$1 Million Punitive Damages Added to Claim on McBirnie : McBirnie Ordered to Pay $1 Million Punitive Damages

Glendale minister William Steuart McBirnie has been ordered to pay $1 million in punitive damages to 24 former members of his United Community Church who were never repaid for loans made to organizations headed by McBirnie.

Commissioner Florence-Marie Cooper ruled Monday in the Glendale division of Los Angeles Superior Court that McBirnie and nine organizations connected to his religious empire must pay former parishioners the $1 million in addition to about $221,000 in unpaid loans and accrued interest. McBirnie and his organizations also must pay $13,110 in court costs and attorney’s fees.

Cooper ruled last week that McBirnie and his organizations were involved in fraudulent activities in connection with the loans and that they “at no time intended to fulfill the promises made at the time the money was borrowed.”

Attorneys for McBirnie said they would appeal Cooper’s ruling on the grounds that the minister was never properly served with a complaint in the case. One of his attorneys, Robert Garcin, said that the former parishioners wrongfully accused McBirnie of fraud and that “personal animosity found its way into the trial.”

Loans ‘Protected by Credit Record’

McBirnie solicited the loans from 1972 to 1980 under the pretext that they would bear 8% to 12% annual interest, according to court documents. The loans would be protected by “the outstanding and unblemished credit record” of McBirnie’s organizations, according to a flyer introduced as evidence. The flyer promised: “Your savings can work for God and country and at the same time be very profitable for you!”

The money was to be used to help finance construction of church-affiliated buildings, such as a research library, training centers and the United Community Church auditorium at Kenwood Avenue and Colorado Street, according to court records. The loans were for amounts ranging from $1,000 to $25,000.

Punitive damages were justified, Cooper said at a hearing last week, because “general damages, standing alone, will do nothing to deter this kind of wrongful conduct in the future.”

Besides McBirnie, the suit named organizations founded by the 65-year-old clergyman and operated out of his blocklong complex of offices in downtown Glendale. They are: Community Churches of America, California Graduate School of Theology, Center for Americanism Studies, Voice of Americanism, United Community Churches of America, Heritage Foundation, Concord Senior Housing Foundation, United Community Church and World Emergency.

Cooper ordered all defendants in the suit to make restitution. She found that the various McBirnie-founded entities are treated “interchangeably as if they were one” and that they are under McBirnie’s control.

Twenty-three parishioners loaned money to Community Churches of America, the umbrella organization for McBirnie’s enterprises at the time the loans were made; one plaintiff loaned money to the minister’s anti-communist Voice of Americanism radio program. With the exception of the radio program, all of McBirnie’s organizations are supposed to be nonprofit.

Life Savings Invested

The plaintiffs, many of them senior citizens who said they had invested substantial amounts of their life savings, had asked for $5 million in punitive damages when the suit was filed a year ago. Nevertheless, their attorney, Christ T. Troupis, said he was satisfied with Cooper’s ruling, calling it a compassionate decision on behalf of his clients.

“I find $1 million to be a significant amount of money,” Troupis said. “It indicates that the judge was very concerned and very angered over McBirnie and the activities of his various organizations.”

Troupis said his clients’ money was misspent, although some of it did go toward building church projects. The rest, he said, went to pay off debts for other entities and for McBirnie’s personal use.

Garcin said that a complaint was served at his office but that he wasn’t authorized at the time to accept the complaint on McBirnie’s behalf.

Because the complaint went unanswered, McBirnie’s attorneys were not allowed to present written or oral arguments at the hearing. Garcin said McBirnie “is looking forward to the day he can get into court to show what an injustice is being done.”

Complaint Served

Troupis, however, maintains that the complaint was served properly and called arguments to the contrary “nonsense.”

Calls placed to McBirnie at his Glendale headquarters were referred to Garcin.

McBirnie came to the Glendale area in 1961, accepting a position as senior pastor at the United Community Church of Glendale. He won over thousands of listeners with his stridently political radio broadcasts and built the church’s membership from about 100 to more than 1,000.

Among the avid listeners who became followers of McBirnie is Blanche Reese, a 75-year-old Glendale widow who lost more than $23,000 and who now gets by on monthly Social Security checks and the help of friends. Reese, who belonged to the United Community Church for 20 years, said she responded to McBirnie’s pleas from the pulpit to help construct church buildings because “I trusted him.”

Reese said she was so moved by McBirnie that she even convinced her sister, a Voice of Americanism listener who lives in Sacramento, to make a $10,000 loan, which has not been repaid. Her sister, she said, has a suit against McBirnie pending in a Sacramento court.

“I can’t have any respect for him. We helped him when he needed help and now I need help and he won’t help,” Reese said of McBirnie. “If a minister preaches the Gospel and doesn’t practice it in his own life, then you lose faith in him.”

Church Went Broke

But McBirnie’s attorneys claim that there was no fraud and that the loans were solicited with the intent to pay them back. The loans were not repaid, Garcin said, because Community Churches of America went broke.

“It’s kind of like Chrysler went broke once and Lockheed went broke once,” Garcin said. “Companies do go broke. CCA is bankrupt. They’re without assets; they’re without funds to pay back all those notes.”

Garcin conceded that the former parishioners had a right to seek collection on their promissory notes but he said that charging McBirnie with fraud was unjustified and grew out of feelings of “spite, animosity, anger, dislike, whatever you want to call it.”

The request for punitive damages, he said, may have stemmed from the plaintiffs’ own greed.

Garcin maintains that McBirnie was only acting as president of a corporation when he signed promissory notes on behalf of Community Churches of America and should not be held personally responsible for repaying loans.

Community Churches of America is no longer affiliated with McBirnie’s organizations, Garcin said, because it merged “some years back” with a Washington, D.C.-based corporation, which he declined to name.

Sale of Assets

Troupis said there is no truth to the claim that Community Churches of America is bankrupt. He said the purpose of the merger was to force people to go to Washington in order to file claims against the organization. Troupis said he intends to collect the money owed his clients by conducting a sheriff’s sale of property belonging to McBirnie’s organizations.

“There are assets there,” Troupis said. “It’s just a matter of whose name they happen to be in at this point in time.”

In 1983, Troupis oversaw the public auction of eight buildings owned by McBirnie organizations to collect a $76,000 debt owed to the Thomas Nelson Publishing Co. of Nashville, Tenn., for Bibles ordered by Community Churches of America. The publishing company claimed title to the auctioned property but returned it to McBirnie’s control when the debt was paid within a year.

One of the properties auctioned was the Concord, a senior-citizen apartment in Pasadena whose residents filed a class-action suit against McBirnie in 1982. The Concord was a operating under a federal Department of Housing and Urban Development rent-subsidy program when it was purchased by McBirnie’s Concord Senior Housing Foundation in 1979.

Rents Would Double

McBirnie’s organization paid off the 34-year debt remaining on HUD’s 50-year mortgage, put the building up for sale for a $3 million profit and notified tenants that their rents would be doubled. The tenants were threatened with eviction when they filed suit to stop the action.

The tenants won their court battle and the Concord went back under the authority of HUD’s subsidy program. The mortgage prepayment was rescinded but Concord Senior Housing Foundation still owns the building, making payments to HUD for the life of the mortgage.

McBirnie faces more court battles, according to Troupis. The attorney said he has two other suits similar to the one heard by Cooper last week. Those suits, pending in Glendale courts, claim that McBirnie defaulted on $100,000 worth of loans from other parishioners.

Troupis said he also has been contacted by at least four other people who want to pursue claims. He said he also has spoken with six attorneys who plan to file claims on behalf of clients who lost about $300,000 in unpaid loans.