Update Diocese Accuses Grace's Armstrong of Theft, Fraud

The Gazette [Colorado]
March 28, 2007

The Episcopal Diocese of Colorado accuses the Reverend Donald Armstrong of theft and fraud involving hundreds of thousands of dollars belonging to Grace Church and St. Stephen's Parish in a letter to congregation members.

The letter from Bishop Robert O'Neill was sent Tuesday and outlined the charges of a presentment, the Episcopal equivalent of a court indictment. It came a day after the Colorado Springs church's leadership voted to abandon the Episcopal Church and instead affiliate with an Africa-based Anglican church. O'Neill called that action invalid, saying that "while people can leave the Episcopal Church, parishes cannot."

Armstrong denied any wrongdoing and accused the bishop of slander. "I believe their numbers are wrong, their assumptions are wrong and their conclusions are wrong," he said about the diocese and the findings of its investigation. He said he will address his congregation about the accusations April 14 and added that an independent audit is being done to bolster his case to parishioners.

Armstrong had been suspended from his post since December, but at the same time that it voted to leave the Episcopal Church, Grace's 11-member vestry voted to reinstate him.

O'Neill's letter accuses Armstrong of:

-"Theft from Grace Church of $392,409.93 in unauthorized payments for educational and personal expenses for Father Armstrong's family

-"Tax Fraud involving $548,097.27 in non-salary income and benefits not reported to the Internal Revenue Service and the Colorado Department of Revenue

-"The unlawful extension and receipt of loans to Father Armstrong totaling $122,479.16

-"The improper use of Clergy Discretionary Funds in the amount of $136,354.78

-"The unauthorized encumbrance and alienation of the parish's real property

-"The failure to maintain proper books of accounts by causing Grace Church to record false or fraudulent entries in its books and records"

O'Neill added: "These are serious allegations. That the former vestry has made a decision to 'leave' the Episcopal Church and restore Father Armstrong to a position of leadership in light of this is an irresponsible breach of the confidence you entrusted it."

The diocese declined to provide additional details about the charges.

Grace is — or was — one of Colorado's largest Episcopal churches. It has an average Sunday attendance of about 800, with about 2,000 members registered in its database.

In voting to separate from the 2.4-million-member Episcopal Church, the Grace vestry accused Episcopal leaders of losing their moral way.

Armstrong has been a vocal opponent of the Episcopal Church's perceived turn from orthodox beliefs. That stems partly from a 2003 decision to appoint a gay bishop in New Hampshire, and talk about blessing same-sex unions.

Letter from Bishop O'Neill


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