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.