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Charles Street’s cash transfers subject of bankruptcy hearing

Howard Manly | 2/27/2013, 6 a.m.

Making matters worse, they listed the transferred money as income under the headings “special activity” or “general offering” on Groover’s annual pastor reports.  

Adams testified that the transfers were Groover’s idea and that he authorized them. In explaining why a transfer of funds would be considered income, Rev. Adams had the following exchange with OneUnited bank attorney Lawrence Edelman.

“As far as I’m concerned,” Adams explained, “income is the way I reported it on my reports. I use whatever funds are used to take care of expenses.”

Groover and Adams further testified that they did not tell Lilly Foundation that they were transferring money. In fact, Groover appeared confused on whether he should tell Lilly. “I intend to think about it and I intend to do the right — as always, the right thing,” Groover testified. When asked what was the right thing, Groover testified, “I’ll need to think about it.”

The relationship between OneUnited and Charles Street started on Oct. 3, 2006 when Groover agreed to borrow $3.6 million to build a 22,000-square-foot community center on church-owned land near Grove Hall.

Called the Roxbury Renaissance Center, the building would feature a grand ballroom, multi-purpose meeting space, conference rooms, prayer and meditation space and sound proof musical practice rooms. To pay for the construction, Groover said that he would raise money by renting space for wedding receptions and community meetings.

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

Charles Street had also borrowed another $1.1 million, separate from the $3.6 million construction loan. That loan is also in default.

As part of its initial defense, Charles Street attorneys argued in legal documents that 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 [a] loan made [according] to prudent lending standards.”

To forestall the pending foreclosure of its property by OneUnited Bank, Charles Street filed for bankruptcy in March in a move to keep the church operating as it has for nearly the last two centuries.

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.

Under oath during bankruptcy proceedings, Groover has admitted that “mistakes were made.”