Cornerstone Falters
Four years after sustaining injuries in an accident that killed her first husband, Kathy Woody-Deming of Clermont, Georgia, took early retirement due to physical problems.
However, she now plans to apply for substitute-teaching assignments to replace some of her income, lost when Cornerstone Ministries Investments (CMI) filed for Chapter 11 bankruptcy reorganization.
"It was the way I paid my bills," said Woody-Deming, who stopped receiving payments last January on the bond she purchased in 2005. "I am scratching out every kind of job I can get ahold of."
One of the 20 most invested of Cornerstone's more than 3,500 unsecured creditors, Woody-Deming isn't the only one suffering from the company's setback. The real estate downturn exposed how CMI adopted a riskier investment strategy, unbeknownst to some investors who thought the company's emphasis was church real estate, as it had been for many years.
Although Hays Financial Consulting, the firm overseeing CMI's communication, has posted a website for information, few people connected with the case are willing to comment. Interim president and CEO John Ottinger Jr. declined to speak with Christianity Today. The ministry's attorney and a trustee with Hays Financial did not return phone calls.
The Presbyterian Church in America (PCA) founded the Investors Fund for Building and Development in 1985, but divested itself in 1994. In 2000 the fund, renamed the Presbyterian Investors Fund, merged with then four-year-old Cornerstone, but retained many of its Presbyterian connections. Ottinger is a former PCA pastor, as is Cecil Brooks, who served as president until 2006.
Until 2001, most of Cornerstone's earnings came from financing church facilities, giving an appearance of safety to investors. ...
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Nathan
Yes, halflight, except how does a fund investing in church buildings go broke due to commercial real estate failures? And this isn't the first time for these same people the story goes.
wesh
"the great majority of its loans were risky second mortgages, one reason it was able to charge up to 10.5 percent on new loans." There are no solid real estate investments that provide 10.5% cash returns on an ongoing basis. If is sounds to good to be true, there is a 98% probability it is a lie. This stuff is geared to suckers, the poor, the elderly, and the uneducated, etc. The idea of getting something for nothing [perhaps this is greed or just delusion] is common place today. In finances, it is the tortise that wins.
halflight
It's natural for investors who have lost money, like the Demings, to feel somehow cheated. However, a publication like Christianity Today should be careful before it repeats allegations of wrongdoing in a financial failure. If there have been no SEC or state securities regulation enforcement actions against Cornerstone management, that should be stated along with the Demings comments.
halflight
I worked as an attorney doing securities filings for church-related bond companies. Most problems resulted not from dishonesty or greed, but from naivete and inexperience. Most of our clients came to us after they had been sanctioned by a state for violating securities regulations, but the violations were almost always unintentional. I see nothing in this article that indicates that the prospectus and advertising materials intentionally misled Cornerstone's customers; nor is there anything to indicate an ongoing SEC or state securities regulator investigation for fraud. Unfortunately, most investors don't read the prospectus they receive from the bond seller nor SEC filings (as the article states). They buy investments with little knowledge of the level of risk involved in the investment. The fact that investors "thought" Cornerstone was doing something with less investment risk isn't relevant. What is relevant is the information in the prospectus they received from Cornerstone.
Scott McCarty
I am surprized how far we Christians have wandered from the teachings of the New Testament we like to crow about. Did not the Lord Jesus tell us to avoid accumulating earthly possessions for our selfish usage ? Notez the words "selfish usage" = just to see how much we can make. How many of us take to heart1 Timothy 6 : 6 - 10 ? I know how the folks feel who lost it all. After selling house and property after my mother's passing, I gave it in 1998 to a close friend to invest to help us with monthly interest for our missionary work in France (since 1971). It all disappeared after 7 years; all of his family also lost everything invested. Our worldly environnement has so penetrated Christian thinking that we act as the world does. From my vantage point in France, I am dismayed to observe that Christians think the USA is a Christian nation with a Christian president. We need to meditate seriously more often 1 John 2 : 15 - 17