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IRS files lien against Bernice Edwards

By DAVID BARSTOW and MONICA DAVEY

©St. Petersburg Times, published January 16, 2006


The Internal Revenue Service has filed a $41,300 tax lien in Pinellas County against Bernice V. Edwards, the convicted embezzler from Milwaukee who owns a waterfront home here with the Rev. Henry Lyons.
photo of house The lien in Florida gives the IRS access to Bernice Edwards' assets here, which include joint ownership of the house in Tierra Verde. (Times files)

The lien was filed Wednesday, a day after the Times reported that the National Baptist Convention USA president was preparing to put the $700,000 Tierra Verde home up for sale.

The lien does not prevent Lyons from selling the house but ensures that the government recovers Edwards' unpaid taxes out of the proceeds from its sale, real estate experts said Thursday.

For years, the IRS has sought repayment of Edwards' debts in Wisconsin's courts, but the lien in Florida this week gives the agency access to Edwards' assets here, which include joint ownership of the luxury house and a $135,000 Mercedes-Benz. In Milwaukee, the 41-year-old mother of three has less: a trail of unpaid debts and bankruptcies.

Edwards, the former director of corporate public relations in the National Baptist Convention, owes about $5,300 for failing to pay enough personal income tax in 1990, 1991 and 1992, according to the IRS lien. She owes another $36,000 for failing to give the government money withheld from her employees for payroll taxes in 1992, the IRS document shows.

That year, Edwards was running a publicly funded school, which was shut down after school officials found records in disarray. Federal authorities convicted Edwards of embezzling taxpayers' dollars from the school. As part of her probation, Edwards was ordered in 1994 to pay all back taxes. The lien indicates she failed to do so.

The lien against Edwards will continue to grow until it is collected. IRS spokesman Holger Euringer declined to comment on Edwards' case but said similar tax debts grow at a rate of 14 percent each year, including interest and late payment penalties. Edwards could not be reached for comment Thursday.

Lyons' own taxes are another area of focus for unfolding state and federal criminal investigations. FBI agent Neil Palenzuela appeared Thursday before a federal grand jury looking into Lyons' handling of personal and convention finances. The grand jury has subpoenaed Lyons' tax documents, as well as one of his tax accountants. Lyons, meanwhile, recently filed amended tax returns for 1994 and 1995.

The Tierra Verde house has become another important element of the investigations. Lyons' wife, Deborah, pleaded guilty last year to setting fire to the house. She told investigators at the time that she suspected Edwards and Lyons of having an affair.

For Lyons and Edwards, the house is a potential criminal liability. It is a violation of federal law to convert for private gain the assets of a not-for-profit organization such as the National Baptist Convention. A criminal investigator for the IRS has been assigned to the federal investigation into Lyons.

Lyons bought the five-bedroom waterfront home on March 1, 1996, then added Edwards' name to the deed the same day.

But Lyons alone signed the $455,000 mortgage on the house, and $90,000 of the down payment came from a secret convention bank account he controlled at a St. Petersburg bank. Another $136,000 of the down payment came from a secret Milwaukee account that held more than $1-million in payments from one of the convention's corporate partners. The mortgage itself was secured with a lease committing the convention to pay rent to Lyons.

Lyons, however, has repeatedly sought to minimize his ownership interest in the Tierra Verde house. In sworn statements to prosecutors, Lyons has said that Edwards put up all the money for the down payment and is responsible for making all the mortgage payments. All he did, he has said, is lend his good credit history to the deal.

But those statements contradict the language of the mortgage agreement Lyons signed. In paragraph 32 of the agreement, Lyons pledged that "the entire down payment is cash from my own funds."

Earlier this week, Lyons' attorney, Grady Irvin, said the pastor was eager to sell the house.

"Find me someone interested in buying it at fair market value," Irvin said. At the same time, he acknowledged that the sale is complicated by Edwards' joint ownership of the house. This means Lyons is not free to sell the house on his own, and Edwards has her own set of legal advisers, Irvin said.

But another of Lyons' attorneys said Thursday that the IRS tax lien will not affect Lyons' plans.

"The sale can still go through," Denis de Vlaming said. Lyons is on "the verge of" putting the house on the market, he said.

De Vlaming said "the majority of the equity in the home" belongs to Edwards.

"I think the profit that's going to be realized is going to be going to her," he said.

In another development, the $214,500 in donations that Lyons failed to distribute to burned churches across the South is at last finding its way to needy congregations.

According to the Anti-Defamation League, which raised the money and entrusted it to Lyons in 1996, the $214,500 is being divided among eight churches struck by arson, including one in St. Petersburg. St. Jude Holiness Church on Auburn Street, which burned down in January, 1993, received $44,000 to rebuild. The other churches are in Texas, California, Arkansas, Tennessee, South Carolina, Louisiana and Maryland.


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