Where did he get the money?
Rev. Henry Lyons offers new explanation
By DAVID BARSTOW and MONICA DAVEY, Times Staff Writers
©St. Petersburg Times, published August 27, 1997
In the last two years, the Rev. Henry J. Lyons has given convicted embezzler Bernice Edwards $440,000 from the proceeds of two National Baptist Convention USA business deals, according to documents prepared by Lyons.
Together, Lyons and Edwards spent at least $187,000 of that money on a waterfront home, a luxury car and a time-share unit, the documents show.
Lyons has said repeatedly that no convention money has gone for private use. He has insisted that those items were purchased with an inheritance Edwards received after the death of her husband.
Inheritance was not mentioned in the four documents Lyons presented on Saturday to a committee of convention officials investigating his conduct as president of the nation's largest black religious organization.
The documents, obtained by the Times, consist of charts Lyons created to explain some of his financial dealings with Edwards, the Milwaukee woman he hired in 1994 as the convention's director of corporate public relations.
In an interview at his home late Monday night, Lyons explained the meaning of his flow charts and confirmed that he has fired Edwards because of recent publicity about their controversial relationship.
"We cut it," he said. "She no longer works for the NBC."
Lyons also said he made a "serious judgment error" by co-mingling $150,000 in payments to Edwards with convention funds he alone controlled at the United Bank and Trust Co. in St. Petersburg.
"It was a mistake," he said. "It's my big, big mistake in life."
According to Lyons' description of his charts:
He paid Edwards a $75,000 commission from the proceeds of a $225,000 deal she helped negotiate with General Motors. (A GM spokesman said the company paid the convention to display cars at NBC's annual meetings, but he would not disclose the amount.) Lyons said Edwards used her commission to make a $75,000 deposit on a $135,000 Mercedes-Benz she bought for his use.
Edwards received $365,000 from the proceeds of a second convention deal with Globe Life and Accident Insurance Co. of Oklahoma City. The company, he said, bought the names and addresses of 9-million African-Americans from the convention. Edwards used an unspecified amount of the $365,000 for expenses related to the transaction, Lyons said. The rest, he explained, she kept as her commission.
From her Globe commission, $90,000 was spent on the purchase of a $700,000 Tierra Verde home co-owned by Lyons and Edwards, he said. Another $22,000 was spent on a Lake Tahoe time share purchased on Edwards' 39th birthday. A deed lists Lyons and Edwards as co-owners of the time share.
Last month, during a meeting with convention officials, Lyons described Edwards as "an extremely wealthy lady" who inherited a sizable fortune from her dead husband -- "more (money) than I would ever see or dream about."
It was her money -- not convention money -- that financed many of their joint purchases, he said then. He made no mention of five-figure commissions or business deals with GM and Globe, according to a tape recording of that meeting.
After that meeting, the Times revealed that Edwards declared bankruptcy four times since 1992 and nearly lost her home to foreclosure. There is no record in Milwaukee of her inheriting money from the man she called her husband, and his relatives say they have not given Edwards money. Edwards could not be reached Tuesday. Now, with these latest documents, Lyons acknowledges that much of the money used for his and Edwards' purchases came directly from National Baptist Convention deals -- not from an inheritance.
In fact, Lyons' charts show $187,000 of the money they used coming directly from the Baptist Builder Fund, a convention account he controls at the United Bank and Trust Co. in St. Petersburg. Records of that account and others have been subpoenaed by prosecutors as part of a criminal investigation into Lyons.
In Monday night's interview, Lyons said the money he and Edwards spent from the Baptist Builder Fund actually belonged to Edwards. He was simply holding it in the account for her, he said, calling that a decision he has since repented over and over.
The Baptist Builder Fund is a central focus of prosecutors and the convention's 18-member ethics committee, which questioned Lyons for three hours on Saturday in Salt Lake City. Hundreds of thousands of dollars flowed through this account, records show, yet several top convention officials were unaware of its existence. The convention's most recent audit and annual report made no mention of it.
Nor does the annual report include a word about either the Globe or GM deals, although details of other corporate partnerships are spelled out. The report lists stipends and salaries for dozens of convention employees and officials. (Lyons, for example, receives an $85,000 stipend as president.) The report does not, however, list the $440,000 in convention funds Lyons disbursed to Edwards.
It is unclear how the convention's investigative committee views the payments to Edwards. The committee's chairman, the Rev. E.V. Hill, will not answer questions about the investigation until it is complete, a worker at his Los Angeles church said Tuesday.
The payouts to Edwards, though, will get close scrutiny from prosecutors who want to know whether Lyons improperly diverted convention money for his own gain.
A spokesman for the district of the Internal Revenue Service that handles tax exempt organizations would not comment specifically on the National Baptist Convention. But in general, the funds of a tax exempt entity must be spent in the best, most efficient way possible, spokesman Dom LaPonzina said, and not for the personal benefit of any one official.
"Tax exempt entities are prohibited from personal inurement," said LaPonzina. "They are required to make decisions in the best interest of the organization -- for getting the biggest bang for the organization's buck. If you have decisions made based on personal benefit, as opposed to organization benefit, that's where you've got a problem."
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For years, Lyons has argued that the National Baptist Convention should aggressively market its membership to corporate America. "We will start to name manufacturers and companies that will do business with African-American people," Lyons said in a speech last year. "It is time for us to share in the wealth of this nation, and that's what we're after."
On the surface, the convention would seem a marketer's dream. The convention has long claimed it has 8.5-million members from 33,000 churches, and companies can and do pay dearly for such a membership list. All the more so if Lyons, one of the nation's most prominent black leaders, is willing to endorse their products in mailings to his flock.
But Lyons' efforts to market the NBC membership were thwarted by two problems: The NBC does not have a membership list. Nor does it have 33,000 churches.
The group's annual report lists fewer than 5,000 churches making contributions. Lyons himself has acknowledged that 33,000 is an exaggeration.
"Thirty three thousand churches? There ain't no 33,000 churches," Lyons told convention leaders last month.
Lyons worked hard to build a membership list. He appealed to pastors to send in their church's membership list. But many, like the Rev. Avery Aldridge of Flint, Mich., refused, worried that they would lose money, power and control to the national organization.
"It was a sense of preserving the integrity of local churches," he said. "People get excited if they hear from the president of the National Baptist Convention. He says they should send in $500 and they may send in $500 and then cut back their tithe to the local church."
But Lyons and Edwards persisted in seeking marketing deals with corporations. In April 1995, they began talks with Globe Life. According to Lyons, the convention agreed to sell the company a mailing list of 9-million names. It was Edwards' job to come up with those 9-million names, he said.
Edwards used some of the $365,000 he gave her to buy the names of African-American residents across the country, he said. Many of those people had no affiliation with the Baptist convention. "We sold black names," he said, "not NBC names. And they (Globe) understood that."
According to Lyons, it was a lucrative deal: Globe paid his organization 25 cents for each of the 9-million names, he said. That would mean Globe paid the NBC $2.25-million for the mailing list and Lyons' endorsement.
Andrew Morrison, who operates a leading African-American direct marketing agency, Nia Direct, in New York, said 25 cents per name is "way above the industry norm," and he questioned the quality of such a large list.
His company, eight years in existence, has roughly 5-million names of black people in its data base. "People can purport to have 9-million names, but once you dig deeper, it usually just ends up being people with certain zip codes and if they're honest, they'll tell you that their accuracy is only about 60 percent. A lot of the names will not be African-Americans."
A Globe official said Tuesday his company paid a substantial amount to the convention but not $2.25-million. "The compensation figures mentioned during our telephone conversation are significantly higher than what we have paid to the National Baptist Convention USA," Globe general counsel Gene Calame said by letter Tuesday.
He did not elaborate.
-- Times staff writers Steve Nohlgren and Craig Pittman and Times researcher John Martin contributed to this report.
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