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The Rev. Henry Lyons

 

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Lyons' friend says he didn't get money

By DAVID BARSTOW, MONICA DAVEY and MIKE WILSON

©St. Petersburg Times, published October 10, 1997


PALATKA -- Seven years ago, Fred Demps was a janitor. Two years later, a repo man towed his car.

Then fortune smiled.

His old friend, the Rev. Henry J. Lyons, became president of the National Baptist Convention USA. Before long, Demps was negotiating a $61-million hotel deal for the convention and jetting to Africa and the far corners of this country in search of business deals to make millions for the convention.

Now the 46-year-old minister is a key figure in the financial scandals that have criminal investigators scrutinizing Lyons' and the convention's bank records. Based on interviews and court documents, one point is clear:

Demps and Lyons disagree on what happened to hundreds of thousands of dollars in corporate payments to the convention.

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

"That's not accurate at all," Demps said in an interview.

He insisted that he has not earned a single dollar in commissions or salary from Lyons or the convention. Demps said he was reimbursed for travel and other expenses associated with the deals, but not for his time. He estimated he was reimbursed for $175,000 in expenses.

"I'm not getting rich," he said.

Demps lives 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 are few indications in public records that Demps has enjoyed sudden wealth. There is, however, a record of unpaid debts.

In a deposition with a creditor five months ago, Demps testified under oath that he had been unemployed for the last three years and was living off his wife's $18,000 salary as a staff assistant for the St. Johns River Water Management District.

"Do you have any money coming in?" Demps was asked by an attorney for First Union National Bank, which has sued the Dempses for failing to repay a $27,000 bank loan.

"My wife works," Demps replied.

"Besides that?" the attorney asked.

"No," Demps said.

Lyons could not be reached for comment Thursday. Anthony Battaglia, one of his attorneys, also declined to comment.

But in previous interviews and written statements, Lyons has said he had a contract with Demps that paid Demps 50 percent of whatever corporate payments he generated to the convention. Lyons said he had a similar contract with Bernice Edwards, the convicted embezzler whom Lyons also assigned to pursue corporate deals for the convention. An "addendum" to those contracts paid Lyons another 25 percent of the corporate money, he said.

"We call it percentage and commission," Lyons said, adding that he now believes the commissions to Demps and Edwards shouldn't have been so high.

"It's a bit high. . . . It's what I did. I'm here to tell you the absolute truth. I am not here to hide anything. This is what I did. Yes, it's high, but it's what I did."

Demps, though, had no memory of signing a contract with Lyons.

"I don't recall that," he said. "It might have been."

By his own admission, Demps has little experience negotiating corporate business deals.

For most of his adult life, Demps made his living as a custodian. He worked as a maintenance man for a Masonic lodge in Jacksonville from 1972 to 1977, records show.

In 1977, he went to work for the city of Jacksonville as a "custodial foreman." He stayed in that job until he retired in 1990, making $9.34 an hour. He earned "satisfactory" performance ratings.

Demps' job application to the city of Jacksonville says he graduated from Howard University in 1972 with a bachelor's degree in sociology. Howard officials said they had no record of Demps attending the Washington, D.C., school.

In an interview, Demps said he did not know how the information got on his job application.

"I never went there," he said, adding that his formal education ended with high school in Jacksonville.

In an August interview, Lyons explained why he picked Demps to solicit deals with major corporations in America and abroad:

"First of all, he is a good friend, that's number one. Just like Bernice Edwards, a good friend. And Rev. Demps has always been a good person in . . . corporate America to get out and to touch corporate America for sponsorship dollars. He's pretty sharp at it. He's a smart guy. He does the job well. And so, I keep him out there."

The son of a Jacksonville preacher, Demps says he has been a Baptist minister "all my life." He has been a pastor at Calvary Baptist Church in Palatka for more than a decade.

David Wright, chairman of the deacon ministry at Calvary and a church member for nine years, praised Demps. "He is doing exactly what God has called him to do in this house," Wright said.

Demps said he first met Lyons after Lyons was elected president of the Florida General Baptist Convention in 1982. Demps was, and still is, a vice president in the state convention. In 1984, Lyons and Demps formed a for-profit company called Henfred Enterprises. The company was involuntarily dissolved a year later. They have been partners in other unsuccessful business ventures since.

The pair also has at least one notable accomplishment.

In 1990, under Lyons' leadership, the Florida General Baptist Convention began borrowing money to build a camp-style retreat on about 150 acres 12 miles west of Palatka.

Demps has been deeply involved from the start.

With about $650,000 in loans from First Union National Bank, the state convention constructed a kitchen and dining building, an "adult housing facility," and five sleeping buildings with 20 bunk beds each. The road leading to the remote retreat is named Dr. Henry J. Lyons Boulevard.

"We are so proud of that facility," Demps said.

Bank officials say the group always has made regular payments on its loans and is in good standing.

The same cannot be said of Demps' personal finances. He has been sued repeatedly for debts.

In 1985, he was sued for failing to repay a $32,000 mortgage on property he owned in Putnam County. He lost the land to foreclosure.

In 1990, he defaulted on a consumer loan from First Union National Bank of Florida.

In 1992, he was sued for not paying a $575 medical bill. The same year, his 1987 Jeep Grand Wagoneer was repossessed after he failed to make payments on it.

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, Rep. Corrine Brown, D-Jacksonville. Demps' job was to go to community events and "make people aware of the congresswoman's services," Ronnie Simmons, Brown's chief of staff said.

Demps has said he was fired from that job when a creditor garnished his wages.

"That is not true," Simmons said.

Simmons said Demps left Brown's office when she ended the job of community outreach coordinator.

People who have tried to get Demps to pay his debts have been met with little cooperation. At least twice, lawyers have asked judges to hold Demps in contempt for failing to show up for depositions.

"I don't think he has ever made a voluntary payment," said Ken Hutcheson, an attorney for First Union, which gave Demps the consumer loan.

Demps has had little success as the convention's point man for corporate America.

Of the three deals he is most closely associated with, one resulted in a lawsuit against the convention, a second left a corporate executive saying he had been ripped off, and the third was doomed, at least in part, by Demps' missteps.

Last month, the Union Planters Bank of Middle Tennessee filed suit against the National Baptist Convention. The bank had reached a deal with Lyons and Demps in the spring of 1995 to market Union Planters credit cards to convention members. To get the promotion off the ground, bank officials loaned the convention $300,000 based on a resolution authorizing Lyons to accept the money. The resolution turned out to be phony.

The bank is suing to get repaid.

In interviews, Lyons has said he split the $300,000 three ways. Demps got $150,000 as a commission for setting up the deal. Lyons got $75,000. The remaining $75,000, Lyons said, went to the convention.

But Demps disagreed with Lyons' description. Did Demps get a $150,000 commission? "Absolutely not," he said.

Demps said he worked hard to make the credit card program a success. He traveled from one convention meeting to the next, persuading "thousands" of Baptists to apply for credit cards, he said. He said he hired people to staff Union Planters' booths at some of the meetings.

Lyons paid him $125,000, Demps said, and "all of it went for expenses." Demps said it was his "understanding" that he would only collect commissions if the bank program thrived.

The promotion was a bust. Demps blames the bank for turning down so many credit applicants; the bank blames the convention.

A second corporate deal involving Demps also ended badly.

Py Lam, head of Virginia-based Nettele Systems Ltd., said he is considering legal action against the National Baptist Convention over a deal to market long-distance services to convention members.

Lam said he went to numerous convention meetings trying to sign up customers. "We were able to sign up only about 200 people," he said. He said he repeatedly sent expense money to Demps and others, but never received an accounting of how the money was spent. Lam said he and his partners invested hundreds of thousands of dollars in the deal. They lost it all, he said.

Of Demps, Lam said, "This guy took us left and right. Smooth, very smooth."

Demps said Lam is "fishy" and failed to live up to his end of the deal: hooking up convention members to the new phone service.

Demps said he was reimbursed about $50,000 by Lam for his travel expenses. Demps got that, he said, only after he submitted receipts.

Last year, the National Baptist Convention USA got involved in a deal to build a hotel on public land adjoining the Broward County Convention Center in Fort Lauderdale. The Baptist group, operating under the name NBC Holdings, pledged to build the $61-million Hilton hotel and book 200,000 Baptist conventioneers into it every year.

The Baptist group's proposal listed Demps as chief executive officer of NBC Holdings, but his role in the deal is murky.

Six people negotiated with developers on behalf of the county. Of these people, five said they barely knew Demps -- or never met him at all.

One negotiator who clearly knew Demps was Sylvia Poitier, the only African-American on the Broward County Commission. Demps' mysterious relationship with Poitier was a factor in getting NBC kicked out of the hotel deal altogether.

Early this year, Demps' Palatka congregation voted to lend "in the neighborhood of fifty to sixty thousand dollars" to the group working on the hotel deal, according to Calvary finance director James Norwood Jr.

By then, several Broward commissioners had lost confidence in the Baptist group because it never produced an audited financial statement.

Then came news of Demps' business relationship with Poitier, the county commissioner.

On the eve of an important County Commission debate in August, it was revealed that Poitier had personally repaid the loan to Calvary.

Why did Poitier -- an elected official with a say in who would develop the hotel -- give money to a church aligned with one of the potential developers?

She didn't return phone calls seeking an answer. But after her relationship with Demps was revealed, the convention was out of the deal.


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