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  • Watching the money

    By DAVID BARSTOW and DAVID DAHL

    ©St. Petersburg Times, published July 13, 1997


    NASHVILLE, Tenn. -- The river of money starts as a trickle in tiny churches like the True Vine Baptist Church in Doucett, Texas, which sent in $57.73.

    The river swells with the sale of cook books, video tapes and solid maple National Baptist Convention commemorative rockers -- $379 plus tax.

    It is fed by "love offerings" and "solidarity days." It is fed by fund-raising groups known as Armies of God, and by individual Standard Bearers who send in $25 a month, and by Operation Freedom, in which those who donate $200 get their name engraved on a wall over an eternal flame.

    There's even a 900 number -- $2.95 for the first minute and $1 for each additional minute -- to listen to the Dr. Lyons Information Line.

    In the end, the river of money -- millions of dollars deep -- flows through the all-powerful hands of one man: The Rev. Henry J. Lyons, president of the National Baptist Convention USA Inc., the nation's largest black church group.

    Lyons, 55, has drawn praise for his ability to raise money and pay off large convention debts. But after a week of revelations about a newly lavish lifestyle, Lyons is drawing scrutiny from law enforcement, reporters and longtime political enemies within the church with an Old Testament sense of justice.

    Yes, Lyons' story includes a mystery woman, dubious business deals and hidden criminal histories. But most of all it is about money -- one denomination's relentless acquisition of it, the good works it can do, and the pull it can have on the mighty and the meek. St. Paul said the love of money is the root of all evil, but those seeking to understand the influence of money on the National Baptist Convention USA should also remember the words of Ecclesiastes:

    "Money meets every need."

    * * *

    As described by its 461-page annual report, the Baptist convention is a complex, highly compartmentalized organization with thousands of loyal volunteers and a web of business dealings. Sometimes in partnership with private corporations, it sells everything from music tapes to travel services to life insurance to cemetery plots.

    This year, it expected to bring in revenues of $6.6-million and spend $5.1-million, leaving a $1.4-million surplus, the report states.

    As president and chief executive officer of the convention, Lyons exercises firm control over the purse strings. Lyons alone appoints all committees, including the finance and budget committee. The treasurer of the convention can spend money only "upon order signed by the president."

    Lyons has broad authority to spend money as he sees fit, and he does so with little financial oversight -- either from the government or from the convention's board.

    The IRS, for all its vigilence and tenacity, is reluctant to take on religion.

    "Church audits are rare and likely to be rarer," said former IRS commissioner Don Alexander. "Churches are held to a lesser standard than others on account they are rendering things to God and can't be called to account to man."

    Religious organizations don't pay federal taxes. That doesn't mean the IRS can't audit religious groups. Unlike other non-profits, though, audits of religious groups require approval from high-level IRS officials.

    "Congress imposed a very high standard for the IRS to meet before it undertakes an audit of a religious organization," said James Hasson, a tax lawyer in Atlanta.

    According to the annual report, the convention has run afoul of the IRS in one respect: Failing to pay payroll taxes. The convention and IRS have agreed to a monthly installment plan to make up the past due payments, but the report does not say what is owed.

    In the absence of IRS scrutiny, accountability is left to the organization, which has a long history of freewheeling fiscal management.

    In 1994, Lyons ran as a reformist candidate to replace the Rev. T. J. Jemison, who faced criticism during his 12-year reign for autocratic handling of church money.

    "His (Jemison's) administration is an administration Haitian-style," Lyons said at the time. "The only difference in us and Haiti is we're up here and they're down there, where they got no laws. And that's our only salvation."

    According to the convention's constitution, "An auditor shall make annual examination and audits of the books and accounts of all Boards of the Convention." The auditor is to have "full and free access to all books and records" and report his findings at the annual meeting.

    But in the entire annual report, which includes meeting minutes and numerous financial statements, there is one mention of an independent accounting of convention expenditures.

    In 1996, a Memphis accountant reviewed one branch of the convention called the Moderators Department. The accountant reported that the department collected $98,732 and spent $91,655, but went on to say that his review was "substantially less in scope than an audit in accordance with generally accepted auditing standards."

    In the proposed 1996-97 budget, $5,000 is set aside for an "oratorical contest" and $31,187 for "music," but no money is specifically set aside for audits.

    The convention has a chief of security, a historian and six vice presidents, but no accountant is listed on the payroll. The closest the organization comes to a chief financial officer is the treasurer, who is paid $18,500 -- less than Lyons' administrative assistant.

    Meeting minutes reveal little discussion of budget or fiscal matters. And a listing of job descriptions shows that other than Lyons, only three convention officials -- the general secretary, the third vice president and the treasurer -- have significant say over money matters. All three of those officials are appointed by Lyons and serve at his pleasure. All three also receive annual stipends ranging from $7,100 to $31,700.

    Lyons himself receives an $80,000 stipend, the report says.

    The Women's Auxiliary of the convention raises about $500,000 a year for the organization by selling cook books and holding other fund-raising events. "If women want to know (what) happens to money raised, all they need to do is ask," the annual report states.

    * * *

    In sermons and speeches, Lyons has frequently addressed the topic of money. He does not view money as evil, the way St. Paul did. To him, the accumulation of wealth is essential for the political empowerment of African-Americans.

    "You can't do for nobody else until you do for yourself," he told the convention in his 1995 annual address. "You need money, economics, it's the engine that drives the car, economic empowerment."

    Lyons has steered the National Baptist Convention toward more money-making ventures. Last year, the convention joined with four other black church organizations to market merchandise produced by a for-profit firm. The five denominations own 70 percent of the stock in Revelation Corp. of America, according to published accounts. Members will be able to enjoy discounts on groceries, clothes and other products marketed through the company.

    "I want talk about getting R-I-C-H!" Lyons told the convention last September in a discussion about Revelation Corp. "We can have silver and gold and Jesus!"

    This ethic is reflected in the convention's impressive Nashville headquarters, built with a $7-million bank loan. The World Center has an atrium, an auditorium-sized sanctuary, a cafeteria for 300, conference rooms and church offices.

    Lyons has lived his message of wealth in his personal life, too, especially since becoming president of the Baptist convention in 1994. Last year he bought a $700,000 waterfront home on Tierra Verde. Earlier this year, he and Bernice V. Edwards, a convicted embezzler who shares ownership of the Tierra Verde home with him, arranged for the purchase of a $135,000 Mercedes-Benz.

    In a news conference Friday, Lyons defended his spending, "I am proud that I have enjoyed some financial success in the past few years, but I am disappointed that the media has used this to cast my character in an unfavorable light."

    Mozella G. Mitchell, a University of South Florida religion professor and an ordained AME Zion minister, compares the status and prestige of a black American preacher to that of a preslavery tribal chief. The preacher's whole community looks up to him, she said, and is willing to grant him enormous privileges that ordinary people would not expect for themselves.

    Those privileges include money.

    "You see, we have so many poor people in churches who cannot on their own live as well as they would like," she said.

    "Psychologically, they can live that out through their leader. They're very much conditioned to that sort of thing, making sure that their pastor lives the best life. They live vicariously through him. So it's pretty easy to get them to raise money, to buy the Cadillac or the Lincoln Town Car, or whatever it is, or the fine clothes, so that they can have a sense of power too.

    "Remember, the pastor is their spokesperson."

    But the purchases by Lyons -- and the attendant media attention -- increase the possibility that the IRS will more closely examine the organization and Lyons, tax experts said.

    Religious organizations must follow the rules that govern tax-exempt organizations. One of those rules states that the heads of the organizations must only receive "reasonable" compensation -- judged by what others in the same profession receive. A second rule says the heads of organizations can not operate the entity for private gain.

    Jim and Tammy Bakker, for example, got a $1.2-million tax bill from the IRS. Jim Bakker was convicted in 1989 of 24 counts of fraud, after testimony that he paid for luxuries like an air-conditioned dog house and a fleet of Mercedes-Benzes and Rolls-Royces.

    William Aramony, the former president of United Way of America, was sentenced in 1995 to 7 years in prison for fraudulently diverting $1.2-million of the charity's money. He financed a romance with a teenage girlfriend and other benefits for himself and friends.

    In purchasing the $135,000 Mercedes, Lyons and Edwards presented Lokey Motor in Clearwater with a check for $36,000. The receipt for the check was made out to the National Baptist Convention and Henry Lyons. And in the organization's proposed 1996-97 budget, some $44,000 was set aside for a "national guest house."

    It is unclear whether that $44,000 was to support the Tierra Verde property, of which the National Baptist Convention has no ownership. Lyons' wife, Deborah, has said the home is a "national guest house" for the convention. On Friday, Lyons also described it as a guest house. But, he emphasized, "There has never been any money taken from . . . the National Baptist Convention to secure the loan on the house."

    He did not address the $135,000 Mercedes.

    If the IRS suspects Lyons dipped into convention funds for private gain, a new law makes it likely that Lyons -- not the convention -- would face the harshest consequences.

    Congress last year allowed the IRS to impose penalties on the heads of non-profit organizations who violate federal tax law by making improper expenditures. In the past, only the organization itself faced the prospect of losing its tax-exempt status.

    In the meantime, Lyons is facing closer scrutiny from within the convention. Some ministers say they plan to withhold their regular contributions to the national convention until they can get a better accounting of expenses.

    "In times like these, everybody wants to know where every penny is spent," said the Rev. E. V. Hill, the prominent minister of the Mt. Zion Baptist Church in Los Angeles. "From the White House to this house, every time there is a problem, it tightens the screw."

    Board members, he said, receive a financial report at their meetings several times a year. It is not unusual for board members to question some expenses. Hill said he expects to raise at their next board meeting the issue of the convention's credit cards. In the last financial statement sent to board members, there are $21,000 in credit card expenses ($8,000 alone for American Express). But there is no breakdown of what was purchased with the credit cards.

    "I just put a question mark by it, not because I thought something was wrong," he said. "I just think it was not a good policy not to break it down."
    -- Staff writers Tim Roche, Monica Davey, Jim Harper, Mike Wilson and David Olinger contributed to this report, as did researchers Kitty Bennett, John Martin and Carolyn Hardnett.


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