By Jim Hannah
The Cincinnati Enquirer
COLD SPRING - As the chairman of the trustees at First Baptist Church negotiated Thursday to stave off foreclosure on its $4 million mortgage, the church's attorneys resigned.
Meanwhile, a grand jury heard more testimony about the congregation's finances, and dissident members asked lawyers how to force the church into receivership.
Attorneys for Fifth Third Bank have given the church until 5 p.m. today to reach an agreement to either pay off the loan or put up more collateral, and abide by new requirements, including filing monthly financial statements and other restrictions.
Fifth Third called the church's loan last week. The bank claims 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 members deny the claims and say they have never been late with a mortgage payment.
"I spent most of the afternoon working with Fifth Third," said John Roseberry, chairman of the trustees. "We have come to no resolution with the bank. We have until 5 p.m. (today). I'm still trying to work out something."
Thursday was at least the third time the grand jury has heard testimony about church finances. Kentucky State Police are investigating a claim by the church's former treasurer, a certified public accountant, that thousands of dollars from accounts controlled by the Rev. Larry Davis, the pastor, were spent at motels, a casino, online gambling sites and sports-betting tip services.
Davis didn't return a phone call left Thursday at his home. He has denied he stole any church money, but has not explained the expenditures that were unusual for a church. He says his attorney, Jim Morgan of Newport, has advised him not to speak until the criminal investigation is completed.
The congregation has been in turmoil since January over allegations of financial impropriety on the part of Davis. Davis, who remains the pastor, has not been charged with any crime.
Campbell County Commonwealth's Attorney Jack Porter said the conclusion of the criminal investigation will come in the next 30 days.
"I know it is going slowly, but there is a lot of records that have to be sorted," Porter said. "In my 15 years of prosecuting, this is the biggest financial case I have been involved in."
Covington lawyers Phil Taliaferro and Chris Mehling, who had been negotiating with Fifth Third Bank, declined Thursday to represent the church any longer. Members ignored the attorneys' advice Wednesday when they voted to remove - at the behest of Davis - the majority of trustees and deacons.
Mehling told the congregation he didn't think the vote was consistent with the church's bylaws. He said they do not allow the church to remove a member from office simply by voting on it. Mehling said the deacons have to initiate that process. Davis disagreed. He said the deacons didn't have the exclusive right to remove people.
Some members who were upset with the vote have asked Taliaferro and Mehling how to go about forcing the church into receivership so a judge can appoint an independent administrator. Mehling told the members that any member of a nonprofit group in Kentucky could appeal to a local circuit judge to force a group into receivership. Such a move could wrest control of the church from Davis and his supporters.
Another possibility would be for Fifth Third to ask a judge to force receivership. Bank attorney Alan Statman couldn't be reached Thursday.
The church - once best known for helping bring the Billy Graham Crusade to Cincinnati - began imploding Wednesday when members removed dozens of people from their posts at the church.
Larry Graziana, who made the motion to remove the members from leadership, said some of them had given privileged information about the church to journalists. He said that caused bad publicity.
Graziana also said the dissident group had collected money at its competing service in the name of First Baptist.
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