Friday, August 21, 2015

Court Says Sale of Boston Church Was Invalid

In First Bostonview Management, LLC v. Bostonview Corp., (MA App., Aug. 19, 2015), the Massachusetts Appeals Court held the purported sale of the property of Boston's Swedenborgian Church on the Hill invalid.  The court said in part:
[T]he sale of substantially all of the Bostonview church property (consisting of a church sanctuary, a parish meeting hall, a large apartment complex, offices, and parking spaces on prime land on Beacon Hill near the Massachusetts State House) was indisputably an "extraordinary transaction," and, if completed to the end would have stripped Bostonview of the very essence of its existence as a charitable corporation.... We conclude that the authority to make such a divesting asset/property sale contract ... was beyond the power of the charitable corporate board to delegate to two of its officers. The contract was void. The "shady" nature of the underlying prenegotiations to sell the church's very valuable (but sole) asset for $30 million -- including combined cash payments of close to $100,000 to two of the executive officers, and the purchase of the $94,000 luxury car for the church secretary -- only serves to demonstrate why restrictions on "extraordinary transactions" must be closely scrutinized by the charity's corporate board. 
The court also held that: "subsequent approval or other conduct by the board of directors of a charitable corporation will not substitute for prior specific authorization to commit the charity to an extraordinary transaction."

Boston Business Journal gives additional background:
The case centered on developer Michael Perry’s 2004 agreement to pay $30 million to purchase the property....  Perry struck the agreement with Thomas J. Kennedy and Edward J. MacKenzie Jr., who were then officials at Bostonview Corp., the charitable organization that conducted business on behalf of the Swedenborgian church. MacKenzie, who has claimed he was an enforcer for incarcerated mobster Whitey Bulger, was later sentenced to 12 years in prison for allegedly stealing millions from the church.