A second lawsuit has been filed against the AME Church, alleging that the worldwide denomination’s retirement fund was mishandled, leading to an alleged loss of $90 million in retirement fund investments meant for thousands of pastors and other church retirees.
The AARP Foundation has joined as co-counsels in a Maryland lawsuit against the AME Church, filed on March 22 in U.S. District Court in Maryland by the law film Kantor & Kantor. The suit is the second against the denomination since one was filed last month in Tennessee. Both seek class action status due to the number of potential victims.
Both suits claim millions of dollars were mismanaged, leaving AME clergy and other retirees in the dark about what happened to their portion of the investment, which was intended to provide retirement income. The suits name several other defendants including the former executive director of the AME’s Department of Retirement Services.
People “dedicated themselves for years working for the church and were promised that the savings were invested conservatively and then it turns out that was not true,” said William Alvarado Rivera, senior vice president of litigation at AARP Foundation. “It’s a real tragedy.”
The Nashville-based AME Church, which has between 2.5 million and 3 million members, said that it was investigating “possible financial irregularities” in retirement fund investments the church holds.
There are more than 500 AME churches in Georgia, according to church officials. Several local pastors declined to comment.
The issues were uncovered as the church’s Department of Retirement Services was moving to new leadership in 2021. The church confirmed there is also a federal investigation underway, although it did not identify the agency.
“We are actively working with law enforcement to investigate this matter and recover any misappropriated funds,” according to a statement Tuesday from the AME Church.
The Maryland lawsuit claims that AME leadership and its retirement services department violated the Employee Retirement Income Security Act and breached their contractual and fiduciary duties and that bad investments were made in a ”risky venture capital company and an ultimately valueless real estate deal,” according to the Maryland filing on behalf the Rev. Cedric V. Alexander of Bowie, Md., a retired AME pastor.
A earlier lawsuit was filed in U.S. District Court, Western District of Tennessee in Memphis on March 3, on behalf of the Rev. Pearce Ewing, of Jacksonville, Fla. that also alleges a breach of fiduciary duties and negligent conduct in managing the retirement fund.
The lawsuit claims Ewing, who retired last September, attempted to access his retirement funds and was, “denied access to his money and has since learned that there may be nothing left.”
“This was his nest egg and he had to go to work as a nighttime truck driver to support himself,” said Fred Tromberg, one of the attorneys representing Ewing. “He had over 30 years as a pulpit minister. He never, ever imagined that’s what he’s have to do to put food on the table and pay his bills.”
The Rev. Jeffrey Streator, who is not part of either filing, said some beneficiaries have more than $100,000 in the fund. Streator has about $35,000 invested in the church’s retirement fund, he said.
Fortunately for Streator, who recently moved from Georgia to Texas, he has other retirement accounts from his job as a professor of mechanical engineering at Georgia Tech, where he worked for more than three decades. He’s currently head of the department of mechanical engineering at Prairie View A&M University.
“I think about those who are pastors and this is their only source of income,” said Streator, 59. who is on a hiatus from the pulpit after pastoring for 20 years at Summerhill AME Church in Rome and Greater Mount Carmel AME Church in Doraville. “The idea that it may not be available to them is just reprehensible and totally unacceptable.”
A Special Task Force Committee has been assembled representing the Department of Retirement Services Commission, the general board, the council of bishops and AME Church members at large to develop a plan of reorganization, recovery and restoration for fund participants, according to the statement.
The Rev. Clinton Brown, 56, a former AME pastor in metro Atlanta, has a few thousand dollars in the retirement fund.
“I think it’s just terrible oversight and lack of fiduciary responsibility,” said Brown, a former professional retirement manager and now owner of a trucking company. “I just don’t see how, with all the checks and balances that we have, that something like this could happen.”
Some AME pastors, he said, are looking for part-time jobs.
“They’re angry‚” he said. “There’s a lot of anxiety and confusion, but they’re afraid to speak out because of the hierarchical system that we have. They’re worried there will be retribution against you and you might not be pastoring again.”