Monday, February 05, 2001

Newsletter accused of siphoning money

Publication took cash on promise of insurance

The Associated Press

        BARBERTON, Ohio — Two supporters of a newsletter that urged subscribers to drop their health insurance and donate money to pay each other's medical bills now are accusing the group's administrators of skimming money to pay for extravagant homes and airplanes while millions of dollars in subscriber bills go unpaid.

        The monthly “Christian Brotherhood Newsletter,” at its peak, had 80,000 subscribers donating $50 million a year to cover the health costs of the group. They paid a set monthly fee to the newsletter to cover each other's medical bills; one payment a year went to Christian Brothers to run the program.

        Several states said the newsletter was an illegal insurance program and tried to ban it — a handful, including Wisconsin, Delaware, Washington and Maryland succeeded.

        Legal battles against the newsletter often were unsuccessful because none of the subscribers ever complained. In 1998, the Iowa Supreme Court ruled the newsletter lacked a key element to be classified as an insurance company — the insurer didn't risk losing any money on the insured.

        But now friends and supporters of newsletter founder, the Rev. Bruce Hawthorn, are speaking out against him and subscribers are being harassed by collection agencies because $8 million in claims haven't been paid, the Akron Beacon Journal reported Sunday.

        Half the newsletter's subscribers have dropped out and the IRS has started an investigation that already has resulted in the organization agreeing to pay more than $180,000 in back taxes.

        Attorney General Betty Montgomery filed a lawsuit against the Rev. Hawthorn Dec. 11. Allegations range from financial fraud to having an exotic dancer on the payroll.

        The Rev. Hawthorn refused to talk with the Beacon Journal, except to say he is innocent.

        “It's people trying to take away our organization illegally and they won't succeed,” he said.

        The Associated Press was unable to reach the Rev. Hawthorn for comment Sunday. He has an unlisted home phone number and there was no answer at the newsletter office.

        Richard Lupton, a Virginia pastor, is a former newsletter trustee who helped Montgomery's office in its lawsuit.

        On Dec. 6, the Rev. Hawthorn changed the office locks and kicked Mr. Lupton and another former trustee, Howard Russell, out of the organization. The pair went to the attorney general's office to turn in the Rev. Hawthorn.

        They said they went to Ms. Montgomery because the newsletter's founder was corrupted along the way by his own success, and they were morally obligated to protect the subscribers.

        As many as six years ago, a lawyer working for subscribers questioned some of the newsletter's expenses, including 53 pieces of real estate, including the Rev. Hawthorn's $1.1 million farm and 16 homes where employees, mainly relatives, lived for free or for rents far below market value.


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- Newsletter accused of siphoning money