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In the Name of the Father and the Son and the Wholly Owned Subsidiary

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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.

Jesse and his fellow plaintiffs refused to sign the new pacts.
So far, plaintiffs in the ongoing suit have paid about $4,300 apiece in legal fees.

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Terry Greene Sterling