March 29, 2012 — vol. 47, no 34
Charles Street AME seeks federal bankruptcy protection
Charles Street pastor Gregory G. Groover Sr. recently told a crowd that he appreciated their support. (Sandy Middlebrooke photo)
In what was described as “gross, severe financial mismanagement,” the historic Charles Street AME Church filed for bankruptcy last week, pleading to a federal judge to restructure about $4 million in debt to OneUnited bank as well as other creditors.
Though Rev. Gregory Groover Sr. repeatedly said in several public appearances that the church didn’t miss a payment, a different story emerged in bankruptcy court: the church was late on 43 of its 56 payments and missed its final two payments.
In addition to OneUnited, Charles Street owes about $630,000 to Thomas Construction Company, the Dorchester firm hired to build its proposed Roxbury Renaissance Center; another $450,000 is owed to Tremont Credit Union for a loan to repair the church’s roof; and an unspecified amount is owed to “no more than 20” other creditors.
The bankruptcy filings last week was a move to forestall the pending foreclosure of its property by OneUnited bank – and keep the church operating as it has for the last nearly two centuries. That includes a payment arrangement with several utility companies to keep heat, electricity and telephones turned on and the ability to pay about $45,000 a month for salaries and benefits to five full-time staff members and several part-timers.
In recent weeks, the financial dealings of Charles Street AME became the subject of a nasty public fight between two of Boston’s leading black institutions. OneUnited is the nation’s largest black-owned bank and their move to collect Charles Street’s outstanding debt triggered angry criticisms from several local politicians and black clergy.
Making matters worse was Charles Street’s charges in legal documents that said the bank made “a reckless” loan and that they knew —or should have known — that the church would be unable to repay as originally agreed.
“The loan was improperly underwritten from the start,” a church lawyer argued in court papers, “and was offered by OneUnited for the ulterior motive of expanding its retail business and gaining publicity, rather than loan made to prudent lending standards.”
During last week’s hearing before bankruptcy Judge Frank Bailey, OneUnited attorney Liam Vesely called such church criticisms “unfair” and explained that the default on the loans was not the fault of OneUnited but rather “gross severe financial mismanagement” on the part of Charles Street.
The relationship between OneUnited and Charles St. didn’t start out acrimoniously. On Oct. 3, 2006, Groover, who is also the Boston School Committee chairman, agreed to borrow $3.6 million to build a 22,000-square-foot community center on church-owned land near Grove Hall featuring a grand ballroom, multi-purpose meeting space, conference rooms, prayer and meditation space and sound proof musical practice rooms.
That loan became due on June 1, 2008, and despite a total of five extensions, the church was unable to satisfy its debt by Sept. 1, 2009. A year later, on Aug. 17, 2010, OneUnited then sued in Suffolk Superior Court for breach of contract. Also named in the suit was Charles Street AME’s co-signer, the First Episcopal District of the African Methodist Episcopal Church based in Philadelphia.
Charles Street had also borrowed another $1.1 million, separate from the $3.6 million construction loan. That loan is also in default.
And the community center remains unfinished. According to Thomas Construction, Charles Street agreed to pay $2.9 million to build the center. Charles Street further agreed on nearly $550,000 in extra work. Charles Street paid the firm about $2.5 million but failed to pay the remaining balance of about $630,000.
Judge Bailey set another hearing on May 1.
The construction firm has sued Charles Street for breach of contract and also named OneUnited as a co-defendant.
Vesely, the OneUnited attorney, told Judge Bailey during the hearing that the bank’s goal was not to put Charles Street AME out of business. “I want to make it clear that the bank is not trying to put this very honorable and good church out of business,” Vesely said. “But the bank is a lender that also has its own mission.”
| Apr 3 9:03am by B. Tower [192.138.214.116] | |
I don't see how anyone could take this piece seriously. Mel Miller is the longest tenured member on OneUnited's board, and he clearly has an agenda with press coverage like this. This isn't reporting, this is an editorial (a misleading one at that). Absent from this hatchet job is the fact that OneUnited is flat out of cash reserves, which I think would have been a material fact worth reporting. If you're not convinced that OneUnited's claim is of questionable legitimacy, I recommend you just type OneUnited CEO "Kevin Cohee"'s name into google and see for yourself what "mismanagement" looks like. Further, keep in mind that "court documents" includes documents submitted by both sides. If OneUnited simply alleged that as "fact" it would appear in a "court document" that they were late on payments. The Charles Street Church has been unconscionably dragged through the mud, to the detriment of a good man and wonderful church members. This 'article' is an embarrassment to this publication; enough is enough. |
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| Mar 28 20:29pm by Justin Abernathy, Roxbury [75.195.77.188] | |
What? A $45,000 monthly payroll...and they cant re-organize to pay the loan? And why a home in Milton? |
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| Mar 28 20:16pm by Deeply Concerned Clergy [75.195.77.188] | |
I am impressed with The Bay State Banner's coverage of this story nothwithstanding the potential conflict of interest. Howard Manly's reporting has been clear and even-tempered. He should commended for his high journalistic standard. Mr. Miller's editorials, on the other hand, have been somewhat aggressive and a bit unbalanced, but one can understand this given the fact he is a member of the board of directors for the OneUnited Bank. I am glad that Miller divulged this fact recently. What concerns me about this week's article is that it appears that Reverend Groover may have been caught in lies to the public, and in particular to his parishioners and his fellow clergy. When he says to the public that the church has not "missed" a mortgage payment he gives the impression that payments were made on time and fully. The Banner reports this week that according to court records, 46 of 56 mortgage payments were late and that two final payments were not made at all. When Reverend Groover made comments that payments were not "missed" I grew sympathetic to his plight and the position of other ministers who supported him. But now that seems to me to be a deception. If that is true, shame on you Reverend Groover and others among the black clergy which may have perpetuated this lie. I look forward to the Banner's continued coverage on this issue.
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related articles
The clock is ticking
The increasingly nasty legal fight between two of Boston's leading black institutions took a public turn for the worse last week. About 300 people packed the pews of Charles Street African Methodist Episcopal church to show support for the church and demand justice from OneUnited Bank, which is moving ahead on its plans to foreclose on church property.
Amid cries of hallelujah and praises to God Almighty, speaker after speaker, mostly members of the black clergy, told the jubilant crowd that the fight was not over, that somehow, someway, Charles Street would be able to maintain its property and finish construction on its proposed Roxbury Renaissance Center.
A bankrupt church strategy
The election of Barack Obama as president did not launch the post-racial America as many had hoped. While many racial attitudes have softened, the Republican campaign for a presidential candidate establishes that racial hostility is still very much alive. The campaigns of the conservatives often seem to be primarily efforts to organize the bigots to evict the black family from the White House.
Despite the flagrant racial adversity, some journalists have the temerity to suggest that there is no longer any need for black-owned banks in America. They apparently come to that conclusion because OneUnited Bank has been forced to foreclose an unpaid loan to Charles Street African American Episcopal Church in Boston.
