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Here is the story you refer to http://www.yellowrobe.com/practice/general/247-money-rules-for-buddhist-monks-and-nuns-by-dhamminda-bhikkhu.html
It is taught that even a layperson who is an anagami (non-returner) keeps the ten precepts naturally and does not accept or use money. For example the anagami Ghatikara was without gems, gold, silver, or money, and made his living by taking earth that had eroded from the river bank and making it into pots. These pots he left at the side of the road and anyone who wished could leave a suitable amount of rice or food and take the pots. In this way Ghatikara supported himself and his blind parents. (See Ghatikara Sutta of Majjhima Nikaya.)
This demonstrates how money is an impediment to enlightenment and how the truly enlightened do not use money. The above quotes all prove that the acceptance of money by monks is not a small fault, and that it can render a monk incapable of attaining Nibbana .
Upvote:11
Thanks @soulsings for pointing me in the right direction; since I was looking for the Pali reference, here's the passage from the Ghatikara Sutta (MN 81):
“Then he said: ‘Venerable sir, have you a better supporter than I am?’—‘I have, great king. There is a market town called Vebhalinga where a potter named Ghaṭīkāra lives. He is my supporter, my chief supporter. Now you, great king, thought: “The Blessed One Kassapa, accomplished and fully enlightened, does not accept from me a residence for the Rains in Benares,” and you were very disappointed and sad; but the potter Ghaṭīkāra is not and will not be so. The potter Ghaṭīkāra has gone for refuge to the Buddha, the Dhamma, and the Sangha. He abstains from killing living beings, from taking what is not given, from misconduct in sensual pleasures, from false speech, and from wine, liquor, and intoxicants, which are the basis of negligence. He has unwavering confidence in the Buddha, the Dhamma, and the Sangha, and he possesses the virtues loved by noble ones. He is free from doubt about suffering, about the origin of suffering, about the cessation of suffering, and about the way leading to the cessation of suffering. He eats only one meal a day, he observes celibacy, he is virtuous, of good character. He has laid aside gems and gold, he has given up gold and silver. He does not dig the ground for clay with a pick or with his own hands; what has broken off riverbanks or is thrown up by rats, he brings home in a carrier; when he has made a pot he says: “Let anyone who likes set down some selected rice or selected beans or selected lentils, and let him take away whatever he likes. He supports his blind and aged parents. Having destroyed the five lower fetters, he is one who will reappear spontaneously [in the Pure Abodes] and there attain final Nibbāna without ever returning from that world.
-- MN 81 (Bodhi, trans)