"I went to Jerusalem to become acquainted (Gk. istoria) with Cephas" - Paul's words from Galatians 1:18.

The Defalcation of Clinton Samuel (C.S.) Carnes: The Southern Baptist Convention's Worst Fraud

Defalcation - n. (dē-ˌfal-ˈkā-shən) - Def.  The act or an instance of embezzling


The picture to the left is a never before published 1928 press photo of a group of Southern Baptists and other interested persons waiting for a glimpse of the recently captured Home Mission Board Treasurer Clinton Samuel (C.S.) Carnes at the Atlanta train station.

C.S Carnes stole $909,461 from Southern Baptists, the Home Mission Board, and the recently formed Cooperative Program. In today's dollars, the amount Carnes embezzled is a staggering $12,344,066, the worst fraud ever perpetrated on Southern Baptists.

On Wednesday, August 15, 1928, C.S. Carnes locked up his desk in Atlanta, Georgia and said he was going out of state on business. The Home Mission Board's treasurer's job was to lend money to financial strapped rural churches through Home Mission funds. But Carnes went even further. On the good name of the Southern Baptist Convention and the Home Mission Board, he began to make unauthorized contacts and contracts with many small town banks on behalf of Southern Baptist rural churches. Carnes won the banks over with his word alone, often negotiating and borrowing $15,000, $10,000 and other round dollar sums "for the Board." Carnes established accounts "for the board" in 18 different states, using over 150 separate banks, with each bank either "holding funds for the board" or "paper covering loans" made by Carnes.  Unfortunately, all the monies "for the board" promptly went into C.S. Carnes' deep pockets, with Carne's intention to "pay back" the bank loans with future money he would earn through his nefarious personal investments.

As Carnes left Georgia for "business" that hot August day, auditors for the Home Mission Board
began examining his books. Soon, they discovered Carnes' massive fraud. Possibly either tipped off, or sensing imminent discovery of his malfeasance, Carnes never returned to Atlanta, leaving his wife and adult children to face the shame of his actions. After a warrant for Carnes' arrest was issued, newspapers across the nation headlined the nationwide search for the Baptist treasurer. Reporters began digging into Carnes' past, asking questions like "How could this happen?" and "What ever happened to all that money?" 

It was soon discovered that Carnes' embezzlement included the financing of the Hollywood careers of Swedish beauty Sonya Nordlie and American starlet Lois Griffin.  Carnes had the two aspiring actresses sign agreements that they would give him 10% of their future Hollywood earnings in return for his gifts of cash. However, it wasn't just beautiful women that Carnes financed. He became a real estate mogul, investing in commercial property and purchasing a personal mansion in Atlanta. He paid cash for at least four high-end personal vehicles, funded his boys' college education with cash, and soon became a regular in the high society benefits of the greater metropolitan area of Atlanta. Carnes' annual salary was only $4,500, but his lifestyle was extravagant. For the decade he served as the treasurer of the Home Mission Board of the Southern Baptist Convention nobody seems to have officially questioned Carnes about his material excess. 

Six weeks after C.S. Carnes fled Atlanta on August 15, 1928, he was captured by police in Winnipeg, Canada. One month later, singer/songwriter Dan Hornsby released a hit folk song, putting the story of C.S. Carnes to music. You may listen to the catchy song here.  Time Magazine declared the defalcation of C.S. Carnes "a devastating blow to the image of the Southern Baptist Convention and extremely damaging to the trust Baptists have in their Boards." That was probably a rare understatement for Time.

After a plea bargain agreement, Clinton Samuel Carnes was sentenced in early 1929 to five to seven years imprisonment. Prosecutors stated the agreement would save the state of Georgia a long, expensive trial. Justice would be served, they argued, because of Carnes' advanced age. It was stated at sentencing that Carnes had agreed to aid in untangling the board's accounts on which auditors had been working since his disappearance the previous summer. Only one of the 20 indictments was returned against Carnes, as the state announced the others would be dismissed if the 61-year-old former layman did not seek a pardon or parole before the expiration of his minimum sentence.

In 1933 Carnes' wife (Maude), still living in Atlanta, listed herself as a (wid C S) "widow to C.S." in the city directory. Though her husband was still in prison, and though he would soon be released, shame ended Maude Carnes marriage before death did. In 1935 C.S. Carnes finished serving his prison sentence.  He never returned to Atlanta, but moved to Denver, Colorado. He eventually settled in Salt Lake City, Utah and died there in obscurity on July 31, 1950, one day after his eighty-second birthday. 


Lessons from Carnes' Defalcation

Clinton Samuel (CS) Carnes
I'll close this sad saga by pointing out four little known facts from Carnes' extraordinary embezzlement and include a few of the important lessons worth remembering. Before Carnes went to trial, he grew a mustache and allowed his hair to grow longer (compare the picture of Carnes at the top right to the one bottom left).

(1). C.S. Carnes had been in prison just two years prior to being hired as the treasurer for the Home Mission Board. His first imprisonment (1914-1916) was for "mail fraud," and it seems nobody from the Home Mission Board performed due diligence in checking the background of Mr. Carnes. The surest expectation of future conduct are certified anecdotes of past character. 

(2). C.S. Carnes was known to the Home Mission Board because he had somehow obtained a job with an independent company that sent a team of workers for a perfunctory audit of the Home Mission Board books in 1917. When the audit team gave its report, a tall, ascetic-looking auditor made appropriate suggestions, impressing Home Mission board members.  A few months later when the treasurer of the Home Mission Board resigned, the Board went looking for the man whose bearing and appearance impressed them. The Board hired Carnes in 1918 and for the next decade, the treasurer of the Home Mission Board stole from Southern Baptists. Outward appearance is never a qualification for Kingdom ministry, for some of God's choices servants are often cultures' outcasts. 

(3). C.S. Carnes rewarded loyalist with financial gifts, loans, and ministry appointments. Due to his position of influence and "authority" no Southern Baptists stepped to the microphone to question the expenditures and lifestyle of their Home Mission Board treasurer. Sycophants enable swindlers, and an organization that bestows "authority and power" to its leaders only creates more sycophants, and thus more swindlers. 

(4). C.S. Carnes took nearly a million dollars. On Armistice Day, November 11, 1929, the Southern Baptist Convention asked "each Southern Baptist to give" in order to cover the million dollar debt of C.S. Carnes. The promotional committee of the Convention could not have known when they announced the Armistice Day campaign that the stock market would crash two weeks prior to the event. Unable to cover the financial shortfall, the Southern Baptist Convention's Home Mission Board went out of business and ceased to exist for eight years (1929-1937). It is not always a bad thing when a convention runs short of money, for during dark times, the systemic problems that led to the shortfall are often corrected. 

14 comments:

Anonymous said...

I've heard the story countless times but I've never heard anyone explain if any HMB leader or trustee was held even partly accountable for this. I suppose that a defunct HMB meant that numerous people lost jobs.

William Thornton

Bob Cleveland said...

There's an axiom in the insurance world, stating that only honest, trusted people steal.

That's what I told my insurance clients, when recommending they purchase Employee Fidelity ... employee theft ... insurance. Most did, and occasionally one was most thankful they'd bought it, or most regretful they hadn't.

The insurance industry also has many tips and clues for employers who desire to be prudent in those matters.

Wade Burleson said...

William,

I think you are correct about the consequences of a defunct HMB.

I have been familiar with this story, but in the age of the Internet, I found nothing recent that summarized what happened online. Most of what I've written was a compilation of reporting done by newspapers in the late 1920's.

Other than old-timers like me and you, few Southern Baptists are familiar with Carnes and the problems one man caused the SBC 90 years ago.

Thanks for commenting.

Wade Burleson said...

Very interesting tidbit of information from the insurance business, Bob.

Thanks!

Wayworn Wanderer said...

"the worst fraud ever perpetrated on Southern Baptists"

Well, yes, if you don't count the Fundamentalist Takeover.

Rex Ray said...

Wayworm,

Great point!

Pege' said...

WOW!!!

Rex Ray said...

Wade,
Your post is how a good reputation was false.
This email is in reverse.

To Bill O’Rilley and Martin Dugard
From Rex Ray
These 13 facts in James Tague book with page numbers as (#) and my comments in [ ] will prove ‘conspiracy’. Also there’s a link showing Oswald’s letter.

1. Photograph of Texas Department of Public Safety showed two spent rounds and one live round in the ‘sniper’s nest’. (#279) [“live” means the rifle firing pin had not made a dent in the round; only the lead and powder had been removed.]
2. [No one knew the exact time JFK would pass the School Book Depository.] Four employees saw Oswald reading a newspaper on the first floor at 11:50. (#47)
3. Oswald asked James Jarman JR. why people were gathering outside. Jarman answered, and Oswald said, “Oh, I see.” (#46)
4. Carolyn Arnold saw Oswald eating in the lunchroom on the second floor at 12:15. (#47) [First shot fired at 12:30]
5. Marrion L. Baker, policeman, pulled a gun on Oswald in the lunchroom 75 seconds after the first shot was fired. Oswald appeared normal, calm, and collected. Afterwards, Oswald bought a soda from a soft-drink-machine. (#44)
6. Vickie Adams and Sandra Styles were watching through a window on the 4th floor as shots were fired. They immediately went down the creaky wooden stairs in three inch high heels and outside without seeing anyone. They would have taken one of the two elevators but the electricity was off. (#214)
7. If Oswald had shot Kennedy from the 6th floor, he would have had to hide his rifle on the 5th floor, and be in the lunchroom in 75 seconds without being out of breath. Also, since the women had a head start of two floors, he would have the impossible task of running past them without being seen. (#217)
8. After drinking the soda, Oswald casually walked out of the front door and caught a bus. After the bus got stalled in traffic, he got a taxi but not before waiting for the bus driver to give him a transfer that was stamped 11:40 which was on him when he was arrested.) (#95) [Would a killer on the run wait for a transfer?]
9. Attorney General of Texas, Waggoner Carr, said Oswald was hired by the FBI in September 1962 as an informant with a salary of $200 a month. (#179)
10. Oswald had been put at the TSBD (October 15, 1963…five weeks before the assassination. (#205)
11. E. Howard Hunt was a former CIA agent who served 33 months in prison for Watergate. Oswald believed he was in charge and wrote a letter two weeks before the assassination:
“Dear Mr. Hunt, I would like information concluding my position. I am asking only for information. I am suggesting that we discuss the matter fully before any steps are taken by me or anyone else. Thank You, Lee Harvey Oswald.”
http://johnsonbushandnixonkilljohnfkennedy.blogspot.com/
[Oswald should have known Paul Newman’s statement: “If you're playing poker and look around the table and can't tell who the sucker is, it's you.”]
12. “It is evident to me [Tague] that the taxi ride to Oak Cliff [to his apartment] gave Oswald a moment to think, and he panicked knowing he was a patsy. (#97) TV quoted him saying: “I’m a patsy.”
13. Oswald rushed in and out of his room so fast, his landlady, Earlene Roberts said, “My, you’re sure in a hurry.” (#95) [probably got his pistol.]
14. “A theater cashier called police and reported a suspicious wild-looking man had entered the Texas Theater on West Jefferson Street.” (#96) [In the lunchroom, Oswald faced a policeman’s gun and stayed clam because he hadn’t done anything wrong, but now fear had him looking for someplace to hide.]

Anonymous said...

Bro. Wade,

If he went to prison in 1929 at the age of 61 he would have been 82 yrs old when he died in 1950 not 72 as the article states. :)

Wade Burleson said...

Anonymous, thank you.

Bob Allen said...

Wade,

You clearly have too much time on your hands (wink), but I loved the Dan Hornsby ballad.

The talk among the old Baptist editors is that the phrase "tell the truth and trust the people" originated with a question about what to say about the Carnes scandal.

Wade Burleson said...

Bob - fascinating tidbit about "tell the truth and trust the people" - I did not realize this.

Also, I am probably one of those rare birds that enjoys researching and writing during my downtimes - its relaxing and enjoyable - more so than watching inane sitcoms. :)

Thanks for the comment.

Wade Burleson said...

Rex Ray,

I've often wondered if part of the enjoyment of heaven is to uncover and discover the truth about historical events.

I'll definitely add the fourteen points you list from Teague's book to my list of questions on the other side. :)

Rex Ray said...

Wade,

OK, you made me laugh.
I appreciate you not ribbing me for saying Oswald was [a] clam. :)