A Richmond pastor is under fire for allegedly misusing money in his church’s bankruptcy estate. Photos by Evelyn Rupert.
Two new lawsuits have spawned from the bankruptcy proceedings of a local church, including allegations that its pastor and his relatives may have used the church’s assets to acquire cars, real estate and offshore accounts.
The trustee overseeing the Chapter 11 bankruptcy case of the Richmond Christian Center has sued the church’s pastor, Stephen A. Parson Sr., his sons Stephen Jr. and Mark, and several other defendants in an attempt to recover as much as $3 million for the bankruptcy estate.
The church was put into Chapter 11 in attempt to avoid foreclosure of its Cowardin Avenue sanctuary and to potentially restructure its finances and remain in its Southside home.
Rather than preserving the church’s assets, LeClairRyan attorney Bruce Matson, who was appointed trustee of RCC’s case in January, claims in the March 31 lawsuit that Parson Sr. and others made numerous unauthorized transfers of church funds after it was already in bankruptcy.
The Richmond Christian Center is located at 214 Cowardin Ave.
Among the transfers was $54,226 that supposedly was being used to help the church begin to refinance its debt.
In fact, the case alleges, the pastor transferred the money to ultimately be used to buy a residential property in Akron, Ohio, for one of his relatives.
Another $25,000 was allegedly transferred from the church to the pastor and Mark Parson. That money was then deposited in foreign exchange accounts through a brokerage in the Caribbean island nation of Dominica, the suit claims.
The church estate, while under Chapter 11 protection, also paid for the lease of two BMWs for the pastor and Mark Parson. Mark Parson has since returned the vehicle to the church, court records show, but he failed to maintain the vehicle and its repossession was imminent as of February.
The elder Parson, according to the suit, remained in possession of the other BMW as of February. The lawsuit claims he had refused to assume the lease payments, which were in arrears, and the car is approaching repossession.
The case argues that the transfers of funds were not in the usual course of the church’s business and were made without the bankruptcy court’s permission, a necessary step while the organization remains in Chapter 11.
Several of Parson Jr.’s companies, including SP-RCC Properties, YES Behavioral Health and Life Changers Mental Health and Supportive Services of Virginia, are also named as defendants in the case.
Those companies had agreements to lease some of the real estate RCC owned around its Cowardin Avenue church and to make the monthly rent payments directly to the church’s main lender, Foundation Capital Resources. Those payments were abruptly stopped in April 2013, the case alleges, and more than $3 million in rent and late fees is owed.
The case then claims those companies unlawfully removed HVAC units and kitchen and office equipment from the properties.
The church property went through an auction in November.
Also named as defendants in the case are Florida-based Commercial Mortgage City Corp., its president Jeffrey Lustbader and KSUS Group of New York and its general partner Ken Stevenson.
They received funds from RCC for the potential refinancing of the church’s debt. But no refinance occurred, and those two companies continue to unlawfully hold the church’s funds, the case claims.
The trustee’s case is asking a federal judge to force the defendants to turn over the money and assets to the bankruptcy estate.
If Matson succeeds in his efforts, he said he believes the RCC congregation, which still has a few hundred members and actively holds services in the church each week, has a chance for a financially stable future.
“Essentially, my recommendation was that there seemed to be a realistic possibility to restructure so the congregation could stay together and move forward,” Matson said. “That’s what we’ve been doing.
“The congregation has shown a real willingness to stand by the church in the future,” Matson said. “They’ve shown, despite some adversity, to be very faithful.”
He sees three sources of revenue that could help the church satisfy creditors and keep it afloat going forward: contributions from members each week, money he hopes to get back through the lawsuit, and pending lease agreements to rent out some of the church’s unused facilities. That includes leasing the church’s kitchen facility to a chef and its gymnasium property to another tenant.
“Between those three sources, we will put together a plan that allows the church to restructure its debts and continue in existence,” Matson said, adding that he’s aiming to have a reorganization plan in place by the summer.
The church owes Foundation Capital about $2.3 million, according to court records.
One other obstacle for the church remains. A second lawsuit was filed April 8 in Richmond federal court by Mountain of Blessings Christian Center, an eastern Henrico congregation that was the winning bidder in an auction of RCC’s real estate held last year.
The court approved the sale and the price of $2.15 million, but the deal has yet to close at Matson’s discretion as the overseer of the church’s finances. Mountain of Blessings has sued to try to force Matson’s hand or to seek up to $2.73 million in damages.
“The purpose of the present litigation is to buy the property,” said Bill Baldwin, an attorney with Thorsen, Honey, Baldwin & Meyer, who is representing Mountain of Blessings. “The church is ready to buy the property. We have a court-approved deal and we’d like to close. We believe the trustee is required to carry out the deal.”
Matson maintains that a sale of the property is not in RCC’s best interest.
Meanwhile, Pastor Parson’s status with the church remains in limbo.
He was removed from the church’s board in February, and court records show he has taken a sabbatical from preaching.
Matson said that’s an issue that the congregation will work through on its own.
“I think that issue is still up in the air,” Matson said. “I understand he is meeting with the congregation. I’m not going to tell them who should be their worship leader.”
A Richmond pastor is under fire for allegedly misusing money in his church’s bankruptcy estate. Photos by Evelyn Rupert.
Two new lawsuits have spawned from the bankruptcy proceedings of a local church, including allegations that its pastor and his relatives may have used the church’s assets to acquire cars, real estate and offshore accounts.
The trustee overseeing the Chapter 11 bankruptcy case of the Richmond Christian Center has sued the church’s pastor, Stephen A. Parson Sr., his sons Stephen Jr. and Mark, and several other defendants in an attempt to recover as much as $3 million for the bankruptcy estate.
The church was put into Chapter 11 in attempt to avoid foreclosure of its Cowardin Avenue sanctuary and to potentially restructure its finances and remain in its Southside home.
Rather than preserving the church’s assets, LeClairRyan attorney Bruce Matson, who was appointed trustee of RCC’s case in January, claims in the March 31 lawsuit that Parson Sr. and others made numerous unauthorized transfers of church funds after it was already in bankruptcy.
The Richmond Christian Center is located at 214 Cowardin Ave.
Among the transfers was $54,226 that supposedly was being used to help the church begin to refinance its debt.
In fact, the case alleges, the pastor transferred the money to ultimately be used to buy a residential property in Akron, Ohio, for one of his relatives.
Another $25,000 was allegedly transferred from the church to the pastor and Mark Parson. That money was then deposited in foreign exchange accounts through a brokerage in the Caribbean island nation of Dominica, the suit claims.
The church estate, while under Chapter 11 protection, also paid for the lease of two BMWs for the pastor and Mark Parson. Mark Parson has since returned the vehicle to the church, court records show, but he failed to maintain the vehicle and its repossession was imminent as of February.
The elder Parson, according to the suit, remained in possession of the other BMW as of February. The lawsuit claims he had refused to assume the lease payments, which were in arrears, and the car is approaching repossession.
The case argues that the transfers of funds were not in the usual course of the church’s business and were made without the bankruptcy court’s permission, a necessary step while the organization remains in Chapter 11.
Several of Parson Jr.’s companies, including SP-RCC Properties, YES Behavioral Health and Life Changers Mental Health and Supportive Services of Virginia, are also named as defendants in the case.
Those companies had agreements to lease some of the real estate RCC owned around its Cowardin Avenue church and to make the monthly rent payments directly to the church’s main lender, Foundation Capital Resources. Those payments were abruptly stopped in April 2013, the case alleges, and more than $3 million in rent and late fees is owed.
The case then claims those companies unlawfully removed HVAC units and kitchen and office equipment from the properties.
The church property went through an auction in November.
Also named as defendants in the case are Florida-based Commercial Mortgage City Corp., its president Jeffrey Lustbader and KSUS Group of New York and its general partner Ken Stevenson.
They received funds from RCC for the potential refinancing of the church’s debt. But no refinance occurred, and those two companies continue to unlawfully hold the church’s funds, the case claims.
The trustee’s case is asking a federal judge to force the defendants to turn over the money and assets to the bankruptcy estate.
If Matson succeeds in his efforts, he said he believes the RCC congregation, which still has a few hundred members and actively holds services in the church each week, has a chance for a financially stable future.
“Essentially, my recommendation was that there seemed to be a realistic possibility to restructure so the congregation could stay together and move forward,” Matson said. “That’s what we’ve been doing.
“The congregation has shown a real willingness to stand by the church in the future,” Matson said. “They’ve shown, despite some adversity, to be very faithful.”
He sees three sources of revenue that could help the church satisfy creditors and keep it afloat going forward: contributions from members each week, money he hopes to get back through the lawsuit, and pending lease agreements to rent out some of the church’s unused facilities. That includes leasing the church’s kitchen facility to a chef and its gymnasium property to another tenant.
“Between those three sources, we will put together a plan that allows the church to restructure its debts and continue in existence,” Matson said, adding that he’s aiming to have a reorganization plan in place by the summer.
The church owes Foundation Capital about $2.3 million, according to court records.
One other obstacle for the church remains. A second lawsuit was filed April 8 in Richmond federal court by Mountain of Blessings Christian Center, an eastern Henrico congregation that was the winning bidder in an auction of RCC’s real estate held last year.
The court approved the sale and the price of $2.15 million, but the deal has yet to close at Matson’s discretion as the overseer of the church’s finances. Mountain of Blessings has sued to try to force Matson’s hand or to seek up to $2.73 million in damages.
“The purpose of the present litigation is to buy the property,” said Bill Baldwin, an attorney with Thorsen, Honey, Baldwin & Meyer, who is representing Mountain of Blessings. “The church is ready to buy the property. We have a court-approved deal and we’d like to close. We believe the trustee is required to carry out the deal.”
Matson maintains that a sale of the property is not in RCC’s best interest.
Meanwhile, Pastor Parson’s status with the church remains in limbo.
He was removed from the church’s board in February, and court records show he has taken a sabbatical from preaching.
Matson said that’s an issue that the congregation will work through on its own.
“I think that issue is still up in the air,” Matson said. “I understand he is meeting with the congregation. I’m not going to tell them who should be their worship leader.”