Ohio Jury Finds Nonprofit Founder and Family Liable for $14 Million in Damages

After four days of deliberations, a jury in Akron, Ohio, has charged the Rev. Bruce Hawthorn and members of his family with diverting funds from the Barberton Rescue Mission and an affiliated newsletter and has ordered the quartet and two for-profit companies created by family members to pay more than $14 million in punitive and compensatory damages, the Akron Beacon Journal reports.

The ruling ends a lawsuit filed by the mission and the Ohio attorney general's office to recover donations that the plaintiffs claim the family used to pay themselves excessive salaries and purchase dozens of pieces of property, vehicles, and trips.

Hawthorne, who founded the mission in the 1960s to help homeless alcoholics in Akron, created the Christian Brotherhood Newsletter in 1981 as an alternative health insurance program, with subscribers to the newsletter paying a monthly fee and the money then being pooled and used to pay the medical bills of fellow subscribers. As the number of subscribers grew — the newsletter had more than 33,000 by the mid-1990s — Hawthorne added members of his family, including his nephew, Daniel Beers, and brother-in-law, Ronald Beers, to the mission's payroll and created a for-profit company, Benevolent Health Systems (BHS), to negotiate medical bills on behalf of subscribers. By 1998, Daniel Beers' income had soared to $1.3 million a year, even as the company's unpaid medical reached $34 million, prompting investigations by federal, state, and local authorities.

Although criminal charges were never brought, Hawthorne and the Beers were removed from the charities in 2002. In finding them liable for civil and solicitation fraud, breach of fiduciary duty, conversion, and unjust enrichment, the jury ordered Hawthorne and Ronald Beers to pay $2.9 million and $121,800, respectively, in compensatory and punitive damages, while Daniel Beers was found liable for $240,000 in compensatory damages and $3 million in punitive damages. In addition, BHS was assessed $6.3 million in damages, while Hawthorne and Sons, a second for-profit entity that was created to handle various services for the newsletter, was assessed $1.6 million. Both companies are now defunct.

Although Hawthorne, who is said to be ailing, was not in the courtroom, Daniel Beers defended his actions and said the verdicts would be appealed. "It's unfortunate the jury felt the way they did," he told the Beacon Journal. "These are healthcare dollars and we got paid on the savings. The jury just didn't see it in our favor today. It doesn't mean what we did was wrong." Beers added that the jury's verdict was "not a collectible judgment."

"I think this was a necessary outcome, regardless of collectibility," said R. Scott Haley, the Akron attorney appointed as receiver. Haley added that the ruling helped "at least to ensure accountability for those people in positions of trust."

Phil Trexler. "Minister, Family Liable in Suit." Akron Beacon Journal 05/26/2004.