Friday, October 07, 2005
Cold Spring pastor admits theft
COVINGTON, Ohio - The Rev. Larry Davis admitted to stealing up to $730,000 over three years from First Baptist Church of Cold Spring as part of a plea agreement announced Thursday.
Davis is facing 24 to 30 months in prison and up to $199,000 in back taxes after pleading guilty in U.S. District Court to one count each of falsifying a loan application and income tax evasion.
By agreeing to a plea, Davis avoided a trial set to begin next month and the possibility of being sentenced to the maximum of 30 years in prison and a $1 million fine just on the charge of falsifying a loan application.
Prosecutors dropped three counts of income tax evasion and two counts of transferring stolen church money across state lines to buy a used Porsche 911 and minivan.
As U.S. District Judge David Bunning read the plea agreement from the bench, he looked up at Davis and asked what exactly he was spending all the extra cash on. But before Davis could answer, his lawyer, Patrick Hanley, stepped in and said it was "personal use."
Davis declined to speak with reporters as he left the courthouse. He remained the church's pastor as of Thursday evening, member John Roseberry said. At a prayer service 14 hours before his court appearance, Roseberry said Davis did not tell his congregation about his plea.
Darryl Neltner, the former treasurer of First Baptist who alerted police to the missing church money, was among the half-dozen people who attended the court hearing. Neltner declined to comment, but other former church members said the scandal has ripped the once influential and growing church apart. Davis and the church were once best known for helping bring the Billy Graham Crusade to Cincinnati in 2002
Stuart Oehrle is among 400 members who left the church since the scandal.
"Larry Davis could have gotten up in front of us and admitted he did something wrong and asked for help," said Oehrle, who is also a Cold Spring city councilman. "Instead, he allowed the congregation to divide and polarize as people took sides. That's what ultimately led to the division of the church."
Hundreds left and formed a new church, Christ Baptist, about a half-mile away.
"Our hope ... is that the plea will help people who are hurting by bringing closure to the situation," said Dan Reynolds, spokesman for 416-member Christ Baptist Church. "But our other prayers are with those who are unchurched and lost. We don't want this to prevent them from having a relationship with God."
He said the plea will allow members of both churches to focus more on God's work.
After Neltner's letter to police in January 2004 questioning how Davis handled church money, authorities launched a 14-month federal investigation.
The investigation and resulting plea agreement outlined an elaborate scheme to divert money from the church's building campaign for Davis' personal use.
More than $7,000 was withdrawn from automated-teller machines at horse racetracks, according to Neltner. Another $7,243 went to a Southern Ontario sporting goods store specializing in hockey gear, Kohl's department store and an Internet-based personal investment account, according to the plea agreement.
Court papers indicate Davis diverted the money without detection from 2000 to January 2004 by appointing himself as general contractor to an ambitious building program the congregation had undertaken.
In addition to paying contractors, Davis was writing checks to himself and withdrawing cash at automated-teller machines.
Then, in September 2003, when building construction went over budget, there was not enough money in the construction account to cover the costs. Davis then forged documents to get an additional $500,000 from a multimillion-dollar line of credit the church had with Fifth Third Bank.
Davis convinced Fifth Third to give him the additional $500,000 by submitting a fake resolution he said was approved by the congregation authorizing the $500,000 loan, according to the plea agreement. The resolution was on the church's letterhead and Davis forged the signature of an unidentified church member.
Court records state Davis admitted to the member that he had forged the signature after the criminal investigation was launched. Davis also told loan officers that the church owed contractors more than $160,000 - but they had already been paid with existing church money, according to court records.
When trying to get the loan, Davis told bank officials that a Dayton, Ohio, trucking company was owed $60,583, but the plea agreement said the company is owned by a friend of Davis and didn't work on the church's construction project.
Davis even told the bank that the church owed him $71,130, a statement federal prosecutors now say was false.
Davis was diverting so much money to himself that his taxable income ballooned. It went from an estimated $86,111 in 2000 to between $300,000 and $400,000 in 2003, according to court documents. Federal prosecutors estimate Davis owes $80,000 to $108,000 in taxes for 2003 alone.
Current members of First Baptist Church gathered at the congregation's 1,300-plus-seat sanctuary on U.S. 27 Thursday evening directed a reporter's questions to Jeff McCarthy, chairman of the deacons.
McCarthy didn't return a phone call left at his home Thursday evening.
"Nothing will drive me from the church," John Roseberry, the immediate past chairman of the trustees at First Baptist Church of Cold Spring, said when reached at home. "I've been a church member for more than 30 years."
See also, the never-ending chronicle of church-related crime.
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