The Rev. Henry Lyons
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Feds join investigation of pastor
By LARRY DOUGHERTY and CRAIG PITTMAN
©St. Petersburg Times, published August 22, 1997
U.S. Attorney Charles Wilson said Thursday that his Tampa office has launched an investigation of the Rev. Henry J. Lyons' financial dealings to see if he has violated federal law.
Wilson declined to say what laws Lyons might have broken or which other federal agencies might be involved in the investigation.
Meanwhile an appeals court shot down Lyons' efforts to block state prosecutors from subpoenaing his bank records. That clears the way for investigators to start examining those records when the United Bank and Trust Co. opens today, said Pinellas-Pasco State Attorney Bernie McCabe.
An 18-member investigating committee of the National Baptist Convention USA plans to grill the embattled president this weekend, armed with a list of more than 100 questions on such topics as how he has spent money from the Baptist Builders Fund and how he met convicted embezzler Bernice Edwards.
Lyons recently has answered questions posed to him by reporters from two African-American papers. In his latest interview -- with the Weekly Challenger of St. Petersburg -- Lyons said he used the Baptist Builder Fund "as a discretionary account. And it was my prerogative to do that."
He said that he was the only person who could sign checks on that account but that he put into the Baptist Builder Fund account thousands of dollars that Edwards -- who has declared bankruptcy four times -- gave him to maintain a $700,000 house they bought together in Tierra Verde.
"The house was maintained out of that account, but it was all her money," Lyons told the Challenger, making it clear he was answering questions against the advice of his attorneys.
Lyons also said he could not recall how the names of two convention officials wound up on a lease that promised the convention would pay him $4,000 a month to rent the Tierra Verde house. The lease was used as security for the mortgage.
The two officials, convention chairman A.H. Newman and secretary Roscoe Cooper, have given sworn statements to investigators that the signatures on the lease are not theirs.
"How it got signed, I don't remember a thing about how it carried the names of Dr. Cooper and the chairman of the board," Lyons told the Challenger.
All of Lyons' dealings have come under increasing scrutiny since his wife's arrest July 6. Pinellas deputies said she set several fires inside the Tierra Verde house, causing about $30,000 in damages. The deputies said she told them she was outraged to learn about the house and feared her husband had been unfaithful. They charged her with arson and burglary.
A day later, Mrs. Lyons told a Times reporter that she had known about the house for some time and had driven over to get some papers for her husband. As for the fire, she said, it was an accident -- she was lighting a cigarette and dropped the match.
The fire at the Tierra Verde house led to several other discoveries: Lyons and Edwards also owned property together in Lake Tahoe, Nev.; they had tried to buy a $1-million home in Charlotte, N.C.; they purchased expensive jewelry and paid utility bills with money from the Baptist Builders Fund.
The fund is not mentioned in any of the convention's financial statements and other convention officials said they had never heard of such a fund, which is at the United Bank and Trust Co. in St. Petersburg.
So last month, McCabe, the state attorney, issued subpoenas for any accounts at United Bank involving either the National Baptist Convention USA or Lyons. Attorneys for both Lyons and the convention objected and succeeded in delaying the subpoenas for two weeks.
The showdown came in a hearing Tuesday. Anthony Battaglia, an attorney for Lyons, argued that the subpoenas violated Lyons' right of privacy. To overcome that right of privacy, he contended, prosecutors should show a judge that they had come up with evidence connecting Lyons to a suspected crime.
Pinellas-Pasco Circuit Judge Frank Quesada agreed with Battaglia, ruling that Lyons did have a constitutional right to keep his bank records private. But then Quesada met behind closed doors with McCabe and several assistant prosecutors to hear what evidence they have uncovered that might justify violating Lyons' privacy.
When the closed-door conference ended, Quesada announced that McCabe had convinced him that prosecutors were justified in seeking Lyons' bank accounts.
Battaglia asked for 48 hours to appeal, and Quesada agreed. The 48 hours was to expire at 5 p.m. Thursday. About 4:30 p.m., three judges of the 2nd District Court of Appeal issued a terse ruling.
"We deny the petition because there is no showing that the trial court departed from the essential requirements of the law," wrote appellate Judge Jerry R. Parker, with judges David Patterson and James Whatley concurring.
Lyons cannot appeal further, his attorney conceded. The appeals court ruling "brings closure to that issue," Battaglia said.
The revelation of the federal investigation into Lyons' dealings is unusual. Rarely do federal prosecutors confirm the existence of an investigation before they have decided whether to file charges. Wilson said he was doing so in light of the "substantial publicity" Lyons' dealings have received and to "assure the public" his office was acting appropriately.
Battaglia, himself a former federal prosecutor, said only that Wilson had the right to make such an announcement in light of what he called "an avalanche" of Times stories about Lyons.
Former federal prosecutors interviewed Thursday said federal investigators face a variety of tricky issues in investigating a figure such as Lyons, president of the 8.5-million-strong National Baptist Convention USA.
"The government has to be particularly sensitive with a religious group, because of the constitutional problems," said George Tragos, now a Clearwater defense attorney. "You have to protect their First Amendment rights."
Tragos represented Richard Dortch during the investigation into PTL and its founder, Jim Bakker. In that case, Tragos said, the Internal Revenue Service decided that PTL's spending ran afoul of its tax-exempt status.
If investigators found that Lyons handled money inappropriately, Tragos said, Lyons might face criminal or civil penalties and possibly jeopardize his church's tax-exempt status.
Former federal prosecutor Bill Jung, now a Tampa defense attorney, said investigators might look to state law when evaluating some of Lyons' dealings.
Without imputing any guilt to Lyons, Jung said, "What you read in the paper sounds like misappropriation, maybe embezzlement. Misappropriation, unless it involves federal money, is a state matter."
Even if false documents have been submitted to a bank to obtain a loan, Jung said, the FBI typically won't investigate unless the bank has suffered a loss.
"Typically a bank loses money when Joe Blow doesn't pay it back, the bank sniffs out fraud, and then is duty bound to report it to the FBI," Jung said. "The FBI does bank fraud by referral."
But if payments are being made on a loan, and no loss has been incurred, Jung said, investigators are not apt to pursue it.
"They're busy as beavers, and they're not looking to make work," Jung said. "Only in rare occasions would they go after it."
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