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Baptists sued for failing to repay loan

By DAVID BARSTOW, MIKE WILSON and MONICA DAVEY

©St. Petersburg Times, published September 17, 1997


The fires keep burning around the Rev. Henry J. Lyons, try as he might to put them out.

Tuesday's blazes:

  • One of the corporate deals Lyons struck as president of the National Baptist Convention USA Inc. spilled into the court system. Union Planters Bank in Nashville, Tenn., sued the convention, alleging that Lyons failed to repay a $300,000 loan.

    The loan was to help the convention market Union Planters credit cards to millions of Baptists, the bank said. But Lyons and another convention official pocketed $225,000 of the money as their "commissions" for setting up the deal.

  • New criticism emerged over Lyons' handling of $244,500 in donations entrusted to him to rebuild black churches destroyed by arson.

    Lyons has revealed he withheld most of that money -- without telling the donor -- after he decided the churches didn't need the aid. But it was learned Tuesday that Lyons withheld even more of the donations than he first revealed. Lyons' attorney informed the Anti-Defamation League last week that $189,500 had been withheld. The actual amount: $214,500.

    The day's events showed how difficult it has been for Lyons to build on his dramatic victory two weeks ago in Denver, where he retained his presidency after winning four separate votes of confidence at the convention's annual meeting. In an interview with the Times on Tuesday, Lyons attempted again to end some of the controversies that have dogged him for months.

    He said he has formed a four-person committee (including himself) that will meet monthly to oversee the convention's troubled finances. The committee's first task when it meets later this month: hiring a professional financial officer, Lyons said.

    He also addressed two of the most visible examples of the wealth he has accumulated as leader of the nation's largest black church group -- a $135,000 Mercedes-Benz and a $700,000 Tierra Verde home.

    The car was bought in his church's name to avoid about $10,000 in state sales taxes -- a detail that drew interest from state tax investigators. Those taxes have now been paid, Lyons said, adding that he intends to get rid of the car. As for the house, it could be on the market next month.

    "I have been putting out one fire after another," a subdued Lyons said.

    Payment or loan?

    In the spring of 1995, Union Planters Bank of Middle Tennessee made a deal with Lyons. The bank wanted to market credit cards to members of the convention, a group that claims to represent 8.5-million people.

    Officials representing the bank say the type of arrangement was common in the credit card industry. The bank loaned the convention $300,000 to get the card promotion started, according to Robert R. Campbell, an attorney for the bank. The convention was expected to deliver thousands of its members as credit card customers and then would receive a cut of the profits in exchange.

    But the pitch for the special cards -- decorated with the convention logo and pictures of clouds -- failed to take off, bank officials said. Few convention members signed up.

    What's more, the bank now alleges, none of the $300,000 start-up loan was repaid. In its suit, filed Friday in Nashville, the bank says the convention owes it $330,470.41, plus attorney fees.

    Lyons signed the loan, dated April 25, 1995, and $300,000 was wired to a convention account at the United Bank in Pinellas County, Campbell said. (The Baptist Builder Fund, an account that has become central in the controversy surrounding Lyons' use of convention funds, also is at United Bank.)

    When no repayments came in, the bank warned the convention with a letter, dated July 28, 1997: "The Convention is in default under the terms of these documents, for among other reasons, failure to pay interest and failure to provide satisfactory financial statements in a timely manner."

    The bank said it had not received interest payments since October 1996. The bank also noted that the convention's audit had not made mention of the $300,000 bank loan.

    "We were left with no choice," Campbell said of the lawsuit.

    The National Baptist Convention has 30 days to file a response to the lawsuit. Neither Lyons nor his attorney could be reached Tuesday evening.

    In an interview outside of his home on Aug. 27, Lyons said the bank paid his organization $300,000 to promote credit cards to its members.

    Lyons never described the sum as a loan.

    It was a payment, he said.

    Lyons said the $300,000 was split three ways. His friend and business associate, the Rev. Frederick L. Demps, got $150,000 as his commission. Lyons kept $75,000 as his commission. And the convention itself got the remaining $75,000.

    Campbell, the bank's attorney, said there was no payment. "It was unequivocally a loan," Campbell said.

    Lyons said he and Demps worked hard for their three-fourths share. "We went to work, we got all the materials, we did everything we could do."

    In the end, like the bank, Lyons was left discouraged by the credit card deal.

    He said he told bank officials: "We can make this work if you bend a little. They wouldn't bend, they wouldn't do anything." He did not elaborate.

    Like Lyons, Demps said the $300,000 was not a loan, but a fee. But Demps' version of how the money was split did not match Lyons'.

    Demps said he spent $125,000 on costs associated with getting people to sign up for the credit card.

    "We traveled all over the United States promoting the cards with various materials," he said. For example, he and the bank offered the credit card at the convention's Congress on Christian Education in San Diego in 1995.

    Asked what Lyons did with the other $175,000, Demps said, "I'm sure that's what Dr. Lyons used the money for, was to travel and promote the card in various places that he went."

    Demps said he received "quite a few responses" to the promotion, adding that things went "pretty well at first." The trouble was that a lot of people didn't qualify for credit, he said.

    In the interview Tuesday, Lyons said the convention no longer will participate in deals such as the one with Union Planters Bank. Response to them has been too negative.

    "It's looked upon so badly," Lyons said.

    Money for needy churches

    Last year, the Anti-Defamation League asked the National Baptist Convention USA to distribute $244,500 it had raised on behalf of burned-out black churches in the South.

    Letters bearing Lyons' signature said he had distributed all the money. He hadn't.

    Lyons' attorney, Grady Irvin, promised Friday to return the balance of unused ADL money -- $189,500. On Tuesday, the convention's check arrived at the ADL offices in New York. The amount: $214,500.

    Irvin said the convention returned more money than expected because it gave some of its own money to the churches.

    "Again," Foxman said, "every day, it's a new story."

    "I am pleased," Foxman said of the reimbursement. "I think there is a greater disclosure of truth."

    Foxman said the money will be handed out to needy churches "as soon as it is possible to be done."

    In his interview with the Times, Lyons said it was unfair to scrutinize his handling of the ADL donation. Others have also raised money for churches, but no one has questioned their conduct, he said. He mentioned the New York-based National Council of Churches as an example.

    "I really would at least like a report" on how the National Council has spent its money, he said.

    A group of staunch Lyons supporters in the New York area held a news conference in Brooklyn to make the same point.

    "There was $10- or $11- to $13-million raised by a church group which is predominantly white, and nobody asks them what they did with the $13-million," said the Rev. Samuel Austin, pastor of Brown Memorial Baptist Church and a National Baptist Convention USA board member.

    An official for the National Council said it has spent every cent rebuilding churches.

    "We're not sitting on any money," said Don Rojas, director of the burned churches project.

    The National Council examined 124 burned churches and gave money to 90, Rojas said. The rest of the churches rebuilt without help or had insurance and didn't need more money.

    Rojas said the National Council is still raising money because many black churches still need help rebuilding. About 20 have burned in 1997 and more than 350 since 1990, he said.


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