"This was no surprise to us and frankly of no interest either--this is just all the Episcopal Church has left, with no theology to debate those of us who have made a case for tradition, they have to resort to kangaroo courts ginned up in the their quickly failing club house," Armstrong told VirtueOnline.

The court had been reviewing the evidence since July 31. A preliminary judgment was made public August 8 by the five members of the Ecclesiastical Court who unanimously found Armstrong guilty of diverting $392,409 from the parish's operating fund and committing tax fraud by not reporting $548,000 in non-salary income and benefits to state and federal tax authorities.

"The charges are bogus. O'Neill spent $1,000,000 with the very people who defended Kobe Bryant on rape charges, and what O'Neill got for that was a fancy report that itself admits it never saw my tax records, and never interviewed me, my staff or the vestry--and yet assumed I didn't pay my taxes and that the parish leadership didn't give my children scholarships for college. "Included in the charges about my discretionary fund misuse, for example, is reimbursement $259.00 for bibles we gave the graduating Seniors--I can see where that would violate Episcopal sensitivities and be thought to be malfeasance."

Said Armstrong: "The bishop's own investigative auditor admits that, 'As of the date of this report, we have not requested nor had access to Father Armstrong's personal income tax returns...We have not obtained all information needed to complete our investigation...We have not had the opportunity to discuss these findings with Father Armstrong, the Wardens, the Treasurer and /or the Vestry of Grace Church (or their respective attorneys) to obtain their explanation of the concerns we have outlined herein.'"

The hearing also found Armstrong guilty of receiving illegal loans totaling $122,479.16 in violation of Diocesan Canons; unauthorized encumbrance and alienation of Grace Church's real property; violation of the temporary inhibition placed on Armstrong; the improper use of clergy discretionary funds; and failure to maintain proper books of account.

The three-hour evidentiary hearing was held at St. John's Cathedral in Denver July 31, and featured testimony from Sheri Betzer, a tax fraud examiner and former IRS agent who investigated parish financial records ranging over a 10-year period, and Karl Ross, an attorney and co-executor of the Clarice C. Bowton Trust, established to fund seminarian scholarships, which accused Armstrong of misusing for personal purpose.

Armstrong retorted that it had been reported to him that the clergy on the court were people who themselves were hanging by a thread in fear of not making it to pension eligibility. "One of the lay members, I have been told, left her family, changed her name, and announced that she was a lesbian--what chance does an orthodox priest stand in that system?

"I noticed that among the charges is one that we borrowed 4.5 million dollars with permission for only 2.5 million---what they did was to add the temporary construction loans we had on our renovation together with the amount of the final consolidation loan...anyone, especially an accountant, ought to be able to understand that one ...misuse of the discretionary fund includes checks clearly marked benevolence...and our discretionary fund is a church checking account, annually audited, requiring two signatures."

Armstrong said he hoped that with this behind them the standing committee might resume their required fiduciary responsibilities and do some sort of intervention for a diocese that is running an operating deficit. "Spending $1,000,000 to hunt down a priest, regardless of your long term resentment and desire to get even, isn't a good idea," he said.

"In the end we are a CANA parish and I am a CANA priest. The accusations made by O'Neill are being fully investigated by CANA at my request--so I can reclaim my good name that the Episcopal Diocese and Bishop of Colorado have slandered."

Armstrong says he has more than 500 people in church every Sunday at the parish's property and has a fully funded budget that includes legal expenses.

A group who left the church to stay with the diocese continues to meet at nearby First Christian Church until a civil lawsuit over ownership of Grace Church, filed with the El Paso County District Court, is decided.

Armstrong's spokesman, Alan Crippen, said that the findings are no surprise.

"We have far more confidence in the civil justice system in the state of Colorado and would be happy to meet the bishop and the diocese there anytime," Crippen said. "We have supreme confidence the good name of our rector will be exonerated."

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