Cornerstone Ministries Investments, Inc., a Georgia-based company in the business of lending money to fund churches and/or faith-based organizations, filed for Chapter 11 bankruptcy on February 10, 2008 after apparently investing in speculative secular real estate ventures.
Cornerstone was able to lend money to churches by raising money through the issuance of Cornerstone stocks and bonds. Church-going consumers interested in making altruistic investments in the development of new churches were often the people investing in these stocks and bonds.
It appears that Cornerstone deviated from its core mission and branched out into secular, very speculative real estate ventures at the expense of its investors. Now that Cornerstone has filed for bankruptcy, the values of those stocks and bonds have plummeted, leaving the investors holding the bag.
The question becomes what can investors do to try and recover the losses? The answer is that it will be necessary for investors who suffered investment losses to determine whether any collateral parties can be held liable. These collateral parties may include brokerage firms, investment advisors and the like that were involved in the transactions.
It would be wise for anyone who invested and lost money in Cornerstone to take the following steps immediately:
1. Start making a written chronology that touches on the following areas:
– How did you learn about Cornerstone Ministries?
– Did someone recommend the investment to you? If so, who?
– Why did you decide to invest?
– What did you expect the investment to do for you?
– Did you purchase the investment to generate income? If so, how much income did it generate and how important was that income to your overall financial picture?
– How was the investment described to you? Was it described as a safe investment? Risky?
– Were any promises made to you about the performance of the investment?
2. Gather all of the written marketing materials that you received in connection with the investment.
The written chronology is very important because (1) memories fail over time and (2) the document is a “living”? document because it can evolve over time when new information is added later. For example, many times an unrelated event such as a TV commercial will trigger a memory about a statement that was made to you about the investment. If you have already created a written chronology, it is easy to add that information.