Lawyer demands escrowed funds; Mo. leaders reiterate stance
Apr 16, 2002
By Don Hinkle

JEFFERSON CITY, Mo. (BP)--"Ludicrous" is how one Missouri Baptist Convention leader described demands by an attorney representing trustees of a Baptist retirement community that the convention release $400,000 in escrowed funds previously earmarked for the entity.

The escrowed money was overwhelmingly approved by messengers to the Missouri Baptist Convention annual meeting in October after trustees of the three-facility Baptist Home voted to give themselves sole authority in selecting their successors, thus removing Missouri Baptist churches from the selection process. Messengers also approved escrowing funds to four other entities whose trustees voted to become self-perpetuating.

Attorney Jim Shoemake, representing The Baptist Home with the St. Louis-based law firm of Guilfoil Petzall & Shoemake, in a letter to Missouri Baptist Convention attorney Mike Whitehead demanded not only the release of escrowed money but threatened the MBC, its executive board and certain individuals with possible legal action if any of the escrowed funds are lost or diverted for any other purpose.

After asking for answers to several questions concerning the escrowed funds in his letter to Whitehead, Shoemake wrote, "Under the circumstances, and without the requested information, it is our opinion the withholding of funds from the institutions by the Convention is improper. We hereby make formal demand that the Convention pay these funds over to the institutions as originally intended. You can expect that The Baptist Home will take all necessary and appropriate actions to protect its interests and recover any funds that are being improperly withheld.

"In the event the funds suffer any loss or are diverted for any other purpose, the Convention, its Executive Board and any individuals responsible for such actions will be held accountable."

Shoemake's March 8 letter marks the second time in six months Guilfoil, Petzall & Shoemake attorneys -- acting in behalf of Baptist Home trustees -- have threatened legal action against MBC leaders. MBC-elected trustees were told they could face criminal trespassing charges if they attempted to attend the December meeting of Baptist Home trustees.

"I think it is ludicrous that he [Shoemake] would send that letter," said Gary Taylor, chairman of the MBC's Legal Task Force Committee and pastor of First Baptist Church, O'Fallon. "It's laughable. We're always being criticized as a committee and we haven't sued -- or threatened to sue -- anyone and this is the second time they've threatened us."

The Baptist Home, with an estimated $40 million in assets and endowment, consists of three retirement residences for Baptists age 65 and over. They are located in Ironton, Ozark and Chillicothe, each providing intermediate and residential care as well as independent living apartments for about 290 senior adults, according to the entity's Internet site.

"The Baptist Home ministries for the Aging is an extension of the churches of the Missouri Baptist Convention ... ," according to its mission statement at the website.

Despite the tone of Shoemake's letter, MBC President Bob Curtis, pastor of Ballwin Baptist Church, Ballwin, said the funds cannot be released without approval from MBC messengers.

"I think it's unfortunate and shows -- from the attorney's perspective -- that he doesn't understand Baptist polity," Curtis said. "Part of the reason we took the action we did was due to the MBC's Business and Financial Plan that says we give money only to institutions where we elect the trustees.

"We're trying to work through the process of answering Mr. Shoemake's questions [in his letter of demands], but I'm still putting my focus not on letters by attorneys, but rather on biblical reconciliation and restoration."

Curtis and Taylor confirmed that the presidents of the five entities where trustees have voted to become self-perpetuating -- The Baptist Home, Missouri Baptist College, Missouri Baptist Foundation, Word & Way newsjournal and Windermere Conference Center -- have agreed to meet with them in the near future to discuss the continuing controversy.

"We should sit down as brothers, in the spirit of Christ and deal with this," Taylor said. "That's the way it ought to be. We've been transparent, above table and we've told our attorneys, 'You work for us, we don't work for you.'"

Shoemake, in his letter to Whitehead, questioned whether the Missouri Baptist Convention has the authority to withhold funds from institutions when such funds were donated "with the expectation they would be passed on to the institutions to support their work."

"We are also concerned about how these funds are being held, invested and managed, and how secure they are," Shoemake wrote before asking nine questions:

"Where are the funds deposited?

"What are the terms of the 'escrow' arrangement, specifically, what are the provisions addressing the termination of the escrow arrangement?

"Who is the escrow agent?

"Please provide a copy of any escrow agreement(s).

"How are the funds being invested?

"What is the rate of return of the invested funds?

"In the decision to 'escrow' funds, what consideration did the Convention give to the intentions and expectations of the donors of these funds that the funds would be made available to the respective institutions on a timely basis?

"Were donors consulted to determine whether they had any objections to the 'escrow' arrangement?

"Has the Convention considered returning these funds to the donors so that the donors themselves may determine whether the funds they have contributed should be made available to the institutions?"

In a March 11 reply letter, Whitehead wrote, "Let me assure you that MBC considers the use of funds to be a matter of spiritual stewardship to God and to God's people. In receiving and disbursing every penny of God's money, the Convention follows biblical principles and congregational polity as expressed in its governing documents. The Convention has not diverted any charitable donation from any lawfully designated purpose. The budget allocation decisions made by the MBC in November 2001, including the escrow of certain agency funds beginning in Jan. 1, 2002, were lawful, ethical and consistent with basic Baptist principles of governance.

"As you know, an overwhelming majority of the messengers at the MBC annual meeting in November 2001 voted to escrow the money of the five agencies unless and until the agency boards rescinded their unauthorized charter changes and returned to the lawful former relationship under the authority and accountability of the MBC. This would require, as a minimum, that the boards recognize as lawful agency trustees those persons who were duly elected by the MBC in November 2001."

Whitehead pointed out that the MBC's decision to escrow was not done in secret, "in contrast to the votes by some agency boards to become self-perpetuating."

He told Shoemake that the Missouri convention's purposes and methods in doing cooperative ministry are widely known, have not changed and are set out in the MBC constitution, bylaws, Business and Financial Plan and other governing documents.

Shoemake's letter demanding that the MBC release the escrowed funds was disclosed by Whitehead less than a week after Baptist Press reported the legal opinions of three prominent Missouri law firms hired by the MBC to examine whether the trustee actions were illegal. All three, independently, came to the unanimous decision that the trustees violated Missouri law and that the five entities belong to the MBC, not the trustees.

MBC leaders have put the legal opinions on the MBC website and are preparing to mail them to the approximately 2,000 MBC churches throughout the state.

In his reply to Shoemake, Whitehead wrote that a large number of MBC donors are unhappy their donations have been diverted from their intended purpose as a result of the trustees voting to become self-perpetuating.

"These donors made gifts to the MBC, prior to November 2001, expecting that MBC would fund only what MBC controlled, and that MBC would keep control of what it owned," Whitehead wrote. "These donors expected that agencies receiving MBC funds would remain under the lawful authority and control of the MBC. Such donors have given many millions of dollars over many years of time in reliance upon this basic Baptist principle of cooperative ministry. Their expectations were violated, their donative intent ignored, when the Baptist Home board presumed to become independent and self-perpetuating. Board actions may well constitute an unlawful conversion of property, real and personal, for which responsible individuals should be held fully accountable."

Whitehead asked Shoemake and the trustees to answer several questions:

When Shoemake wrote, "... such funds were donated with the expectation they would be passed on to the institutions ..." Whitehead asked what funds were being described. "Are you referring to individual donors who made undesignated gifts through their churches, who in turn give to the Cooperative Program? Are you suggesting that their donations are, in effect, designated gifts?

"Are you referring to churches that made undesignated contributions to the Cooperative Program through the MBC? Are you suggesting that churches that make unconditional gifts to the CP are somehow still legally entitled to control the use of the gift, just as if it had been made with designations?

"Are you referring to donors who made gifts after the Cape Girardeau convention in November 2001? Is there something about the action by the Convention and the numerous communications to the churches thereafter that you believe was deficient so that donors lacked sufficient notice of the budgetary motions adopted by the MBC?"

A slim majority of trustees with The Baptist Home, Missouri Baptist College, Missouri Baptist Foundation, Word & Way and Windermere voted to become self-perpetuating as it became apparent that more conservatives would be joining their boards -- and ultimately gaining a majority -- after conservatives won the last four MBC presidential elections. Trustees with the Missouri Christian Life Commission, Hannibal-LaGrange College, Southwest Baptist University and the Missouri Baptist Children's Home have remained loyal to the state convention.

The trustees of the five entities in dispute said they acted only to protect the entities from politics and liability concerns. The three legal opinions obtained by the MBC debunked those motives.

Some of the trustees involved with the five entities are sympathetic to the new Baptist General Convention of Missouri and to the Cooperative Baptist Fellowship, formed a decade ago by moderates and liberals as a separate organization from the Southern Baptist Convention. The BGCM will hold its first convention April 19-20 at Fee Fee Baptist Church near St. Louis.