Class Action Alleges ‘Extraordinarily Risky Investments’ Cost African Methodist Episcopal Church Retirement Plan Nearly $100M

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A Maryland reverend alleges in a proposed class action lawsuit that the African Methodist Episcopal Church, Inc. (AMEC) and the bodies responsible for overseeing its retirement plan have mismanaged the plan to the tune of tens of millions of dollars in losses for participants. 

The 48-page lawsuit alleges the defendants have completely and totally abrogated their fiduciary duties to AMEC retirement plan participants, including by allowing a single, unmonitored individual, Dr. Jerome V. Harris, to control all of the plan’s assets and investments. The complaint alleges Dr. Harris invested plan assets “imprudently” into “extraordinarily risky investments” that cost plan participants nearly $100 million in retirement savings.

Moreover, the complaint alleges that the church and its co-defendants, in a show of “astounding” disloyalty and imprudence with regard to plan participants’ retirement security, gave Dr. Harris, the former executive director of the AMEC Department of Retirement Services, sole authority to invest tens of millions of the clergy and other church servants’ savings into a “questionable and potentially unlawful” purchase of undeveloped land in Florida, a promissory note to an Illinois solar panel installer and “an even more foolish investment in a now non-existent capital venture outfit.” 

According to the lawsuit, the governing documents of the AMEC’s retirement plan stipulate that it is governed by the federal Employee Retirement Income Security Act (ERISA), and as such the defendants are bound to act with the utmost prudence and solely in the interest of plan participants when making management and investment decisions. 

The lawsuit states that a December 14, 2021 article published by the Atlanta Journal-Constitution reported that AMCE had revealed it was looking into “possible financial irregularities” in its retirement fund investments. Per the suit, the plaintiff heard rumors around that time that the plan had lost “a large share of his and other clergy and employees’ retirement savings,” totaling approximately $90 million in assets. 

This rumor was confirmed during a January 31, 2022 meeting of the general board, the lawsuit says: 

“The meeting was recorded and made available to the public via posting the video on the internet. At that meeting it was reported that as recently as June 30, 2021, the Plan Trust had a value of $126,800,000. More than $90 million of this $126.8 million was missing, and no one connected with the Church, except its former Department of Retirement Services Executive Director, Defendant Harris, knew where the money and other plan related records went.”

Those who attended the meeting were also informed that despite what they had been repeatedly told over the last two decades, the plan’s assets were not all invested in annuities provided by Symetra. Instead, tens of millions of dollars in assets had been invested in “high-risk, speculative and demonstratively imprudent investments” in now-defunct capital venture outfit Motorskill Ventures Group, the complaint says. 

Further, AMEC’s investigative committee reported that they had only been able to verify $36.9 million of the plan’s assets invested with Symetra along with another $1,000,000 of value for a high-risk investment in undeveloped real estate in Key Marco Island, Florida, the suit continues. According to the case, Dr. Harris initially invested $1.5 million of the plan’s assets in the undeveloped land, reflecting a loss of $500,000. 

The lawsuit alleges Dr. Harris would not have secretly moved tens of millions of dollars of the AMEC plan’s assets out of Symetra annuity investments and into Motorskill Ventures Group, the Florida undeveloped land venture, or Financial Freedom Fund, LLC, the manager of a private real estate investment trust, if he did not stand to benefit in some way. 

According to the case, out of the January 31 meeting also came news that the office of AMEC’s executive director of retirement services had been emptied, “with nothing in the office but ‘empty files and paperclips.’” 

Most recently, the plaintiff received a letter from the Department of Retirement Services that stated that federal investigatory agencies and outside consultants were working on the matter of what happened to the plan’s assets, and that distributions would be delayed pending the results of the inquiry, the lawsuit relays.

“As of the date of the filing of this Complaint, Plaintiff has not received any of his retirement benefits, despite being retired, without much income, for well over a year,” the suit says.

The lawsuit looks to represent all participants and beneficiaries in the African Methodist Episcopal Church Ministerial Retirement Annuity Plan. 

Named as defendants in the lawsuit are Dr. Jerome V. Harris; Bishop Samuel L. Green, Sr.; the Trustees of the African Methodist Episcopal Church Ministerial Retirement Annuity Plan; the African Methodist Episcopal Church Ministerial Retirement Annuity Plan; the African Methodist Episcopal Church Department of Retirement Services; African Methodist Episcopal Church, Inc.; the General Board of the African Methodist Episcopal Church and the Council of Bishops of the African Methodist Episcopal Church.

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