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U.S. bankruptcy judge continues Charles Street hearings

Howard Manly | 5/9/2012, 9:32 a.m.

A federal bankruptcy judge last week continued hearings until later this month on the latest motions in the case between Charles Street AME and OneUnited bank, two of Boston’s leading black institutions.

One of the motions, filed by OneUnited attorneys, asks Judge Frank Bailey to allow bank officials to question under oath officials from both Çharles Street and its regional affiliate First Episcopal District of the African Methodist Episcopal Church in order to determine the financial relationship between the two entities.

Corporate structure and financial management are two issues that have emerged in public hearings as a result of OneUnited’s efforts to collect about $4 million in outstanding loans from the church, the largest of which was co-signed by the First District.

At the time, the First District, based in Philadelphia, claimed it had $65 million in cash and nearly $500 million in assets.

In addition to OneUnited, Charles St. has listed in bankruptcy papers as many as 40 outstanding creditors, include $450,000 to Tremont Federal Credit Union and $620,000 to Thomas Construction Co., the Dorchester firm that was hired to build the Roxbury Renaissance Center on church property in Grove Hall.

Charles St. now claims it has only $15,000 in cash.

Another hearing is scheduled on May 22.

At ultimate issue is how to resolve the increasingly acrimonious dispute between OneUnited and Charles Street.

On Oct. 3, 2006, Rev. Gregory Groover Sr., who is also the Boston School Committee chairman, agreed to borrow money to build a 22,000-square-foot community center featuring a grand ballroom, multi-purpose meeting space, conference rooms, prayer and meditation space and sound proof musical practice rooms.

The $3.6 million 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 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.

Appointed to Charles Street in 1994, Groover has repeatedly said in several public appearances that the church didn’t miss a payment.

According to documents filed by OneUnited, Charles Street was late on 46 of its 59 payments. That “pattern of delinquency,” OneUnited stated, triggered 17 notices of intent to foreclose and forced Charles Street to pay about $17,000 in late fees.

In a recent lengthy interview, Groover acknowledged his responsibility. “For all the miscalculation, for the wrong steps, I take the blame, and I take the full responsibility,” he said in the published report. “Every day I toss and turn, feeling like I let my congregation down.’’

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 presiding Bishop, Richard Franklin Norris, to move at will money from one church to another — 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 branch faltered. Its chief financial officer at the time, Clarence Fleming, wrote a confirming memo to Amanda Feng, OneUnited’s Vice President for Asset Management.

“As discussed with you today,” Fleming wrote on Feb. 9, 2009, “the First Episcopal District does not track loan guarantees. The reason is that our practice is to rescue any one of the churches that is troubled, for that reason, we view each church as having a built-in guarantee.”