By Patrick Crowley
The Cincinnati Enquirer

COLD SPRING - The Rev. Larry Davis spent money from a Baptist church construction fund because he was owed more than $100,000 in back pay, a church trustee said Sunday.

Rob Moore, a trustee at the First Baptist Church of Cold Spring, said Davis has told him about the church's delinquency in paying his salary. Moore added that he did not have immediate access to the financial records and was unable to provide specifics on Davis' financial situation with the Campbell County church.

"This can be explained, and it will be explained," Moore said Sunday. "Larry Davis was owed money, and that's the issue here."

New instances of questionable spending on gambling services, restaurants, hotels and apparel has turned up on the church's financial statements from late last year.

The November and December financial statements also show large cash withdrawals, including $10,000 in cash to Larry Davis, who at the time controlled the construction account.

The new information comes to light as the church faces a deadline today for paying off its $4 million mortgage to Fifth Third Bank.

The church is current on the loan, but on March 10 it received a letter from Fifth Third saying that unless the mortgage was paid off by today, the bank would begin foreclosure proceedings.

The letter from attorney Alan J. Stratman said Fifth Third Bank is concerned the church might not have spent its loan money according to the terms of its contract. He also cited "a material adverse change" in the church's financial condition.

"The borrower has engaged in false, misleading and materially inaccurate representations when it certified that the proceeds of the loan were to be used solely for construction of improvements on the real estate securing this note," the letter said.

Church officials and lawyers have said they will talk to the bank today and try to hold off the foreclosure.

The Kentucky State Police and the Campbell County Grand Jury have launched investigations into spending from the construction account that was listed on the January bank statement.

Fifth Third Bank had previously identified $500,000 in questionable spending at horse tracks, at online gambling sites and at a Detroit casino.

The November and December statements, obtained over the weekend by the Enquirer, have been reviewed by church deacons and trustees and are to be presented to the 1,200-member congregation during a scheduled Wednesday night business meeting.

The November and December statements show the following expenditures:

• $2,424.95 to Ifund Transactions, DRF (Daily Racing Form) Data Services the Gold Sheet, which are Internet sites providing gambling and gambling tips on horse racing and professional and college sports.

• $50,000 transfer to Provident Securities, a stock brokerage.

• $144.21 to a Hilton Hotel. The location is not identified.

• $183.54 to Moyer Restaurant & Winery in Manchester, Ohio, about 60 miles east of Cincinnati.

• $10,000 to Davis and another $9,666.67 transaction referenced as "cash."

• $4,202 in ATM withdrawals.

• $60,000 to "Spring Arbor." The entry is not explained, but there is a Spring Arbor University in Michigan that bills itself as a liberal arts Christian university.

• Purchases at retailers including Macy's ($208.30), Filenes Basement ($330.11), Fella Bella Shop, a children's apparel store in New York City, $144.02, and Stein-Mart ($171.18).

• $431.49 to Alamo Rent a Car.

Davis no longer controls the account and has denied any wrongdoing. And while the grand jury has issued search warrants for his church-provided Cold Spring home, Davis has not been named as a suspect or charged with any crime.

Newport lawyer Jim Morgan, Davis' attorney, said Sunday that he had not seen the financial statements but is aware of some of the spending from the construction account that Davis controlled at the time.

"I've heard those things before," Morgan said. "Without getting into the nitty gritty of those transactions (Davis) has provided me with what appears to be an explanation for the transactions."

Citing the investigations, Morgan said he could not elaborate. Davis was unavailable to comment Sunday but said earlier that the spending would be explained.

Moore confirmed the authenticity of the financial statements. But he pointed out that whoever gave the Enquirer the statements left off information that can confirm Davis is owed at least some money by the church.

"That tells me a lot right there," Moore said. "Somebody only wants information out that makes Larry look bad, but it doesn't tell the whole story."

Other trustees and church deacons either refused to comment or did not return phone calls Sunday.

Spending money set aside to pay off a construction loan on gambling, hotels, restaurants, clothes and more may help explain why Fifth Third Bank is trying to force the church to pay off its $4 million mortgage loan by today. Moore said Saturday he believes the bank will be satisfied if the church agrees to post an additional $800,000 in collateral and allow the loan payments to be directly taken from the church's bank account.

"I don't think people are going to have a problem with that," Moore said. "This can be worked out."

The situation has deeply divided the church into pro- and anti-Davis factions. Several members have started attending services at another church. And a discussion of a community service program held Saturday in the church's sanctuary erupted into a shouting match between the two sides.

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E-mail pcrowley@enquirer.com