Anatomy of a swindle:
The Rev. Henry J. Lyons and the Loewen Group
By DAVID BARSTOW and MONICA DAVEY
© St. Petersburg Times, published August 30, 1998
y the time the Alula Spirit cruised out of Vancouver's harbor with the Rev. Henry J. Lyons and executives of the world's second largest funeral company, everyone aboard could feel how close they were to a deal.
Lyons and the Canadian company had courted each other for months. If Lyons' National Baptist Convention USA Inc. would agree to sell The Loewen Group's burial plots to Baptists for a cut of the profits, the white executives at Loewen imagined they could dominate a coveted market: black America.
The returns they envisioned were enormous, and both sides knew that as they set out on Loewen's 110-foot yacht for one final night of mutual seduction.
The Loewen executives had schmoozed plenty of partners-to-be on these waters. Landing the deal was daily life at Loewen, a competitive company of former investment bankers and MBAs.
So here was Henry Lyons and a handful of his preacher friends, men raised on the Old Testament, which teaches: A good name is rather to be chosen than great riches. They seemed worlds away from their pulpits in the states. To the Loewen dealmakers, this looked easy.
What the Loewen executives could not see that summer evening in 1995 was Lyons' own mastery at making the deal, and then wringing it dry. For all its business know-how, The Loewen Group was to become Henry Lyons' biggest victim, according to state and federal prosecutors.
Of all the corporations Lyons allegedly defrauded, Loewen lost the most money. In all, the company spent $3.2-million. Half of the state's racketeering case centers on Loewen. The company is the alleged victim in 15 of the 54 federal counts against Lyons -- more than any of the other 11 organizations listed as victims.
Loewen could be the most important relationship for Lyons to explain in court.
Indeed, Lyons' attorneys have hinted they may make Loewen itself a focal point of their main defense: that greedy white corporations, desperate for black consumers, pursued and exploited a simple preacher with large sums of money.
But banking records, internal correspondence and interviews with key participants in the Loewen deal reveal an entirely different picture. The records expose the creativity, the fearlessness, the flexibility with which Lyons and his primary partner, Bernice Edwards, carried out a sophisticated swindle.
Lyons repeatedly submitted phony expense budgets and then systematically diverted Loewen's funds to himself, his friends, his family, his church and his convention, the records show.
"We will do one thing and one thing only," Lyons pledged to Loewen, "and that is to generate sales."
What did Loewen's money pay for?
New golf clubs. Tires for Lyons' Mercedes. Mortgage payments on his alleged girlfriend's house. And her taxes. And her hot tub. Salaries for his church musicians. The pool man.
The records show a bold pattern of attack that swerved and counterpunched, month after month, to reap the maximum return:
When Loewen asked questions about the mounting expenses for the partnership, Lyons would lash out at the questions. "Yet another affront to my integrity and character," he complained.
When Loewen expressed concern that the convention's sales figures were consistently 80 percent below target, Lyons would threaten. "The program has not lived up to its potential because you have not lived up to your commitments," Lyons told Loewen.
Up against a wall, Lyons and Edwards would dream up a new scheme and start over.
They understood the Loewen Group's vulnerabilities about race, its disadvantage as an outsider intruding on the tradition of black funerals. They knew how to exploit those weaknesses.
With Loewen closing in on Lyons' bogus expenses, Lyons blamed the company for harming his reputation in the black community. People were calling him a pawn for a white corporation, he said. The only way to restore his good name, Lyons informed Loewen, was with a national public relations campaign.
He sent another phony bill: $1,259,469.
'Hope of the rainbow'
Long before he met Henry Lyons, Raymond L. Loewen, 57, had established himself as a multimillion-dollar force.
Loewen, the politician, once got himself elected to British Columbia's legislature. Then he built a real estate company. Then the son of a funeral home owner recreated himself again and, by the mid-1980s, was leading The Loewen Group from a suburb of Vancouver.
Through aggressive acquisitions, The Loewen Group expanded to 16,000 employees, 1,100 funeral homes, 500 cemeteries and 50 crematoria.
But black people were a market Ray Loewen -- and his competitors -- never had been able to crack. The industry remained segregated: Black people usually sought out independent black funeral directors to bury their family members.
That's why Henry Lyons was so attractive to Loewen executives when they met in early 1995. The new National Baptist Convention president claimed to represent more than 8-million black Baptists.
What if Loewen and Lyons, together, sought the market?
Both sides fantasized about the advantages. One company memo calculated Lyons' influence over black America might bring in $400-million a year. "A snowballing effect will occur because sales will increase, then revenues, and finally the public stock value will increase accordingly," the memo said.
For Lyons, the gains were easy to imagine. Since his 1994 election, he had sought out deals with corporate America. Already, his NBC partnerships for phone service and credit cards were putting hundreds of thousands of dollars into his pockets.
So, in the spring of 1995, the courtship began.
They met. They exchanged letters. The tone was warm, full of promise. To Ray Loewen, Lyons wrote: "We, too, share in the hope of the rainbow."
Loewen's leaders -- a small group of white men -- struggled to understand the black church. They asked for a background report on the convention, and got a rudimentary lesson: "The black church is the center of the black community. . . . Black Baptist services are highly emotional."
Loewen's executives were impressed by the glowing reports of Lyons in U.S. newspapers and his friendship with President Clinton.
Lyons' role as a man of God won special appeal in this company. Ray Loewen, a graduate of Briercrest Theological College, was a deeply religious man, raised in a Dutch Mennonite family, who often opened meetings with a prayer, hands held around a boardroom table.
Lyons invited Loewen executives to the convention's summer meeting in San Diego, and with hopes for a partnership hanging in the air, asked for a donation to his "Christian Education Fund" for black colleges. Loewen gave $30,000.
Lyons was pleased. Banking records show he put most of Loewen's donation into his own savings account. He wrote a thank-you to Ray Loewen: "With much prayer and hope for our endeavors, I remain sincerely yours."
By August, both sides were ready to move beyond flirtation.
Loewen flew Lyons and 10 of his ministers to Canada. After the dinner cruise and a night's rest, the ministers were shuttled to Loewen's headquarters on Aug. 29, 1995, for a contract signing ceremony.
The three-page contract said the Baptist convention would create an affiliate company of sales counselors to sell Loewen cemetery plots. Loewen would give 33 percent of sales to the convention through commissions to sales counselors, pastors, churches and the NBC itself.
Lyons signed for the NBC. Snapshots were taken.
"There were a lot of smiles around," said Bradley D. Stam, a senior vice president for Loewen. "It was a deal that was built as much or more on trust than it was on legal documents and financial statements."
Within a month, Lyons wanted another, bigger "education" donation. Loewen, eager to keep its deal rolling, gave $70,000.
A day later, Lyons deposited the check, made payable to the NBC, into a secret account he controlled, and started writing checks -- to himself and his friends. He got $50,000. Schools got nothing.
In December, Lyons wanted more. This time, the money was for an NBC "drug rehabilitation program." Lyons held out an added perk: The donation would lead to a meeting between Ray Loewen and President Clinton, who Lyons said supported the program. Loewen agreed to $100,000.
This time, one of Lyons' assistants instructed Loewen to wire the money to an account called J.H. Associates at a Milwaukee bank. The Loewen officials knew the assistant as "Bree Jones," the wealthy wife of an African American media mogul.
A courthouse check would have shown that the woman -- also known as Bernice Edwards -- was a felon and four-time bankruptcy filer on probation for embezzling in her last business deal.
But Loewen didn't check, and Lyons never corrected their misimpressions of Edwards.
When the $100,000 donation arrived at the J.H. Associates account, which was secretly controlled by Edwards, the money went many places: to Lyons, a jewelry store, her kids' private school.
There was no drug program.
'All hands on deck'
No one at Loewen much noticed when the meeting with President Clinton failed to materialize. By late 1995, every Loewen executive was focused on a threat to the company's survival.
In a Jackson, Miss., courtroom, a funeral home owner was suing Loewen, accusing it of trying to swallow up the competition and crush the little guy. Lawyers for the white, 72-year-old mortician portrayed Ray Loewen as a heartless tycoon stomping on a century-old family business.
The case had no connection to the NBC, but to improve Loewen's image before the mostly black jury, Loewen's attorneys called a last-minute witness -- one of Lyons' assistants.
His testimony was a chance to introduce the NBC-Loewen contract. The NBC program hadn't gotten off the ground, but Loewen's attorneys hoped jurors would view the partnership as a sign of the company's loftier goals.
The strategy boomeranged.
The anti-Loewen lawyers managed to turn the contract into Loewen's biggest sin of all. They brought in an economist who -- using Lyons' 8-million membership claim -- concluded Loewen would make $3-billion off the backs of NBC members.
The jurors were appalled, and said so with their verdict: Loewen owed one little Mississippi mortician $500-million, the largest judgment in state history.
The company's leaders were staring at bankruptcy. They were struggling with the trial publicity, and the abysmal image it projected of their treatment of black people.
What the Loewen executives were not thinking about, in the winter of 1995, was Henry Lyons. But he was thinking about them.
A month after the verdict, Lyons and Bernice Edwards called Loewen. They said they had valuable information for the company: their contacts in Mississippi told them Loewen had been "railroaded" in court. There were rumors of jury tampering. Loewen's biggest competitor might have been involved, Loewen's officials recall being told.
Lyons and Edwards offered a way out. They would hire "the right people" to investigate. It could cost a lot, maybe $2-million, to pay retainers for Mississippi ministers, investigators and lawyers who could get to the bottom of the tampering.
If the scenario sounded unlikely, it also played into Loewen's new fears about race. Loewen's attempt to curry favor with black jurors had backfired. Loewen was the outsider, as Lyons reminded them. He hinted knowingly about his connections. He wouldn't say who they were.
Lyons' offer also played perfectly into Loewen's state of desperation. "The company was within a millimeter of bankruptcy at that point and it was all hands on deck," said Stam, the senior vice president.
The executives agreed to Lyons' idea, told him to mail receipts from the people he hired, and then got back to their crisis.
The next month, Loewen learned it had to post a $625-million appeal bond. Loewen didn't have that kind of money. On Jan. 26, 1996, it settled for $175-million. It was a devastating blow, but at least it was over. Or so Loewen's leaders thought.
The same day, Lyons and Edwards were making a $34,000 down payment on a $700,000 waterfront home in Tierra Verde. They would need to put down more at the closing, but that was okay. They were expecting plenty soon.
Lyons and Edwards didn't learn of Loewen's settlement until days later. Furious, they called the company. The politeness of the boat ride had vanished. They were screaming, recalled Loewen senior executive Lawrence Miller.
"You authorized us to spend $2-million and we have already spent the money," Miller remembered them saying. "Where is our money?"
The Loewen executives didn't want to jeopardize the NBC partnership -- and its future returns. They agreed to reimburse half, or $1-million.
They wired $500,000 immediately, and promised the rest after Lyons and Edwards mailed receipts.
The money set off a shopping spree of a level unprecedented even for Lyons and Edwards. They paid $10,000 on a Volvo for Lyons' daughter. They made a down payment on a 5-carat diamond. They paid $226,000 more on the Tierra Verde house.
They began calling Loewen again. Where's the next $500,000? Edwards was relentless, badgering Loewen president Tim Hogenkamp at home. We need receipts, he replied. It was then, he said, that Lyons raised the stakes.
In a phone call to Hogenkamp and Miller, Lyons said he was at the White House. The Congressional Black Caucus, he said, was threatening to investigate Loewen for exploiting black consumers, but Lyons had managed to get it stopped. He was "shoulder-to-shoulder with Loewen," Miller recalled him saying.
Then Lyons demanded the $500,000, Miller said. Lyons threatened to hold a Capitol news conference. "What I think of Loewen depends on whether I get my money," Miller remembered him saying.
Loewen didn't consider walking away. The only way to recoup their costs, they figured, was with those profits they had dreamed of with the sale of cemetery plots.
Even now, they had faith in the partnership. "Yes, they wouldn't provide receipts," said Loewen attorney Randall M. Walters, "but that was a common theme throughout."
Prosecutors say the truth was this: There were no receipts, no investigators, lawyers or ministers poking around in Mississippi.
A year into this relationship with the NBC, and Loewen had little to show for it. By now, Loewen had paid $1,225,000 to Lyons and Edwards. This was where prosecutors would end their criminal charges against Lyons in connection to Loewen. But it was just the start for Lyons.
Goodwill and Golf Clubs
A week after the second $500,000 payment, Lyons and Edwards opened an account for the National African American Church Council at the United Bank in St. Petersburg.
The NAACC was a subsidiary of the NBC, but Lyons and Edwards set up the account in a way that avoided scrutiny by convention officers. They told the bank to send statements to their new house on Tierra Verde, not NBC headquarters in Nashville. They alone had access to the account.
This account was the critical link in the marketing partnership between Loewen and the NBC. Lyons and Loewen were to agree on an expense budget, then Loewen would wire money each month to the NAACC account. Lyons' NAACC sales counselors would sell Loewen cemetery plots, first in Washington, D.C., and later in other cities.
The arrangement was based on trust, and Lyons and Edwards exploited that fact from the get-go.
It started with their monthly expense reports to Loewen. Lyons and Edwards submitted vague one-page reports with such line items as "Goodwill Toward Pastors -- $4,000" and "Bonuses and Gas Allowance -- $6,000." Each month, they nudged the numbers higher. In April 1996, they requested $48,334. In May, $67,467. In June, $79,384.
There wasn't a peep of protest from Loewen, norequest for receipts. In a billion-dollar company, these sums were barely noticed. Loewen executives signed off on the budgets and wired the money.
Lyons and Edwards were emboldened. One month they said they needed $867 for a janitor. The next month it was $1,200, later $1,925.
At first, the expense reports spelled out salaries: Lyons earned $16,667 a month, or $200,004 a year. Edwards and the Rev. John Chaplin, an NBC vice president, each were listed at $12,500 a month.
Soon, they didn't even bother with detail, simply listing the total salary for all NAACC employees.
The contract gave Loewen the right to quarterly performance reviews with budget adjustments based on "actual results." No such reviews were requested.
What would a review of the NAACC's first four months have found? Lyons paid himself, Edwards and Chaplin $431,000 of the $486,000 Loewen wired. It would have found such expenses as a $2,038 check to Normans, one of Edwards' favorite clothing stores. And $21,000 in checks to Brenda Harris, an NBC official who told her Nashville neighbors she and Lyons were engaged.
Little money was spent selling cemetery plots. No checks -- at least none for more than $500 -- went for office equipment or supplies or postage or printing.
Chaplin spearheaded the NAACC's sales efforts from his church in Washington, D.C. In an memo, a Loewen employee there vented his frustrations about Chaplin, Lyons and Edwards. "There appears to be an active, conscious effort to undermine all of our attempts to help them to establish a solid, workable management system," wrote Jim Lentz.
Of a handful of sales counselors Chaplin recruited, few worked full time. They were poorly trained. Office supplies, meager as they were, often disappeared.
Sales weren't even close to Loewen's goals. By June, Loewen expected to have 50 sales counselors selling $400,000 a month. In reality, seven counselors sold $38,000 worth of Loewen cemetery plots.
"They obviously do not have any idea of how to run a sales organization," Lentz concluded.
Undaunted, Lyons made ever larger demands of Loewen. He proposed a joint venture to buy up black-owned funeral homes. He pushed for more money for the NAACC, citing "our endeavor toward total sales objectives."
He submitted an expense budget to open an NAACC branch in St. Petersburg, across from his church in an old donut shop. Bank records show Lyons and Edwards spent less than $40,000 fixing it up, installing a few desks, chairs and computers. Their bill to Loewen: $168,000.
Where did Loewen's money go? For starters, to the mortgage on the Tierra Verde house. And to the mortgage on Brenda Harris' new home. And to the funeral expenses for TyRon Lewis, the black St. Petersburg man whose death at the hands of a white police officer touched off race riots.
Then there was the NAACC check Bernice Edwards wrote to a man named Ed Veasey.
A note on the $2,184 check, dated Oct. 6, said it was for "office purchases."
Not according to Veasey.
At the time, he worked the front desk at the Don Cesar Beach Resort & Spa, Edwards' favorite hotel. Edwards, with her knack for instant friendships, learned of Veasey's training as a gourmet chef. Soon, Veasey was earning extra money cooking private, candlelit dinners for her and Lyons at their Tierra Verde home. (His best effort: jumbo prawns in a champagne cream sauce and homemade cheesecake.)
But the $2,184 check wasn't for cooking.
"They wanted to go golfing," Veasey said. Only they had no clubs or clothes, so Edwards dispatched Veasey to a golf store for his-and-her golf ensembles. "My budget was pretty much unlimited. She told me, "You got to look good when you play.' "
Soaring Expenses, Sinking Sales
Gregg Strom was the Loewen executive most involved in the NBC deal. After months of ever-larger expenses and miserable sales, Strom was concerned.
"Quite honestly, the program is "upside down'! " Strom wrote in one memo. "The Loewen Group has only "given' and we haven't "got.' " Strom embarked on a quixotic campaign to control costs.
He offered the NAACC free space in a Loewen office in Washington. It had more space, plenty of phones. His offer was rejected.
He scrutinized NAACC expense budgets. In a letter, he "respectfully" asked for more information on the November 1996 budget. On the $57,116 request for salaries: "Please break down this figure." On the $3,000 in rent: "How many square feet is this amount for, and what building?"
Strom was unprepared for the ferocity of Lyons' response. In letters to Strom's bosses, including Ray Loewen himself, Lyons attacked Strom, accusing him of trying to "abort and sabotage" the NAACC. "We are treated as someone who wants something for nothing," Lyons complained.
Lyons dismissed the slow sales as growing pains. He brandished his favorite weapon: the perception he could deliver 8-million Baptists.
"I am hoping that the partnership arrangement that you and I have would allow me to use the influence and power, to generate sales in your cemeteries," Lyons wrote Loewen.
As Lyons knew, his aggressive tactics again hit Loewen at a moment of corporate vulnerability. That fall, Loewen executives were fending off a takeover attempt by their largest competitor. "The last thing the company needed was adverse publicity," said Stam, the vice president.
Loewen backed off, the money kept flowing and Lyons and Edwards continued to skim with abandon, secure in the knowledge that Loewen could be bluffed, bullied or baited away from any serious examination of the NAACC's phony expenses. Such was their level of confidence that in December, Lyons and Edwards flew first class to Hawaii -- then charged Loewen for their $4,569 airfare.
To his flock, Lyons had sold the Loewen partnership as their ticket to economic empowerment. He projected 66,000 high-paying jobs would be created. The deal, he asserted, would generate millions of dollars for struggling NBC churches.
Lyons' vision of empowerment was a mirage. In all of 1996, a handful of pastors and churches in Washington and St. Petersburg earned $36,000 in commissions. A dozen or so NAACC sales counselors split $61,000 in commissions.
George Gomillion was a counselor. A member of Lyons' church, Gomillion knew from his wife's death what it was to struggle with funeral costs. He saw the need for pre-paid cemetery plots that let families absorb costs over time. And in that need, he saw a chance to prosper.
Lyons and Edwards demanded that Loewen reimburse them for tens of thousands of dollars in "gas allowances" and "employee benefits" and "bonuses."
But Gomillion remembers a no-frills sales operation where you paid from your own pocket if you took a customer to lunch. He said he never got gas money or benefits or bonuses.
He and other counselors blamed Loewen. Gomillion figured the company "saw dollar signs" and was trying to squeeze all it could from the NAACC with the minimum investment. At least that's the impression they got from Lyons and Edwards.
"Dr. Lyons wasn't making any money out of the deal," Gomillion said in a recent interview.
The headlines were blunt: "White Hands Want Black Bodies," declared The Final Call, a Nation of Islam newspaper in Chicago. "Black Undertakers Under Attack," said the Afro-American in Washington, D.C.
In late 1996, the nation's African-American newspapers unleashed fierce criticism of Lyons' partnership with Loewen.
Their theme -- that Lyons had sold out to help a white conglomerate gobble up black funeral homes -- might have caused some leaders to cringe. But to Lyons, with his gift for tactical improvisation, the headlines were a new opportunity.
Lyons blamed Loewen for this "assault" on his "moral character and reputation."
Lyons demanded a meeting with Ray Loewen. It was only fair, Lyons said, that Loewen should finance a "crisis communication strategy" to tell African Americans that Henry Lyons was nobody's "pawn." He had a 10-point plan. There would be direct mail campaigns, satellite conferences, a five-city media tour, ads in hundreds of black newspapers -- all financed by Loewen and coordinated by his public relations director, Bernice Edwards.
It was a skillful maneuver. The new demands diverted attention from festering concernsabout NAACC expenses. Loewen executives were asking uncomfortable new questions. Suddenly, it was Lyons on the offensive, exploiting an old vulnerability -- Loewen's ignorance of America's racial riptides, which had nearly consumed Loewen in Mississippi. Now Lyons was raising the specter of another racial mess and, with it, a clear threat: Unless Loewen financed his public relations campaign, he might abandon it to the riptides.
It was a bluff. More than ever, Lyons and Edwards needed Loewen's money to feed their growing appetite for luxury. That month, February 1997, the pair bought a $135,000 Mercedes Benz 600 S, $130,000 in jewelry and signed papers to buy a $925,000 mansion in Charlotte, N.C.
The Loewen executives knew none of this on Feb. 27, when they met Lyons in Vancouver to discuss the "crisis communication plan."
During another cruise on the Alula Spirit, Ray Loewen and Henry Lyons and their aides joined hands before dinner.
asked to say grace.
During the meeting, Loewen's executives agreed to consider a scaled-back version of Lyons' "image recovery" plan. Lyons and Edwards had other ideas.
On May 2, 1997, they sent Loewen a bill for "Phase I." They claimed to have sent letters to all 8.5-million NBC members, all 33,000 NBC churches, and to four officers in each church. At 11 cents a letter, postage alone cost $996,710, they said. Printing and labor was another $262,759. Lyons and Edwards wanted reimbursement, saying the expenses "have already been incurred."
This wasn't true.
The convention's own records show it has fewer than 5,000 churches and 1-million members. No membership mailing list exists. Moreover, after the Vancouver meeting, Lyons wrote just one check of any significance for postage, NAACC bank records show. It was for $2,368.
Lyons and Edwards said Phases II and III would cost even more. The total to repair Lyons' reputation: $3,034,469.
This was peanuts compared to what Lyons now wanted for the NAACC. Though the NAACC's cemetery sales remained dismal, Lyons demanded that Loewen give him $18-million a year to expand to 15 cities, plus part ownership in 50 Loewen cemeteries.
Lyons' rapidly escalating demands sparked a strong response. At long last, Loewen said no. No to $3-million for image recovery. No to $18-million. No to inflated salaries and undocumented expenses.
Lawrence Miller, the Loewen executive, delivered the message in a letter to Edwards that began with this: "It is very frustrating dealing with you and the National Baptist Convention." Miller said NAACC salaries would be cut by half. Henceforth, he added, Loewen would only advance money for legitimate business expenses "where there are receipts."
Receipts? What would Loewen say if it got a peek at the NAACC check book? What would it say about the $1,229 check Lyons wrote to Pinch-A-Penny, a pool store? Or the $1,674 check to his interior decorator and the $1,037 check to the Men's Wearhouse? Or the $779 check he wrote to buy a painting for his church office?
And what would Loewen say about the $1,399 check Lyons wrote to stain Brenda Harris' deck in Nashville and the $11,110 check he wrote to Harris' mother?
This was real trouble, and Lyons responded accordingly: "Mr. Loewen," he wrote, "I do not appreciate the attack on my staff or the National Baptist Convention."
Lyons rejected budget cuts. He rejected requests for receipts. He rejected reduced salaries.
"It appears that your company sought to use the office of the President of the National Baptist Convention without any cost and has placed an assessment on my worth and character; to this I take great offense," Lyons continued.
"I have a high ethical standard."
Lyons' broadside was a partial success. Loewen agreed to pay up to $200,000 for a PR campaign, and, without seeing a single receipt, it wired the $250,807 Lyons demanded for the NAACC's April and May 1997 "expenses."
Why did Loewen give in? Stam, the company's counsel, explained it this way: "You start out with a relationship that's based upon a lot of optimism and trust. . . . You cut your partner some slack even when things don't look like they're going just the way you want them to.
"You start asking for more information. . . . The friction starts to develop, and the last thing you do is you come to the realization that your partner actually is defrauding you."
Having once again bluffed Loewen into retreat, Lyons pressed his attack.
In a May 14, 1997, letter to Miller, Lyons demanded that Loewen "immediately advance" $3.3-million for his image recovery. He demanded that Loewen stop "complaining" about expenses. Otherwise, he wrote, he would explore "all options."
At 3:30 p.m. that day, Lyons and Edwards settled into first-class on an American Airlines flight to Hawaii, where they requested adjoining $365 suites at the Hyatt on Maui.
Loewen got the airline bill: $6,777.
Lyons had made a blunder, a big one. Loewen's frustrated executives recognized it at once.
In his latest list of demands, Lyons asked Loewen to provide "a complete financial accounting" of the money Loewen had advanced the NAACC.
No problem, replied Ray Loewen. We'd love to. In fact, now that you've raised the point, it seems only fair we get the same from you.
Until this moment, the Loewen executives had been reluctant to press Lyons for receipts. "It was the religious concern, and the other thing was the racial thing, as well," said David A. Laundy, a former Loewen vice president. "Two reasons why, you know, you better be careful."
Within weeks, Loewen's accountants produced an elaborate spread sheet with a dismal bottom line: Loewen had paid $3.1-million to Lyons and the NBC, more than double the $1.2-million in total NAACC sales. Now Ray Loewen asked Lyons to produce his accounting.
Lyons' response: "I interpret your request for documents from me as yet another affront to my integrity and character."
Instead, Lyons sent Loewen another bill, $282,598 in "set-up expenses actually incurred" to expand the NAACC to Detroit. Lyons told Loewen he bought $120,100 of equipment, furniture and supplies.
That's news to the Rev. Johnnie Jordan, an NBC board member who allowed Lyons to use his Greater Mt. Olive Baptist Church as an initial base for the NAACC in Detroit. "They used my FAX, my copy machine, all my material all day," Jordan said.
Eventually, the NAACC rented space in a modest office building. The only equipment of value was a $400 copier/FAX machine, Jordan said.
Lyons said he paid $47,600 in salaries and bonuses. "There were no salaries," Jordan said.
Bonuses? "I gave one of the (sales) counselors money -- I think it was under a hundred dollars -- to come back one evening and go through the building and clean it," Jordan said. "We didn't have a janitor."
Jordan, an old friend of Lyons, helped him campaign for NBC president. When Lyons told him the NAACC would create good jobs for Baptists, Jordan believed. "I took his word on faith," he said. "I would not do it again. My church and myself, we lost."
Ray Loewen was losing faith, too. On June 13, in a meeting with Lyons, Loewen said he might pull the plug. His terms for continuing: "Exclusive control of the training, management, scheduling and administration" of the NAACC. Further advances will "only be for actual out-of-pocket expenditures, supported by original receipts."
Lyons threatened a lawsuit for breach of contract, then threatened to "suspend operations."
Loewen held firm.
Two weeks later, Lyons sent the first receipts Loewen had seen in nine months of asking. They totaled $92,548, all for the new Detroit operation.
The company disallowed two-thirds of the expenses, including $44,504 for office equipment. Said Loewen: "The Florida supplier informs us that it does not sell the equipment listed on the invoice."
By now, the demise of the partnership was virtually assured. But there was one final blow, delivered by Deborah Lyons on July 6, 1997, the day she set fire to the Tierra Verde home where her husband shared gourmet dinners with Edwards. Her act of rage set in motion investigations that produced criminal charges against Lyons and Edwards.
In Canada, Loewen's executives weren't sure whether to laugh or cry as they read for the first time about Edwards' history of deceit and embezzlement.
But perhaps the last laugh belonged to Lyons and Edwards. Twelve days after the fire, with investigators moving in, they transacted a last piece of business with the nearly depleted NAACC account.
They withdrew $5,000 to hire a defense attorney.