SEC Investigates Muni-Bond Sales in Memphis Ministry

The Securities and Exchange Commission’s (SEC) Atlanta office is conducting an inquiry into Global Ministries Foundation and the 2011 sale of $12 million worth of bonds to purchase the Warren and Tulane apartments. The apartments are allegedly infested with roaches and caked with sewage. The ministry owns two municipal bond financed low-income apartment complexes. The trustee, Bank of New York Mellon Corp, sued Global Ministries in May and won the appointment of a receiver after the bonds defaulted. Two months earlier, in March, the U.S. Department of Housing and Urban Development cut off rent subsidies for more than 1,000 residents that backed the bonds and relocated them because of health and safety violations. Subsequently, the bonds defaulted.

Richard Hamlet, a Baptist minister, ran GMF, which built a 10,500 unit low-rent real estate empire with money raised in the municipal-bond market. In 2011, GMF issued $12 million in bonds through Memphis Health, Educational and Housing Facility Board, to finance the purchase of Warrant and Tulane in an area where as many as 40 percent of the families live in poverty. The SEC has since told the receiver to preserve documents created on or after June 1^st, 2010, concerning the bond issue.