Lyons spread millions to himself, others
By DAVID BARSTOW and MONICA DAVEY
© St. Petersburg Times, published May 17, 1998
T. PETERSBURG -- He wrote check after check -- to alleged mistresses, his pals, his wife, his children. He wrote checks for his MasterCard and his Mercedes, for his investment adviser and his interior decorator.
The fattest checks of all he wrote to himself: Henry J. Lyons, self-proclaimed man of God, Friend of Bill, champion of Black America.
Take one stretch in 1995. According to newly released investigative records, in a six-month period he paid himself $30,000, then $25,500, then $150,000, then $25,000, then another $25,000, then $50,000.
He was just getting warmed up.
From a complex network of secret bank accounts he controlled as president of the National Baptist Convention USA Inc., Lyons in two years doled out at least $4.1-million in convention funds to himself, his family and his friends, the records show.
When contacted for this story, Lyons' attorney Grady Irvin issued a written statement saying the defense team had not had an opportunity to review the new records, but would, by policy, not publicly comment "on the substantive aspects of the materials anyway."
Still, Irvin's letter defended Lyons handling of finances and cautioned against "unsubstantiated" inferences:
"The St. Petersburg Times continues to pepper its newspapers with less than objective "reporting.' . . ."
According to the records released by state prosecutors, Lyons diverted huge sums almost as fast as they poured into NBC accounts. In June 1995, for example, a corporation made a $30,000 donation to the NBC Education Fund. Three days later, almost all the money was in Lyons' personal savings account.
In April 1996, the Nigerian military regime wired $200,000 to a convention account. Within a week, Lyons had diverted $177,329 from the same account -- $1,000 went to his son, $2,465 went to his Burdines bill, but most of it went to his own savings account.
The investigative records -- some 1,400 pages of banking information, correspondence and interview reports -- reveal for the first time the winding trail of money that led this year to state racketeering and grand theft charges against Lyons.
The records show who got paid what and when. They offer the fullest accounting yet of Lyons' financial activities. But this is not the complete picture. Investigators did not subpoena checks for less than $500, nor have they made public all banking records obtained during their investigation. When those records are released, the amount of convention money Lyons diverted for personal gain may climb higher than the $4.1-million figure.
The records out now, though, indicate that Lyons has repeatedly misled NBC board members about his financial dealings.
Last fall, as he fought to remain president of the convention, Lyons promised a full accounting -- "the absolute truth" -- to a special NBC investigative committee. Just about every number he provided the committee in a written report obtained by the Times was false. Banking records reveal that his report vastly understated the amount of money he and his friends diverted from marketing deals between the NBC and corporations.
After hearing Lyons' explanations, the NBC board declared that no convention money was misappropriated. As a result, Lyons is not charged with stealing from the convention.
Instead, Pinellas-Pasco State Attorney Bernie McCabe has accused Lyons of stealing from groups and companies that paid millions to the convention as donations or marketing fees.
The newly released records underscore another legal threat. They demonstrate the severity of potential tax violations facing Lyons and his co-defendant, Bernice Edwards, a convicted embezzler whom Lyons hired as his director of corporate public relations.
Between February 1995 and early 1997, Lyons pocketed at least $1,409,573 in convention money, the records show. That's about $1.2-million more than he told the IRS he earned in all of 1995 and 1996, according to his tax preparers.
In his written statement, Irvin defended Lyons:
"I caution you that you are treading on thin ground in making these unsubstantiated inferences or allegations that Rev. Lyons misled the committee and board, diverted funds (or committed some illegal act), or has run afoul of the Internal Revenue Service."
Edwards, who sometimes claimed she was Lyons' fiancee during their expensive shopping sprees, received at least $1,278,630 in convention money. Edwards claimed a total taxable income of $2,956 in 1995, the same year records show she collected no less than $189,400 from the convention. More recent tax returns haven't been made public.
Edwards and her attorney declined to comment.
Brenda Harris, another convention employee who sometimes claimed she was engaged to Lyons, was paid at least $456,264. Her financial records have been subpoenaed by a federal grand jury in Tampa, which began investigating Lyons and the convention late last year for tax and bank fraud.
Nader Baydoun, Harris' Nashville attorney, acknowledged that Harris received "gifts" from Lyons, but said most of the money was for "legitimate business purposes" in Harris' capacity coordinating meetings and travel for the convention. "My understanding is that the bulk of what she got would be reimbursements or payments to vendors."
Under federal tax laws, heads of tax-exempt organizations like the NBC may not operate the entity for private gain. William Aramony, the former United Way president, went to prison in 1995 for fraudulently diverting $1.2-million to finance, among other things, a romance with a teenage girlfriend.
17 accounts in different banks
* * *
"I'm not the best bookkeeper in the world," Henry Lyons told the St. Petersburg Times last fall as he sought to explain his handling of convention finances.
Perhaps, but the reports released by state prosecutors portray Lyons as a sophisticated money manager. He presided over no fewer than 17 personal and convention bank accounts in several different banks. He had multiple checking and savings accounts, money market accounts, trust accounts, operating accounts, investment accounts.
He shared at least eight separate accounts with Bernice Edwards.
Between these accounts, Lyons routinely shifted tens of thousands of dollars in a single day. He executed wire transfers, phone transfers and wrote hundreds of checks.
Look at March 1996. On the 14th, a Canadian company in business with the convention wired $500,000 to a secret account Edwards held in Milwaukee. Four days later, $355,000 was wired from Edwards' account to the Baptist Builder Fund, a secret convention account Lyons kept at the United Bank and Trust Co. in St. Petersburg.
Over the next 48 hours, Lyons made the following withdrawals from the Baptist Builder Fund: He wrote a $50,000 check to Edwards; transferred $50,000 to a United Bank account he shared with Edwards; wrote another $50,000 check to Brenda Harris; and wrote a fourth $50,000 check to his own savings account at the United Bank.
In his money management, Lyons displayed a penchant for secrecy, investigative records indicate. He opened NBC accounts without telling the convention board. He withheld bank records from convention auditors. He sometimes supplied banks with false employer identification numbers, or with false NBC resolutions authorizing new accounts.
He maintained tight control over his accounts. He alone wrote and signed all checks from the Baptist Builder Fund, prosecutors found. He alone directed aides where to deposit money, if he didn't make the deposits himself. There were no receipt books or disbursement journals.
Any bank statements, check registers or canceled checks were kept in a locked cabinet in Lyons' office at Bethel Metropolitan Baptist Church. He alone had the key, his employees told investigators.
From his employees, Lyons frequently demanded a strict, to-the-dollar accounting of how money was spent. With his corporate partners, he could be tenacious when demanding payments for fees or expenses. But when others pressed Lyons for any sort of accounting, he treated such requests as an affront to his integrity.
In fact, the investigative records show, Lyons routinely blended the finances of the convention with his personal finances.
When his daughter bought a Volvo 850 GLT, Lyons helped pay for it with a $10,000 check from the Baptist Builder Fund. When he needed to make a car payment, or a mortgage payment, or a credit card payment, he reached for the Baptist Builder Fund checkbook, the prosecution records show. Or he simply wrote out a five-figure check to "H.J. Lyons" for deposit to his savings account.
(When the Times first revealed the existence of the Baptist Builder Fund last summer, Grady Irvin said Lyons did not divert money from the account for personal gain. He said the account wasn't listed in convention financial documents because it did not hold "a significant amount" of money.)
Lyons was far more generous to himself than he was to African-American colleges, in whose name he so often raised money from corporate sponsors. In 1996, during the convention's annual meeting, corporate sponsors gave Lyons $155,000 to distribute to colleges.
Lyons, the "education president," gave $62,500 to seven colleges, investigators said.
Another $78,000 went to his personal bank accounts.
A misleading report
Facing questions from his own convention members last fall, Lyons typed up a formal report, complete with lists and flow charts to explain his financial dealings
Lyons' report to a special NBC investigative committee outlined marketing deals he made with corporations that wanted to sell products -- cars, credit cards, coffins -- to convention members. The convention had never done such deals before, but Lyons said he thought they would be an excellent way to fund needy black colleges and pay off convention debts.
Lyons had not told his members about all the deals. He said he was now coming clean -- and he regretted having kept the dealmaking a secret.
"Why not just divulge it? Why not tell it? It is something I would definitely not ever do again. I promise you that," Lyons said last August. "But the convention got the money. They got the money. I didn't hold out the money on them. They got the money and I got records to prove it."
The newly released records, however, reveal that Lyons' official report to his convention was packed with inaccuracies. In fact, only a few of Lyons' figures are backed up by the investigative and banking records.
Lyons understated -- by millions of dollars -- the value of the corporate deals to the convention. Lyons understated -- again, by millions -- the amount of the "commissions" he and his two closest associates, Edwards and the Rev. Frederick Demps, paid themselves on those deals. Lyons also neglected to list all the family members and friends who were benefitting from the deals.
In Irvin's written response for this story, he suggested that Lyons' official report may not have been Lyons' complete or final explanation of finances to the investigative committee. The committee also met with Lyons behind closed doors, Irvin pointed out.
"The St. Petersburg Times is not, and to the best of my knowledge never has been, in a position to know what was completely "reported' " to the committee, Irvin wrote. ". . . A report is often supplemented with oral presentation or amended submissions."
But Irvin provided no specifics of changes to the figures in the document Lyons had titled "President Lyons' Report to the Commission on Ethics and Accountability, August 23, 1997."
In that report and in Lyons' own explanations of it to the St. Petersburg Times at the time, Lyons described how corporate deals brought in $2.1-million. In fact, the newly released records show the deals were worth more than twice that.
Lyons said he and his closest associates had paid themselves as much as $1.2-million in "commissions" for work on the deals. When convention members complained that the commissions sounded awfully steep, Lyons conceded the point. "I said: "Okay, it's a bit high. I agree,' " Lyons recalled telling convention leaders. "As I look at it again . . . I would not make it that high."
Actually, the commissions were far higher, records show.
From just five corporate deals, Lyons, his friends and family received $3.4-million. Lyons himself received more than $1-million -- twice the amount he estimated to his convention. Edwards received $1.2-million -- again, twice what Lyons told his convention.
Lyons' official accounting of the convention's partnership with a Canadian funeral home conglomerate contained the most inaccuracies of all, the records show.
Lyons said the Loewen Group had paid $800,000 to sell funeral products to NBC members. Of that, he reported, he and Edwards had split about $400,000 for their work. He said he was "foggy" on the exact breakdown.
The fog extended far beyond that detail. The Loewen Group actually paid $3,240,968 to the convention, the records show. At least $2.5-million of that went to Lyons, his associates and his family. Lyons received more than $700,000 (including money for his mortgage payment, car payment and American Express bill). Edwards got $1.1-million (including money for diamonds, dresses and the Don CeSar Beach Resort).
And, in his report, Lyons failed to tell his convention that any Loewen funds went to Brenda Harris, the NBC employee prosecutors describe as Lyons' paramour. Harris received $139,739, the records indicate.
Lyons also failed to name his wife and daughters, who received another $41,280.
Nor did he mention in the report how other friends, including U.S. Rep. Corrine Brown, D-Jacksonville, got a total of $532,000 from the Loewen pact.
In other parts of his official report, Lyons overstated what Edwards earned in commissions, while understating his own cut, the records indicate.
A General Motors Co. affiliate paid the convention more than $200,000 to market cars to NBC members. In Lyons' report of the transaction, the convention kept $150,000, Edwards received $75,000, and he got nothing.
Investigative records do not reflect Edwards receiving anything, but they do indicate Lyons benefited from the deal, including a payment of $30,000 deposited directly into his personal checking account at United Bank. It's not clear where all the GM money went.
The detailed flow charts that accompanied Lyons' report to the convention were intended to show which corporate funds were used to pay for several big ticket items that had drawn controversy: a waterfront home, a Mercedes, a diamond ring and a time-share condominium at Lake Tahoe.
But, records show, some of the charts incorrectly demonstrated which money paid for what.
According to Lyons' charts, Globe Life and Accident Insurance Co. of Oklahoma City paid the convention $600,000 to sell insurance to NBC members. Of that, $365,000 went to Edwards, Lyons said, including $90,000 for a down payment on the Tierra Verde house.
But bank records show that Globe funds did not go to the house down payment. The Loewen Group's money paid for that. What's more, the Globe deal actually was worth more than $1-million. Half of that went to Lyons and his associates. At least $200,000 was deposited in his personal savings account, the records show.
No personal gain?
In his written report to the convention, Lyons never mentioned two sources of money
In 1996, the Anti-Defamation League presented him with $244,500 to rebuild churches that had been burned. When the ADL demanded an accounting a year later, Lyons acknowledged that only $30,000 had gone to the needy churches. The churches didn't need the rest, Lyons explained. Then he announced he would refund to the ADL the balance: $214,500.
At the time, Lyons' attorney stressed that the ADL money had never gone to "any personal gain" or "personal purpose." Said Irvin: "In other words, the money is there. . . . Not one dime of the money was spent to benefit any one person personally."
The investigative records show otherwise.
One day after Lyons deposited the ADL check into the Baptist Builder Fund, he paid his $4,000 American Express bill with a Baptist Builder check. The same day, $60,000 was transferred by phone from that convention account into the Lyonses' personal savings account.
Two days later, Lyons paid his interior decorator with another $4,000 check from the Baptist Builder Fund.
All told, nearly half of the ADL donation went to Lyons, Harris, Lyons' wife, Lyons' children and Rochelle McCanns, an Indianapolis woman.
Lyons also has denied being paid to lobby for Nigeria. His attorney has suggested that $350,000 received into convention accounts from that military regime could have been used to pay the costs of a 10-day fact-finding trip to that country by a 15-member delegation led by Lyons.
But investigative records show nearly half of the $350,000 from Nigeria went to Lyons or to pay his bills. (The bills appear unrelated to the African trip: Lyons' payments to Burdines, Nationwide Credit, Exclusive Apparel.) In fact, nearly the entire sum -- $316,712 -- went to Lyons, Harris, Lyons' family and his other associates.
Days after Lyons returned from the Nigerian trip last summer, he insisted money was not his motivator. "My effort has been strictly from a humanitarian point of view."