Police raid Grace Church & St. Stephen's

Via TitusOneNine:

November 26, 2008 - 11:20 AM

LANCE BENZEL and TOM ROEDER
THE GAZETTE

Colorado Springs police detectives raided Grace Church & St. Stephen's on Wednesday morning to seize paper financial records and computers as part of a theft investigation launched more than a year ago.

More than 20 officers cordoned off the blocklong church complex at 601 N. Tejon St., evicting its controversial pastor, the Rev. Donald Armstrong, who wandered the sidewalk in clerical garb, a copy of the warrant in his right hand.

The raid focused on records tied to allegations from the Episcopal Diocese of Colorado that Armstrong embezzled $400,000 from Grace Church & St. Stephen's Parish, the congregation he headed before he and his followers broke away in early 2007 to affiliate with the Convocation of Anglicans in North America.

Colorado Springs police Lt. David Whitlock said officers were searching for evidence of theft and fraud. Police also searched Armstrong's Colorado Springs home Wednesday.

Dennis Hartley, Armstong's attorney, said the 4th Judicial District Attorney's Office will likely review the material police found to decide whether to pursue charges.

"I'm glad they did (the raid), because when they get through with it they'll understand there is no case against Father Armstrong," Hartley said. He noted that the Internal Revenue Service has investigated Armstrong for a year and a half and "obviously has turned up nothing."

Outside the church, Armstrong greeted onlookers with a smile but declined to comment.

One of his parishioners nearby said the police action has long been expected.

The bitter split between the two factions of Grace Church & St. Stephen's took place in March 2007, with the Armstrong faction citing the U.S. church's ordination of gay clergy and other theological issues they believe run counter to biblical teachings. Armstrong and his followers joined the more conservative CANA group, the U.S. affiliate of Anglican Archbishop Peter Akinola of Nigeria, and they've continued to worship at the majestic stone church on North Tejon Street.

The group that remained with the Episcopal Diocese of Colorado and still calls itself Grace and St. Stephen's Episcopal Church has been worshipping at another downtown location until a lawsuit over who owns the $17 million Tejon Street property is decided early next year. Whitlock said the raid had nothing to do with the property dispute.

About a year before the split, the diocese had been investigating the church's finances, and in December 2006, Armstrong was suspended.

In August 2007, the Denver-based diocese filed a complaint with Colorado Springs police saying that $400,000 in church funds had been embezzled. An ecclesiastical court representing the diocese convicted Armstrong of stealing the money - a move that has no teeth outside the denomination. The court also concluded that Armstrong committed tax fraud by underreporting his income and causing the church to issue false W-2s.

Later that year, an audit conducted by a Colorado Springs certified public accountant at the request of the local CANA congregation found no financial wrongdoing on Armstrong's part. The diocese stood by its findings.

Members who left Armstrong's flock in the split stood near the police tape to watch the raid.

"This is a day I've been awaiting for a long time," said former Armstrong follower Stormy Burns as police hauled bags of evidence from the parish offices. "This is my church. It's very emotional, but I'm glad there has been action on the part of police."

The Rev. Michael O'Donnell, who most recently has been pastor for Grace & St. Stephen's Episcopal and was an associate rector under Armstrong, said he had no details about the Wednesday-morning search of the Tejon Street church. But he said he's been kept apprised of the investigation and wasn't surprised that a search was taking place more than a year after the diocese filed its complaint.

"They really took their time," he said of Colorado Springs police. "It was a thorough investigation. They wanted to make sure to cross every T and dot every I."

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Barb Cotter of The Gazette contributed to this report.