After the publicity around LWCC/Hammond’s endorsement of a candidate in October '06, an anonymous source gave The Minnesota Independent (MNIND), an online newspaper, a copy of a lengthy financial report on LWCC that had been prepared in late 2004.
The report had been prepared by "Marshall Financial Group [then known as The Marshall Group], a non-bank lending company that set up and serviced large participation loans, mostly in real estate… Its core business had been organizing and leading loans that were too big for one bank to handle..." Source: Mpls/St Paul Business Journal 11/13/08
MNIND reported that the Marshall Group docs seemed to show financial deals that "heavily benefited Hammond personally." The Marshall Group report listed "generous loans Hammond received from the church totalling $1.9 million. It outlined agreements for rental of airplanes he purchased with church loans, then leased back to the church--at a profit to him of nearly $900,000." MNIND sent the docs to a tax watchdog group (CREW) for its opinion. After seeing the documents, CREW filed a complaint with the IRS.
From the report, here are dates and amounts of loans to Hammond from 1999-2004, and a few other dealings. It's long and slow loading, but if you want to see for yourself, access it here.
LWCC had been founded in 1980 and operated as LWCC. In 12/94 Living Word International Inc. incorporated for religious/charitable purposes. Revenues and expenses of LW Int'l have been intermingled with those of LWCC.
In April 1998, LWCC borrowed $1 million to buy 500 acres near Brainerd. LWCC representatives said it might be developed into a camp. As of the writing of the Marshall Group report, this land had not been developed.
Loan #1. In 7/99 LWCC sold an airplane to Hammond for $1,063,000. LWCC was paid $700,000 in cash and given promissory note for $363,000 at 8.7%. (In other words, it agreed to let Hammond pay off the remainder of the cost over time, in effect loaning him $363,000 toward the cost of the airplane.)
Loan #2. In 4/02 LWCC gave Hammond an additional loan of $30,500. The July ‘99 note for the airplane was restated at $159,000. According to the church, the note was “paid in full” by April, 2003.
Loans #3, 4. In 2000 LWCC two or more loans not including the $30,500. These combined for a 2002 balance of $568,000.
These next two transactions were explained in this way: A business “related by management control” (which the Marshall report didn’t name, but “related by management control” sounds like Hammond or someone close to him) operated internet service and receives subscription revenues for total of hundreds of thousands in ’03 & ’04.
The Church’s integrated auxiliary, Living Word International, Inc., has a contract with a corporation related by management control to provide internet services to Living Word Int’l Inc. Terms of the agreement call for set fees to be paid to this corporation based on the number of subscribers to the proprietary internet service to be offered by the auxiliary church. The corp. provides the necessary access, service and support to allow subscribers to access the auxiliary Church’s internet portal. Living Word International, Inc. is the only customer of this corporation.
?1st loan to Hammond-owned corporation? In December, 2000, LWCC made a $180,000 loan through Living Word Int’l to “a related corporation that is providing internet services.”
?2nd loan to Hammond-owned corporation? In June of 2001 there was a second loan to this “related corporation providing internet services” for $198,000. (This was later combined with the 12/00 loan for total of $378,000, unsecured, due 12/04. )
Loan #5. In 12/01 Hammond was given an unsecured loan for $15,000 5.75%. Monthly payments were $288; was declared paid in full in 8/03.
Loan #6. In 5/02 LWCC made another loan to its senior pastor, this time for $155,000, secured by an airplane hangar.
Loan #7. In 5/03 LWCC borrowed $630,000 for a hangar for “leased aircraft.”
Loan #8. In 12/03, LWCC loaned another $177,133 to Hammond, unsecured.
Loan #9. In March ’03 there was yet another unsecured loan to the “Senior Pastor-President,” this time for $225,000.
What questions does this raise in your mind? How about these for starters.
Why was LWCC was loaning large sums of money to Hammond again and again? LWCC is not a bank or lending institution. Secondly, why does Hammond keep seeking loans from LWCC? Why doesn't he go to his bank or other lender?
More from the Marshall Group report, what it means, why it matters, and what happened next, in future posts.
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