A federal lawsuit alleging that one the nation’s largest Black denominations lost 70% (approximately $100 million) from its retirement plans—impacting the retirement benefits of upwards of 5000 beneficiaries due to “foolish” and “risky” investments, was filed last month.
The 49-page complaint was brought by retired AME Pastor Cedric V. Alexander—whose pastoral appointments included Walker Temple AME and Price Chapel AME in Los Angeles. Alexander filed the action under the Employee Retirement Income Security Act (ERISA) for himself and on behalf of thousands of current and former clergy and other employees of the African Methodist Episcopal Church over the mismanagement of funds and the loss of tens of millions on which Alexander and the other former clergy and employees were relying on for their retirement.
Those named as defendants in the lawsuit include former Executive Director of Retirement Services, Dr. Jerome V. Harris, former Retirement Services Chair Bishop Samuel L. Green, Sr., the Trustees of the African Methodist Episcopal Church Ministerial Retirement Annuity Plan, the General Board of AME Church and its Council of Bishops.
According to legal documents, “Dr. Harris invested Plan assets in imprudent, extraordinarily risky investments that ultimately lost nearly $100 million of plan participants’ retirement savings. The document read, “Astounding in its disloyalty and imprudence to the retirement security of those serving the Church, Defendants provided Dr. Harris sole authority to invest tens of millions of AMEC clergy’s and other Church servants’ retirement savings in a questionable and potentially unlawful purchase of undeveloped land in Florida, a promissory note to an Illinois installer of solar panels, and an even more foolish investment in a now non-existent capital venture outfit.”
Alexander, who retired in 2020, had a statement balance in the plan of $86,631.75 as of March 31, 2021. On September 13, 2021, he requested a rollover of his plan assets to an IRA, but was instead informed that the rollover had been held up due to a pending audit and that the funds had been frozen.
On December 14, 2021, a news article by the Atlanta Journal-Constitution reported that the AME Church revealed it was investigating “possible financial irregularities” with its retirement fund investments. At that time, Alexander heard rumors that the Plan had lost a large share of his and other clergy and employees’ retirement savings, totaling approximately $90 million. On January 31, 2022, a meeting of the General Board confirmed that the Plan had, in fact, lost more than $90 million, with the exact amount unknown.
Upon investigation into the missing assets, it was discovered that tens of millions of dollars had been invested in high-risk, speculative and demonstratively imprudent investments in Motorskill Ventures Group (a now defunct venture capital outfit. It was further determined that the Council of Bishops, General Board, Department of Retirement Services, the chair of the Department, Bishop Green and the Trustees allowed a single individual, Defendant Harris, to exercise full decision making authority over the use of all plan assets.
At a January 31 meeting, it was announced that the church would “never again will we allow one person to count the money.”
During the first week of February 2022, Rev. Alexander received a letter from the Department of Retirement Services informing Plan participants of “troubling news,” That “plan funds were frozen, and distributions delayed pending the investigative findings.” Further that the office of the executive director of the AME’s Department of Retirement Services “had been emptied, with nothing in the office cabinets but ’empty files and paperclips.’ Even the most current version of the Plan document could not be located.”
At the date of his filing the lawsuit, Alexander’s benefits had been reduced from $86,631.75 to $26,025.29 or approximately 70% of his retirement savings, with other former clergy and employees similarly informed that their pension payments were halted and/or reduced.
Officials of the AME church say that they are taking the allegations seriously and are committed to making every fund participant whole.