Suit Against Pastor Finally Yields Money : Loans: After nearly a decade of legal wrangling, parishioners are recovering cash lent to the Rev. William Steuart McBirnie, who mismanaged their funds.

Walter and Myra Kendall of Glendale lost $5,000 after lending $8,000 to a pastor they trusted.

Blanche Reese lost her life savings of $23,500 to the same man.

So did Dorcas Burton, who was forced to move from her Glendale apartment and find cheaper housing at the Concord senior citizens complex in Pasadena.

When they and 22 other creditors filed suit in April, 1984, against their former minister--the Rev. William Steuart McBirnie--the group never expected it would take nearly a decade to recover their losses.

“We felt it was a winning case and it was (only) a matter of time,” said Walter Kendall, 54, the principal complainant against McBirnie and his various organizations. “We were optimistic.”

About $700,000 in checks from an April, 1985, judgment in favor of the creditors finally arrived in the mail last month, said Christ T. Troupis, the plaintiffs’ attorney. Funds were made available after several legal entanglements in bankruptcy court and a flood of failed appeals by McBirnie’s attorneys.

U.S. Supreme Court justices rejected the last appeal in January, 1988, Troupis said.

Bankruptcy trustees appointed to handle the settlement money did not return phone messages. McBirnie could not be located.

Meanwhile, most creditors are not divulging the amount they received in the settlement.

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Part of their concern is that they do not want to anger about 400 other plaintiffs, mainly from the San Gabriel Valley and Northwest Los Angeles, who have yet to be paid. They are seeking an additional $3.5 million, but only $1.6 million in assets is left, Troupis said.

Based on the original 1984 suit, McBirnie solicited loans from 1972 to 1980 while he was pastor of the United Community Church in Glendale. He told congregation members that the money would be used to help finance construction projects for such church-affiliated buildings as a research library, training centers and an auditorium.

“He had a gift of gab,” Kendall said. “You tend to trust him just because of the presentation of himself (on the pulpit).”

Plaintiffs who loaned amounts ranging from $1,000 to more than $25,000 claimed McBirnie not only mismanaged their money, but also spent some of it on himself and properties he bought.

After the judgment against McBirnie, he stepped down as senior minister of the church in 1986. The organizations he founded--including the church, the California Graduate School of Theology and the Concord Senior Housing Foundation in Pasadena--were forced into bankruptcy proceedings to forestall creditors.

Money raised from the sale of McBirnie’s properties is being used to pay back creditors.

Bankruptcy trustees are scheduled to come up with a payment plan for the remaining unpaid creditors, who are not expected to recover their full amounts with interest, Troupis said.

The ages of the 26 creditors who won the initial judgment now range from their 50s to the late 90s. Five never lived to see the money, and two still can’t be found: Rose Bussey and Mary Jane Layman.

Hazel Smith died a month after the judgment was announced.

“If she were still alive, she would almost be 101 years old,” said her 67-year-old son, Harley. “We just have to move on. Nobody’s going to be able to undo the things that (were) done.”

Indeed, Hazel Smith and the Kendalls were among those who decided to start over and form their own church--Christ Evangelical Free Church--in Glendale in 1982.

“I think we just wanted to maintain our cohesiveness as a group,” said Walter Kendall, who had been going to McBirnie’s church since 1975. He is an elder at the Evangelical Free Church and keeps in touch with most of the creditors.

Kendall said the losses were tougher on those creditors--mostly widows--who lost their life savings.

“Some of the people got emotional about it,” he said. “They were disappointed . . . upset with the idea of a minister not managing the money properly.”

Said Troupis: “The people who were owed the most were people like Blanche Reese. This is a lot of money to her.”

Getting the settlement check “just settled a lot of anxieties for her,” he said.

Before that, Reese had to live on her Social Security income and received financial help from the Kendalls and others in the community.

Throughout the ordeal, Kendall said, he has been able to forgive McBirnie, but is more careful about whom or what groups he trusts with his money. “We’re looking at organizations a little bit more closely now,” he said.