CEF/DIL: Refuting the Unofficial Party Line

When the whole ABC District debacle debuted in Jan 2105, depositors that’d trusted the Lutheran Church with their funds were treated rather shabbily – good information wasn’t forthcoming, District officials misrepresented what had actually happened, District struck a Task Force to investigate what happened and when the task force issued its first report, disbanded the task force before it could make its final report (Note 1).

Synod used the disaster to wedge in restructuring, and beyond drafting a pastor as the interim ecclesiastical supervisor, has actively blocked any effort to show the depositors even a shred of christian charity. In the time since then the Synod Board has done its best to imitate the “see no evil, hear no evil” monkeys – Synod wasn’t involved, Synod has no responsibility, Synod will not do anything in regard to this mess, and the two members that have confessed to financial crimes can remain as members in good standing. (Note 2, 3).

In the seven years since ABC District announced a “sufficient cash shortage” (Note 4) the depositor abuse continues. In the CEF Investors Forum I’ve gotten reports that the unofficial party line is that depositors

  1. were greedy going for that 7% interest rate for 7 months;
  2. didn’t do their due diligence as any prudent investor should; &
  3. are going to get all their money back & then some when POP sells.

I’ll go through all these in order.

1 – “were greedy going for that 7% interest rate for 7 months;”

Nothing, and I mean nothing in Scriptures prohibits people from getting a return on their funds. Many stories include people that were wealthy and problems that came with owning and managing large amounts of resources. One also has to take into account who was offering the 7% returns – ABC District. And if CEF was offering a 7% return, where did the money come from? You guessed it – member churches to build churches and schools. And who set those rates? The ABC District and the District’s Board of Directors.

Now return on investment is all relative – if the current commercial interest rate is 8% then 7% is a steep discount on the what the person could get elsewhere. If the current commercial rate is 6% then 7% is a better return vs what could be gotten elsewhere. Going from my admittedly fuzzy memory the 7% rate was not out of the ordinary at the time it was offered.

So – nothing untoward there.

2 – “didn’t do their due diligence as any prudent investor should”

Anyone making this comment doesn’t know the difference between accredited investors and non-accredited investors.

Accredited investors are people that have the resources to trade in investments that have looser security rules compared to funds that are sold to non-accredited investors. Accredited investors could be taking on more risk and the assumption is that they know what they’re doing or can absorb the loss if things don’t work out. That means that accredited investors have to perform an appropriate level of due diligence before making an investment.

Non-accredited investors are people with limited resources to review investments, so they are limited to trading funds that are marketed under tighter securities laws. This lowers the risk to the general public so they do not need to do the same level of due diligence that an accredited investor does.

CEF was sold to non-accredited investors as a no-risk way to fund the building of churches and schools. As such CEF had the responsibility to conduct itself accordingly as part of its responsibility to maintain the public trust.

Now consider – the ABC District CEF had been run for longer than many people had been alive. It was run by a church that purports to believe in being honest and forthright. District officials – including the District President – were publicly telling people their money was safe. (Note 2 has a link to the ASC report detailing some of District’s false statements.) It was unthinkable that a fund that had been run by Christians for Christians to fund low-risk loans to churches and schools had misled them by making high-risk loans and investments and gone insolvent, particularly when the people one should be able to count on to be trustworthy were saying everything was good.

The truth is that District’s actions breached the trust that its depositors had given them by changing its risk profile without telling its depositors. It knew it was in trouble within a few years of Prince of Peace’s founding and failed to report that to the depositors. It knew it’d have trouble making the venture work and that bankruptcy was on the table as an option and it didn’t tell its depositors that either.

Synod also had a role to play in this in that Districts were supposed to be under Synod and Synod had a duty to monitor each Districts’ financial health. If Synod saw something untoward (like a failed or missing audit) it was supposed to call the District to account, and if that didn’t work then report the issue to Synod in convention. Synod did not do this. This responsibility falls on each Synodical President that was in power during this time.

So let’s not pick on the depositors whose only mistake was trusting their church leaders to tell them the truth.

3 – are going to get all their money back & then some when POP sells.

First, how do they know what POP will sell for?

There’s no guarantee how much the depositors will get back or when it’ll happen, so saying depositors will get all their funds back or more is bearing false witness because nobody knows the future except God.

Second, for some people it won’t matter.

One senior had given her funds to POP to invest and use the interest to help pay for her upkeep. When POP went into CCAA that money became part of the of the proceeding and wasn’t available to pay her bills any more – but the cost of her care continued. As a result she was evicted from the place she’d planned to die in and moved to a public facility somewhere else. Given her advanced age, by the time POP sells she’ll probably be dead.

Another case I’d read was that of a hard-working salt of the earth husband and wife. They’d lived a prudent life, raised their family, was getting up in years and she was starting to have medical difficulties. They’d entrusted their life savings to CEF and while they could get along for a bit using the food they’d stored up, if they didn’t get access to their money they wouldn’t be able to pay for her medical bills or their upkeep and life would get very difficult.

Other seniors that had been self-sufficient ended up having to ask their children for support since they’d lost access to their savings. For some retirees the proceeds from CEF was what they lived off of – it’s cold comfort to be told you’ll get their money back sometime in the future but until then you’re on your own.

Third, it doesn’t take into account the time value of money or inflation.

Let’s assume that one could make a 3% return somewhere and that POP sells for $50M. 3% x $50M = $1.5M in lost income each year. Multiply that by 7 years to cover the 2015-2022 time period and the total comes to $10.5M or 21% in income that someone could’ve made if they had access to their money.

Inflation is also eating away at the value of each dollar. If we assume 2% inflation for the 2015-2022 time period, returning $50M to the depositors in 2022 dollars only works out to $43.5M in 2015 dollars. ($50M / 1.02^7). And given the current high rate of inflation, that loss of value is even worse.


To conclude, what is needed here is simple Christian charity. The depositors have suffered an immense loss – not only of their savings but also of their trust in a Church that claims to reflect Christ Himself. They need whatever help and comfort that can be provided – and I’d hope the Church would live up to the love of Christ that it purports to preach and teach.

As for these comments – they’re as uninformed as they are inappropriate and I’d hope whoever is spreading this nonsense will stop.


Note 1: You can read Task Force’s first report here. Make sure you’re in a safe place with something to settle your stomach because the District’s flippant attitude about taking advantage of its members’ trust is just sickening.

Note 2: ASC’s SETTLEMENT AGREEMENT AND UNDERTAKING details the offenses Donald Robert Schiemann and Mark David Ruf admit to perpetrating and the sanctions ASC has imposed.

Note 3: Synod’s official actions in this manner have made it clear that Synod sees itself as a corporation, not as a Christian organization that has any Christian responsibilities to its members or the clergy it claims to supervise.

Note 4: What actually happened is they had turned the fund into a Ponzi scheme and ran out of depositor money. It would seem obeying the commandment about bearing false witness doesn’t apply when you’re a District President.

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