Lyons arrested

St. Petersburg Times, February 27, 1998
By Monica Davey

ST. PETERSBURG -- Pinellas-Pasco prosecutors charged Baptist leader Henry J. Lyons with racketeering and grand theft on Wednesday, alleging that he and several aides in the National Baptist Convention USA Inc. used fraud and extortion to steal millions of dollars.

Lyons turned himself in at the Pinellas County Jail at 3:15 p.m. and was released in lieu of $100,000 bail about 20 minutes later.

Wednesday night, Lyons told his congregation during regular church services that he did not understand the charges against him and complained about how much his attorneys are costing him. But he praised Sheriff Everett Rice for the way he was treated at the jail.

At one point during the service church members stood and applauded him. "My name will be cleared," Lyons told the congregation.

Attorney Grady Irvin declined to respond to any of the specific allegations contained in the three-count information or an 82-page affidavit seeking a warrant for the arrests of Lyons and Bernice Edwards, a former convention employee who was taken into custody Wednesday night in Wisconsin.

Lyons is charged with one count of violating the Racketeer Influenced and Corrupt Organization Act, a first-degree felony, and two counts of grand theft, also felonies. Edwards, a convicted embezzler, is named as a co-defendant in the racketeering count.

If convicted as charged, Lyons would likely face a prison term of less than 10 years, lawyers said.

Pinellas-Pasco State Attorney Bernie McCabe, whose office began investigating Lyons last July, declined to comment.

The arrest affidavit, written by David A. Kurash, an investigator for McCabe, accuses Lyons of using the good name of the National Baptist Convention USA to swindle millions of dollars from big corporations by inflating the convention's membership. It accuses him of selling one company a list of black church members so patently phony that it included an official of the Ku Klux Klan.

It accuses him of taking thousands of dollars intended for burned churches and instead spending it on himself, his family and an employee described as his "paramour."

It says he invoked his friendship with President Clinton to extort a half-million dollars from one company.

Around noon Wednesday, Lyons' attorneys, family members and parishioners began gathering at the St. Petersburg offices of one of his lawyers. Just before 3 p.m., Lyons, seated beside his wife in the back of an Infiniti sport utility vehicle, rode in a caravan of lawyers and reporters to the Pinellas County Jail. His daughter, Vonda, drove.

Lyons looked serious but relaxed as he entered the booking area with his lawyers. Attorney F. Lee Bailey put his arm around Lyons as he stepped into a fingerprinting and photographing section.

Deborah Lyons sat beside her daughters and church members on benches in the waiting area of the jail. "We're standing on God's promises," Mrs. Lyons said.

Twenty minutes later, Lyons emerged. Mrs. Lyons rushed to stand hear him. "Pray for us," she said to watching reporters. Are you supporting your husband, a reporter asked? "All the way."

In Milwaukee, Edwards was arrested Wednesday evening, about an hour after Milwaukee authorities received the warrant from Florida. Bail was set at $50,000. She had not been released from the jail late Wednesday, jail officials said.

Today she is scheduled to appear before a judge. There she can request a hearing if she wants to fight extradition to Florida. Neither Edwards nor her attorney could be reached for comment.

Membership lists

Lyons and Edwards are accused of using wildly inflated NBC membership numbers and phony claims of a membership list to make deals with large corporations. The companies were eager to sell their products to African-Americans and were pleased when Lyons, Edwards and other partners offered them access to an NBC mailing list

"These agreements essentially involved Lyons and/or NBC endorsing their service, or product, in exchange for large payments and/or contributions to the NBC," the affidavit says. "Most of the funds, after being deposited to the NBC Baptist Builder bank account, were then diverted" to Lyons and several aides. "The NBC Baptist Builder bank account was used to "launder' the funds."

The list of NBC members that Lyons and his partners tried to peddle to companies, the affidavit says, was a "complete hoax and does not exist." In truth, no mailing list of NBC members existed with the exception of "a few thousand names in a computer."

So Lyons told his employees to make one up, the affidavit says. Lyons and his employees pulled names from other groups, old business cards, anywhere. "Most of these people on the list were not Baptist or NBC members, and many were not black," Renee Fagans, a former employee of NBC convention official Brenda Harris, told the investigators.

Lyons' membership claims also were wrong, the affidavit says. Though Lyons and his partners represented the NBC as the largest black Baptist group with 8.5-million members, the group is far smaller.

"Everyone knew that wasn't true," Lynda Shorter, Lyons' former assistant, told investigators. "Lyons would just make up a figure for the number of churches in a particular state, and he would then make up a figure for how many members in each state." Lyons chuckled as he made up the numbers, Shorter said.

"The companies . . . relying on Lyons, Bernice Edwards and (Palatka minister Fred) Demps' representations, paid millions of dollars to the NBC. The victims then lost all or substantially all of their funds," the affidavit stated.

In 1995, officials at Globe Accident and Life Insurance Co. of Oklahoma City met with Lyons and Edwards. The company wanted to market its insurance to Baptists, and Lyons said he wanted to help his members because it "saddened him when a member died and there was little or no insurance to provide a proper burial for the deceased."

A deal was struck. Globe paid $400,000 for a list of names and addresses.

But Globe's promotional mailing was a disaster. The mailing list didn't seem to be reaching black Baptists. The chairman of the board of Globe's parent company, who was not a member of the NBC, received the mailing. So did other Globe employees. So did an Imperial Wizard of the Ku Klux Klan.

Told of the concerns, Lyons told Globe officials it wasn't his fault; someone had purposely sabotaged the membership list after he won a hard-fought election in 1994.

Hoping the contract could be salvaged, Globe gave Edwards and Lyons a second chance: For an additional $600,000, Globe would get "exclusive use" of the NBC's list for three years. Lyons and Globe officials signed another contract. Again, the mailing list was a mess, the affidavit says.

Robert Richey, Globe's representative on the NBC project, told authorities that Lyons and the NBC "defrauded" Globe for more than $1-million and that the project was the worst he had ever been associated with.

The company's president, Mark McAndrew, said it was the "worst business deal he has ever been involved in."

The Loewen Group

According to the affidavit, Lyons and Edwards also extorted and defrauded millions of dollars from the Loewen Group, a large Canadian funeral company, then used the money to finance six-figure spending sprees on clothes, jewelry and real estate

As Lyons and Loewen negotiated a partnership to market Loewen products, Lyons solicited several "contributions" for the convention, including $70,000 for his "Christian Education Fund" and $100,000 for a new drug rehabilitation program. According to one Loewen executive, "Lyons told him if Loewen Group would make the contribution to the drug rehabilitation program, he would set up a meeting between Ray Loewen, the corporate chairman, and President Bill Clinton."

Much of the money from those contributions ended up with Lyons or his friends, the affidavit alleges. Days after one $30,000 contribution, Lyons transferred $25,500 into his personal savings account, the affidavit states. Days after the $70,000 donation for the education fund, Lyons wrote checks to himself for $50,000, to Edwards for $10,000 and to a company owned by Harris for $8,939.

As for the $100,000 contribution for drug rehabilitation, "there are no withdrawals which can be identified as relating to any "drug rehabilitation' program." But there were checks for jewelry, hotel bills and private school tuition for Edwards' daughter.

In late 1995, Loewen was hit by a $500-million judgment in a Mississippi civil suit. The suit threatened to bankrupt the company. According to two Loewen executives, Larry Miller and Tim Hogenkamp, Lyons and Edwards called after the verdict to offer some unusual help. Lyons, they said, offered to use his "connections" in Mississippi to get the verdict reversed.

"Miller said Lyons and (Edwards) stated that it would cost up to $2-million; that they would have to pay various retainers and otherwise to hire the "right people,' such as investigators and lawyers."

In January 1996, Loewen settled the Mississippi suit for $175-million. Days later, Lyons and Edwards called the Loewen executives, the affidavit states.

"Where is our money?" they asked, according to the executives. "You authorized us to spend $2-million and we have already spent the money."

Prosecutors found no evidence that Lyons hired any lawyers or investigators in Mississippi to help Loewen.

The Loewen executives asked for receipts. Lyons and Edwards said receipts were on the way. The executives "trusted Lyons" and "believed he was "the black Pope' " so they sent $500,000 to a bank account in Milwaukee. Lyons and Edwards provided "the name and bank routing number" of the account, held under the name J.H. Associates at the Guaranty Bank.

This account, the affidavits allege, "was nothing more than a "hidden' personal bank account used to "launder' the funds obtained from the Loewen Group."

No receipts came, so Loewen sent no more money.

Weeks later, Lyons and Edwards called again.

"I want my money or I am prepared to call a press conference terminating our agreement," Hogenkamp quoted Lyons as saying. Hogenkamp said Lyons threatened to "denounce the company in very unfavorable terms" and to instigate an investigation of Loewen by members of the Congressional Black Caucus.

"Hogenkamp stated that he believed he was being blackmailed," the affidavit states.

Loewen wired another $500,000 to the J.H. Associates account.

According to the affidavit, Lyons and Edwards used the $1-million in this account to finance the purchase of a $700,000 home on Tierra Verde. Edwards told a Realtor that "she and Lyons were going to live at the house." Edwards also dipped into the money for $60,000 in "expensive clothing," $53,000 for jewelry and $28,500 for furniture.

Black colleges

The affidavit says Lyons often promised to turn over money from corporations to traditionally black colleges. Instead of supporting education, Lyons deposited most of the money into the Baptist Builder Fund "and not (in) any "Education Fund,' " the report says

In one instance, Lyons solicited a $600,000 donation from United American Insurance Co., an affiliate of Globe, saying he was going to give the money to Selma University in Alabama. He said the school "was in dire financial condition and was about to close," the report says.

Lyons deposited the $600,000 into the Baptist Builder Fund on Oct. 24, 1995. Two days later, he sent $266,000 to a secret Milwaukee bank account controlled by Bernice Edwards. Two days after that, he wrote a $50,000 check directly to Edwards. He used $20,000 to buy a luxury time-share condominium for himself and Edwards. And he deposited $55,000 into his personal accounts.

Within 10 days, $463,700 of the $600,000 was gone -- and none of it went to Selma University.

In his public statements, Lyons grossly overstated the sums the convention gave to the colleges, the report says. For example, he said he gave $40,000 to Florida Memorial College in Miami, but Kurash says only $9,000 in Baptist Builder Fund checks went to the school. Several schools that Lyons said received donations of $2,500 received no money at all.

In all, Lyons claimed the convention gave $1.65-million. But Lyons wrote only $287,000 in Baptist Builder Fund checks to black colleges, the report says.

Though Lyons also claimed he gave tens of thousands of dollars of his own money to the colleges, all the known personal bank accounts of Henry and Deborah Lyons showed only two checks made payable to colleges or seminaries, the affidavit says. The total: $1,500.

Burned churches

Prosecutors also charged Lyons with two counts of grand theft, accusing him of stealing thousands of dollars intended to help burned churches

Lyons kept $60,000 for himself, according to the affidavit. And Lyons gave more than $25,000 of the money for the burned churches to a woman the affidavit identifies as "Lyons' paramour," Brenda Harris, the NBC conventions and meetings director.

Lyons gave another $4,000 of the money to "an interior decorator for decorating services at his personal residence in St. Petersburg," Kurash wrote.

In November 1996, the Anti-Defamation League presented Lyons with a check for $225,000 to be given to Southern churches that were burned down.

Two weeks later, Lyons asked for more money from the ADL for burned churches. ADL officials asked him to account for how he spent the first contribution. Lyons sent ADL officials a letter naming six Alabama churches that he said had been given $35,000 each. The letter was false.

When Lyons got the ADL money, he could have put it in an existing NBC account specifically earmarked for burned churches, Kurash wrote. Instead, he put it all into a secret account at the United Bank in St. Petersburg called the Baptist Builder Fund.

Lyons has refused to answer prosecutors' questions about his finances or to turn over any financial records, Kurash wrote, but investigators found that after Lyons wrote the checks to three churches totaling $39,000, he "then used much of the ADL funds for his own use."

Not a dime went to any other churches, even though they desperately needed money to rebuild, Kurash wrote. Instead, Lyons took $60,000 for his own bank account, then transferred money out of that account to an investment account he had at Raymond James, the investigator wrote.

According to Kurash, some of the rest went to three of the women in his life: $25,300 for Harris; $12,177 to his wife, Deborah; $2,094 went to his daughter, Stephanie Lyons.

Lyons also spent $4,000 to pay off his own credit card bills, Kurash wrote.

In fact, right after he asked the ADL for more money, Lyons and Edwards bought a new 1997 Mercedes S600V using $37,500 from the Baptist Builder Fund, Kurash noted.

Harris' assistant, Renee Fagans, told Kurash "that Henry Lyons had told her that he was in love with Brenda Harris and that he was going to marry her." Fagans said Harris bragged "that she and Lyons were going to be married as soon as he could "get rid of his alcoholic wife.' "

Lyons and Harris once took a trip to New York together, Fagans said, "and he bought her a very expensive mink coat, as well as repeatedly sending her very substantial amounts of money."

From June 1995 to July 1997, Lyons sent Harris at least $523,370 from the Baptist Builder Fund and other NBC accounts, Kurash wrote. He also sent her another $100,000 from an NBC Convention bank account, but some of that may have been related to her travel agency, Kurash wrote.

Times staff writer Craig Pittman, Mike Wilson, David Barstow, Jounice Nealy and researcher Carolyn Hardnett contributed to this report.