Iolanda and Pasquale Ranalli immigrated to New York from Italy in 1953. Middle-aged and poor, they had modest aspirations--to raise their three children, and then to save enough money for a happy retirement in America.
But life in America was more of a struggle than they had envisioned. Unable to speak English, Iolanda worked as a seamstress for 65 cents an hour; Pasquale was a railroad laborer.
In 1978, the couple moved to Phoenix for health reasons. Ten years later, Pasquale died.
The next year, 1989, Iolanda was 77 years old, weary of living alone in the little house she and her husband had purchased. So she sold the house, her only asset, and "invested" the proceeds--$66,000, all the money she owned--in a two-bedroom, two-bath residence in a Christian retirement community called Paradise Valley Estates. Now known as Baptist Village-Paradise Valley, the retirement community is located at 25th Place and Cactus, near the Phoenix Mountains Preserve.
Iolanda, a Catholic, liked the fact that elderly Christians of all denominations were welcome. Touted as a place where elderly believers could live happily and safely, the retirement community was being built and promoted by ministers affiliated with the Conservative Baptist Church, a Baptist denomination.
Iolanda now says that because she was personally dealing with Robert Lindstrom, a Baptist minister, she trusted him when he asked her to sign a so-called "equity agreement." Based on what Lindstrom told her, she says, she was convinced that by signing the agreement she was investing her life savings in a condolike "garden home" that she could sell--for a profit--when she could no longer live independently.
Iolanda did not consult a lawyer before closing the deal because Lindstrom impressed her as a good Christian who quoted the Bible.
"I know the Bible, I live by the Bible," she says in broken English during a recent interview with New Times. "I trusted," Iolanda says.
Iolanda Ranalli doesn't trust anymore.
In 1993, Iolanda broke her back and could no longer live alone in her "garden home"--actually a small suite in a rectangular two-story building that could pass for any number of cookie-cutter apartment complexes in Phoenix.
But when Iolanda tried to sell her place, she was stunned to learn that she didn't own the residence, had never owned it, had only purchased the right to occupy it until she died.
And her money would be refunded to her only if someone else first purchased the right to "occupy" the residence, she discovered.
But four years later, Iolanda's little unit is still empty, even though Paradise Valley Estates was sold in 1995 to companies controlled by a different, and richer, Baptist denomination--the Southern Baptists.
Last year, when Iolanda was 83, the new owners offered to lease Iolanda's place and return her life savings in increments of $580 monthly, noting that she would receive the entire sum in "approximately 8.5 years."
Iolanda angrily refused the offer, observing that she can't wait until she is 91 to recover her savings.
Iolanda is now 84, ashamed that she must live with an adult daughter after years of saving for a secure retirement. Her only income--a $600 monthly social security check--does not cover costs of food, expensive medicine, clothing.
Because Iolanda is too poor to afford a lawyer, her daughter sought assistance from the State Bar Association, which refers poor elderly people to law firms that volunteer their services.
In March, Iolanda Ranalli filed a lawsuit in Maricopa County Superior Court. She contends that Conservative Baptist companies and several affiliated ministers had defrauded her of her life savings. She also claims that the Southern Baptists, the new owners, have made no effort to sell her "garden home" so that she can get her money back, but are instead using it as a model for prospective tenants.
"There is a statute in Arizona that forbids financial exploitation of the elderly," says Dennis Kiker, Iolanda's attorney. "This is not a simple contract or tort suit. This is a social issue--the exploitation of an extremely vulnerable class of people."
Public documents obtained by New Times reveal that Iolanda Ranalli isn't the only elderly Christian who claims to have been cheated of her money by the Baptist groups connected with the northeast Phoenix retirement center.
In a 1993 Superior Court lawsuit that was settled out of court, investors, many of whom were elderly, claimed that Conservative Baptist ministers used their stature as men of the cloth to sell them unregistered securities (bonds) issued by an insolvent Conservative Baptist corporation.
In a separate, ongoing case, 16 elderly residents of Baptist Village-Paradise Valley accuse ministers and several Baptist companies of fraud in connection with sales of the residences in the retirement center, and of "using their name, appearance of integrity and church affiliation to instill trust" of prospective buyers.
In that same lawsuit, some retirees also claim they sank their life savings into the retirement center because ministers falsely assured them that a nursing home would be built on the property to accommodate them as their health failed.
The nursing home has not been built.
Several widows, like Ranalli, claim they have no means other than their equity in the retirement center--equity they had been told at the time of their purchase would be easily recoverable. They claim that because the units aren't selling and have decreased in value, they cannot recover their life savings.
The seniors also accuse the Conservative Baptist and Southern Baptist companies of rigging a 1995 sale of the retirement center. The plaintiffs allege the center was sold by the Conservative Baptist companies to the Southern Baptist companies at a fraction of its value to rescue the responsible Conservative Baptists from being personally sued or scrutinized by the Arizona Corporation Commission.
The Southern Baptist organizations named in the lawsuits include the umbrella foundation, Baptist Foundation of Arizona, and two subsidiaries--Foundation Housing Corporation and Arizona Baptist Retirement Center Inc.
The Conservative Baptist organizations being sued include the umbrella Arizona Baptist Convention (also known as the Southwest Conservative Baptist Convention) and subsidiaries Arizona Baptist Retirement Services Inc. and Conservative Baptist Retirement Community Inc.
All the named companies--and the ministers who serve as officers and directors of the companies--deny wrongdoing in court papers.
The Southern Baptists contend they are "good Samaritans" who had the "financial wherewithal" to rescue the retirement center as it was floundering, says John DeWulf, an attorney for the Southern Baptist companies. DeWulf says the units have not decreased in value, and suggests the plaintiffs have been misinformed about the marketability of their investments.
DeWulf says it's "ridiculous" that the plaintiffs have accused the Baptist groups of rigging the sale of the retirement center to shield themselves from liability.
"We shouldn't even be in the lawsuit," he says.
Neither the Conservative Baptist ministers nor representatives of the companies being sued would comment for this article, on the advice of their lawyers. But their position is clear in public records: They view themselves as ethical ministers and volunteers who had nothing to gain financially from the retirement center. They claim they were honestly motivated to create a "ministry" and provide a good lifestyle for elderly Christians. But their dream was smashed by a real estate crash, which prevented them from selling residential units and caused them to default on $2.5 million worth of bonds. They claim they never promised a nursing home.
However, public records and the elderly residents tell a different story.
Eleven years ago, retirees Edna and Jesse Gilmore read an advertisement for Paradise Valley Estates in a newspaper. The Gilmores themselves are Christians, and they were impressed that a retirement center was being built by Baptists.
Jesse says he and Edna agreed that "Baptists are good people."
During a tour of the retirement center, the Gilmores met the Reverend Robert Lindstrom, executive director of Arizona Baptist Retirement Services, which had been incorporated in 1983 to build and operate the facility.
"We were very much impressed that a minister was running the thing," Jesse Gilmore recalls.
Lindstrom did not tell Jesse that Arizona Baptist Retirement Services had filed papers at the Arizona Corporation Commission indicating it was insolvent.
And later, when the Reverend Edward Mitchell took over Lindstrom's job, Jesse had no idea that the company's debt was mushrooming.
Instead, in mass mailings and sales pitches, ministers and others affiliated with Arizona Baptist Retirement Services urged the Gilmores and others to buy into the center.
In one solicitation letter, Arizona Baptist Retirement Services announced: "We rejoice that construction will begin on our third cluster of garden homes this fall. . . . Now is the time to make your reservation (emphasis theirs). . . . We believe that if there is a modest appreciation of property values of only 4 percent per year, most of our residents will receive close to 100 percent return to them or their estates. We not only give you guaranteed equity based on your age, but we will also divide the gross profit with you as well. . . . Our mission is to serve older adults in every way that we can."
It didn't take much to convince the Gilmores to sell their house and pour $43,400 cash into a "garden home" at the retirement center. They liked the Baptist management and the grounds--the swimming pool and the spa and the location of the 100-residence center, tucked in the foothills of the Phoenix Mountains Preserve.
The Gilmores also invested $15,000 in bonds offered by Arizona Baptist Retirement Services. The bonds to finance Paradise Valley Estates were unsecured, but the Gilmores trusted the company to repay them principal and 10 percent interest. After all, letters from ministers promoting the bonds said they were "backed by the absolute integrity of the Arizona Baptist Convention."
But construction of the nursing home was delayed repeatedly, and Jesse Gilmore began to develop doubts about "absolute integrity." His requests for financial information, he says, were rebuffed.
Unbeknownst to Gilmore, Lindstrom and others on the board of directors of the Arizona Baptist Retirement Services knew all along of the company's financial troubles.
"With a projected shortfall of over $426,500 a question may arise as to the option of putting off [further] construction," Lindstrom wrote his fellow directors in 1988, adding that delaying construction of the final cluster of residences "would only save construction costs" but result in "an uncompleted project" that already owed bondholders more than $1 million.
But instead of notifying the Gilmores and other bondholders of the financial trouble, the ministers sold more bonds for their insolvent company.
"I hope you will prayerfully consider this special investment opportunity and that you will do so as soon as possible," Al Kurz, the executive director of the Conservative Baptist Foundation, wrote in a mass mailing in early 1989.
By late 1989, the deficit was $1.81 million. The minutes of one board of directors meeting indicate that pastors were offered a $300 "finder's fee" for each new resident they brought in.
According to minutes of one 1989 meeting of the board of directors--most directors were ministers--the possibility of filing for bankruptcy was broached. In an apparent stab at humor, someone suggested that a remedy would be to "declare insanity on the part of the Board members," the minutes say.
Instead, they authorized the insolvent company to issue even more bonds. Special targets were church members.
By 1992, the deficit was $3.2 million. The ministers could no longer pay interest on bonds held by the Gilmores and others.
"Explain the situation completely to investors; ask their forgiveness; let them know their gift of principal would help if they choose to give some or all of it," the Reverend Ed Shaw wrote in 1992 to pastors and leaders of the Conservative Baptists.
But Jesse Gilmore did not have forgiveness in his heart. He wanted his money back.
"I am like Samson when he took the jawbone of the ass and slew so many," says Jesse. "I'm not as strong as Samson, but I'll fight with all the strength I have."
Jesse is anything but Samsonlike; he's a frail 89-year-old man obsessed with his financial insecurity.
In 1993, Jesse and several other bondholders sued the Conservative Baptist companies and Shaw, Lindstrom and other ministers. The lawsuit alleged fraud because the ministers had misrepresented their company's financial condition. Jesse says he never would have invested in the bonds if he had known the company issuing the bonds was insolvent.
The Conservative Baptist companies did not respond to the accusations of fraud in the lawsuit. But all the investors eventually got their money back--on orders from the Securities Division of the Arizona Corporation Commission, which investigated Arizona Baptist Retirement Services. The commission concluded that the company "failed to provide adequate disclosure to investors" and "offered and sold unregistered securities" in violation of state law.
In order to pay back the bondholders, the Conservative Baptists in 1995 sold Paradise Valley Estates to companies controlled by a different denomination--the Southern Baptists.
For a song.
The $5.47 million project was sold to the Southern Baptists for only $1.55 million, records show.
Paradise Valley Estates became Baptist Village-Paradise Valley.
By then, Edna and Jesse Gilmore didn't care what the retirement center was named.
They'd recovered their bond money but had fallen into an even worse quagmire. Rumors about the bond problem had spooked potential buyers. Then, Jesse says, the fire-sale price paid for the retirement center by the Southern Baptists had caused the value of their residence to plummet even more. (The Southern Baptists deny any downturn in real estate values.)
What's more, according to Jesse, the sale was rigged so that neither company had to honor the "equity agreements" that some residents signed.
Once again, Jesse went to court. He and 16 other residents sued the Baptist-run companies in 1995, alleging, among other things, that the two denominations conspired to cheat them of their equity.
The Baptists deny those allegations; once the lawsuit was filed, they circulated new agreements promising to honor the previous equity agreements.
This is not the sort of retirement the Gilmores had planned.
"The thing," says Jesse, "that runs through my heart and head is, 'Jesse, you made a lousy deal. How are you going to recover your money?'"
Eighty-eight-year-old Lonnie Davis believes he has strayed from the path God intended him to take.
He feels imprisoned in the north Phoenix "garden home" he and his wife purchased in 1987, thinking they were making a good investment in the retirement village for elderly Christians. The man who sold them on the idea was a Baptist minister, for heaven's sake.
"I think the Lord has told me a lot of things without words," Lonnie says. "I think the Lord didn't want us here, we weren't meant to be here and that's why all of this happened to us."
His wife, Lena, 83, pats her husband's knee to soothe him.
"Now Lonnie, the Bible says all things work together for good to those who love the Lord," she says.
Their little residence is crammed with artifacts of their 61 years together--pictures of Jesus, portraits of children, a cuckoo clock, a copper kettle, a crystal candy dish.
Lena still plays her piano, and Lonnie still belts out tunes he learned in the dance halls in the days before he found Jesus.
They've had a good life, they say--until they moved to the retirement community.
"We should never have come here," Lonnie says again. "I loved our old place. It had fruit trees and everything." The Davises trusted the Reverend Robert Lindstrom when they paid $63,000 for their two-bedroom residence at Paradise Valley Estates. The pastor had assured them they were making a good investment that would appreciate.
Lonnie reluctantly moved out of the couple's east Phoenix home, said goodbye to his fruit trees and carted his tools to the retirement center's woodworking shop. A natural handyman, he kept himself busy by helping other residents fix up their places.
Lonnie and Lena never dreamed of suing anyone, let alone a bunch of ministers. But they joined the Gilmores and other residents in the 1995 lawsuit.
They never would have chosen to live at Baptist Village, they say, if they'd been told the company building the retirement center was insolvent. Or if they'd been told they didn't actually own their residence.
They are appalled that no representative of the church has ever expressed remorse for what has happened.
The Davises want to move in with their daughter in Sun City, but they have only social security income and no savings other than the money they paid for their unit. And the units aren't exactly liquid assets.
They see the lawsuit as their only hope, but they wonder if it will be settled during their lifetimes.
Since they've filed suit, they say, they've felt unwelcome. It's not the other residents, Lena says, it's subtle actions taken by the management (an accusation Southern Baptist representatives deny). For example, Lonnie was warned not to park his golf cart by the woodworking shop, not to help other residents with fix-it projects. And Lena was enraged when the new owners told her and others to remove her plants and outdoor furniture from her front porch. She defied the order.
"How can they treat old people this way?" Lena asks. "This is supposed to be our home."
After their children grew up, Paula and Tom Mentis decided to try out retirement living. Because Paula is an Assembly of God minister and both are devout Christians, Paradise Valley Estates appealed to them. They sold their house for about $105,000.
In March 1994, they believed Whitney Benson, a salesman who told them they were purchasing two "condo-type" units for $105,000--one unit for Paula's mother and the other for Tom and Paula. Because the Mentises are relatively "young"--Tom is 69 and Paula is 63--they figured they'd sell their unit if they didn't like the lifestyle.
When the retirement center was sold to the Southern Baptists in 1995, the Mentises say they approached the new owners and asked how to go about selling their "condo-type unit." They thought they could live in the unit until they recovered their money, much like they had sold their previous home.
"You can't sell it," they remember the man saying. "You don't own it."
"It was like someone had handed down a jail sentence," says Paula.
"We can't sell it and they won't sell it."
The salesman, Whitney Benson, was also apparently deceived. In a sworn affidavit, Benson said in 1995 that his boss, the Reverend Edward L. Mitchell, instructed him to tell buyers that the complex was "debt free, that a buyer or buyers were buying a condominium type residence which, after being vacated by an owner or owners would be re-sold by Arizona Baptist Retirement Services. . . . I was never told that a buyer owned nothing nor did any of the sales literature or contract so state. . . . I was not told that the Arizona Baptist Retirement Services was in default on more than $2,500,000 of bonds which were not subject to then pending litigation. . . . I had no knowledge of any inquiry, investigation or any other activity by the Arizona Corporation Commission as to Arizona Baptist Retirement Services . . ."
The Mentises now question how they could have been so trusting.
And they cannot get help from the Arizona Department of Real Estate because, contrary to their assumption, the "equity agreement" they signed was not a real estate transaction and Whitney Benson was not a licensed real estate broker.
Despite what the Mentises claim they were told, they did not buy real estate--instead, they paid $105,000 for the right to occupy two units. In addition, they agreed to pay $490 monthly for maintenance fees.
"I think they're just stuck," says Charlie Downs, a Real Estate Department spokesman who asked an agency lawyer to quickly review the Mentises' "equity agreement."
This isn't the first such agreement the department has seen, Downs says, and complaints are increasing.
But because the agency has no jurisdiction over "contract disputes," it can only suggest people hire an attorney for possible recourse. Of course, an attorney should review the agreement before anyone signs away his life savings, Downs says.
Paula and Tom Mentis now agree they should have hired an attorney before signing the agreement, but that was not in their nature--they had never consulted a lawyer in their lives and saw no need to consult one this time.
After all, a minister had asked them to sign the dotted line.
Agnes and Herb Reincke thought carefully before spending $64,000 on a "garden home" at Paradise Valley Estates in 1987.
What finally convinced them to buy their place was the promise of a nursing home. Their health was already failing, and they figured if one of them had to be institutionalized, the other would be close by, free to walk over from the "garden home" to the nursing facility several times a day. They settled in, but the nursing home was never built. Now they are trapped, they say, and can't recover their equity.
Agnes and Herb are chronically ill. They know one of them will probably be ready for a nursing home soon, and they can't bear the thought of being separated.
"We thought," Herb says, "that we could live a life enjoying our final years, but since we moved in, that hasn't been possible."
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"I'm sure our children would take us in, but we don't want to burden them," says Agnes, a tiny woman who suffers from severe osteoporosis.
"All of the managers have been ministers," says Herb. "Ordained ministers, and they lied. That is the saddest thing of all, to be misled by ministers."
"The whole thing," he concludes, "was a fraud. It was a fraud from the beginning and it's a fraud now.