AME Class Action Claims Church Fiduciaries Lost $90M of Employees Retirement Funds

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AME Church Retirement Fund Class Action Overview:

• Who: AME Church is being sued by employees and pastors who say church fiduciaries mismanaged their retirement funds.
• Why: The plaintiffs allege about 5,000 church staff have been affected after the fiduciaries mishandled and lost nearly $90 million in retirement funds.
• Where: The lawsuit was filed in a Maryland federal court.

Managers of a church retirement fund have been hit with a class action lawsuit alleging they mishandled and lost nearly $90 million of retirement funds, affecting nearly 5,000 church employees.

Former minister Ret. Presiding Elder Cedric Alexander filed the class action complaint against AME Church’s fiduciaries Mar. 22 in a Maryland federal court, alleging violations of the Employee Retirement Income Security Act (ERISA) and breach of contractual and fiduciary duties, according to an AARP press release. AARP is an interest group for those over 50 years old.

The AME Church is the oldest and one of the largest U.S. Protestant denominations and historically Black churches with more than 2.5 million members and 7,000 congregations worldwide.

The lawsuit alleges church leadership mismanaged their duties by not honoring an earned and promised pension plan for pastors, elders, bishops and other employees of affiliated colleges and seminaries.   

“As a result of the African Methodist Episcopal Church’s gross financial mishandling, nearly 5,000 pastors, church elders and other employees find themselves contemplating a future without the retirement funds they were depending on,” said William Alvarado Rivera, AARP senior vice president of litigation. “These employees and retirees served their community for years, some even decades, and justice requires they receive their deserved earnings they were promised.” 

AME Church Retirement Funds Allegedly Put in Risky Investments

AME Church Retirement plan participants had been told for years that contributions from individual local churches were invested in a conservative life insurance company, the lawsuit states.

Employees were told the fund was covered by ERISA, and that they had federal pension protections. AME promised to contribute 12% of each participant’s annual wages into their retirement fund. 

However, in reality, two-thirds of the funds, approximately $90 million, were instead invested in a risky venture capital company and an ultimately valueless real estate deal, the lawsuit states.

AME leadership told participants in February the retirement plan was in fact not covered by ERISA because of a religious exemption, meaning there is no federal insurance to protect against the loss.

What do you think of the way church leadership allegedly managed these funds? Let us know in the comments! 

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