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Temporary order halts sale of Mo. entity’s acreage

JEFFERSON CITY, Mo. (BP)–Lawyers for the Windermere Baptist Conference Center admitted in court Dec. 19 that 1,000 of its 1,302 acres along the Lake of the Ozarks in Missouri have been sold to a bank in a refinancing plan. The judge overseeing a case initiated by the Missouri Baptist Convention against five breakaway entities granted the MBC request for a temporary restraining order against further Windermere real estate transactions and eventually may nullify the 1,000-acre deed to the bank.

Cole County Circuit Court Judge Tom Brown said he wanted to preserve the “status quo” by the temporary restraining order against any further sales or mortgages involving Windermere property while convention attorneys investigate the documents found on the public record. Brown’s order also prohibited any bond sales by Windermere. The judge expressed surprise that Windermere’s board of directors had taken such actions while their authority is in dispute in his court. He suggested that, if he found that the breakaway board lacked authority over the conference center’s assets, the transactions might ultimately be canceled.

“The judge’s TRO [temporary restraining order] is a giant step toward protecting agency assets and canceling any debts that have been incurred by the unauthorized board,” MBC attorney Michael Whitehead said after the hearing. “The banks and bond brokers are on notice that their transactions are subject to cancellation if the court finds that the breakaway board lacked authority to sell or encumber these ministry assets. The TRO means that is more likely to happen.”

On Dec. 15, convention attorneys informed the court that it appeared from public records that Windermere’s board had deeded away more than 900 acres of land. Windermere attorney Jim Shoemake told the court it was more like 200 acres and it might be subject to re-purchase by Windermere.

On Dec. 19, Shoemake told the court that Windermere’s board had, in fact, conveyed 1,000 acres to the National City Bank affiliate in St. Louis in order to reduce debt on the principal. Shoemake said the reduced debt was paid off by a new loan for $14 million on a one-year note from Reliance Trust Company of Atlanta and California Plan of Church Finance, Inc., a subsidiary of the California Baptist Foundation.

Whitehead showed Brown a “special warranty deed” to National City Bank, with headquarters in Cleveland, Ohio, and, a deed of trust for “future advances,” securing an initial loan of $14 million and future advances of up to $30 million. The judge said it appeared to be a line of credit, but Shoemake denied that terminology.

Brown set a followup date for Jan. 4 to check the status of depositions needed to determine whether the temporary restraining order should be converted into a preliminary or permanent injunction. The judge said, for now, he will not stop the cutting of timber, which Windermere attorneys said had been done in consultation with state conservationists solely for the purpose of thinning some of the property’s timberland.

Brown’s ruling was one of the most significant thus far against any of the five breakaway entities where trustees opposed to the theologically conservative direction of the state convention violated Missouri corporate law by amending their charters in 2000 and 2001 to become self-perpetuating without MBC approval. The five entities, which include Windermere with its vast timberland and miles of shoreline along the Lake of the Ozarks in central Missouri, have assets totaling more than $240 million. The other entities are the Missouri Baptist Foundation, which on Dec. 7 reported assets of $150 million; the Word & Way newsjournal, The Baptist Home retirement facility; and Missouri Baptist College.

In November, Windermere chairman Arthur Mallory denied that Windermere was selling any of its real estate but reversed himself within a few days, saying the sale of some of the property to private developers was part of a long-range master plan more than five years old calling for selective development and construction of residential and single-family housing, condominiums and retirement housing options.

According to a Word & Way story posted on its website Dec. 1, Mallory was asked by a trustee Nov. 17 if selling some of Windermere’s property “was an active consideration.” Mallory said no, that property would not be sold, because that would “disrupt development plans” under the master plan, which was five to 10 years old. “This [expansion] is not a Johnny-come-lately decision,” he said. Mallory then reversed himself the next day in a phone conversation with the Word & Way. The news articles did not identify the trustee who asked the question on Nov. 17, nor explain how the trustee could be unaware of the master plan to sell lots, if in fact it had existed for five years or more.

At least four relatively new houses have been constructed recently on a hill overlooking the back of Windermere’s campus. Workers for Tony Lee Logging of Seymour, Mo., told The Pathway state convention newsjournal Dec. 15 that they had been cutting trees at the site for about three weeks. Other trees have been cut near the Windermere entrance off State Road AA.

“We intend to re-depose Dr. Mallory and [former Windermere executive director] Frank Shock,” MBC attorney Whitehead said. “We also need to depose corporate representatives from the banks involved. The judge will decide at the next hearing whether to impose a ‘preliminary’ injunction on Windermere. Before that hearing, we need to determine what has been sold, to whom for what amount and what was done with the proceeds.”

Brown’s most recent rulings come amid a flurry of activity in recent weeks at Windermere, beginning Nov. 17 when trustees suddenly relieved Shock from oversight of daily operations at the facility. Shock had been the executive director since 1989 and began the controversial Wilderness Creek youth camp project that saw Windermere’s indebtedness explode to more than $21 million in recent years.

Word & Way reported that Windermere trustees had refinanced the facility’s red ink and allegedly reduced the indebtedness from $21 million to $14 million. Word & Way did not report that the refinance involved the sale of 1,000 acres of land. The refinancing plan also includes a bond sale, though few details have been disclosed. The bonds were to be sold by California Plan of Church Finance, Inc.

“Transactions like these happen all the time in hostile takeover cases,” Shoemake told the court. “It’s common for boards to engage in these transactions, even during litigation over issues of authority. It happens all the time.”

“Not in my cases,” Judge Brown replied. “This never happens in my cases.”

Restraining orders usually require the requesting party to post a bond, to cover any damages that the defendant might suffer if the bond later is dissolved as being improper. Brown required the MBC to post a $1,000 bond, which was nominal. Shoemake protested the low bond amount and complained that the temporary restraining order might cause lenders and their legal counsel to feel insecure. “Legal counsel and bond counsel have approved all this. Just the entry of the TRO might make them feel nervous,” Shoemake said.

“Well,” the judge concluded, “maybe they should feel nervous.”

MBC Executive Director David Clippard, in a Dec. 14 letter to pastors and other church leaders across the state, cautioned against the purchase of any bonds involving Windermere.

Clippard’s letter stated, in part:

“Investors should be aware that the MBC legal action in Cole County Circuit Court asks the judge to declare that the breakaway board has no legal authority to mortgage land or to sell bonds. MBC is seeking to recover ownership or control of the Windermere real estate. MBC will ask the court to cancel any debts, mortgages or bond obligations incurred by the breakaway board. Hence, individual bond investors could lose their money. It would seem prudent under the circumstances to wait for the outcome of the MBC litigation before deciding to invest in Windermere bonds.”
Don Hinkle is editor of The Pathway, newsjournal of the Missouri Baptist Convention, on the Web at www.mbcpathway.com.

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