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Inquiry targets Lyons venture

By CRAIG PITTMAN

©St. Petersburg Times, published December 2, 1997


The Rev. Henry Lyons promised when elected president of the National Baptist Church USA that he would rescue the nation's largest African-American religious group from the brink of financial disaster.

But one of the first ventures Lyons launched as convention president has come back to haunt him.

The Minority Enterprise Financial Acquisition Corp. was set up in 1995 to use the clout of black consumers to help poor people get homes. Now it is under investigation by federal authorities and is being sued by its former treasurer.

In preparation for the MEFAC suit, scheduled to go to trial in two weeks, Lyons gave a deposition that provides intriguing details about how he has handled the convention's operations:

Lyons testified he had not told his convention's board members or its auditors about the lawsuit, even though his convention could be liable for thousands of dollars in damages.

He said he had not told the convention's auditors that the religious group owns 26 percent of the troubled company, now under investigation by the U.S. Justice Department for mishandling federal money. "I just didn't think to turn it in," he testified.

Lyons said he had hoped to parlay his position as chairman of MEFAC's board into seats on the boards of other corporations. Yet, when MEFAC's treasurer notified him that the company he chaired had not paid a dime in taxes, he said, "I did nothing."

And, under oath, Lyons testified that his convention has 8.5-million members and 33,000 churches, figures that he has acknowledged are not true.

He recently told Times reporters that when he took over the convention in 1995 it consisted of just 4,000 churches. As for the claim of 8.5-million people, he told reporters, "It ain't there."

Just getting Lyons to testify in the MEFAC suit was difficult. Lyons dodged the plaintiff's efforts to question him until a federal magistrate imposed sanctions to punish him.

Lyons paid the $1,000 sanction to plaintiff's attorney Todd Vriesman with a check from the convention's Baptist Builder Fund, a bank account that he has used for everything from buying jewelry to paying water bills for a house he owns with a convicted embezzler.

With his financial affairs now under investigation by state and federal authorities, Lyons recently announced he was closing that account, replacing it with a Presidential Discretionary Account.

In his testimony, Lyons said MEFAC was founded with the best of intentions: to help poor people buy homes. The idea came from a Kansas City minister, the Rev. Hyman Jarrett, who boasted MEFAC would transform the face of blighted urban America.

Jarrett persuaded Lyons to join forces with the Rev. E. Edward Jones, president of the National Baptist Convention of America, which says it has 4.5-million members. Each convention would own 26 percent of MEFAC -- together, 52 percent.

Although Lyons was named MEFAC's chairman, he testified he and Jones agreed to let Jarrett run the day-to-day operations, even though they had never worked with him before.

Lyons said his only task as chairman was to "bring my big convention" into the MEFAC fold to show government agencies and major corporations what a large customer base MEFAC could offer -- although the estimates of millions of customers were based on the false membership count of Lyons' own convention.

"The conventions were to provide the numbers, in terms of packing a 12-million member wallop with two conventions coming together ... " he testified.

Although his convention owned MEFAC's stock, Lyons testified that once MEFAC filed its incorporation papers in Delaware, he considered his MEFAC position to be his alone, not something belonging to the convention.

"At this point it was my understanding that I was serving as an individual, as Henry Lyons, representing myself and my family," he said. "Now what brought about that change, I'm really not clear on, but that's, that's, as I remember it now, I was, once we put it together, put the corporation together and had gone to Delaware, that I'm, I'm a little fuzzy on it, but I'm sure I was signing to represent myself at that point."

When the plaintiff's attorney asked Lyons the difference between his own interests and the convention's, Lyons said, "The two are almost inseparable."

Based on the support of the two conventions, MEFAC was able to get money from the Federal Home Loan Mortgage Board, nicknamed Freddie Mac, as well as the U.S. Department of Agriculture.

The company's former treasurer, Garret Barry, has estimated at least $600,000 went into MEFAC in an 18-month period, some of it from the government, some from investors and some from 41 churches that paid $295 each to attend a MEFAC symposium at Kansas City's Ritz-Carlton Hotel.

Barry contends the only thing MEFAC ever produced is a videotape promoting the company, for which Freddie Mac officials paid $50,000.

And the $150,000 the USDA paid MEFAC to help poor black farmers instead was "ultimately used, in part, to benefit pastors and active lay persons of specific religious denominations," the USDA's inspector general reported earlier this year.

Now the USDA is demanding its money back, and the inspector general's report has been turned over to the Justice Department.

Lyons said he knew nothing of the USDA contract or the money Freddie Mac paid for the videotape. He said he knew the company had serious problems. That was why he wrote Jarrett a letter last year saying he was withdrawing his convention's support, he said.

But he admitted signing MEFAC documents after that date, and said he never resigned as chairman or tried to sell the convention's interest in the company. When Vriesman asked if he had sought any legal advice about getting out of MEFAC, Lyons said, "I got busy and I forgot about it."

-- Staff writer Monica Davey contributed to this report.


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