reported by New Mexico Business Weekly http://www.bizjournals.com/albuquer
Chain letters are illegal. This type of fraud is a felony. I've reported them to the U.S. Postal Inspection Service. If you get a letter from "Prayer by Letters" or a similar scam outfit, please REPORT IT.