Religious nonprofit CEO arrested by FBI in fraud case

Robert Snell
The Detroit News

Detroit — The former CEO of a religious charity serving the poor and homeless stole more than $240,000, money that bankrolled everything from shopping sprees and vacations at resorts in Florida and Northern Michigan to a new roof on his home, prosecutors said Thursday.

John Lynch, 56, of Grosse Pointe Park is accused of stealing from the federally funded Holy Cross organization in Clinton from 2014-17, according to a 28-page complaint unsealed in federal court.

This house on Balfour in Grosse Pointe Park is believed to be the home of John Lynch, 56, CEO of a religious charity serving the poor and homeless. Lynch is accused of stealing from the federally funded Holy Cross organization in Clinton Township from 2014-17, according to a 28-page complaint unsealed in federal court.

Lynch, who was paid $200,000 a year, spent stolen money to pay for car repairs, install a new roof and make mortgage and credit card payments, according to the government. He also spent the money paying his consultant company and for security services at the Samaritan Center, which he secretly controlled through a relative, prosecutors said.

Lynch had issued 14 checks totaling $39,150 to a relative from 2014-15, saying the money was "profit sharing" from Holy Cross and suggested they split the cash, prosecutors said.

"In all, Lynch’s (relative) received $39,150 in Holy Cross funds for no reason, and he kicked back $21,895.50 of that to Lynch," an FBI agent wrote in an affidavit filed in court.

A handcuffed and disheveled Lynch made a brief appearance in federal court, telling U.S. Magistrate Judge Curtis Ivy that he understood the charges against him. Lynch is charged with mail and wire fraud — both punishable by up to 20 years in federal prison — and stealing money from an organization that receives federal funds, a 10-year felony.

He received a court-appointed lawyer, Benton Martin, and was released on $10,000 unsecured bond. Martin declined com

Prosecutors say Lynch tried to hide the embezzlement by submitting bogus invoices and by paying companies setting up companies that he claimed were controlled by a relative but really controlled by Lynch, according to the government.

The criminal allegations spans Lynch's tenure as chief financial officer and chief executive for the nonprofit, previously known as Boysville of Michigan. Holy Cross provides welfare services to disadvantaged children, adolescents and the homeless in southeast and mid-Michigan.

The government’s allegations about spending sprees reads like a TV game show prize package.

Lynch used his Holy Cross-issued credit card to make approximately $36,500 in unauthorized charges, according to the government.

In January 2015, he spent $1,457 at Boyne Highlands Resort in Harbor Springs. Four months later, the credit card was used for a $212 purchase at Lululemon Athletica in Ann Arbor.

In February 2016, the charity’s credit card paid for a $1,300 vacation at the beachfront Ocean Sky Hotel & Resort in Fort Lauderdale and $278.20 meal at a farm-to-table restaurant in Boca Raton.

The card also was used to pay for a Labor Day weekend getaway trip to Mackinac Island that included $515 for a condominium, $290 for the ferry ride and $120 at an island restaurant in September 2016.

Prosecutors say the alleged fraud was uncovered in spring 2017 when a Holy Cross employee noticed what appeared to be Lynch's use of the nonprofit's credit card to pay personal expenses, according to the criminal complaint.

The board hired an outside accounting firm to conduct an investigation and Lynch was terminated that April.

The nonprofit includes the Samaritan Center, which provides health care, employment services and other support on Detroit's east side.

Boysville of Michigan was established by the Bishops of Michigan in 1948 and was supported and controlled by the archbishop of the Roman Catholic Archdiocese of Detroit.

Boysville later became Holy Cross Children's Services.

Holy Cross is not affiliated with or operated by the archdiocese, said Holly Fournier, spokeswoman for the Archdiocese of Detroit.

Twitter: @robertsnellnews