By Cindy Schroeder
The Cincinnati Enquirer
COLD SPRING - A bank's threat to start foreclosure proceedings against First Baptist Church of Cold Spring will be the focus of a congregation meeting Wednesday night.
In a letter sent last week to the church's lawyer, attorneys for Fifth Third Bank said they would recommend that the bank start foreclosure proceedings Monday if the church did not arrange to pay off its $4 million loan.
However, after talking with a Fifth Third lawyer, church lawyer Phil Taliaferro said the church has several days reprieve.
Members will discuss the foreclosure Wednesday at the church's monthly business meeting,Taliaferro said. The congregation also will discuss whether the church should put up more collateral, as requested by Fifth Third.
"We do not believe that (Fifth Third Bank) is going to file any foreclosure action for at least the next few days - until after we have the church meeting." Taliaferro said. He added the church did not receive a letter Monday explaining the collateral issue, as lawyers for the bank had promised.
Fifth Third Bank's March 10 letter, signed by lawyer Alan J. Statman, said the church had "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 (the) note."
Church leaders said all of the money was spent on its intended purpose - construction of a new sanctuary.
"We have not missed any mortgage payments and we're paying our bills," said Darryl Neltner, treasurer of the church. "We don't have any collectors coming after us or anybody that's saying they're not going to do any more business with us. That's one of the reasons I was surprised by the Fifth Third Bank letter.''
Statman did not return a phone call Monday. A bank spokeswoman said the bank would not comment.
"I would suspect there's some room for negotiation," Neltner said. "Obviously, we don't have $4 million setting in a drawer where we can pull it out."
Church members have been divided since mid-January when some accused Rev. Larry Davis of mishandling church money. Kentucky State Police began investigating after the church treasurer wrote a Jan. 23 letter to police. The letter stated money had been withdrawn at horse racetracks and online gambling sites. The treasurer told police Fifth Third Bank had pinpointed more than $500,000 of questionable transactions from church accounts, including a construction account that Davis controlled.
The church's November and December financial statements show expenditures from the church construction account that include $2,424.95 to online sites providing gambling and gambling tips on horse racing and professional and college sports; $10,000 to Davis and another $9,666.67 transaction referenced as "cash," $4,202 in ATM withdrawals and $853.61 in purchases from retailers such as Macy's, Filenes Basement, Stein-Mart and Fella Bella Shop, a children's apparel shop in New York City.
Davis, who has not been charged with a crime, did not return a phone call Monday.
His lawyer, Jim Morgan, said that Davis has explained the transactions to him, but he declined to elaborate.
Rob Moore, a trustee for First Baptist Church of Cold Spring, said Monday the church owed Davis "maybe up to $100,000" in back pay. Moore said he did not have the financial statements in front of him and could not give an exact amount.
Morgan said he has not yet reviewed all of the church's financial records. He added he is waiting for state police to finish their investigation.
"One of the reasons we wanted a review of the financial records was to find out whether the pastor owed the church money or the church owed the pastor money," church lawyer Taliaferro said Monday. "At this point, we're unable to determine one way or another."
Kentucky State Police Trooper Tom Lilley would not give a time frame for the investigation or identify any targets. As new information turns up, he said it's investigated and presented to the Campbell County Grand Jury. He said detectives have appeared before the grand jury twice.
"The detectives are being very thorough,'' Lilley said. "There's no deadline (for wrapping up the investigation).''
Church members say the church is divided into three factions: those who support Davis, those who don't and those who are undecided.
The situation has become so divisive that between 150 and 200 members began worshiping at a competing church Sunday morning.
"There are some honest differences of opinion,'' said Charles Gray, an 18-month member of First Baptist Church of Cold Spring who supports Davis. "But I think when the whole story comes out... all of this could have been settled in house without disruption.''
Attorneys for Fifth Third Bank said they would recommend that the bank start foreclosure proceedings Monday if the First Baptist Church of Cold Spring did not arrange to pay off its $4 million loan. However, church lawyer Phil Taliaferro said the church has several days reprieve.
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