A pastor named in a 2006 church-starting scandal has sued the Baptist General Convention of Texas for libel, slander and defamation over allegations that he misappropriated church funds.

Otto Arango, one of three pastors at the center of an in-house BGCT investigation into the use of $1.3 million to start 258 churches in the Rio Grande Valley, filed a lawsuit June 20 in Hidalgo County District Court. The suit also accuses the Baptist Standard, the state convention’s official newspaper, of publishing allegations against Arango “with malice and lack of good faith.”

A BGCT report at the end of the five-month probe found evidence that about 98 percent of those churches no longer existed and alleged that some were “phantom churches that did not exist at all.”

In his lawsuit, however, Arango claims success for his innovative strategy for planting new Hispanic Baptist churches was cut short when the BGCT hired lawyers to investigate rumors that he was using those funds for personal gain.

Arango claims the state convention exhibited “extreme callousness and reckless disregard” for his reputation,” causing him to suffer “a tremendous loss to his reputation not only in the United States, but in Latin American countries where he was well-known and respected.”

BGCT Executive Director Randel Everett said he was “surprised and disappointed” by the lawsuit.

“The allegations in Mr. Arango’s lawsuit are very general in nature and it is extremely early in the litigation process, but we believe this suit is totally without merit and that the BGCT has no liability in the matter,” Everett said in a statement Wednesday afternoon.

The lawsuit says the defendants “made certain statements of purported fact that the plaintiff had stolen and/or improperly used Defendant BGCT funds, that he had allegedly lied about the number of churches he had formed, and that he had allegedly stolen money from the Defendants.”

“These false and malicious statements have been and continue to be detrimental to Plaintiff’s reputation, credibility and integrity, as Plaintiff had a history of being an honest individual,” the lawsuit says.

Arango further alleges that publication of information in the Baptist Standard allowed it to be picked up by secular newspapers and distributed around the world through the World Wide Web.

Those reports allegedly injured Arango “in his business, trade, occupation and/or profession and in his ability to obtain future employment.”

The lawsuit seeks unspecified damages for lost earnings and mental anguish and punitive damages for “spite, ill will, malicious and fraudulent intent” and acts “calculated to cause injury and/or damage.”

Arango’s lawsuit also names David Montoya, pastor of Calvary Baptist Church in Mineral Wells, Texas, who first brought the allegations against Arango to light in a blog named Spiritual Samurai.

Montoya said the lawsuit opens up possibilities for documents related to the investigation not yet released to the public to be opened by court order. “I want it to go on,” Montoya told EthicsDaily.com. “I don’t want it to be settled. It gives me the chance to vindicate myself.”

Arango is represented by Carlos E. Hernandez, a trial attorney in Edinburg, Texas, who specializes in employment law.

While the BGCT report found no proof that any funds were misused for personal gain, it did cite “evidence that some of the church starts in the Valley were fictitious” and described “troubling deposits of checks” in Arango’s personal bank account.

Two BGCT staff members resigned during the in-house probe. After it was finished, the state convention adopted new policies for better oversight of church-starting funds.

The BGCT declined to sue to recover any of the money, saying it would be too expensive and complicated but turned its report and supporting documents over to the U.S. Attorney General.

Bob Allen is managing editor of EthicsDaily.com.

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