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  1. Frogman

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    Health Ministry Fraud Alleged
    Ohio seeks $16 million in damages against Christian Brotherhood Newsletter.

    By Chuck Fager | posted 3/9/01

    Was an Ohio-based nationwide "biblical medical plan" used as a slush fund to enrich the founder and his family members? Ohio Attorney General Betty Montgomery says that's what happened to "hundreds of thousands of dollars" belonging to the Christian Brotherhood Newsletter, and she filed suit in December to get the money back. Charging numerous instances of fraud and conversion of ministry funds and property to private use, the lawsuit demands return of property and cash valued at more than $2.4 million, and alleges that Hawthorn took larger sums without leaving a paper trail. Montgomery demands $16.3 million in punitive damages, all to go back to Christian Brotherhood, under new leadership.

    Bruce Hawthorn, 59, founded Christian Brotherhood Newsletter in 1982 after successfully appealing to fellow Christians to help with his medical bills following a near-fatal car crash. Hawthorn, the son of a Wesleyan Methodist minister, was then operating a rescue mission for alcoholics in Barberton, Ohio.

    Christian Brotherhood, billed as "a proven and biblical method for Christians to share one another's medical bills without using insurance of any kind, "grew rapidly and now operates in all 50 states. It publishes subscribers' medical expenses as "needs," which are paid by regular contributions from other subscribers. The organization handles millions of dollars worth of medical bills per month for its estimated 40,000 subscribers. Similar programs have sprung up in its wake (CT, Oct. 2, 2000, p. 24).

    Dancer Paid $41,000

    Along the way, however, Hawthorn allegedly raided approximately $728,200 from Christian Brotherhood's accounts for cars, a motor home, real estate, an airplane, and cash to benefit himself and family members. The lawsuit also asserts that, beginning in 1996, "defendant Hawthorn engaged in a relationship with Tabitha Ball, then a 21-year-old employee of an exotic dance club." Ball, briefly on the ministry payroll, was also provided free rent, a car, and credit-card payments totaling over $41,000 during the next two years.

    The suit contends that this and other such unauthorized spending hampered Christian Brotherhood's ability to keep up with subscribers' medical bills. Recent delays in payment ranged up to 18 months, and as much as $34 million in unpaid needs accumulated.

    Among former employees who cooperated with the Ohio investigators were Fe Hawthorn and Judith Bolois. Fe Hawthorn, who is Bruce Hawthorn's stepmother, worked for a decade in Christian Brotherhood's accounting and needs-processing departments. She provided detailed information about millions of dollars "wrongfully transferred" to Bruce Hawthorn and other insiders. Hawthorn said they were skimming $75,000 per month from Christian Brotherhood member claim funds, in addition to numerous irregular "loans" and other payments.

    Judith Bolois worked in the subscriber office and, with her family, subscribed to Christian Brotherhood until last spring. "For many years, until the late 1990s, the Christian Brotherhood Newsletter program operated successfully, meeting subscribers' medical needs as they were incurred," she testified.

    But then, she said, unpaid claims piled up because of insiders abusing Christian Brotherhood funds. Subscribers complained "about being sent to collection agencies, about having liens placed against their homes, and about the breach of trust that [Christian Brotherhood] had caused," Bolois said.

    Hawthorn's office did not return Christianity Today's calls seeking comment.

    The Internal Revenue Service, concerned that Christian Brotherhood board members were mostly Hawthorn family members, began investigating. Christian Brotherhood elected five new board members in November 1999, including Richard Lupton of Troutville, Virginia, and Howard Russell, a Knoxville, Tennessee, pastor. Russell, an old friend of Hawthorn's and a veteran of many nonprofit boards, was elected board chairman.

    "There was a learning curve, but it didn't take long to see that there were certain irregularities occurring," Russell told CT. Russell called an emergency board meeting in April 2000. "I figured then it was just an error in judgment and they'd straighten things out."

    But the same thing happened the next month, and "instead of an apology, the board heard a defense of why things were that way and should be." Russell said he often heard the statement that "God gave this ministry to Bruce Hawthorn."

    "But," Russell added, "we're expected to be stewards and to do what's right."

    Legal Maneuvers

    The board placed Hawthorn on a six-month leave last May. "We were still hoping that he would come to understand how things need to work, and the policies that needed to be adhered to," Russell said.

    The board also brought in a new management team to reduce the backlog of unpaid needs. The Ohio attorney general's filing says the unpaid total was reduced from $34 million to $20 million "over a relatively short period of time."

    "We were seeing significant success," Russell says, "with solid numbers."

    Hawthorn and his allies resisted these changes, Russell says, and last November the board voted to extend Hawthorn's leave indefinitely.

    Hawthorn responded on December 4, attempting to hold a rump board meeting to oust Russell and Lupton. Russell and other excluded members arrived in time to thwart this move, at least temporarily, despite what Russell and the lawsuit refer to as "threats of violence " against them.

    But two days later, according to the complaint, Hawthorn unilaterally advised Russell that he and Lupton were suspended from the board. Hawthorn then changed the locks on the Christian Brotherhood offices and dismissed the new management team, the complaint says.

    Russell and Lupton turned to the Ohio attorney general's office, which filed a lawsuit seeking the multimillion-dollar damage award and an injunction to stop their ouster. A second action, filed on December 22, asks an Ohio court of appeals to remove Hawthorn and his associates from the board, to restore Russell and the other independent board members, or to put the ministry in receivership.

    The Christian Brotherhood Newsletter is still operating, though numerous subscribers have reportedly dropped out. Hawthorn is using ministry funds to pay his attorney, E. Marie Wheeler of Akron.

    Wheeler could not be reached for comment. But Akron's Beacon Journal quoted Wheeler saying in a court motion, "This lawsuit is just another negotiating tool being used by Russell and Lupton to take control of the mission. … This lawsuit is intended to harass the defendants and to be a fishing expedition by the Ohio attorney general."

    Summit County Prosecutor Michael Callahan was reportedly investigating possible criminal violations involved in Christian Brotherhood operations, but Callahan lost his bid for reelection in November. The staff of the new prosecutor, Sherri Bevan Walsh, would not say whether the probe was continuing.

    Russell is not optimistic about the ministry's future: "I believe it will require the hand of God to restore this ministry to integrity and righteousness."

    Received this through an e-mail group forum. thought I would share it with you guys.

    Bro. Dallas
     

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