Groover: ‘Mistakes were made’ in church finances

Howard Manly | 8/22/2012, 10:16 a.m.
Charles Street AME pastor Gregory G. Groover Sr. admitted last week that he deliberately misled his congregation, politicians and the media about his handling of church finances. Sandy Middlebrooke

In often embarrassing testimony, Rev. Gregory Groover Sr. admitted before a bankruptcy judge last week that he had a “problem” managing the church’s finances and he deliberately misled his congregation, politicians and the media by publicly stating that he had never missed a payment to his main creditor, OneUnited Bank.

Groover admitted that he made “erroneous” statements about OneUnited, the nation’s largest black-owned bank and the only institution that agreed to lend him nearly $5 million to not only build a community center in Grove Hall but also to consolidate the church’s then existing debt.

The testimony of Groover, who is also Chairman of the Boston School Committee, now confirms what OneUnited bank attorneys initially described as Groover’s “gross, severe financial mismanagement” in the handling of a $3.6 million construction loan and a $1.1 million debt consolidation loan to Charles Street AME church.

The construction loan was to help pay for 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.

Groover said that he would raise money by renting space for wedding receptions and community meetings. The Roxbury Renaissance Center is still not completed.

Although Groover publicly denied any delinquency , the church was late on 43 of its 56 payments and missed its final two payments, according to court records. That “pattern of delinquency,” OneUnited stated at the time, triggered 17 notices of intent to foreclose and forced Charles Street to pay about $17,000 in late fees.

The construction 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.

But even then, OneUnited bank officials were trying to keep the church on track. OneUnited President Teri Williams testified last week that she arranged meetings with Groover and potential donors, including officials from Fidelity Investments and the Boston Symphony Orchestra, to no avail.

Williams also testified that the bank would have never approved the loans based solely on the church’s finances, but instead relied on the co-signer of the construction loan, the First District AME church, which claimed at the time to have at least $19 million in cash.

“We would not have done the loan without the guarantee,” Williams testified.

Just how much authority Charles Street has over its own affairs remains unclear given the by-laws of its regional governing authority. Those rules enable the First District presiding Bishop, Richard Franklin Norris, to move money from one church to another at will — and move money from one church to the First District.

In letters to OneUnited, submitted as exhibits in the bankruptcy hearings, the First District assured OneUnited officials that it would step up if its local church faltered. Its chief financial officer at the time, Clarence Fleming, wrote a confirming memo to Amanda Feng, OneUnited’s vice president for asset management.