Two Institutions, One Failure, and Nonprofit Board Fiduciary Duty

Two Institutions, One Failure: What the Lemington Home and the AME Church Retirement Fund Have in Common 

Part I of III: The Lemington Home 

 A good deal of my work happens quietly, in board rooms and Steering Committee meetings. I spend my time as a facilitator and a conflict resolution professional, helping organizations, including nonprofit boards, build the unglamorous (and sometimes tedious) infrastructure for good governance: the policies, the succession plans, the honest conversations about who actually has authority to do what. Right now, one of the organizations I work with is doing something I find genuinely admirable — they’re trying to figure out how to live their values through limited hierarchy, which in practice means they’ve chosen not to have an executive director at all. That’s a hard, complex choice, and it only works if the people responsible for leadership, the board of directors, take the responsibility seriously. 

 That work is exactly why I’ve spent a lot of time this year thinking about what happens when the people entrusted to protect an institution simply stop paying attention. Two cases, although separated by a decade,  keep surfacing: the Lemington Home for the Aged, and the ongoing litigation over the African Methodist Episcopal Church’s Ministerial Retirement Annuity Plan. Both situations are built from the same failure to meet their nonprofit board fiduciary duty.

 I want to walk through both because it’s the same lesson I bring into every boardroom I sit in professionally, including the one I sat in last night. 

 

The Lemington Home 

 Founded in 1883, the Lemington Home for the Aged was the oldest nonprofit nursing home in the United States dedicated to the care of African American seniors. For over a century it served a Pittsburgh community that, for most of that history, had few other options for elder care that treated its residents with dignity. 

 By the early 2000s, Lemington was in trouble. Nearly $500,000 in Medicare receivables went unbilled. Grant funds were misappropriated. Employee insurance premiums went unpaid even though the money had already been deducted from paychecks. The board received multiple outside warnings — from the state, from consultants, about the CEO’s performance — and stayed the course anyway. Board attendance often ran below fifty percent; at least one director never showed up to a single meeting over several years. There was even a finance committee that was never established, despite being required in the bylaws.  

 In January 2005, the board voted to close the Home. It filed for Chapter 11 bankruptcy shortly after, and closed permanently. 

 Then, the other shoe dropped. The Official Committee of Unsecured Creditors sued the Home’s directors and officers personally, alleging breach of fiduciary duty and “deepening insolvency.” A district court initially dismissed the claims. The Third Circuit Court of Appeals reversed that dismissal and, in 2015, affirmed a jury verdict of $2.25 million against the directors (CEO and CFO) and officers PERSONALLY — including punitive damages against the officers. The court’s reasoning wasn’t that the board members were crooks. It was that they failed to exercise – nonprofit board fiduciary duty – the most basic form of diligence: showing up, asking questions, and acting once problems were in plain view. 

 A 122-year-old institution built to serve seniors who had few other options disappeared because the people entrusted to lead it weren’t paying attention or engaged.  

 

Part II: AME Church Retirement Fund 

Now, let’s turn to another situation, but this one is near and dear to my heart because…well, it’s MY church. 

The AME Church Retirement Fund 

 The African Methodist Episcopal Church is the oldest independent historically Black denomination in the United States, founded in 1816. Its Ministerial Retirement Annuity Plan exists to provide for the clergy and staff who spent their careers serving its congregations. Some of the members didn’t maintain secular careers; thus, this fund was their only income for retirement. The affected members are ministers, bishops, officers, elders, and other employees of AMEC or AMEC-related institutions who lost money invested in the retirement plan, had diminished returns due to mismanagement, or were promised plan participation they never actually received. The suit covers nearly 5,000 retired and active pastors, bishops, and others. 

According to the consolidated litigation brought on behalf of thousands of plan participants, Rev. Dr. Jerome V. Harris ran the Department of Retirement Services for roughly two decades with essentially no oversight, during which time an alleged embezzlement scheme beginning around 2001 diverted plan assets into self-dealing, illegal, and high-risk investments. The complaint alleges breach of contract, breach of fiduciary duty, negligence, and unjust enrichment — not only against Harris, but against the AME Church itself, Bishop Samuel L. Green Sr., the plan’s trustees, the Department of Retirement Services, the General Board, and the Council of Bishops. The allegation at the center of it all is not that these bodies conspired with Harris. It’s that they let one man operate a fund worth hundreds of millions of dollars without meaningfully oversight — for twenty years. This is the very essence of a failure to exercise nonprofit board fiduciary duty. 

In January 2022, Harris’s successor arrived to find the department’s office cleared out and no records left behind. That discovery triggered the investigation that unraveled the scheme. But we’ll never know all of the details because Harris died in 2024 while he was still a defendant in the litigation.  

The financial picture that emerged was severe: plaintiffs have argued the plan’s balance should have been as much as $227 million higher than it was, while an earlier estimate placed the shortfall closer to $88 million, depending on how the loss is measured. Settlements to date — from the AME Church, Newport Group, and Symetra Life Insurance — total roughly $106 million, just shy of half, which a federal judge said should return most, though not all, of what plan participants were told they had. None of the settling parties have admitted liability, and litigation continues against the defendants who haven’t settled, including Harris’s estate and wife, which were added as defendants. 

  

Comparing These Failures of  Nonprofit Board Fiduciary Duty

Put next to each other, these aren’t really two different stories. They’re the same failure, told twice, in institutions that both mattered enormously to the communities they served. 

In both cases, a single person was handed unsupervised control over something worth protecting — a nursing home’s finances, a denomination’s retirement fund — and the body responsible for checking that person’s work simply didn’t. Not because they were villains. Because oversight is unglamorous, because questioning a trusted colleague or a sitting bishop feels confrontational in a way that avoiding the question doesn’t, and because deference to authority is easier than the discomfort of scrutinizing it. 

The Lemington Home case is fully adjudicated: a jury found directors and officers liable, and an appellate court affirmed it. The AME Church litigation is still unfolding, with settlements reached but liability not admitted by the parties who’ve settled, and claims still pending against others. I want to be precise about that distinction, because it matters — allegations are not verdicts, and the AME Church leadership defendants are entitled to the same presumption of innocence that everybody else is. But precision about legal status doesn’t require pretending the pattern isn’t there. Twenty years of unsupervised control over a fund of this size does not happen by accident, and it does not happen without a governing body that chose comfort over diligence. 

What disappoints me most isn’t any single defendant. It’s what both institutions represented before any of this happened. The Lemington Home was, for over a century, one of the only places a Black elder in Pittsburgh could go and be cared for with dignity. The AME Church is the oldest independent Black denomination in this country, built by people who had to found their own church because they weren’t welcome to worship as equals in the one they’d been attending. Both institutions exist because a community built something for itself when it had no other choice. And in both cases, the people entrusted to steward what that community built let it get quietly hollowed out — not by outside forces, but by insiders who either looked away or never looked at all. 

That is the disservice. Not just the dollars, though the dollars are real and the shortfall is real for every clergy member who spent a career serving a congregation and is now retiring with much less than what they were promised. The deeper disservice is to the legacy itself — to the founders of the Lemington Home who built something extraordinary out of necessity, and to the founders of the AME Church who built an entire denomination because they refused to accept a lesser seat. Both legacies deserved stewards who understood that the honor of the position came with an obligation to actually do the work of oversight, not just occupy the title. 

Governance is not a ceremonial function. It is the whole job. Every board — including those I advise — should look at both of these cases and ask honestly whether “we trust our leadership” has quietly become a substitute for actually checking on them. 

 

Read Part III of III: Morris Brown College and the Cost of a Board That Wasn’t Watching (opens in new tab)

  

A Personal Postscript 

I’ll be direct about something I’ve mostly implied so far rather than said outright: it stings differently that both of these institutions serve Black people. I want to be careful here, because I am not saying this kind of dereliction of duty is unique to us, or that any community deserves it more or less than another. Boards fail institutions everywhere, across every community, for the same tired reasons. But I’m more intimately connected to failures like these when they happen to my people. And if I’m honest, the AME Church’s retirement scandal doesn’t feel like an isolated event to me. It feels like part of a pattern — this isn’t our first struggle with this particular kind of institutional failure. The same goes for institutions like the Lemington Home more broadly. We rightly cherish the historical significance of what these places represent, but it seems that we don’t relish the work of stewarding them. Loving what an institution represents is not the same thing as governing it well. 

This isn’t just a personal disappointment, either. Most of the nonprofits I work with serve communities of color that are under-resourced to begin with — organizations that don’t have the margin for a Lemington or an AME Church-scale failure, because they’re already stretched thin. When board members in those spaces aren’t willing, or simply aren’t able, to do the actual work of governance, the consequences land harder and faster than they would for better-cushioned institutions. That’s part of why I turned down a board invitation just this past week. It wasn’t because I didn’t believe in the cause — I did. It was because I know what real board service requires, and I knew I couldn’t give that organization what it needs right now. Declining wasn’t a lack of commitment. It was, I’d argue, a form of it because I know I don’t have capacity  for nonprofit board fiduciary duty.