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Reverend who lost money has criminal past

Did prison time for bilking banks

Clapp

– A Fort Wayne man accused of losing hundreds of thousands of dollars of other groups’ money is a convicted felon who spent years in federal prison for bank fraud.

On Feb. 21,the Rev. Steven E. Clapp, 64, contacted the Religious Institute, a non-profit group in Connecticut, and Many Voices, a non-profit in Washington, D.C., to tell them the non-profit he had run since 1996, The Christian Community Inc., was broke and the money Christian Community had been holding on the groups’ behalf was gone.

Religious Institute officials said it is owed more than $400,000; officials from Many Voices have refused to answer questions about the situation, but their website says they have been put “in a heartbreaking financial position.”

In a March 18 story, Clapp told The Journal Gazette that the collapse and loss of other groups’ funds was simply because of bad financial decisions and not because of any malfeasance, though non-profit experts questioned how that could be since Christian Community should not have been authorized to spend money that was not its own.

Since then, however, Clapp’s criminal record has come to light, showing a former pastor who not only bilked two banks, but, while out on bond, also swindled a third to finance his flight from justice.

The Journal Gazette has also learned of a loan program Clapp was running through Christian Community, promising investors 10 percent returns and encouraging participants to borrow against their 401(k) retirement funds to invest in it.

That money is also gone, Clapp told the newspaper, amounting to another $500,000, bringing the total amount missing somewhere close to $1 million.

In 1986, Clapp was indicted in a federal court in Danville, Ill., on 15 counts of giving false statements to an insured financial institution, alleging he obtained hundreds of thousands of dollars in bank loans using fake documents, according to court records and articles from the News-Gazette in Champaign, Ill.

The indictment was based on information discovered when Clapp’s companies, C-4 Computer and C-4 Resources, filed for bankruptcy in 1984. Clapp had used sales contracts for computers and software to area churches and colleges as collateral for loans from two Illinois banks, but those sales contracts were faked, the newspaper reported.

On the run

Clapp’s trial was to start in February 1987, but in January, Clapp defrauded a third bank of $500,000 while out on bond, then used the money to flee, becoming a federal fugitive, court records show.

He was arrested in March 1988 at the airport in New Orleans and pleaded guilty a month later to seven of the original charges, plus a new charge of fraud on a federally insured bank for the loan from the third bank and failure to appear, according to court documents.

On June 17, 1988, Clapp was sentenced to 13 years in prison and was expected to serve between 40 and 52 months of that. He was also ordered to pay more than $2.1 million in restitution.

The News-Gazette quoted the judge at Clapp’s sentencing as calling the ordained minister’s crimes “a shocking situation.”

“Considering his background, his education and original calling, it’s especially disturbing that he turned out to be a charlatan,” the judge said.

Clapp was released about 56 months later, on Jan. 22, 1993, and moved to Fort Wayne, where Clapp said he joined Lincolnshire Church of the Brethren at the invitation of Jerry Peterson, who was then pastor.

Clapp said he met Peterson in Illinois when Peterson married the daughter of a member of the church where Clapp was pastor. According to church records, Clapp had been a United Methodist minister in Illinois until 1984, when he left to join another denomination. Clapp said it was to join the Church of the Brethren, but denomination officials did not return calls asking to verify Clapp’s ordination.

He gave up his ordination in light of his crimes, he said, and now says he is ordained through Christian Community.

His résumé lists an MBA from Northwestern University, but the university has no record he was ever a student there.

In an interview last week, Clapp said he accepted Peterson’s offer of a part-time position with Lincolnshire Church of the Brethren as a way to make a clean start. Christian Community Inc. still shares an address with Lincolnshire Church of the Brethren, and until recently Clapp was featured on the church’s website.

“In this congregation, (the felony conviction) was fully disclosed to the people here,” Clapp said. “I went to some pains to disclose it.”

Within months, he was working for Christian Community Inc., of which Peterson was a founding board member.

Christian Community founder Terry Hatfield told The Journal Gazette that Peterson asked him if he would be willing to turn over leadership of Christian Community to him and Clapp. Hatfield did so, he said, thinking it would be a good continuation of the group’s mission.

By June of 1994 – less than 18 months after Clapp’s release from prison – documents were filed with the Indiana Secretary of State showing Peterson replacing Hatfield as president of the non-profit corporation and listing Clapp as its secretary. By 1996, Clapp was listed as president, though he was still on probation for his fraud convictions.

Peterson, who eventually left the ministry, would later become president and CEO of United Way of Allen County. He left that position in 2010 and is now a facilitator at the Contra Costa LGBTQ Youth Advocacy Collaborative in Concord, Calif., according to his LinkedIn profile. He did not return phone or email messages left there over a period of a week. Peterson continued to be listed as an officer in the corporation on annual reports to the Secretary of State through 2010.

‘Difficult to reconcile’

The financial collapse of Christian Community nearly wrecked the Religious Institute, a religious advocacy organization to promote sexual health and reproductive rights, which was using Christian Community as a fiscal sponsor.

Fiscal sponsor means those groups did not have tax-exempt status of their own. Instead, they operated under Christian Community’s tax-exempt status, and Christian Community handled all their finances, including taking in donations and paying bills and staff.

Under that model, Christian Community would not normally be authorized to use those groups’ money for anything other than those groups’ expenses; Religious Institute officials have said they lost $424,000 that Christian Community held for them. They now have a nearby Unitarian church as a fiscal sponsor and are seeking their own tax-exempt status.

Clapp was released from probation March 31, 2000, court records show. Christian Community became fiscal sponsor for Religious Institute in May 2001, officials said.

The Rev. Debra Haffner, executive director for the Religious Institute, said she was shocked to learn Clapp is a convicted felon, and even more surprised to learn that his probation had ended just over a year before he took control of her group’s finances.

“I was almost disbelieving. It felt very difficult to reconcile that to the person I had known since 1998,” Haffner said. “The initial news was horrible, but the extent of the betrayal and how long it’s gone on is even more difficult.”

Haffner said Clapp was well-known and well-respected, and there was never any reason to doubt or question him.

“If we were the only victim, I would really be questioning my own judgment at this time,” she said. “But there are many organizations and many victims … He was obviously very good at what he did in a way that’s horrifying.”

Clapp declines to say how many organizations were hurt or how much money was involved, but he has disputed the $424,000 figure Haffner claims the Religious Institute has lost. He also says that selling Christian Community’s inventory of publications, its copyrights and programs may help restore other groups’ funds that were lost.

Ann Thompson Cook, co-director of Many Voices, declined to comment.

New Life Ministries was another organization involved with Christian Community, though the links are unclear. A Christian Community publication said New Life Ministries was run by Christian Community staff, but was a separate organization with its own board.

Kristen Helbert was director of outreach for Christian Community, but also executive director of New Life Ministries.

Helbert would not say who the board members are or whether the organization has lost any money in Christian Community’s collapse. She also didn’t know with what state the group filed incorporation paperwork.

When asked whether Christian Community had withheld taxes from her paychecks, as required by law, she declined to comment. When Clapp was asked whether Christian Community had paid payroll taxes for its employees, he also had no comment.

An opportunity

In addition to the organizations’ funds held by Christian Community, there was the E3 Dynamic Church Movement, described as a national program to revitalize churches and expand membership. It was to reach 1,200 churches, but needed $600,000 in startup money.

Christian Community had $100,000 for the program, Clapp wrote in a letter to prospective investors, but “the bylaws of Christian Community do not permit commercial borrowing.” Therefore, “I am writing to ask your prayerful consideration of a loan to Christian Community to help with the start-up expenses of this project.”

Haffner’s sister, Jodi Wallace, shared the letters with The Journal Gazette.

Clapp went on to write that the group would like to borrow a total of $500,000 with the minimum loan being $50,000. The loans would pay 10 percent interest, Clapp wrote, and are safe because “Christian Community’s income is adequate to repay the $500,000 even without the income projected in the E3 project.”

He also said E3 had won a $500,000 grant and had more grants on the way. Because the interest rate was so high, the letter said, people should consider borrowing against their underperforming 401(k) accounts to invest in E3.

“Christian Community has good reserves but does not want to deplete them for funding the front end of this project,” Clapp wrote. The E3 program would provide intensive training to congregations on how to engage and expand their membership, with one of the five modules supposed to increase membership by 20 percent in a year.

Clapp said in an interview that at the time he wrote the letters – one is dated March 14, 2011 – Christian Community would have been able to repay anyone who wanted their money back.

“And we paid out 10 percent interest,” Clapp said. “But the development was expensive and it took longer than we anticipated it taking.”

After more questioning, Clapp said about $500,000 in loans had been made, and all of the money was gone. He refused, however, to say how many people had invested.

The Religious Institute’s Haffner and her husband have said they lent Christian Community $100,000; her sister Jodi Wallace said she lent $75,000 and their mother lent $100,000.

“The loan thing, it’s money that’s lost, and it’s tragic,” Clapp said, but he insisted that all the money had been spent on the program, not diverted or spent in other ways.

“There’s no hidden money, there’s no hidden account. There’s no condominium, there’s no anything,” he said.

When it was suggested it was unlikely anyone would believe him, he said, “I know.”

One reason the Religious Institute’s Haffner believed him, she said, was Clapp gave them audits showing Christian Community’s finances were sound. But a 2009 audit is signed by “Donald Yocum, C.P.A.” of Chicago. According to the Illinois Division of Professional Regulation, which licenses accountants in Illinois, there is no accountant with that name. There are none licensed by that name in Indiana, either.

Clapp refused to comment on the audit, saying “I’m not going to go there.”

Other Christian Community board members included Jan Fairchild of Eugene, Ore. A man answering her phone number there said he had bought the house from Fairchild years ago and believed she had moved to Missouri.

No Jan Fairchild could be found in Missouri.

Another Christian Community board member was the Rev. Pat Helman. But Helman’s daughter, Patty Magaro, said Helman had Alzheimer’s the last three years of her life, starting in 2002, and did not leave home. Helman was listed as a board member through 2004; she died in 2005.

The final board member is Sara Sprunger, Clapp’s wife.

The Indiana Attorney General’s Office, which oversees non-profits, is investigating. Spokeswoman Erin Reese said the office is aware of Clapp’s criminal past but could not comment further on the investigation.

Clapp said the entire thing is just a financial tragedy caused by bad decisions, not malfeasance.

dstockman@jg.net

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