Business

Charles St. pastor says $825,000 was misspent

In a full day on the witness stand as the Charles Street African Methodist Episcopal bankruptcy case returned to court Monday, the Rev. Gregory Groover acknowledged that the church had misused $825,000 of restricted endowment funds to meet expenses over nearly five years.

The amount was far more than church leaders had acknowledged in prior hearings in US Bankruptcy Court in Boston. The Lilly Endowment funds were earmarked for a residency program for pastors in training.

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Lawrence Edelman, a lawyer for OneUnited Bank, questioned the pastor of the historic church at length about monthly financial statements showing negative cash flow since Charles Street AME began struggling with nearly $5 million in loans owed to the bank. The lawyer also called the spending of the endowment funds fraud, an allegation Groover denied.

“I’m deeply sorry for that but I would not consider it a fraud,” Groover said. The church’s lawyer, Ross Martin, said the money went to cover expenses, including a large amount paid to the bank.

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Groover took responsibility for the misspending of the funds, which he has previously promised the church would repay. “What we did was wrong. We should not have done it,” he said.

Charles Street AME filed for bankruptcy protection last year, as OneUnited threatened to auction off the Roxbury church. Since then, the church has created lay committees to improve its finance policies and procedures, introducing such rules as requiring two people to sign checks, rather than the pastor.

Groover testified that the church also has frozen hiring, reduced some staff, and cut pay as expense control measures. As part of its reorganization plan, the church would turn over to the bank a house in Milton that was used by prior pastors. Currently, the house is vacant and in disrepair.

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The bank has argued that the church does not have the means to repay its debts and complete construction of a nearby community center that is at the root of the financial battle.

Beth Healy can be reached at bhealy@globe.com.
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