Georgia Bankruptcy Blog

Update February 12, 2009 - Debtor Cornerstone and the Creditors Committee have filed a Joint Plan of Reorganization and a Joint Disclosure Statement.

Update Dec. 12, 2008 - Bankruptcy Court to appoint Examiner.

Cornerstone Ministries Investments, Inc. (google finance) filed a Chapter 11 Petition in the Northern District of Georgia on February 10, 2008, Case No. 08-20355.  From the organization's website --

Cornerstone was founded in 1985 to finance church growth and building programs. Often, church plants and start-ups cannot secure financing from conventional sources. That's where Cornerstone helps. Since our founding, we have financed more than 170 churches and assisted hundreds of others with advice and counsel. In that time, none of the churches we have financed have experienced bankruptcy.

We provide short-term (1-3 years) funding so that the churches can get established and begin to grow in their own facilities. It has been shown that churches grow 15-20% faster in the right facilities.

The filing reflects total assets of $159 million, and liabilities of about $154 million, as of September 2007. The largest unsecured creditor is Trinity Trust Company, of Reno, NV, with a claim of $141 million.  CEDE & Co., of New York, a company that often holds stock for other companies, is listed as holding  debt of over $4 million. Other creditors (over 3,000) are listed here.

Update March 17, 2008 -  The debtor has filed the following documents -

• Statement of Financial Affairs and Schedules.
• Schedule of Bondholders
• Schedule of Vendors
• Equity Security Holders

Scott Riddle's practice focuses on bankruptcy and litigation. Scott has represented Chapter 11 debtors, creditors, trustees and other interested parties in bankruptcy cases and bankruptcy litigation.  For more information, click here.

Cornerstone accepted investments as a faith based organization originally intended to take those investment dollars and make loans to churches, schools etc. They evolved into a company making extremely speculative real estate loans many to closely held development companies owned by Cornerstone officers and directors. Their lending practices where in conflict with the best interests of Cornerstone's investors. Many of those loans become due in 2008 and will likely be impaired resulting in serious investor losses. Someone needs to investigate this company to see if some of their practices were in violation of law.

Jim, So was this situation like the former Arizona Baptist Foundation situation or the Alanar situation if you are familiar with those? I.E. The fund was supposed to only make first mortgage secured loans to Churches but the sponsors went in contravention to the organization's bylaws and invested the money outside the stated corporate purposes?

What type of ventures did this group invest in?

Are Jack Ottinger and Marv Hofflinger still affiliated with this fund?

Jim, that is a pretty incendiary statement you made. Are you willing to put up you first and last name on this blog (I have) Are you willing to name the companies and the names of the the officers and board of director members whom you claim made these speculative loans to their 'closely held companies'?
You are making serious allegations here,
can you back up your statements?

Jim - click chapter 11 petition on main blog page and you will find that Ottinger signed petition and Hoffinger is the biggest creditor.

So what can we expect next as investors? Is this the sort of thing where it will drag on and on and six years from now I get a check for eight bucks?

I just got the bankruptcy paperwork in the mail and am also wondering if there's any way of knowing if those who are small investors will get anything back. Anyone have any idea?

Do I have to pay income tax on the "Interest" I will prob. never see ??

Dan,
Read their latest quarterly report and the latest offering. They list the conflicts. The risk factors are especially telling.

To continue with HosedChurchPlanter's comment -
Cornerstone holds my grandmother's IRA investment. She did not receive her usual dividend check last month. Should she consider her investment lost until and unless Cornerstone can emerge from Chapter 11?

Wellstone is the largest borrower, officers and directors of CMI who have ownership interest in Wellstone: Jack Wehmiller 18.75%, Robert Covington 18.75%, Cecil Brooks 18.75%, John Ottinger 18.75%

CMI was highly leveraged and in many cases in a subordinant position. Wellstone, majority owned by CMI officers and directors, who owes CMI somewheres around $76,000,000 is not meeting some of their obligations. Their middlecreek development is encumbered by hundreds of thousands of dollars in liens and their sales are extremely slow. A good portion of CMI assests have been pledged for loans. Due to their leveraged position and the poor condition of the housing and credit markets it's hard to see how they can realistically restructure. Are the CMI difficulties a result of market conditions, poor management, conflicts of interest or bad faith. Management, past and present, needs to be held accountable.

Well, what do you bond holders want to do?
Iam 65 and most of my retirement in CMI bonds,now there is no income,now what? Maybe we should all [bond] together and hire a bankruptcy lawer to protect our investments.What say you?
Harley

Dan, click on the Chapter 11 Petition link on this page, it will prove what Jim stated. I am the daughter of a Christian senior who invested in Cornerstone. I told her years ago to put her IRA with a bank which is insured. She said that this Organization was "Christian" and she trusted them because they were Christian. She is now out over $13,000. She won't see a penny of that money. I told her to take the rest of her "Christian" holdings and put them in a cash account.

I think the worst people in the world are those that use faith to steal your money, in God's name. Some of those that ran CMI and Wellstone are living a great life in resort communities while the investors may have lost everything.

Thou shalt not steal! I think it is a law.

Jim

Is it for certain that the entire investment is lost? Aren't there some assets to recover in a liquidation?

We too were duped into thinking this fund was being used to build churches and nursing homes. Only later did we learn much of what was going on was speculative housing developments little better than condo flipping.

Dear Hosed,

Pray for a rapid turnaround in the housing market.

Does any one know if the creditors committe apponited by the judge in this case represents the trinty trust which holds all d,e,f,g bonds held in trust for cornerstone? The appointed counsel is Alston & Brid,Atlanta,Ga 404.881.7000.
This should be known,because if not each investor is on ther own.

Alston & Bird represents the unsecured creditors committee, which generally represents the general unsecured creditors as a whole. The committee generally does not pursue matters that might only affect some, but not all, the unsecured creditors. In cases where there is a significant number of bondholders, separate from the general unsecured creditors, a bondholder's committee is also appointed and has its own counsel. Additionally, in some cases, creditors or bondholders may have direct claims against other parties, such as officers and directors.

So Mr Riddle, help me out here. As small-time investors facing losses what actions should we be taking? Is there anything we should be doing other than mailing in the claim form stating the amount of our bonds and hoping for the best? Should we be picking up the phone and calling you (or somebody) for consultation? Or will the Alston and Bird firm be fighting to acheive whatever recovery of our investment is possible? Could individuals also have claims against investment firms who inappropriately recommended CMI?

thanks

I don't want to get into too much detail on the blog, but it is generally a wise move for creditors and bondholders to seek an independent review of the case where they may have different interests than the general unsecured creditors, where the debtor corporation may have been dominated by other parties, or where non-debtors played a major role in leading to the bankruptcy. The unsecured creditors committee and counsel may very well protect the interests of all creditors, but there are times when they do not.

My mothers investment was purchased in 2002, due to mature in 2007. The money was re-invested in Cornerstone without her permission or knowledge. She called Cornerstone, they could not give her an answer. What should she do?

For all of those concerned about loosing it all and are considering bringing additional attorneys to the table, I do not believe you are at a severe level of risk. There are still more assets than liabilities. If you owned a house, a car, and three rental properties and your net worth totaled 2M, but had no renters and therefore no income, you would not be able to pay basic living expenses once any cash on hand had been expired. This is a very similar situation for Cornerstone. The credit market has made it difficult (but not impossible) to refinance these debt obligations which is a key aspect of this business. There is still a great chance of receiving everything back, but unfortunately it does look as though it is going to take some time. The more attorneys that get involved the longer this process will take.

Google "trinity trust" the wife of trinity trust was an employee of either our advisors or us and then "elected" to be a board member of PIF/Cornerstone

Series F bond holders should look into the real possibility that that offering may have been illegal and therefore subject to recession. The SEC has questioned if there was a qualified indenture (trustee). Mr Riddle may be able to help.

Does anyone out there have any information about Wellstone
I am trying to help a widow, her daughter and their disabled daughter who have over $400,000 in bonds (their husband did a great job of accumulating funds but it looks like he got scammed like so many others).

Further comment: Does anyone out there have any information on whether CMI has deviated from their stated corporate purpose. Further, do any officers or directors of CMI have any ownership interest in Wellstone or other projects they have sponsored ?

You can go to this website and check out all the documents that have been filed by Cornerstone in the bankruptcy court. It shows the 20 creditors who seem to be owed the biggest amounts, check out who the TOP 2 are in that list of 20 that are on the court petition for Chapter 11, and also on another document it shows all 6188 bondholders, and another one has all the vendors who are owed money.
http://www.bmcgroup.com/

Bill,
Wellstone LLC is owned 75% by past or present officers or directors of CMI, no question! John Lowery, of Wellstone, has stated he was the largest shareholder. I think that's 100%. There are a number of "Wellstone" corporations involved in this injustice. There's a Wellstone Securities, there's a wellstone communities, there's a wellstone retirement,etc. They are all controlled by the same or similar groups of individuals. Those people have had serious conflicts of interest which I believe could be against the law! Please go to the SEC website and read their own statements in their amendments to their prospectus. Then go to your state's attorney general and the FBI and file complaints against those b-------!

Mark,
If you read CMI's sec filings you will find that CMI's assets are highly leveraged and are therefore at extreme risk. They have put some of their loans in second position to other secured creditors. They have used some of their loans as security to borrow funds that they can not repay and have guarantied other Wellstone loans with no security. If Wellstone can refinance their CMI loans with a third party lender or if there is a dramatic turnaround in the housing market there may be a chance for CMI bond holders, otherwise the outlook is bleak.

Cecil Brooks in the beginning was very convincing about his and CMI's integrity. Is there an objective professional in this field who can evaluate the data that's available and provide an objective evaluation of the situation.
Should all creditors attend the meeting in Gainsville?

Jim,

I tried to locate the info on SEC site. Do you have the info that you could post?
Thanks.

It appears that some former and current CMI officers also hold or held ownership or officer roles in one or more of the organizations that borrowed money from CMI, sometimes simultaneously. How can you justify CMI’s borrower and lender having linked transactions, in which a single individual or group of individuals were responsible for making the loan request and also approving the loan? Was this �"linked relationship� revealed to the CMI Board and/or to CMI stakeholders prior to the transactions? Was this practice approved in advance by the board of directors?

Is it true that extremely high fees were paid by certain borrower officials on behalf of “marketing expenses�? and “relationship building costs�? or certain properties: $1million sponsorship of a marathon, $ for golf course memberships, $ for charter airplane flights (both business and personal), $ for a guest appearance by Jay Leno, $ for numerous box seats for the Dallas Cowboy’s games, $ for donations to foundations and charities, etc. How were these fees paid? Were they revealed to and agreed by the lender’s board?

Anyone hear what the out come of the creditors meeting on the 18th ??

Jim,

Your posts paint a pessimistic view that regretably I can't argue with. I'm curious though what brought you here... do you stand to lose $ in CMI?

HCP

I am one of the top twenty unsecured bond holders. I found out yesterday the last two months of my interest was pulled back by Cornerstone after it had reached my bank and I had paid my bills. Now my brokerage firms says I owe them the money Cornerstone took back. Has any one had this to happen to them? How can this be legal? Not only do I not have my money in Cornerstone now I have to find a way to pay my brokerage firm.

Dear hosed,

CMI and Wellstone's negative impact goes far beyond the bond and stock holders. As it stands today there are plumbers, carpenters, landscapers, electricians and many others who could or will lose hundreds of thousands of dollars, perhaps millions.
There are neighbors to their proposed developments who have lost millions. Greed and corruption reach out in all directions.

Barbara,
Google "sec", click on "filings and forms", then "search for company filings" enter cornerstone ministries investments inc then scroll down to the 2007-10-04 filing(on right side of screen) and go to risk factors that start on pg 4 or 5.

To any of the top twenty, do you feel the mtg on the 18th was a good one and we are on the right track to getting CMI up and running again.
Also has any one explained why CMI is in the pickle they are in, there's lot's of rumors as to why, but what are the facts.

Thank you for your assessment of all the harm done by CMI. Yes, it really is a horrible thing. But that wasn't my question... so I'll ask again, what brings you here? Are you possibly affiliated with the people offering to buy CMI bankruptcy claims for 22 cents on dollar?

Aprox $103M of CMI assests consist of 2nd mortgages, much riskier than a 1st motgage. $35M of their 1st mortgages are pleaged to D B Zwirn.

Anybody out here heard about a capital investment co in N.Y that will buy cornerstone bonds for 22%??? Wonder if there is another investment deal out there that would pay us 35-40% ?? Think they know something we don't.What say you??

Jim:

Where do I find information about the
pledges to D.B.Zwirn?

Thanks

Dear Hosed,

Myself, my family and a hundred or so of my neighbors have been harmed by CMI through Wellstone. I have long felt that some of the officers and directors of CMI have had conflicts of interest that may be criminal in nature. They need to be investigated. I have no interest in CMI assets.
Wellstone continues in a lawsuit as plantif which is costing large sums of money that could be better used to pay parties they owe money such as CMI. I'd like to see Wellstone / CMI get out of my life and spend their time and money trying to salvage what they can of your investments.

Harley, in answer to your question about the 22%...I got a letter today. It is a N.Y.company that invests in claims of unsecured crditors in domestic bankruptcy cases.

Barbara,

The info on Zwirn is in the CMI filings of 3/17/08 listed near the top of this blog

I called ASM to ask some basic questions about their offer to buy our bonds.
Ms Morgan told me they hold the bonds until the bankruptcy is resolved. I asked her how long she thought that would take and she said 5 or 6 years. Oh really?
I wish I would have told her that if her company could afford to tie up their capital that long with no interest and no clear idea as to the resolution, then I could too.
Instead I said thanks but no thanks.

All you people shouldn't make so many quick judgements. If ASM want to buy your bonds for 22cents, rest easy that the bonds are worth a lot more then that. ASM Capital (ran by one Adam S. Moskowitz), wants your bonds so badly that he first bid 10 cents, than 22 cents. And now, they're calling people asking them what would they sell for. Take this as good news. It will be a while longer but all is not lost.

You do have to wonder... these guys wouldn't be offering 22 cents if they didn't think it was worth a lot more. Five or six years? Well, shoot, they were 5 year bonds to begin with; that isn't an eternity. And while it may be hard to imagine, the "credit crisis" will pass, and the assets are still there, just totally illiquid.

This is how I rationalize it anyway. Of course all bets are off if there is slimey behavior going on in the background, as some have suggested here. Not sure you can rule out the possibility of fearmongering on the part of vulture funds like ASM.

HCP

Now.. there is a new company called Debt Acquisition Company of America www.daca4.com and they are offering 35 cents on the dollar.

Think of it this way.. they are NOT saying Cornerstone bonds are worth 35 cents. If they want to buy them for 35, they ARE saying the the value is much higher.

Looks like the bid is up to 35 cents. An encouraging sign.

HCP

Jim is not mistaken with his information.

Subcontractors were repeatedly lied to regarding when to expect payment.

Wellstone properties are all encumbered by valid liens. The work was completed, and the subcontractors were not paid on schedule. A schedule that Wellstone set up.

I have never in my life seen so much money thrown into the wind, as I have with Wellstone.

If you are concerned about where CMI put it's money, you need to look at the cost of TPC memberships, private jets, chauffers, etc, which Wellstone provided to its top management.

Has anyone heard from the committee? How far or have they started with the auditing of Cornerstone? Also when will there be another meeting?

Regarding the entry on this blog by John Doe dated April 10, 2008 at 1:37PM which states:

"If you are concerned about where CMI put it's money, you need to look at the cost of TPC memberships, private jets, chauffeurs, etc, which Wellstone provided to its top management."

If John or anyone else has any specific information that would help us investigate the expenditures John mentions, I would appreciate hearing from them. In addition, the Hayes Consulting web site www.haysconsulting.net will be available by the end of next week.

Thanks,

Steve Deming

Anybody got an idea how long this bankruptcy process will take?

Does anyone have an idea how long this bankruptcy process will take?

Mr. Deming, Unfortunately everything that John Doe stated is true. How can you be contacted directly?

Anybody out there know anything about the trinity trust and what it means?? They hold over a millon $ in trust--what does in trust mean??

Anonymous,
I would love for someone to give me direct information. My email is steve underscore deming at bellsouth dot net Our broker never said any about real estate, just church loans.
Steve

Don't panic and give your money away. If these people did not believe that they were offering less than it was worth do you believe they would make an offer? Don't think so!

What has happen to Anonymous? I thought he was going to write me and tell me about the allegations he purposes is ture. My email is steve_deming@bellsouth.net.

Does anyone know if Wellstone has filed?

Wellstone can't pay thier bills but can spend $100,000 to be title sponsor for a gala in Texas

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As an attorney who has represented investors in similar circumstances, it will be necessary for investors who suffered investment losses to determine whether any collateral parties can be held liable. These collateral parties may include brokerage firms, investment advisors and the like that were involved in the transactions.

It would be wise for anyone who invested and lost money in Cornerstone to take the following steps immediately:

1. Start making a written chronology that touches on the following areas:
- How did you learn about Cornerstone Ministries?
- Did someone recommend the investment to you? If so, who?
- Why did you decide to invest?
- What did you expect the investment to do for you?
- Did you purchase the investment to generate income? If so, how much income did it generate and how important was that income to your overall financial picture?
- How was the investment described to you? Was it described as a safe investment? Risky?
- Were any promises made to you about the performance of the investment?

2. Gather all of the written marketing materials that you received in connection with the investment.

The written chronology is very important because (1) memories fail over time and (2) the document is a “living” document because it can evolve over time when new information is added later. For example, many times an unrelated event such as a TV commercial will trigger a memory about a statement that was made to you about the investment. If you have already created a written chronology, it is easy to add that information.

The above is written as practical advice and not legal advice. It does not create any sort of attorney-client relationship. If you believe that you have been injured, you should seek legal counsel.

Jason R. Doss
Page Perry, LLC
1040 Crown Pointe Parkway
Suite 1050
Atlanta, Georgia 30338
(770) 673-0047
(770) 673-0120 (facsimile)
www.pageperry.com

What is this post above me!? Since when does this blog take ads from lawyers..

It should have been weeded out and never posted.

All of this speculation is fruitless, there is no way to know if everyone will get their money back until CMI has a plan they present to the court. They have more assets then liabilities, and they have some smart people working on it. Remember Chapter 11 is voluntary. They simply need time to get their house in order, don't panic. Send me email with any info you have thats credible, not panicky.

Anyone know the dates for the creditors meeting.

check their latest SEC filing. Their loan loss reserve will exceed $48,000,000. Wellstone's lender on Craig Ranch in Texas is trying to foreclose which will wipe out CMI's position. CMI was leveraged 30 times and in a subordinate position on much of their assests. That means that if a property's value goes down say 10% from their inflated.2007 values CMI's position would likely be a total loss.
You don't have to take anyone's opinion as fact.
If you read their SEC filings and their bankruptcy papers it's all there.

Its my understanding they have 120 days from February 10th (date of Chapter 11), to file the Business Plan with the court. THat would be around June 10th. So, I'd imagine it could be any week now.

I understand they have 120 days from the filing date of 2/10/10 to submit their plan to the court. So that would put it around June 10th., I believe this is the case. However, there are so many lawyers following this thing around, I'm not sure.

Well, Jim that wasn't so helpful.So what's your point anyway?
It's not like we have alot of options here.

Jim's posts have never been known for their actionable content. He seems to be venting. Perhaps he's some sort of jilted insider, who knows. It may well be the case that we're all screwed and he just feels the need to stop by occasionally and remind us of that fact. Hard to tell what the motives could be.

As for reading the filings and such there is so much data there it's hard to see how a layperson could draw conclusions without retaining their own team of experts to interpret it.

I fully expect to take a big loss on this. What remains to be seen is whether it's a total loss. Those buyout offers, which may or may not even be on the table any more, are the only encouraging signs there will at least be some level of recovery.

I have just become aware of some of the questionable business practices of Cornerstone. We were told that the monvey we invested would be invested in Christian based projects. The latest revelations are very disappointing. My wife and I along with the church have investments with Cornerston. I saw on an internet site recently that Cornerstone has filed for an extension of the date to submit their reorganization plan. They have requested a date in September or November.

Dear Disappointed Pastor,

You are right. Some of the officers and directors of CMI took your money, telling you that they would lend it to faith based organizations when in fact they formed Wellstone and lent your money to themselves for highly speculative real estate development. This type of deception is likely criminal and will likely result in the loss of some or all of your money.

And my broker said it would be 30 days for them to get financing and they would be back on track. Not to worry! Duh! Duh! Has anyone seen my broker? I think he gone into hiding. Oh and by the way, seems the other side has it together. The want to elect and examiner to find out about what the Debtor has done. Says the Official Committee of Unsecured Creditor has supported most of the positions taken by the Debtor. Now who was it that was wondering when the next creditors meeting was going to be? Does look like they have got started yet.

Fellow Bond Holders,
We can 2nd guess, believe rumors, jump to conclusions but there is still room to believe in the leadership of CMI and that they never had any intentions to make business decisions that led to this situation.
I hear that one large deal in Texas went sour and caused the current situation.
I believe we who are affected need to pray for these folks who are doing all they can to get back on track.

Worried Wille still praying to the God of impossibilitys for the ressurection of CMI!

Jim is more then likely a lawyer hoping to profit some way by spreading unsubstantiated rumors, etc. about CMI. Don't be surprised to get a call from a "Jim" who happens to be a lawyer who wants to sue CMI on your behalf and collect fee's. Notice "Jim" will not give his last name? Yes, beware.

For Cmi to be successful required that they could continue to raise capital through bond sales and that the speculative real estate development market remain at unsustainable levels. They were banned from selling bonds in a number of key states due to misrepresentation and fraud which severely restricted their ability to raise capital and the housing market tanked, a perfect storm.
My only interest here is that I believe that the actions of some of the CMI officers and directors may have been criminal and if so that they be held accountable.
I am not a lawyer and have no interest in buying any of your stocks or bonds. What I have stated is not rumor. It is based on CMI SEC filings, their bankruptcy petition and newspaper reports.

Please read the Bmc website-letters being mail from the courts to the trinity trust are being returned as undeliverale on the 26 June.
Check it out, if your bonds are held in trust by trinity.
Whats up with this B.S Looks as if we all need to to apply pressure some how on the court and the creditors committee to give us some answers and who the hell is trinity trust anyway!! At the time we purchased the bonds no one said antyhing about any trust companys.
Harley

I have tried to log into your website but it doesn't work.
My mother has a substantial investment in Cornerstone Ministries. As her power of attorney, I would like to know
what recourse we have to reclaim this investment. What is the time frame for the Chapter 11?
We of course, entered this investment on faith and don't understand how/why this money was
mishandled.

The following is a quote from a current web site. Does anyone have further information regarding this?

"Cornerstone Ministries Investments has filed a motion with the U.S. Bankruptcy Court seeking an extension of the exclusive period during which the company can file a plan of reorganization to September 8, 2008 and an extension of time to solicit acceptances until November 7, 2008."

There was an informative article published in the August 2008 edition of Christianity Today magazine discussing Cornerstone's bankruptcy. You can find the article online at:
http://www.christianitytoday.com/ct/2008/august/6.17.html

Jason R. Doss
Page Perry, LLC
1040 Crown Pointe Parkway
Suite 1050
Atlanta, Georgia 30338

I don't like to be the barer of bad new, but it seems that all of these places that are being shut down on their projects, all the people who have made a good, and I mean good, living off of Cornerstone and all the records that the committee are trying to get to examine to see who did right or wrong are being held up by the fancy high priced lawyers that all these board members and building sites like Craig's Ranch are trying to hold this up as long as they possibly can. Doesn't seem like to me this is going to any quick fix. May take longer than 2 years. May not get any money at all.

Looks like www.wellstone.com is down...

I checked the Wellstone site. It's attractive, very appealing and very high end. Very slick advertising.
I clicked on some of the links. Of all the fancy properties shown, there wasn't a church anywhere.
I was always led to believe that my money was being used for Churches and faith based projects.
While I was the one to make the final decision to buy these bonds, I do hold my agents responsible for fully vetting the properties.
They didn't do their jobs. This whole business has been shameful.

Wellstone Cumming, Ga office vacant. Cornerstone Cumming, Ga office vacant.

John B. Lowery is the President and CEO of Wellstone Communities who has been extremely instrumental in CMI/Wellstone leadership in the past three years.

www.john-lowery.com

en.wikipedia.org/wiki/John_B_Lowery

White southerner (who is John B. Lowery?) and Black Baptists in million dollar business deal.
New York Amsterdam News; 7/06/96, Vol. 87 Issue 27, p1, 2p: Reports on the personal and business background of white southerner John B. Lowery who was able to sign five large Afro-American church.

www.bgccc.org/pressRelease_06.php

www.pegasusnews.com/politics/donations/donors/john-b-lowery/

Does anyone know if Cornerstone filed its reorganization plan with the Bankruptcy Court on Sept. 11 as scheduled? I can't find anything on line about it and plan to go by the Courthouse in Gainesville soon if no information becomes available.

I'm a reporter who's interested in talking with folks about troubled firms that have attracted the money of investors based on religion.
Please contact me at suzanne[dot]sataline[at]wsj.com

Does anyone know if the government intervention in the financial crisis will have a trickle down effect that will benefit those of us who have been left holding the bag at CMI? My mother-in-law is in an assisted living facility. She invested with CMI because she thought it was a good organization and could help churches. Now her bank account is almost gone and she can't get her money from CMI.

I found out today that this is not a reorganization but a total liquidation. Was I behind the times or is this a new developement. It saddens me that my mother in law who needs this money to live now has to watch her pennies to get by. What will she do when she needs nursing home care? Very, Very Sad!

I had hopes for this several months ago but after reading of the horrible conflicts of interest I think someone, probably several, should go to jail for a long time. With the current semi-panic of the market it is very unlikely that I or anyone else hoodwinked by these people will get any of our hard saved money back! If they liquidate us small folks will probably get precious little money back.
Jim Too

The docket is enough to make your head spin. Did someone file for a third continuance on the hearing to determine whether they have to produce documents? Every little move adds another month and more money to lawyers pockets.

Nobody will go to jail; that isn't the American way. The world of financial services has deteriorated into a mass of schemes to steal money from people. Forget about calling it a "credit crisis". On the current course nobody will be able to borrow money for anything... at least not from me, because I have no confidence any borrowers will be held responsible to pay.

Has any body been in contact with the creitors comittiee or Don Labate latley ?I have tried to email them and had no luck.

From: Labatecmi@aol.com
To: Investors
Sent: Friday, October 17, 2008 4:17 PM
Subject: Your recent email to the Creditors' Committee gmail site...and other inquiries.

To All,
Because of the shear volume of inquiries and correspondence, by design, the creditors' committee gmail site is not set up to answer individual questions. You can read this in the information included on the Creditors' Committee website, www.haysconsulting.net .

However, I have made myself available to hundreds of bondholders who email me at labatecmi@aol.com , or call me at 770-956-8229. I would be happy to hear from you directly, if you care to contact me. I will do my best to answer your questions, even though some individual concerns/questions may require you to follow up yourself. At least you will know what I know about your concern. Please be aware that I get many emails and calls each day, so my phone may be busy when/if you call, and my email response may not be as rapid as you may desire....but don't give up, for I am eager to be of help when I'm able. I am also attending the many court hearings revolving around this bankruptcy case, so I may not be available to answer my phone as much as I would like. Again, don't be discouraged if you get my phone message recorder, but please make the effort to call me until you reach me as I cannot answer every call with a return call.

Just to answer a couple common questions:
You do not have to file a proof of claim at this time, and if you are ever required to file a proof of claim, you will be notified in plenty of time to respond. The letter that went out to all creditors regarding the 'bar date' and proof of claim requirements was a required letter, but was intended to notify all creditors EXCEPT BONDHOLDERS that a proof of claim was necessary. I know it may have been confusing, but it was spelled out in the letter that bondholders were excluded from filing.

The "Plan," that the Debtor (CMI) is required to file will probably be filed by the end of the year. It will include a 'Disclosure Statement' telling us the state of the business and what to expect when the Debtor is relieved of control of the CMI operations. The Creditors' Committee will have a great amount of influence on what is in the 'Plan,' since we have been working in conjunction with the Debtor to design it. Each bondholder will receive a ballot in which to vote on the plan. By bankruptcy law requirement, the plan will be all inclusive and lengthy; however, we hope to have a shorter Creditors' Committee recommendation, and an explanation of what to expect after "Plan Confirmation," included in the mailing to each bondholder. Once submitted, the whole 'plan process' will take a couple months to 'confirmation,' including the court's review of the plan and it's disclosure statement, the voting process, and the court's final approval.

Your IRA accounts, including required mandatory distributions (RMD), are issues that each of you have to deal with individually, in conjunction with your tax consultants. If you have no tax consultant, discussion with the IRS is in order, since they are the ones who will be able to give you factual information. From what I understand, because of the bankruptcy proceedings, you will not have access of your IRA investment in CMI bonds; but, please seek more legal direction to ensure that your tax ramifications/actions are accurate and correct.

Hope this helped.
Don Labate
Chairman of your Creditors' Committee

Does anyone know if Wellstone's Craig ranch property or any other of their properties are in foreclosure by the first mortgage holders?

JIM - your post on Sept 1 said "cornerstone office, Cumming GA vacant" are you referring to Suite 903? what about 904??

You need to ask John Lowery about Craig Ranch.

My name is Don Labate, co-chair of the Official Committee of Unsecured CMI Creditors.
Before today, I had not posted any blog to this, or anyother Internet site; however, the above email posting indicates that it was posted by me.

Even though I originated the above email, and stand behind its content, I did not send it "To Investors," as posted. Rather, I sent this email to several CMI bondholders, collectively, by individual screenname. These bondholders had recently asked questions, either via the committee's gmail site, or directly to me via email or phone message. I surmise that one of these bondholders posted the blog misleadingly, however innocently, indicating that it came from me.

This blog may be of some value to some CMI bondholders, but for the record, neither I, nor the committee as a whole have endorsed or authorized the use of our personal correspondence on this site. Thank you!

If anyone has a contact for John Lowery I would like to have it. I have tried all the numbers I have found with no success

I just read the latest document, and it seemed to suggest that each bond holder might need their own attorney. Anyone with thoughts on that.

Can anyone tell me if this Wendell Spell is part of Cornerstone Investments. He was with Cornerstone Investments International and took about 30 million and is no where to be found.

From what I understand CMI can not file a plan unless they have enough money to cover bondholders investment. They do not have that money. I assume what we will hear next is that they will be filing Chapter 7.

I wonder why Cecil Brooks recently moved to Florida? Is it because of the creditor protection the state offers? Please do not leave us now Cecil!!

Dear Mr. Labate,
Thank you for all your help. I know you are not getting paid for this and I appreciate all the work you've done and will be doing. I, and my clients, look forward to the guidance you (and the CR Committee) will be providing in regards to the upcoming vote.

12/1/08 Wellstone at Craig ranch files chapter 11

It is my understanding the bondholders will only get 9% to 36% of their money back and that could be less. read the docs that were filed. Seems we have lost everything due to people who knew they were in trouble. Can you really trust anyone?

Does anyone feel that their is a
fraud case. I for one was never
given the prospectus.

My step-father and my mother were married for over 30 years. My step-father had invested in these bonds with the understanding that they were investing in churches. My step-father died leaving my mother this investment to take care of her. They did not have a lot of money but as good Christians they donated their money faithfully every week and month to their church. My step dad died suddenly last year and I had to help my mother with all of her needs and finances. Her bonds were due to mature in Oct. of 2007 and we received a letter from CMI stating that they would be willing to extend her bond at the current interest rate until January of 2008. Not being an investment guru I called the person who my step father seemed to trust at Commonwealth Church Finance, the company that sold them the bonds. I asked Ron at Commonwealth if he thought it was a good idea and he told me that the interest rate was better than anything he currently had so it seemed like a good deal. Still believing that they were investing in churches my mother extended the bond. Then again in January we received another extension letter and I repeated the scenario above. They stated in the extension that they would extend it until May and that my mother would continue to receive her monthly payment. Well right after we sent that in we never received the February payment and have not seen anything since. This was obviously fraud because when they sent that second extension letter they knew that they could not make any more payments but suckered my mother in to an extension. This has been devastating to my mother (and our family as we are all helping her now). When I spoke to CMI and Commonwealth and I told them had I known about their situation my mother would have never signed an extension and would have asked for her funds from the mature bonds. I was then told by BOTH CMI and Commonwealth that even if we had asked for them that it would not have mattered because the funds were probably not there anyway. This certainly seems to me to be a clear cut case of fraud. They solicited her for extensions in to a fund that they knew was sinking faster than the Titanic. I will be seeking legal council. Also FYI I know a fair amount about the law and I have been reading the bankruptcy file. There are 2 proposed settlements, one from the attorneys for CMI and one from the creditor's committee. The one from CMI calls for the bond holders to receive between &% and 34% of the value of their investment and the one from the committee calls for bond holders to receive between 9% and 36% of the value of their bonds. Looks like they swindled many old folks out of their life savings. These are people who hide behind Christianity while stealing your money, God has a special place for them.
We are not selling to these bottom feeders who keep sending letters trying to steal the remnants of my mother's small life savings, they are garbage, unless you must have small amounts of cash now I would not sell to these jackals. Early on I filed a complaint with the Dept. of Financial Regulation (This may not be the proper name, I filed a year ago)in Georgia who told me that they are looking in to criminal misdeeds by CMI and it's officers. They told me that this would not help us monetarily but that they would seek criminal prosecution for any wrong doing. I would suggest everyone who was burned file a complaint.

My step-father and my mother were married for over 30 years. My step-father had invested in these bonds with the understanding that they were investing in churches. My step-father died leaving my mother this investment to take care of her. They did not have a lot of money but as good Christians they donated their money faithfully every week and month to their church. My step dad died suddenly last year and I had to help my mother with all of her needs and finances. Her bonds were due to mature in Oct. of 2007 and we received a letter from CMI stating that they would be willing to extend her bond at the current interest rate until January of 2008. Not being an investment guru I called the person who my step father seemed to trust at Commonwealth Church Finance, the company that sold them the bonds. I asked Ron at Commonwealth if he thought it was a good idea and he told me that the interest rate was better than anything he currently had so it seemed like a good deal. Still believing that they were investing in churches my mother extended the bond. Then again in January we received another extension letter and I repeated the scenario above. They stated in the extension that they would extend it until May and that my mother would continue to receive her monthly payment. Well right after we sent that in we never received the February payment and have not seen anything since. This was obviously fraud because when they sent that second extension letter they knew that they could not make any more payments but suckered my mother in to an extension. This has been devastating to my mother (and our family as we are all helping her now). When I spoke to CMI and Commonwealth and I told them had I known about their situation my mother would have never signed an extension and would have asked for her funds from the mature bonds. I was then told by BOTH CMI and Commonwealth that even if we had asked for them that it would not have mattered because the funds were probably not there anyway. This certainly seems to me to be a clear cut case of fraud. They solicited her for extensions in to a fund that they knew was sinking faster than the Titanic. I will be seeking legal council. Also FYI I know a fair amount about the law and I have been reading the bankruptcy file. There are 2 proposed settlements, one from the attorneys for CMI and one from the creditor's committee. The one from CMI calls for the bond holders to receive between &% and 34% of the value of their investment and the one from the committee calls for bond holders to receive between 9% and 36% of the value of their bonds. Looks like they swindled many old folks out of their life savings. These are people who hide behind Christianity while stealing your money, God has a special place for them.
We are not selling to these bottom feeders who keep sending letters trying to steal the remnants of my mother's small life savings, they are garbage, unless you must have small amounts of cash now I would not sell to these jackals. Early on I filed a complaint with the Dept. of Financial Regulation (This may not be the proper name, I filed a year ago)in Georgia who told me that they are looking in to criminal misdeeds by CMI and it's officers. They told me that this would not help us monetarily but that they would seek criminal prosecution for any wrong doing. I would suggest everyone who was burned file a complaint.

I'm surprised the offers from ASM capital for 22 cents on the dollar are still on the table. Painful as it was, we took the offer (and the loss) and moved on. Now that I hear the potential liquidation plan I'm thinking we were smart to take the offer. Maybe the recovery will eventually be better, but there still seems like a lot of uncertainty both in amount and time.

If it helps at all, and it probably doesn't, here's how we looked at it: If your investment was $10k, the offer is for $2200. Forget about the $10k, that money is gone... instead look at the $2200. Ask yourself if you had $2200 to invest, would your choice of investments be CMI bankruptcy claims? For us the answer was a resounding NO. (Multiply the numbers appropriately to fit your situation.)

Bottom line, we were misled, made a bad investment, blah blah blah. Could well be the case that some people should go to jail, but that won't bring our money back. We learned some valuable lessons, and were blessed to have not put too many eggs in this basket. My heart and prayers go out to those whose lives were impacted to a greater degree.

I shouldn't presume to advise you, but consider that it's unlikely your mother is ever going to see any significant percentage of her money, plan your lives accordingly, pray, and move on.

CMI was of this earth and of men, never to be relied on. Now we look to the Lord's provision, and to His judgement of those who stole from us. And those who stole from us will need to look to the banks, not to us, for any future loans, and most likely will have to sign personally and bring lots of collateral.

Hence the credit crisis.

Dear Hosed,

When did you sell to ASM?

Thanks.

i never signed for nor rec the prospectus.
Was it listed that there were unsecured
loans. was it listed that they took
out second mortgages. if not don't you
think there should be a class action suit
against the persons selling the bonds and
cornerstone.

Mike,

We sold in July. Shortly after the bankruptcy was announded ASM came out with their offer for 22 cents, then not too long after that another outfit sent us an offer for 35 cents. That second offer was a head fake; it encouraged us into thinking maybe all was not lost and we should hold on. (The offers were increasing, why would someone offer 35 cents if they didn't think it was worth a lot more?) As time dragged on I became less optimistic about ever getting a dime back and called the 35 cent people. They told me they weren't buying any more because they subsequently determined it wasn't worth that much. Two things entered my mind at that point: A) Vultures screw up sometimes too and B) the 22 cents, while representing a big loss, was still a chunk of change and I didn't want to lose that too. So I called them up, they said the offer was still good, I faxed them the signed form, and they overnighted me a check.

Harris,

As I understand it the loans they made were all secured. Trouble is what they were secured by wasn't worth nearly enough at the end of the day when the loans started defaulting. Plenty of people to blame who were either dishonest or just plain made bad decisions. Lawsuits will enrich the lawyers and maybe get you fifty bucks back six years from now. The rest of the money has gone to "money heaven".

I was just offered 5 cents on the dollar/ Where did you get 22 cents ??

ASM Capital... I suppose now that the picture has become clearer than it was last spring the 22 cents isn't on the table any more, but you could call them up and see. Now that the liquidation plan is out you may be better off just riding it out, but who knows.

Clearly the smart folks were the ones who jumped on the 35 cent offer... well the really smart ones never got mixed up in this thing to begin with, but once you were stuck in the trap that was probably your best out.

HCP

I was just offered a toaster and can opener. Now how can I refuse that?

Here is something interesting: I still have the letter from the new Pres. Jack Wehmiller dated June 30, 2007. He wrote in part:
"As many of you will remember, we bagan as Presbyterian Investors Fund. Our sole purpose was to be a real estate lender to the not-for-profit world. There have been many changes since those early days. Our lending practices have spanned the senior retirement, for sale single family housing and for rent multi family housing arenas. But the real core of Cornerstone is the church. My charge for this coming year is to return us to our roots in a meaningful way. We take our responsibility to you, the investor, very seriously. I will keep you apprised of our progress. Cordially, Jack Wehmiller, President"

SO, I have cautiously concluded that somebody got greedy -- strayed away from God's plan for this outfit -- and the rest is becoming history.

I, too, received offers of extension in late 2007 -- and took one. But it was already too late. I was going to cash in in January and April of 2007, and in April of 2009, as I was getting nervous about the "changes" mentioned in the above letter. Too late for us -- we are in for $150K+. We have received offers of .22 & .25 from one buyer; and recently .075 on the $1. We serve a just God -- we are looking to Him, now.

God help those who do not "do unto others."

What say you?

Does the Cornerstone mess compare to the highly publicised Madoff scandal? The answer is a resounding yes with one glaring difference. In the Madoff case, Mr Madoff was arrested. He is out on bail and restricted to his home awaiting criminal proceedings. The cornerstone officers and director who took your money under the pretense of lending it to faith based organizations actually leveraged it 30 times then lent most of it to themselves for extremely risky highly speculative real estate ventures. Why haven't they been arrested?

Does anyone have contact info for ASM Capital or know what they are currently offering?

Madoff was a Ponzi scam. this will take
a lot of time to unwind all the associates in this tangle. So far it
is a civil case. Much different than
Madoff

I think there is a good comparison between Cornerstone and Madoff. Cornerstones trouble started when they were prohibited from selling securities in a number of states. They couldn't raise as much money needed to pay off old investors (raise new money to pay the old investors, Ponzi). When old investors started to redeem the house of cards began to collapse. Their assets were so highly leveraged they had no value. No new money and no asset value, default. It sounds like a Ponzi scheme to me.

I discovered FINRA, the Financial Investment Regulatory Authority, after losing my retirement to a lying broker.

FINRA, the Financial Investment Regulatory Authority, is the agency investors should turn to for education and protection. See: www[dot]finra[dot]org. FINRA’s BrokerCheck provides information on all registered brokers. It’s easy to work with, and their call center is terrific.

To Future Investors: A broker whose BrokerCheck shows multiple violations alleged by regulatory agencies and/or investors should be avoided completely. On the other hand, a clean report may only indicate that no one has caught on to his act as yet, so be cautious.

To Angry Investors: After a claim is filed, a FINRA claims examiner will call to verify, so be prepared for that. When verified, the claim is posted on the broker’s BrokerCheck, and will remain there until the dispute is settled. FINRA can assist by providing a forum for arbitration or mediation.

When filing a claim, it should truthfully relate any fraudulent behavior by the broker, including but not limited to:
o making unsuitable recommendations
o making false, misleading or exaggerated claims
o failing to disclose risk
o failing to present a prospectus in a timely manner

An accumulation of unresolved claims can impair a broker’s livelihood. Informed investors will stay away, and FINRA can revoke his license.

I am a bondholder myself. I do not feel in any way that my advisor mislead me or gave me bad advice on this investment. I sit here reading the comments posted and can't help but be upset at those that want to point the finger at the advisors for Cornerstone's actions. I carefully read all information given to me on this investment and spent a great amount of time asking my advisor questions. It is ultimately up to the investor to say yes and then have the advisor move forward. As any investor should know, no investment is guaranteed. We are all taking a chance at the possibility of a profit in return for the use of our money. We may hit it big and we may lose it all. Again, no guarantees. I know my advisor is reaping no benefit for this Cornerstone issue so I can't sit here and say that he deliberately placed my money into this investment that he knew would file chapter 11. I feel that he showed me what he thought was a strong opportunity. I will sit here and wait out the bankruptcy case like the rest of you. What I will not do is discredt my advisor, but pray for him and the stress he is currently under. I suggest in the future you all read and understand all investments before making the transaction. If you can't afford to lose some then you shouldn't invest.

Rush, you can only speak for yourself
not the rest of the investors. You have
no idea how other brokers handled
the deal and spoke about risks.
right

Jim, how did you find they were prohibited from selling
securities in some states.When did
this go into play. This is new news.
Prior to this discovery I felt it
was a civil case. Brought on by
poor performers.

Thank you Rush, You're not my client but I thank you for the kind words. I have sold these bonds to my clients, and I (and my family) also own them. Do I regret that? every hour of every day. In many ways I wish people have never met me, they never would have been introduced to Cornerstone bonds. I understand the anger people have but to direct it at me personally is not 100% right. Don't forget, I also own these bonds. Any suggestion that I (or any broker) would sell CMI's bonds while knowing a problem exists is not only incorrect but down right insulting. There are many other investments out there where I could have made the same commission (or higher), yet I chose CMI's bonds for certain people. It is the largest financial mistake I've ever made.

Everyone is looking to point the figure and if its to be pointed anywhere it should be at management. CMI boasted in their track record 22+ years of not missing a payment, etc.. etc..

I have posted my name, so has Rush.. how about you, "Scammed & Angry"? or are you a lawyer looking to capitalize on our misfortune.. ?

Dear Rush,

Did your advisor tell you that CMI had changed their strategy from faithbased lending to spec real estate, did he tell you that they were leveraged 30 times, did he tell you that they were lending to CMI principles, did he tell you that they hid losses in senior housing,did he tell you they were banded from security sales in a number of states, did he tell you their advisor was run by CMI principles, did he tell you of the CFO revolving door, did he tell you of Wellstone's lack of real development experience, did he tell you that much of CMI's funds were subordinated to other lenders, did he tell you that a CMI investment was extremely risky, did he tell you that just a small downturn in the real estate market could result in a near total loss, did he tell you this type investment wasn't appropriate for a large % of retirement funds? If he informed you of all the above he did his job and if you still invested then you can only look in the mirror for blame. If he failed to inform you then maybe you should look at him.

Jim,,,,of course they didn't tell
their customers the aforementioned
Salespeople always have the commission
or greed before principles. They are
now trying to wiggle out of the
situation. OR WHERE THEY JUST PLAIN
STUPID WHEN THEY READ THE PROSPECTUS.

I posted last year. My mother lost her life savings when they offered her an extension in 0101/2008 at which point they knew they were going under. My step father had just died and neither my mother or I knew much about this investment so we called their broker who advised us to extend when he should have known better. I got a lawyer for my mother who knows a lot about securities law. Now that the examiner's report is out and states that they were all confirmed as crooks I hired Lars Soreide of Soreide Law Group to recover my mother's money from my her broker. If you are interested you can call him at 888-760-6552. I have been very happy with him so far. He seems to be very knowledgeable. I will let all know how we make out. This is a true story. I am not advertising for any one, I am just letting all know what I am doing. You can read my story from last year above.

HAS THERE BEEN ANY CRIMINAL ACTION TAKEN OR INTENT TO COMMIT ANY WITH ANY ONE FROM CMI OR WELLSTONE YET ??
WHAT I UNDERSTAND IS THAT IF THERE IS SUCH ACTION YOU CAN WRITE THE TOTAL AMOUNT OF YOUR LOSSES OFF ON YOUR INCOME TAXES ALL IN ONE YEAR AND NOT A CAPTIAL LOSS @ 3000.00 A YEAR.
ANY INF OUT THERE ??

I talked to an lawyer familiar with securities law. He said according to the findings by the court there was no question of liability on behalf of Cornerstone, the brokerage firms and their representatives.
Now whether the investigations that conclude fraud was committed are enough for tax purposes, or if criminal charges have to be filed against Cornerstone I don't know but it sure would be worth looking into.
I know that I am!