.....Advertisement.....
.....Advertisement.....

Action against former Journey pastor won’t be refiled

-A A +A

Decision ends securities case involving Cheshire

By Gabrielle Porter

The state agency that sought to have a former Conifer pastor banned from selling securities in Colorado will not refile the action in an administrative court, staff said several weeks after the original case was dismissed.

Former Journey Community Church pastor Michael Cheshire was accused of securities fraud related to a bond offering the church made in 2013; state investigators sought to have him banned from selling securities in Colorado again. The church — which no longer exists — was also named.

The investigation was launched after several former church members and investors complained they weren’t told about certain church debts before investing. State law requires sellers to disclose all important information to prospective bondholders. During the bond offering, the church, which met at Conifer High School, owed more than $12,500 in back rent to Jeffco Public Schools — which was not mentioned in the bond financial statements.

A panel of state Securities Board members, led by Greenwood Village-based attorney Herrick Lidstone, heard several hours of testimony before recommending in Cheshire’s favor, calling the case “much ado about nothing.”

However, in a Dec. 3 decision, Securities Commissioner Gerald Rome rejected the panel’s recommendation, taking issue with nearly every part of the decision. At the same time, he dismissed the case and said the action against Cheshire and the church would have to be refiled at the Office of Administrative Courts.

Denver attorney Steven Feder, who represented Cheshire at the hearing, wrote in an e-mail that Cheshire and his supporters are pleased with the outcome.

“Michael Cheshire and the Journey Church had the courage to stand up to overzealous government officials and be fully vindicated,” Feder wrote in his e-mail.

Jill Sarmo, spokeswoman for the state Department of Regulatory Agencies, said in a Dec. 14 e-mail that the state had decided not to refile the suit.

Hearing creates rift between securities officials

While Sarmo wouldn’t comment on why the state decided to drop the issue, Feder pointed out in his e-mail that Rome’s decision was issued after Lidstone — who presided over the hearing — sent Rome a scorching letter defending the hearing’s original recommendation, accusing Rome of wanting a “puppet proxy” securities board and offering his own resignation from the board.

“Your cavalier attitude toward the hearing panel, your apparent acceptance of the staff’s incompetent presentation of its case, your issuing an order that is only designed to give the staff another chance to better present a case in which it completely failed the first time, and in the process that led to your order, all lead to the conclusion that it is your desire that hearing panels merely be a rubber stamp for the staff’s investigation and determination,” Lidstone wrote.

Church background and bond offering

During Journey’s roughly six-year tenure in Conifer, the congregation played a high-profile role in the community, drawing hundreds to its weekend services at the high school. The church’s grandest plan was to build a multimillion-dollar community recreation center, potentially with basketball and racquetball courts, a bowling alley, a swimming pool and movie theaters.

In February 2013, the church issued $1.1 million in bonds, mostly to finance the purchase of the 45-acre Journey Ranch on Highway 73. Some bonds were bought by church members through a private offering; others were sold on the open market. Cheshire and his team hoped to use some of the funds to launch the rec center’s construction.

However, after several months of infighting and after information about the church’s unpaid debts began to surface, attendance dropped precipitously. In the fall of 2014, the church ended services in Conifer. The leadership team, who mostly lived together at the ranch house, moved out of the area. After bondholders were informed in February 2015 that the church possibly was facing foreclosure on the bonds, Cheshire and his team sold the Journey Ranch property and repaid investors.