Note: This article was updated on Thursday afternoon, Sept. 21, to add comment from Michael Blackwell.
The longtime president of Baptist Children’s Homes of North Carolina has retired after trustees presented a scathing report on his use of a “discretionary fund” over many years.
Michael Blackwell, 81, has led the fabled Baptist ministry for 40 years. According to the trustee investigation, he maintained a presidential discretionary fund that was not disclosed to the full board and that over time received at least $360,000 in deposits. About half that amount reportedly was spent by Blackwell on “personal” expenditures — in addition to his alleged solicitation of a donor to buy his wife a new car, which resulted in a personal tax liability.
“Our investigation revealed that Dr. Blackwell created a process outside of BCH policy that enabled him to keep the actual expenses paid by the AMEX card hidden,” the report states. “This process has been practiced consistently for decades, dating back well before the hiring of the current treasurer.”
In an interview with BNG, Blackwell said he cannot speak in detail about the report although he disagrees with its findings and has pledged to make restitution for any expenses he received payment for that should be deemed “personal.” Among those disputed expenditures, he said, were stocks of snacks, drinks and health supplies he routinely handed out to people begging on the streets.
“I never would have done anything to intentionally harm Baptist Children’s Homes,” he said. “That idea is repugnant to me.”
Blackwell had been on leave since May 26 for no stated reason. The internal investigation began that same week, and the report links the leave of absence to the financial review.
Trustees hired a forensic accounting firm and also interviewed key donors and staff to create a full report.
The heart of the findings concern a designated account, known as “Account 2695,” created in 2004 with $50,000 in “proceeds derived from the sale of certain real estate” as authorized by the board’s Executive Committee but apparently never reported to the full board. That fund was given for the president’s personal use as he determined.
According to IRS regulations, any such gifts from an employer must be reported as taxable income — both by the employer and the employee.
Further, the report states: “Between 2009 and the date of this memorandum, Dr. Blackwell directed $312,500 into Account 2695 without board authorization.” Those additional deposits to his personal slush fund appear to have been made, in part, from donor’s gifts without their knowledge.
Over a three-year period, the investigation found, Blackwell spent at least $88,803 on personal items.
The investigation found: “Many of the donor contributions to Account 2695, including those of certain individual trustees (or organizations with which they are affiliated), were specifically designated by such donors to support that account. We found no evidence that these donors knew either (a) that the board neither approved nor was even aware of any ongoing expenses paid from the fund, or (b) that Dr. Blackwell was using the fund for expenditures unrelated to BCH’s charitable purposes. Perhaps more important is that one of BCH’s most significant individual donors lacked awareness that Account 2695 existed and that significant portions of two of their recent donations to BCH were deposited into that account.”
When trustee officers discovered the details of Account 2695 in May, they froze the account, which had a balance of $183,096, and later returned those funds to general operations.
The children’s home board has undergone significant turnover in its trustee roster in recent years, due in part to former trustees being members of churches no longer affiliated with the Baptist State Convention of North Carolina. And then in May, the president of the board, James David “Jim” Goldston III, resigned after he and his wife, Agnes, were arrested and charged with three felony counts of animal cruelty and one misdemeanor count of making threats.
Over a three-year period, the investigation found, Blackwell spent at least $88,803 on “personal” items, including “snacks, drinks, nutritional supplements, clothes, health care costs, subscriptions, and stays at Structure House — a self-improvement center where program participants stay in ‘luxury apartments.’”
Structure House is a residential weight-loss retreat center.
The investigation also found Blackwell for years had directed staff to provide automobiles to his wife after they had served four to eight years in the children’s home’s fleet. Only one of those title transfers was authorized by the board.
Then in May 2022, the ministry purchased a new 2022 Nissan Altima (valued at $30,283) for the president’s wife.
The report explains: “The board did not authorize this gift, nor was it provided the opportunity to do so as required by BCH’s conflict of interest policy.”
A news release announcing Blackwell’s departure said Blackwell has agreed to reimburse Baptist Children’s Homes in full for the misappropriated funds. “Additionally, he will pay the appropriate amount of applicable taxes. Blackwell’s final compensation will only consist of that which is required by law, and BCH policy regarding accrued vacation and sick time.”
No mention was made of criminal charges being filed.
“While the outcome of this review was disappointing, the action taken by the trustees clearly prioritizes that the integrity of the BCH mission and, most importantly, our commitment to the children and families we serve comes first,” said Gayla Freeman, trustee chair. “It is our hope that this is the first step in rebuilding trust with our supporters, partners and North Carolina Baptists who have faithfully stood with us to minister to the needs of the most vulnerable while showing them God’s unconditional love.”
Freeman said the board also will tighten bylaws and financial controls and establish greater oversight. The trustee report said no other staff member was guilty of wrongdoing in Blackwell’s scheme.
Baptist Children’s Homes of North Carolina, which dates to 1885, is one of the largest child care organizations in the Southeastern United States. It has locations in 35 communities throughout North Carolina, South Carolina and in Guatemala and serves children, families, single mothers, expectant mothers, adoptive families, college students, intellectually or developmentally disabled adults, and aging adults.