Bobby Rush's Englewood Church A Million-Dollar Problem
This story was published with the Chicago Sun-Times.
U.S. Rep. Bobby Rush has been ordered to pay $1.1 million on a delinquent bank loan made to his now-shuttered church, the latest setback for the longtime congressman-turned-pastor who once promised his house of worship would help rebuild Englewood.
How much of that debt the South Side Democrat can pay to the creditors — which includes a company run by a billionaire with ties to President Donald Trump — is still being hashed out. Lawyers for both sides are scheduled to appear in court this week.
A Cook County judge in June ordered Rush to pay the loan made a dozen years ago to the church he founded. The loan was used to purchase the Gothic-style church building on the South Side for what is now known as Beloved Community Church of God in Christ.
Due to the terms of the loan and subsequent court actions, Rush is personally liable for the entire judgment. But whether he has the assets to pay the debt is highly doubtful.
“Obviously it’s not going to be an easy task,” Rush’s attorney, Berton N. Ring told the Better Government Association, referring to attempts to collect the debt from Rush.
Rush did not respond to requests for comment.
In an odd political twist, the investment management company that is currently owed the money, along with the Federal Deposit Insurance Corp., is headed by billionaire Thomas J. Barrack, Jr., a close friend of Trump who chaired Trump’s inaugural committee.
Despite the judgment, the case is still wending its way through Cook County Circuit Court as attorneys for the plaintiffs are now trying to get Rush to reveal his assets to determine how much of the debt he can pay. The next court date is set for Wednesday.
The million-dollar-plus judgment comes 12 years after Rush’s congregation moved into the large limestone church, the former Our Redeemer Lutheran Church built in the 1920s at 6430 S. Harvard Ave. It was purchased for $800,000, in part with a $550,000 bank loan from New City Bank. Rush and seven other church members cosigned the loan to the church.
At the time, Rush said he planned to make the church the cornerstone of his effort to rebuild Englewood, the long-struggling South Side neighborhood that is part of his First Congressional district. He formed a community development corporation, Rebirth of Englewood, and discussed building affordable homes and a technology center in the neighborhood, as well as providing needed social services and cultural arts programs.
Little of that has come to fruition.
As the BGA has previously reported, Rush’s nonprofit received $1 million from the charitable arm of telecommunications giant SBC – now called AT&T – for an unbuilt technology center to offer computer training and serve as a small-business incubator. The nonprofit also received $32,630 in taxpayer funds to help buy and rehab a building near 68th and Halsted streets to house the tech center.
But a decade later, all the money is gone and the tech center hasn’t been built, and Rush was unable or unwilling to show where the money ended up. Rush in 2013 told the BGA he did not run the day-to-day operation and retained no records, and claimed the $1 million grant was intended for programs not for a building.
The church’s fragile finances, meanwhile, were often shored up with help from Rush’s political connections.
In January 2005, on the day Beloved closed on the purchase of the church building, $25,000 was transferred from Rush’s campaign fund to the church - one of many “donations” to the church listed on his campaign reports. Since 2004, Rush funneled more than $200,000 in campaign funds to the church, though the flow of donations has tapered off.
What’s more, the church stopped making its $3,562 monthly loan payments in November 2011, court records show. That sparked the lawsuit.
Ring said Rush wants to resolve the matter and “is hoping he can put this behind him.” The congressman has made “sincere” efforts to settle the case, but isn’t rolling over, Ring said.
“Congressman Rush has asked me to take advantage of statutes that protect him or his assets,” Ring said. “The congressman plans to comply with all court orders and so far, he has done so. He respects the court process.”
For example, Illinois law protects retirement accounts from being seized to pay the judgment.
Rush has a Thrift Savings Account - a retirement savings vehicle for federal employees - valued between $250,000 and $500,000, according to the federal financial disclosure form he has to file annually as a congressman. He does not list any bank accounts, stock or brokerage accounts worth more than $1,000.
The only other assets mentioned are residences in Chicago and Michigan, both of which carry mortgages as high as $250,000, according to his federal disclosure form. The holder of the mortgage for Rush’s Michigan home is foreclosing on it, saying Rush has not made loan payments since July 2015.
The $1.1 million judgment against Rush for the church loan includes $542,000 unpaid principal, $441,000 in interest, $48,000 in plaintiff’s attorneys’ fees plus other expenses, records show.
While the original loan was made by New City Bank, that institution failed in 2012 and the loan was acquired along with a pool of other loans from failed banks by the FDIC and the Los Angeles-based Colony Northstar, Inc. which Barrack runs as executive chairman. Colony manages the partnership and the federal agency retains a 60 percent interest in the loan recovery and expenses.
The arrangement predates Trump’s June 2015 entry into the presidential race, as does the lawsuit. Asked if Barrack’s political connections played any role in the lawsuit against Rush, a spokesperson for Colony said, “Absolutely not.”
Ring said he didn’t think the congressman is aware the creditor suing him has ties to Trump.
Rush has had a string of difficulties since the case was initiated. His original attorney withdrew, citing lack of cooperation from Rush, and Ring has not been successful in legal maneuvers to get the casedismissed. Meanwhile, Rush’s creditors have dropped other co-signers of the loan from the legal action, pushing the entire liability burden on to the congressman.
The creditors sued for the money due on the promissory note rather than foreclose on the church. The building is vacant and tough to market, especially after a windstorm in 2014 damaged three large stained-glass windows that left the building exposed to the weather and forced the church to move services to a different location. Rush has previously estimated the cost for securing the church windows at $125,000.
In March 2015, the city filed suit demanding the church secure the building and a court order declared it “hazardous” and “an ongoing nuisance.” A permanent injunction issued in August 2017 restrains the church from occupying the structure.
Because the recent court judgment is against Rush personally, he cannot tap into his congressional campaign fund, which most recent records show has a balance of $82,665, to help pay it. The Federal Election Commission prohibits those in congress from using campaign funds for expenses that are personal and would exist “irrespective” of whether the politician was in office or a candidate.
In an affidavit filed in court, Rush said he was not paid a salary as pastor and that he received no proceeds of the church loan.
“Congressman Rush decided to help out the church and sign the note. He did not get any money. He got no financial benefit from it at all. He was just helping out the church,” said Ring.
“He was just too nice of a guy. It was kind of unfortunate.”