The conservative Colorado Springs pastor who broke away from the Episcopal Church to form a new Anglican congregation in May 2007 now is accused of stealing $291,000 from Grace Church and St. Stephen's Parish.

The Rev. Don Armstrong was indicted on 20 counts of felony theft by an El Paso County grand jury Wednesday. He surrendered to authorities Thursday but was soon free on bond, according to the Colorado Springs Police Department.

Armstrong's spokesman did not return calls Friday.

Police and a special prosecutor conducted a two-year investigation into allegations of Armstrong's financial wrongdoings at the church.

In the indictment, Armstrong, 60, is accused of using the Clarice Bowton Trust, a scholarship fund for new ministers, to pay his own children's college expenses, including rent and tuition bills.

The trust was activated after Bowton's death in the late 1970s, and its terms were never amended.

The indictment further states that Armstrong's use of the trust was eventually questioned by a trust officer, who terminated its distribution to the church as of December 2001.

Once Armstrong's access to the trust was cut off, the indictment said, the pastor began using the general funds of the church to pay for his son's and daughter's educations. Court records say Armstrong siphoned $291,000 from the church and the trust over a 7 1/2-year period.

When Armstrong left the Episcopal Church, he said the split was over theological differences, such as his opposition to gay marriage and the church's ordination of openly gay clergy.

But Colorado Episcopal Diocese officials countered that they believed Armstrong, who had been Grace's pastor for 20 years, had left to escape reckoning for embezzlement uncovered by diocesan officials. The diocese notified police of its suspicions in May 2007.

In fall 2007, an Ecclesiastical Court in Denver found Armstrong guilty of financial and pastoral misconduct that included theft of almost $400,000.

Armstrong also was removed from active ministry in the Episcopal Church. The diocese would not comment further Friday.

In 2007, Armstrong affiliated his parish with the theologically conservative Convocation of Anglicans in North America.

Armstrong and his group kept possession of Grace Church and St. Stephen buildings on Tejon Street until an El Paso County judge ruled March 24 that the pastor must surrender the $17 million property to the diocese around April 1.

Armstrong and followers then moved to a new house of worship, St. George's Anglican Church on Fieldstone Road. Officials there issued a statement Friday expressing full support for Armstrong and belief in his innocence, according to The Gazette of Colorado Springs.

Convocation of Anglicans in North America Bishop Martyn Minns said Friday that the indictment was a painful but necessary step in Armstrong's journey of publicly proving his innocence.

The case will be prosecuted by Pueblo County District Attorney Bill Thiebaut because the El Paso County DA at the time the case was opened had been a parishioner of Armstrong's and recused himself.

Electa Draper: 303-954-1276 or edraper@denverpost.com