A former executive director of the African Methodist Episcopal Church was sued for making $100 million worth of "foolish" and risky investments on the retirement plan of thousands of members.
The Christian Post highlighted the class-action lawsuit filed by African Methodist Episcopal Church, Inc.'s retired pastor Rev. Cedric Alexander against former Department of Retirement Services Executive Director Rev. Jerome Harris for the severe losses incurred by 70% of the denomination's retirement plan. The losses financially affect 5,000 retirement plan participants who AME repeatedly assured of their investment's safety and growth under Symetra Financial.
Alexander recently discovered something was wrong with the retirement funds a year after his retirement last September 2020. Alexander has checked his retirement fund from January 1 to March 31, 2021 and saw a balance of $86,631.75, the fruit of serving the church for twenty years. The former pastor then requested his funds' rollover to an individual retirement account in September 13.
However, AME Department of Retirement Services Executive Director Rev. James Miller told him on October that his request could not be accommodated due to a pending audit that has frozen the church's retirement fund. In November, Miller informed Alexander and the retirement funds' other participants through a letter that the audit is taking longer. Then the Atlanta Journal-Constitution reported by December 14 that AME is undergoing an investigation involving "possible financial irregularities" with the retirement funds.
When Alexander checked his account during the investigation, his plan was reduced to $26,025.29. Other participants similarly experienced a 70% reduction in their retirement plans.
AME then informed participants that at least $90 million of the $128 million retirement fund was missing after the general board affirmed it during a January 31 meeting. The denomination revealed that only Harris knew where the funds and their related records went. The said meeting also revealed that the retirement plan's assets were not all invested in Symetra as annuities despite prior presentations made to participants for the last twenty years that they were.
Alexander received a letter from AME in February confirming that the funds are frozen and that distribution is delayed until the investigation is completed. The letter also said that federal investigatory agencies were working on the matter.
According to the lawsuit, the AME hierarchy allowed everything involving the retirement plan to be single-handedly supervised by Harris.
"Instead, 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. Rev. Miller, Defendant Harris's replacement as Executive Director of the Department of Retirement Services, put it this way: 'never again will we allow one person to count the money,' essentially conceding that the Plan's other fiduciaries previously had completely abdicated their duties owed to the Plan and the Plan's participants, including Plaintiff Alexander and the other members of the Class," the lawsuit said.
This, the lawsuit stressed, is contrary to the AME retirement plan governing documents. The Employee Retirement Income Security Act of 1974 stipulated that management and investment decisions should be made solely for the benefit of participants, which Harris did not adhere to.
Harris accordingly invested millions in Motorskill Ventures Group, which has already closed, and in Financial Freedom LLC. Motorskill has informed AME last June that the funds were terminated since the investments are worthless. Motorskills said they will not recover anything despite the losses.
The lawsuit identified only $36.9 million was invested in Symetra. While another $1.5 million was invested in another risky and speculative investment involving an undeveloped property in Key Marco Island, Florida. The said investment reflected a $500,000 loss for the denomination.
"Upon information and belief, Defendant Harris would not have secretly moved tens of millions of dollars in Plan asset's out of Symetra annuity investments and invested them in a risky or fraudulent venture capital company Motorskill Ventures Group, Financial Freedom Fund, LLC, or invested an additional $1.5 million in a Florida land deal if he did not stand to benefit in some way," the lawsuit pointed out.