Just when you think Southwestern’s trustees have been asleep at the switch, you find out they may not have been on duty at all. If true, Southern Baptists would be better off if the seminary’s endowment had been managed by Bernie Madoff.

Let us explain.

For two decades after it opened in 1986, the 17th floor of the iconic Lipstick Building in Midtown Manhattan housed the offices of Bernard L. Madoff Investment Securities. That is until Dec. 11, 2008, when two federal agents arrested Madoff in his New York penthouse apartment. For years, Madoff had run a Ponzi scheme that racked up more than $50 billion in losses for investors. When all was said and done, Madoff was sentenced to 150 years in prison for his crimes and ordered to pay restitution of $170 billion.

Last November, the government authorized a third payout from the Madoff Victim Fund to more than 27,000 victims that included wealthy individuals, charitable foundations, schools, and pension funds. To date, victims have received $1.97 billion from that fund. A separate recovery supervised by New York attorney Irving Picard, a court-appointed trustee, has paid out another $13.3 billion. Notable victims include the late Elie Wiesel, actor Kevin Bacon, baseball Hall of Famer Sandy Koufax, numerous Jewish charities and universities, and the Baptist Foundation of Oklahoma. None of them will likely ever be made whole.

When news of the Madoff scandal broke, the president of the Oklahoma foundation reported that while the organization had no direct investments with Madoff, one of the fund’s managers had given the foundation “nominal exposure” in Madoff’s fund. The total loss was approximately $1.4 million out of $234 million in assets the foundation managed at the time, or less than 1 percent of its assets.

Understandably, the market collapse of 2008 made investors nervous. The temptation to pull out of the market, chalk up portfolio losses, and convert to cash was felt by ministers living on fixed incomes and large religious foundations alike. Nonetheless, Southern Baptists were cautioned by leadership at Guidestone Financial Resources to stay the course. Investors who “bail out of the stock market after a sharp downturn wind up missing out on the rebound that will help them recover their losses,” Guidestone’s president O.S. Hawkins warned.

Somebody forgot to tell Paige Patterson.

Just two years earlier on the upside of the housing bubble, Patterson attempted to move the seminary’s $90 million endowment away from the independently-managed Baptist Foundation of Texas to an internally-controlled corporation, The Southwestern Seminary Foundation. But after questions were raised about the move — including the potential exposure of the seminary’s portfolio to so-called sin stocks — the trustees delayed the transfer.

In time, however, Patterson got his way. He simply waited until the dust settled and made his move. The only problem: by the time Patterson decided to cash out of the market, the economy was in meltdown mode and the endowment value was falling. Yet at Patterson’s instruction, Southwestern Seminary officials arranged for a transfer of the endowment balance under management by the Baptist Foundation of Texas to the seminary’s own foundation, which is governed by a board separate from, though accountable to, the seminary’s trustees. The foundation board has been chaired by Texas pastor, Criswell College alumnus and former Southwestern trustee chairman, John Mark Caton.

The convention annuals, complete with publicly available IRS Form 990s, seem to paint an alarming picture of what happened next.

Southwestern Seminary’s endowment and third-party managed investments went from a value of $130,997,365 in 2008 to $105,016,368 in 2009. a near 20 percent loss in a span of 12 months. And the losses didn’t stop there.

The next year, the seminary reported the endowment was down to $103,509,157. The following year, it dropped to $99,287,129. That was 2011, back when the Pattersons were closing out their multi-million purchase of bogus Dead Sea Scrolls and cancelling retirement benefits for seminary faculty and staff.

Between 2011 and 2014, the fund grew again from a fifteen year low to $125,516,127. Then it dipped down again, losing nearly $1 million in value between 2014-15 and taking a sharp decline to $116,817,879 in 2016.  Last year, the seminary reported its endowment held at $129,246,961.

So here’s the bottom line: The day Paige Patterson brought the endowment in-house was possibly the worst moment in the last thirty years to start tinkering with the seminary’s investment portfolio and converting securities to cash. When he did, thousands of seminary supporters through the years — including alumni, small church pastors, widows, and retired faculty — lost approximately $25 million.

That’s $10 million more than Yeshiva University lost to Bernie Madoff, and the money is gone forever. Indeed, the value of the seminary’s endowment has yet to return to its pre-2008 level despite meteoric growth of the market in the intervening years.

Today, the Southwestern Seminary Foundation is still under control a small group of hand-picked trustees. Of course, there is no explanation of what happened to the seminary’s endowment in the SBC Books of Reports, news releases from the seminary, or federally-mandated public disclosures. At least not that we’ve seen so far.

What we do know is this: tax-exempt non-profit organizations like the Southwestern Seminary Foundation are legally bound to make available for public inspection their annual returns, including any schedules, attachments, or supporting documents, as well as copies of the organizations conflict of interest policy, governing documents, and financial statements.

We put in that formal request to Southwestern yesterday.

Developing . . .