Posted: Tue May 17, 2005 10:07 am Post subject: Church Loses Millions In New Scandal
GENERAL CONFERENCE LOSES MILLIONS
IN STOCK SPECULATION
Silver Spring, Maryland (May 11, 2005)—The General Conference Corporation of Seventh-day Adventists has lost millions of dollars in a speculative, high-risk stock venture. As the largest investor in Lifepoint, Inc., the records indicate that between 1997 through 2003, the General Conference had participated in every round of the company’s financing, investing what appears to be $19 million into the unproven, high-risk venture. According to the Company’s financial statements, Lifepoint never made a profit as the Company accumulated more than $84 million in losses over a span of 13 years, most of which were obtained through investor capital. Unsuccessful in securing additional financing, on April 28, 2005, Lifepoint shut down its operations and assigned its assets to a trustee.
Before the General Conference invested into the Company eight years ago, Lifepoint, Inc. was a “de-listed public company with no cash, no product” and very little else, according to Linda Masterson, former President and CEO of the now defunked Company. Nonetheless, the General Conference went on to become Lifepoint’s largest investor. At its peak in 2002, Lifepoint employed about 100 workers at its Ontario, California headquarters. At the time, the Company was preparing a broad launch using a $10 million line of credit secured from the General Conference. However, in early 2003, the General Conference terminated the loan and the Company was forced to lay off most of its workforce. The next year was spent lining up new funding for the Company to simply stay afloat. Unable to secure more investors or loans, on April 28, 2005, the Company shut down its operations, according to a statement filed with the Securities and Exchange Commission. The Company is now in the hands of a trustee who will sell its remaining assets.
Lifepoint, Inc. has lost a staggering total of $84,556,490 between 1992 and 2005, with most of the losses generated in the last eight years, according to the Company’s financial statements. Although it is unclear why the General Conference would make such a risky investment, the Church has had a previous history of financial scandals. No doubt an investigation is in order.
About Lifepoint, Inc.
Lifepoint tried unsuccessfully to develop a product that would make it possible to test saliva samples for the presence and concentration of drugs, alcohol, and other substances that usually require blood or urine samples. Lifepoint marketed a product called the IMPACT Test System, a machine that company officials said could deliver results faster, cheaper and better than existing method. Tests that have to be done through laboratories—taking days—could now supposedly be done in minutes.
Lifepoint’s patented and proprietary technologies for the use of saliva as a non-invasive, blood-comparable test specimen, used in conjunction with the flow immunosensor technology licensed from the U.S. Navy, had enabled LifePoint to allegedly develop a broadly applicable, rapid, on-site diagnostic test system. According to company officials, the Company had planned to use the product in three target markets (potentially worth $1.6 billion): law enforcement, industrial workplace, and medical emergency rooms. However, sources from the FDA claim that the use of saliva for drug testing is problematic and has yet to be successfully developed.
Lifepoint’s Stock
Lifepoint, Inc. had been trading at a high of more than $6.00 per share in 2000 to a low of .03 cents per share on April 29, 2005, when trading was halted and the Company was shut down. The General Conference was Lifepoint’s largest investor. According to a statement made by the company dated March 21, 2000, “over 53% of the remaining shares are owned by the General Conference who have participated in every financing round LifePoint has completed since 1997, including the current private placement [of $9.2 million].”
In December 2002, the General Conference Corp. of Seventh-day Adventists, had holdings of 6,052,108 shares. It is unclear at this time how much the General Conference actually paid for these shares. SEC records indicate that in 2003, the General Conference purchased additional shares at $4.43 per share.
According to an interview on August 11, 2003 with Linda Masterson, former CEO and President of Lifepoint, “in the Spring of 2003, we lost the working capital line from a major institutional investor [i.e., General Conference]. The institutional investor had a change of investment managers and with it a change in their investment strategy. Similar decisions were made about other investments of the same type.” The General Conference began selling its shares in late 2003 for less than .56 cents per share and on January 4, 2005, they sold 500,000 shares for .28 cents per share—substantially lower than the purchase price. According to the Company’s website, which is still functioning as of today’s date, “the General Conference Corporation of Seventh Day Adventists is the largest investor in LifePoint with approximately a 20% holding.”
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