Osage church investigates financial irregularities

Church leaders at Grace Community Church of Osage are wondering how to rebound after Becker County authorities declined this week to prosecute the former pastor for alleged financial irregularities discovered in early May.

The investigation began when parishioners and a church accountant discovered what they believed were misappropriated funds at the Baptist church.

Becker County investigators were careful to characterize the probe as one of possible internal discord in the church, not embezzlement.

But church officers have nonetheless hired an attorney to look into the legality of some expenditures and where the money went.

In late May, former pastor Bill Ullom and wife Brenda held a three-day rummage sale of their personal belongings at their Osage home. Church members say they then moved to Hawaii.

Ken Polley, Grace's former pastor, is helping the parish through its financial crisis.

"It's a pretty good sized iceberg," he said of the church's finances. When the church built a new parish five years ago it incurred "some legitimate debt," he said.

Church deacon Joann Christlieb said there's no misunderstanding.

"Oh no," she said in response to a query of whether the irregularities were simply a question of authority or who had financial oversight over church finances. "Actually we don't know where it all went, but it's gone."

"It's a very delicate situation," said Becker County Sheriff Tim Gordon.

Wednesday afternoon assistant Becker County attorney Gretchen Thilmony said she was declining to prosecute.

"There was no... they were looking at possible forgery," she said of the charges she was asked to look into. "There was no evidence he (Bill Ullom) acted with the intent to injure or defraud the church."

The Enterprise could not reach the Ulloms for comment.

Concerned parishioners who contacted the Enterprise earlier this week estimated anywhere from $40,000 to $700,000 may not have been spent in furtherance of the church's mission or to retire its building debt.

"If you're talking about unaccounted for funds, it certainly wouldn't be up in that boundary at all," said Polley. But he declined to say how much money was missing.

Christlieb said she doesn't know how much is unaccounted for.

"The computers got erased, the paper trail got burnt and we're gradually investigating each count that contacts us," she said.

"When you put everything on computers and they erase the computers, they retrieve what they can per se," she said of the accounting to find the funds.

"But that doesn't tell you where it went. We have gotten a lawyer and he's working on it."

Don Shaw, regional director of the North Central Conservative Baptist Association, a 10-state consortium of Baptist churches, issued an online bulletin in June. It said:

"We urgently request that you pray for Grace Community Church, Osage, Minnesota, and its satellite campus in Bagley. This church is facing a monumental financial and organizational crisis which is having a profoundly negative impact on the gospel. This situation has led to the necessary resignation of the senior pastor. We also request prayer for Bill Ullom (the senior pastor who has resigned) and his wife Brenda."

Shaw did not respond to a request for additional comments about the situation.

One man who contacted the newspaper was particularly concerned that the Ulloms' past financial dealings had not been known prior to their hiring in Osage.

An Enterprise investigation of those dealings turned up an eviction from Hennepin Housing in 1996, a default judgment for $746.48 issued against the 47-year-old pastor in 1998 in Hennepin County Court, filed by the Credit Bureau of Faribault, and a judgment in the same court issued against the couple for $1,302.17 in 1998.

At the time, the couple was living in Crystal and doing business as B&B Maintenance.

A source close to the investigation said the church finances are complex, but that all the funds have been accounted for. There were multiple lines of authority within the church itself; deacons and the pastor could apparently spend church funds and sometimes they were all co-signatories on promissory notes.

Gordon would not go into specifics but acknowledged the complexity of the financial picture. He did say the funds have been accounted for.

A letter went out to church members explaining the circumstances.

Christlieb said as the church continues to try to pinpoint where the funds went, visiting pastors from Detroit Lakes are serving the congregation.

"We've been interviewing interim pastors trying to get someone to get us through the crisis," she said.

She said the church will survive and continue its mission.

"The assessment I've made is it's sustainable," Polley said of the financial predicament. "It's not going to collapse so that's an encouraging thing. They're going to have some hills they need to climb."

And as the church begins that ascent to solvency, one of the principal tenets of Christianity will be put to the test - forgiveness.