Tampabay: Key Lyons associate accused of tax fraud

The Rev. Frederick T. Demps, 50, is charged with three counts of filing false tax returns, according to the U.S. Attorney's Office in Tampa. He surrendered Wednesday to U.S. marshals in Jacksonville.

Demps knew that his annual income was substantially greater than the $18,000 to $20,000 he reported each year from 1995 to 1997, court documents claim.

Demps was released on $25,000 bail. He faces a maximum of three years in prison and a $250,000 fine for each count.

Lyons was found guilty in 1999 of swindling $4-million from companies doing business with the National Baptist Convention USA, one of the nation's largest black church organizations.

He is serving a 5 1/2-year sentence for racketeering and theft.

During the investigation into Lyons' activities, he and Demps disagreed on what happened to hundreds of thousands of dollars in corporate payments made to the convention.

On Wednesday, federal officials would say only that Demps' indictment arose from the Lyons investigation in the late 1990s. Demps' lawyer, Robert S. Willis, said he did not know whether Lyons had testified against his client before a grand jury meeting in Tampa.

In January, Lyons was moved from a work camp in Polk County to the Hillsborough County Jail. No one involved in the case would say at the time why he was transferred.

"The only real connection between the cases is that they began investigating this as a result of information obtained during the Lyons case," Willis said. "This seems to be a straightforward personal tax evasion indictment."

For most of his adult life, Demps worked as a custodian. In 1977, he was a "custodial foreman" for the city of Jacksonville, a job that paid him $9.34 an hour. He retired in 1990.

But Demps' fortunes turned a few years later when he began working with Lyons, who had become president of the National Baptist Convention USA. Demps helped negotiate hotel deals and sought out new business opportunities for the convention.

After criminal investigators began scrutinizing the convention's bank records, the two men disagreed on how Demps was paid for his services or what happened to hundreds of thousands of dollars from several deals.

Lyons said, for instance, he paid Demps $207,500 in "commissions" for setting up marketing deals between the convention and three corporations.

Demps said he did not earn any money in commissions or salary, either from Lyons or the convention. He said he was reimbursed for travel and other expenses associated with the deals, but not for his time. He estimated he was reimbursed $175,000 in expenses.

In 1999, Demps lived in a modest home in Palatka, assessed at $72,000. Aside from a $44,000 Toyota Land Cruiser bought for him by his church, and a $22,000 Chevy pickup bought for him by NBC Holding Co., there were few indications in public records that Demps enjoyed substantial wealth.

There were, however, plenty of unpaid debts in his past.

In the 1980s and 1990s, Demps was sued in separate cases for failing to repay a $32,000 mortgage and for not paying a $575 medical bill. He also defaulted on a consumer loan from First Union National Bank of Florida, and his 1987 Jeep Grand Wagoneer was repossessed after he failed to make payments.

In 1993, when one of his creditors moved to seize all the money in his bank account at Putnam State Bank, they found a balance of $639.47.

For most of 1993, Demps worked as a community outreach coordinator for one of Lyons' closest political allies, U.S. Rep. Corrine Brown, D-Jacksonville. Demps' job was to go to community events and raise awareness of the congresswoman's services.

Demps has said he was fired from that job when a creditor garnished his wages. A spokesman for Brown said Demps left Brown's office when she ended the job of community outreach coordinator.

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