[Episcopalian] Orthodox Priest Found Guilty of Financial Misconduct; [He says Charges are Bogus, TEC

he Rev. Don Armstrong, former Episcopal rector of Grace and St. Stephen's Episcopal Church in Colorado Springs, was found guilty on all counts of financial misconduct presented to an Ecclesiastical Court of the Diocese of Colorado. It is now in the hands of Bishop Rob O'Neill as to his punishment.

"This was no surprise to us and frankly of no interest either--this is just all the Episcopal Church has left, with no theology to debate those of us who have made a case for tradition, they have to resort to kangaroo courts ginned up in the their quickly failing club house," Armstrong told VirtueOnline.

The court had been reviewing the evidence since July 31. A preliminary judgment was made public August 8 by the five members of the Ecclesiastical Court who unanimously found Armstrong guilty of diverting $392,409 from the parish's operating fund and committing tax fraud by not reporting $548,000 in non-salary income and benefits to state and federal tax authorities.

"The charges are bogus. O'Neill spent $1,000,000 with the very people who defended Kobe Bryant on rape charges, and what O'Neill got for that was a fancy report that itself admits it never saw my tax records, and never interviewed me, my staff or the vestry--and yet assumed I didn't pay my taxes and that the parish leadership didn't give my children scholarships for college. "Included in the charges about my discretionary fund misuse, for example, is reimbursement $259.00 for bibles we gave the graduating Seniors--I can see where that would violate Episcopal sensitivities and be thought to be malfeasance."

Said Armstrong: "The bishop's own investigative auditor admits that, 'As of the date of this report, we have not requested nor had access to Father Armstrong's personal income tax returns...We have not obtained all information needed to complete our investigation...We have not had the opportunity to discuss these findings with Father Armstrong, the Wardens, the Treasurer and /or the Vestry of Grace Church (or their respective attorneys) to obtain their explanation of the concerns we have outlined herein.'"

The hearing also found Armstrong guilty of receiving illegal loans totaling $122,479.16 in violation of Diocesan Canons; unauthorized encumbrance and alienation of Grace Church's real property; violation of the temporary inhibition placed on Armstrong; the improper use of clergy discretionary funds; and failure to maintain proper books of account.

The three-hour evidentiary hearing was held at St. John's Cathedral in Denver July 31, and featured testimony from Sheri Betzer, a tax fraud examiner and former IRS agent who investigated parish financial records ranging over a 10-year period, and Karl Ross, an attorney and co-executor of the Clarice C. Bowton Trust, established to fund seminarian scholarships, which accused Armstrong of misusing for personal purpose.

Armstrong retorted that it had been reported to him that the clergy on the court were people who themselves were hanging by a thread in fear of not making it to pension eligibility. "One of the lay members, I have been told, left her family, changed her name, and announced that she was a lesbian--what chance does an orthodox priest stand in that system?

"I noticed that among the charges is one that we borrowed 4.5 million dollars with permission for only 2.5 million---what they did was to add the temporary construction loans we had on our renovation together with the amount of the final consolidation loan...anyone, especially an accountant, ought to be able to understand that one ...misuse of the discretionary fund includes checks clearly marked benevolence...and our discretionary fund is a church checking account, annually audited, requiring two signatures."

Armstrong said he hoped that with this behind them the standing committee might resume their required fiduciary responsibilities and do some sort of intervention for a diocese that is running an operating deficit. "Spending $1,000,000 to hunt down a priest, regardless of your long term resentment and desire to get even, isn't a good idea," he said.

"In the end we are a CANA parish and I am a CANA priest. The accusations made by O'Neill are being fully investigated by CANA at my request--so I can reclaim my good name that the Episcopal Diocese and Bishop of Colorado have slandered."

Armstrong says he has more than 500 people in church every Sunday at the parish's property and has a fully funded budget that includes legal expenses.

A group who left the church to stay with the diocese continues to meet at nearby First Christian Church until a civil lawsuit over ownership of Grace Church, filed with the El Paso County District Court, is decided.

"We have far more confidence in the civil justice system in the state of Colorado and would be happy to meet the bishop and the diocese there anytime," Crippen said. "We have supreme confidence the good name of our rector will be exonerated."

Cases like this will be dissected and destroyed point by point in a civil court. The Bishop would lose his robes and hat to pay for damages.

You only say that because you're buying Armstrong's spin. The real facts of the case are far less friendly to him. For example, the Ecclesiastical Court included some very conservative and orthodox priests -- and their vote was unanimous. Regardless of whether or not the case is advantageous to the agenda of the revisionist wing of TEC (and it certainly is that), Armstrong appears to be involved in real and serious financial wrongdoing.

To really understand the case, you should probably start out with the Presentment, to help you understand the context of that spin. There things there which don't inspire much confidence in his innocence. For example,

1. Both sides agree that the transactions in Armstrong's presentment occurred. They included loans, use of the restricted Bowton Trust funds for his kids' college expense, other "Armstrong college fund" payments, and transfers of funds within different accounts, which ultimately were paid to Armstrong. The total was in the hundreds of thousands of dollars. The question is whether those transactions are legal. Sheri Betzer, the accountant whose report formed the bulk of the evidence, is a highly respected forensic auditor who does this sort of work for a living -- she's not a Diocesan stooge; she's not even an Episcopalian, so far as I know. If she claims to have found criminal wrongdoing, those charges should be taken seriously. And, in fact, a criminal investigation has been opened on that question.

2. None of the transactions -- loans, scholarships for his kids, and so on -- were ever reported in the monthly budget statements. Most people who served on the vestry during the timeframe of the investigation never knew -- were never informed -- that the transactions were taking place. The full vestry certainly never voted on or approved any of the transactions. The budget reports did include a specific line item for the Anglican Institute (a ministry of the parish), but that line item never, ever, reflected the fact that thousands of dollars per month (from various sources) were transferred into the Anglican Institute budget, and then transferred out to a personal account belonging to Don Armstrong. (The senior wardens, treasurer, and parish bookkeeper were aware of the transactions.) These were not minor funds -- and none but a very few people were aware of them.

3. The Bowton Trust was set up for scholarships based on intent to pursue theological studies, intent to enter the Episcopal ministry, and financial need. The monies went to Armstrong's children instead -- neither of whom ever went to seminary (or anything remotely close to it). Another college scholarship fund, the Helen Smith trust, provided sums typically on the order of $500-1000 for parishioners -- and something like $35,000 for Armstrong's children.

4. Some of the transactions -- in particular, the loans and salary advances -- are explicitly illegal under Colorado laws governing the operation of non-profit corporations (which includes church corporations such as Grace Church).

And then there's this little nugget, which shows just how far you can trust what Don Armstrong is saying:

"Included in the charges about my discretionary fund misuse, for example, is reimbursement $259.00 for bibles we gave the graduating Seniors--I can see where that would violate Episcopal sensitivities and be thought to be malfeasance."

For that specific item, Canon law (Title III, Canon 9.5(b)(6) prohibits the use of the Discretionary Fund for anything but the poor and needy. It specifically prohibits the use of the funds for personal clergy use, or parish operating expenses. The $259 noted above, is an obvious "operating expense," and thus ineligible as a discretionary fund expense.

But that's the BEST face he can put on it. Mr. Armstrong fails to mention that among the other items he charged to discretionary expenses were lunches and gifts, a "Cable Guy Tip" for $200, $55 for three parking tickets (Armstrong's, of course), travel expenses, car repairs, and so on.

One of the things I've learned over my years at FR, is to be able to spot spin, and to look for facts before believing what the spinner says. In this particular instance, I have a far more intimate knowledge of the facts of the case, and am thus able to discern the spin much more clearly. To put it bluntly, Don Armstrong is more interested in saving his own rear end, than he is in telling the truth.

One final thing: Armstrong's goal here is to make the whole thing seem like a theological dispute, with him as the persecuted victim. It's not that. Not even close.

I hope that if you are an actual witness to any of the malfeasance you allege you will take it up with CANA.

That's just it -- I and many others didn't know about the transactions at all. That's not "being a witness," per se. At most, the fact that the transactions were apparently hidden from the vestry is cause for significant suspicion, but it says nothing about illegality. Looking back, I can see how the topic of the (mis)use of restricted trust funds was artfully dodged around, but for the most part, the transactions were never mentioned nor reported to the vestry. As an aside, the various vestries obviously failed in their responsibility to provide proper financial oversight.

The CANA bishop is Martin Minns, and as yet he has apparently showed no interest in the allegations, evidence, or anything else about this case. He's an old seminary classmate and friend of Armstrong's, so perhaps that explains his reticence to get into it. In any case, now that there's a criminal investigation, Minns had better start paying attention for the good of CANA.

The last thing this new denomination needs is a crook for a priest or genuine bad press.

That's true.

I have to say with the legal shananagans The Episcopal Church is doing to many other ex-Episcopal priests and congregations, even suing down to individual vestry members, I’m a skeptic in this case.

Agreed. However, the bishop didn't instigate this particular case. Rather, the original allegations were made to him by a former parish bookkeeper and, given their nature, any bishop would have been required to pursue them. There's no denying the fact that this case is politically useful for the revisionists ... but it's a legitimate case nonetheless.

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