A major startup went bankrupt. Years later, Alabama churches are paying the price.

In 2022, a letter arrived at St. Andrew’s Global Methodist Church in Cullman, Alabama, demanding $700,000. The letter came from the trustee of a bankruptcy case and indicated the church had 10 days to respond. Church staffers thought the note was a scam.

St. Andrew's wasn't the only ones. About 100 churches in Alabama had been given tainted money and were told to repay it. It grew to nearly 900 employees in five years and generated $100 million in annual profits. It moved into a downtown office in the Bio+Tech Park. One of BlueWave’s two co-founders, Robert Bradford Johnson, took several million dollars of his earnings from HDL and other ventures and donated it to about 100 churches in northern Alabama, where he lived.

St. Andrew’s spent all of the money it got on its community in Cullman. It dispatched 50 of its members to buy gifts and boxes of food for needy families at Christmas. It hired a youth ministry director, a position Johnson funded for two years. When a storm hit Dauphin Island off the coast of mainland Alabama, the church organized a mission trip to help clean up.

‘Fraudulent transfers’At the beginning of HDL’s bankruptcy, the court appointed Richard Arrowsmith to serve as the trustee, whose job is to recover as much money as possible belonging to HDL, known as the debtor, and distribute it to the people and companies owed money, called creditors. After Centre First lost its trial, the other churches Funk represented decided to settle. The judge determined St. Andrew’s owed about $520,000 — slightly more than its annual budget. The trustee offered to knock off an additional 10% if the churches paid quickly, Funk said. The churches started scrambling to cobble together the necessary money.

Law ‘can be abused’Funk, the lawyer who defended the churches, says he understands the need for recovering money from BlueWave and its shareholders. But going after churches so far removed from the original debtor does not sit right with him. He has never seen it before, he said.

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