Gospel for Asia Suing Insurance Company over Attorney Fees in RICO Case

Gospel for Asia has retained Locke Lord to defend them against the allegations of fraud by Garland and Phyllis Murphy. One of their attorneys is Harriet Miers, former White House counsel to President George W. Bush. Furthermore, GFA has to pay the costs of a Special Master since they were sanctioned by federal judge Timothy Brooks. No doubt the costs are high for all of that.

According to a suit filed by GFA in March, GFA’s leaders (K.P. Yohannan, David Carroll, Pat Emerick, etc.)  hoped to recover those legal fees via an insurance claim with Philadelphia Indemnity Insurance Company. Although details are sealed, it appears the insurance company declined to fully pay GFA’s claim. Here is a brief statement of the dispute from a recent court document.

1.1 GFA Parties bring this action for Philadelphia’s breaches of its common law duty of good faith and fair dealing and the Texas Insurance Code for unfair settlement practices and for failing to promptly pay covered claims as a result of its wrongful denials and/or wrongful delays in providing defenses in lawsuits against them.

1.2. Philadelphia denies that any reasonable defense fees or expenses remain unpaid and contends that, accordingly, this case should be dismissed. Additionally, Philadelphia denies that it breached its common law duty of good faith and fair dealing or the Texas Insurance Code. Philadelphia contends that it had a reasonable basis for the coverage positions that it has taken and liability was not reasonably clear.

For more detail, see GFA’s original petition.

One crucial court document is sealed and Philadelphia Insurance declined to speak to me. In plain language, it appears that the insurance company has found a reason why they believe they are not liable to pay the claim GFA made. It may be that Locke Lord’s fees are beyond reasonable or that Philadelphia believes GFA is at fault in some way. In any case, the trial is to be by jury in late 2019, probably after the RICO trial.

GFA and Lawsuits

For a Christian ministry, GFA here and abroad, is involved in many legal battles. Aside from the RICO suit, and now the action against their insurance company, GFA has sued the Church of South India for defamation. Back in 2015, GFA threatened Patheos with legal action when I published audio of a staff meeting. I wonder how many donor designate their funds for the legal defense fund.

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Image Fair use, GFA Facebook page

Dear Gospel for Asia: How Will Funds Raised for Kerala Flood Victims Get to Them?

Over the past week, the news out of the state of Kerala in India has been devastating. Due to severe flooding, over 400 are dead and 800,000 have been displaced. Sadly, those numbers are expected to climb. Of course, the natural impulse is to help.

Kerala is the home of K.P. Yohannan, Gospel for Asia (now called Ayana Charitable Trust in India), and Believers’ Church. While it is understandable that K.P. has been informing his followers about what is happening there, he is also doing something that raises a question: K.P. is raising foreign donations to send to flood victims. The question is how will those funds get to flood victims?

In 2017, the government of India canceled the registration of Gospel for Asia (Ayana Charitable Trust), Believers’ Church India, and two other affiliated organizations to receive foreign donations. Yohannan is raising money but it isn’t clear how those funds will get to flood victims when the Indian organizations he fronts can’t receive them?

Different Answers from Different Sources

Yesterday via email in response to a GFA press release asking for donations for flood victims, I asked public relations contact Gregg Wooding of InChrist Communications if he could explain how donations will get to flood victims. He replied:

GFA has headquarters in Kerala, India. Volunteers are actively rescuing, feeding those affected by flooding and providing other supplies.

I wrote back to ask how GFA in Kerala could receive those funds since the Indian government had canceled the organization’s FCRA registration. He did not answer.

Earlier in the day a source called GFA in Wills Point, TX on behalf of my blog and asked how American donations could be accepted in India since the FCRA registrations had been canceled. The caller was told that GFA still is able to operate in India, but the license to receive money is with Believers Eastern Church. The GFA representative said that the funds given to GFA are sent to Believers Church. He added that GFA and Believers’ Church are technically and legally different entities. GFA cannot guarantee money given for India disaster relief will be used for that purpose through Believers’ Church because GFA has no legal or ultimate authority over Believers’ Church. Money given to GFA is preferenced by donors for a certain purpose and Believers’ Church in practice uses the money for what it is preferenced for.

Leaving aside the uncertainty that the Believers’ Church might not use the funds as intended, GFA’s answer doesn’t match what the Indian government says. As I will demonstrate below, the registrations for GFA (Ayana Charitable Trust), Believers’ Church, and two other GFA affiliated organizations were canceled in 2017.  The question remains – how will American funds get to flood victims since GFA and Believers’ Church are unable to receive foreign contributions? Maybe there is an answer to this question, but GFA hasn’t provided one that fits with information available to the public.

FCRA – Foreign Contribution Regulation Act

In India, a charity must be registered with the government to receive foreign donations. There are rigorous reporting requirements as specified by the Foreign Contribution Regulation Act (FCRA) and the records are available to the world via the Home Ministry’s website. In fact, those records prompted the early questions about Gospel for Asia’s finances that eventually led to GFA being removed from membership in the Evangelical Council for Financial Accountability.

The FCRA rules are clear that only registered organizations can receive foreign donations (click here for a larger image).

Among other conditions, the rules (Q.2b) state that an organization “must obtain the FCRA registration/prior permission from the Central Government.” In contrast, Q.3i specifies that “individuals or associations who have been prohibited from receiving foreign contributions” cannot receive them.

To determine organizations which have been canceled, one can go to the India’s Home Ministry website and scroll down to the FCRA link.  On that site, there is a link near the bottom left which reads: List of Associations whose registration has been cancelled. If you click through, you will need to select the state of Kerala. Once you do that, you will see Ayana Charitable Trust at the top of the list. Scrolling down you will soon encounter Believers’ Church India and Love India Ministries and Last Hour Ministries.  Here are screen caps of Ayana Charitable Trust (formerly GFA-India), Believers’ Church, Love India Ministries, and Last Hour Ministries on the canceled list).

Since the very organizations which GFA and GFA’s PR representative said will take the money can’t do so, it is a fair and significant question to ask how donations intended for flood victims will get to them.  So far, GFA has not provided a satisfactory answer or provided evidence that the Indian government is wrong. Donors should demand more.

For more on the impact of the revocation of registration to receive foreign funds in India, see this article on Compassion International. When the Indian government canceled their registration to receive foreign donations, they left India. 

 

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Image: with permission Indian Navy (GODL-India) [GODL-India (https://data.gov.in/sites/default/files/Gazette_Notification_OGDL.pdf)], via Wikimedia Commons

8th District Court of Appeals Denies Gospel for Asia’s Petition for Writ of Mandamus

Today, the 8th District Court of Appeals denied the petition from Gospel for Asia a writ of mandamus which would have vacated Judge Timothy Brooks order for sanctions and the appointment of a special master to oversee discovery in the fraud case against GFA.

The denial in full is as follows:

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
___________________
No: 18-2322
___________________
In re: Gospel for ASIA, Inc.; Gospel for Asia-International; K.P. Yohannan; Gisela Punnose; Daniel Punnose; David Carroll; Pat Emerick
Petitioners
___________________________________________
Appeal from U.S. District Court for the Western District of Arkansas – Fayetteville
(5:17-cv-05035-TLB)
___________________________________________
JUDGMENT
Before BENTON, KELLY and GRASZ, Circuit Judges.
Petition for writ of mandamus has been considered by the court and is denied. The petitioners’ motion to seal appendix is denied. Mandate shall issue forthwith.

June 26, 2018

This will allow the sanctions from Judge Brooks to go forward and is a victory for the Murphys. If Judge Brooks follows through, then a special master will be appointed with full access to the records of GFA thus allowing discovery to proceed.

Gospel for Asia will have to absorb the cost of the special master and should alert donors to this reality. A federal district judge and now a Court of Appeals (along with the Evangelical Council for Financial Accountability) have taken the position that GFA is not being forthcoming with information.

We may be getting closer to learning if there is any evidence to validate GFA’s claims that they have spent money as donors intend. The plaintiffs contend GFA’s leaders conspired to divert donations from intended causes such mission work or helping the poor to for profit enterprises or other purposes which donors didn’t intend. Now that the Court of Appeals has cleared the way for discovery to proceed, the plaintiffs and eventually the donor public may get to see exactly what GFA has done with millions in donations.

 

ECFA Report: Gospel for Asia Made Inaccurate Statements and Withheld Information

In a 2015 Evangelical Council for Financial Accountability report to Gospel for Asia founder and CEO K.P. Yohannan, ECFA Vice President John C. Van Drunen delineated a devastating list of findings from a lengthy and in depth investigation of Gospel for Asia’s financial practices. The end result of the investigation was the eviction of GFA from the  ECFA. Due to the relevance of the investigation conducted by the ECFA to the current RICO and fraud lawsuit against GFA (Murphy v. GFA), I am highlighting pertinent parts of the report in a series of blog posts. Yesterday, I pointed out that GFA admitted that field partners didn’t track expenditures as precisely as they took donations. Today, I show that ECFA accused GFA of making false statements and withholding information.

Toward the end of the report, Van Drunen made an observation about the process of collecting information.

Certain information provided to ECFA by GFA that was crucial to our review was, at least initially, inaccurate.

Our review process has covered nearly four months. Certain pertinent information about the compliance issues was not revealed to ECFA by GFA until late in the review process.

We have learned significant information from sources unrelated to GFA that we should have learned directly from GFA.

Although I have been critical of the ECFA in the past, I must credit them in this case. Mr. Van Drunen and his staff deserve credit for persisting through initial deflection and distraction. Also, I am aware that information published here (“unrelated to GFA”) made it possible for the investigation to ask certain questions which might have come up otherwise.

I want to point out that GFA didn’t fully answer all of the questions nor was the ECFA able to verify all claims. Take this issue for instance:

16. Claims of inappropriate use of funds under an Indian tax assessment. ECFA received concerns that an Indian Tax Court case indicates that GFA India misused funds for purposes other than what they were intended. ECFA reviewed this matter for compliance with ECFA Standard 4. On July 27, GFA’s staff indicated that this matter was a false charge that was later remanded and that GFA India was absolved of any wrongdoing in this matter. GFA’s staff was not able to provide any documentation other than reports from field partners on this matter.

This concern was brought to light by my blog post from July 17, 2015. It appears from the court record that GFA was to pay a tax which they probably did. However, that doesn’t change the finding that GFA inappropriately used funds. GFA has never produced a court record absolving them of wrongdoing. They had a chance to do that to ECFA but did not do so.

GFA and Accountability: A Pattern

As Van Drunen’s reaction demonstrates, Judge Brooks is not the first observer to express frustration with GFA’s answers to questions about accountability. In one Court order, Brooks expressed his frustration with GFA’s response to discovery requests, writing at the time:

I feel like when I read the defendants’ answers and when I read their response that it is as if this Court had not already addressed and ruled on some of these same issues at least twice, if not more and, yet, here we are again.

Eventually, GFA’s delays led Brooks to sanction GFA and signal his intention to appoint an attorney (special master) to oversee discovery.  Given the history, going back before Murphy v. GFA, oversight seems like a good idea.

 

ECFA Report: Gospel for Asia Solicited Funds for Narrower Purposes Than the Eventual Expenditure of Funds

Since 2015, I have investigated the mission giant Gospel for Asia. First privately and then publicly, former employees of GFA sounded alarms about financial and personnel management. A former donor alerted me to the situation and eventually numerous insiders in India and the U.S. came forward with information about the second largest mission organization in the U.S.

At present, former and current leaders of GFA are defendants in two lawsuits which allege that they conspired to defraud donors by using donations in ways contrary what donors intended. One case is stalled in federal court but the other — Murphy v. GFA — is moving forward.

At the heart of Murphy v. GFA is the allegation that GFA didn’t use donations as donors intended. The judge in the case, Timothy Brooks, ordered GFA to produce documentation which could address this basic allegation. Because GFA has not produced documentation responsive to Brooks’ requests, he signaled his intention to appoint a Special Master to oversee the discovery process.

Although the federal suit is potentially more serious, GFA has been investigated on these allegations before. In 2015, the Evangelical Council for Financial Accountability investigated GFA’s financial dealings and eventually evicted GFA from membership due to multiple violations of ECFA standards.

The ECFA Investigated GFA’s Financial Accountability

Prior to removing GFA, the ECFA prepared a report of their investigation which was provided to GFA board members. The report was written in the form of a letter dated September 2, 2015 to GFA founder and president K.P. Yohannan. Former board member Gayle Erwin provided it to me after his resignation from GFA’s board.

Periodically over the next few weeks, I am going to highlight aspects of the ECFA report which are relevant to issues raised in Murphy v. GFA. This is especially relevant to the decision of GFA attorneys to ask the 8th District Court of Appeals to force Judge Brooks to withdraw his sanctions and not appoint an attorney to oversee the discovery process.

Since the key issue in the case is about how GFA spent donor funds, I will start with what the ECFA found on this question. On page 4 of the letter, ECFA’s representative wrote:

6. GFA solicits funds for narrower purposes than the eventual expenditure of the funds.

During ECFA’s review on August 12, GFA staff provided a document to demonstrate the flow of funds from GFA to field partners. ECFA learned that donor-restricted donations are appropriately tracked by particular revenue classifications. However, we also discovered, and it was confirmed by GFA staff, that the disbursement of the gifts are tracked in much broader categories. For example, donations were received and tracked for 38 different specific items including kerosene lanterns, bio sand filters, chickens, manual sewing machines, blankets, bicycle rickshaws, and others, but related expenses were only tracked as “community development.” In other words, donations were raised for 38 specific items, with the donations pooled for expenditure purposes instead of expending them specifically for the purposes raised.

ECFA did not find any evidence that donors to the 38 different giving categories had awareness that their gifts were grouped and used in a broader category than the specific categories in which the gifts were raised. ECFA’s staff raised concerns regarding GFA’s compliance with ECFA Standard 4, 7.1, and 7.2 in raising funds for a particular purpose but then failing to document the actual use of those funds by the particular donor-restricted purpose.

Subsequent to this conversation, on August 16, GFA staff indicated that GFA field partners will begin tracking expenditures by specific item accounts to provide adequate transparency as to the use of designated funds.

The Murphys donated $34, 911 to GFA between 2009 and 2014. According to the information provided by GFA to the ECFA, expenditures were not tracked by specific item accounts until at least after August 2015. GFA led donors to believe their donations would go for one of 38 items, but GFA did not track the way those funds were spent to know if the funds were spent as intended. “Community Development” is a label which could obscure many activities and allow GFA’s field partners to spend money on things not contemplated by donors. This admission by GFA staff, some of whom are defendants in Murphy v. GFA, seems particularly relevant to the discovery process but has not been disclosed to the Court by GFA’s attorneys.

Thus, I am left wondering which account is true – the one in the ECFA report or the one offered by GFA attorneys in various Court pleadings. To the ECFA, GFA staff claimed field partners in India didn’t track expenditures by specific items accounts. In their filings, GFA attorneys have indicated that documents in exist in India.  In the recent writ of mandamus to the 8th District Court of Appeals, GFA attorneys wrote:

There are millions of such documents spread over 12,000 locations in almost every part of India. SASA00718-SA00720. Plaintiffs have made no effort to inspect those documents. Petitioners also secured and produced over 60,000 pages of bank statements, ledgers, and summaries from the field. (p. 16)

Presumably, when this case gets to trial, the ECFA report will be entered into evidence. It might be that ECFA staff who were involved will be deposed. Eventually, the admissions made by GFA staff regarding the same questions at issue in this trial will come out.

 

Gospel for Asia Asks 8th District Court of Appeals to Withdraw Sanctions

Gospel for Asia’s Writ of Mandamus Contradicts Investigation Filed by Evangelical Council for Financial Accountability

On June 18, Gospel for Asia’s legal team took the extraordinary step of petitioning the 8th Circuit Court of Appeals for writ of mandamus which, if granted, would vacate Judge Timothy Brooks’ sanction of GFA and his order for a Special Master to oversee discovery in the fraud case against GFA brought by Garland and Phyliss Murphy.  Earlier this month, Brooks found that GFA had willfully delayed discovery and failed to comply with court orders. In response, he sanctioned GFA and signaled his intention to give an attorney access to GFA’s records as a means to speed up GFA compliance with court ordered discovery of information in the case.

Despite being a nonprofit organization, GFA has faced repeated questions and frustration from Judge Brooks over the inability to produce sufficient responses to discovery requests. Now, with the prospect of additional transparency, GFA is seeking to have the action reversed through the Court of Appeals.

GFA’s Case

In their June 18 filing, GFA defendants claim that Judge Brooks should not have sanctioned them because they have done their best to produce documents showing how they spent donor funds. Judge Brooks recently ruled that GFA had not done enough and abused the discovery process. As a result, he sanctioned the mission group.

GFA now counters by claiming that Judge Brooks erred by assuming GFA leaders in the U.S., namely K.P. Yohannan, have more control over operations in India than they actually do. GFA attorneys claim Brooks presented no evidence that Yohannan has the power to compel the production of necessary documents.

GFA also claims that Judge Brooks did not adequately take into consideration the burden of discovery as compared to the claims raised by the case. Specifically, the Murphys donated nearly $35,000 but the discovery requests involved over $360-million in donations.

GFA’s 100% Claim

As a part of GFA’s prayer to the appeals court, they make some claims that are at odds with other information in the public record. GFA’s attorney’s state:

As explained in opposition to Plaintiffs’ certification motion, GFA encouraged donors to participate in the good works GFA was sponsoring in Asia, but it’s the representations it made to donors varied. ECF73. For example, GFA told many donors that “100% of what you give toward sponsorship goes to the field,” ECF1, ¶17, but donations must be made “without restrictions” with GFA retaining discretion to use donations to best fulfill its mission. ECF71 at 4. There was no guarantee that each of the $376 million donated would be used for its exact designated purpose.

There is little dispute that GFA frequently touted their claim to spend 100% of donations on the field. This became a point of contention after concerns about their spending practices in India became public. After that, GFA made some changes which allowed them more flexibility.

In 2015, when interviewed by the Evangelical Council for Financial Accountability, GFA representatives acknowledged the claim that they sent 100% to the field. On page 5 of the ECFA report to GFA, this admission is clear:

Use of funds restricted for the field for other purposes. On June 3, ECFA discussed GFA’s claim that 100 percent of field funds are sent and used in the field. GFA staff confirmed that this was accurate.

On August 24, ECFA was informed that GFA India made a gift to GFA of $19,778,613 in 2013 to complete GFA’s new office. On August 27, GFA’s staff confirmed that the funds relating to this donation were originally received by GFA as gifts restricted for the field and GFA transferred to field partners to fulfill donor restrictions.

It appears to me that the attorneys for all sides might want to interview the people who conducted and participated in this report. Here we have an admission that nearly $20-million was donated for field work but then was sent back to the U.S. for completion of the Texas headquarters. The ECFA report continues:

Reallocating gifts donated for field purposes contradicts GFA’s claim that 100 percent of funds are sent to the field. In fact, a significant amount of donations restricted for the field made a circuitous trip back to GFA and were used for the headquarters construction, as though they had never gone to the field. This appears to be a violation of Standard 7.1.

GFA claimed that the field partner (presumably Believers’ Church) took out a loan to pay back the $20-million and then used field generated money to pay back the loan. If that is the case, then it should be a simple matter to produce the documents.

In May 2015, defendant David Carroll told me via email:

Our field office is also audited by an independent accounting firm, to ensure compliance with regulations governing the recognition and spending according to donor designations of monies received.

While I don’t know if these audits have been offered as a part of the discovery process, I have to wonder if they actually exist.

GFA’s Claim About Control over the Field

GFA’s attorneys claim Judge Brooks used the wrong definition of control in reference to the GFA defendants. Furthermore, they claim no evidence was presented to support any theory of control. From the writ:

Plaintiffs did not introduce evidence to prove that Petitioners had control over the documents in India. Instead, the court’s decision relied on what it termed “the power of the pursestrings.” A00262, A00360. Because GFA made large donations to third parties in India, the court assumed that Petitioners could compel the third parties to produce the documents Plaintiffs wanted. The court’s assumptions are no evidence of control, regardless of which standard is applied.

The district court also assumed that control existed because Petitioner K.P. Yohannan held a prominent position in BEC, and his family members were allegedly involved in related entities. A00011. Of course, there is a significant difference between being an ecumenical leader in a church and having the legal right to compel production from over 12,700 churches all over India on demand. And involvement in transferring funds does not equate to the legal ability to compel production of documents (and bank records have already been produced). Plaintiffs offered no evidence to connect Yohannan’s family members with particular entities from whom documents were requested, nor do Plaintiffs show that Yohannan could compel these unnamed family members to use their alleged positions to obtain documents from any, much less, all of the 12,000 locations in India where documents are located. The district court’s reasoning is all based on assumptions of control, not evidence.7

Note here that GFA does not offer any evidence that Yohannan is without authority in India. Instead of asserting something, the attorneys simply cast doubt.

Why has GFA not produced documents describing Yohannan’s role in India?  The only Constitution which can be found designates him as the supreme authority over all matters temporal and spiritual. He doesn’t just hold a “prominent position;” Yohannan is the supreme leader.

Yohannan’s son-in-law Daniel Johnson is on the board of Believer’s Church as is Yohannan’s niece Siny Punnose. Yohannan sits on multiple boards of the hospitals, schools, Bridge of Hope, and other entities in India and around the world. Yohannan’s name is on all of the deeds of property owned by the church.

This notion of no control in India was doubted in 2015 by the ECFA as well due to the church Constitution of 2003 which is the copy given to ECFA by GFA. In that Constitution, Yohannan is referred to in this way:

By virtue of the ecclesiastical position, the Metropolitan Bishop is the legal authority on everything that belongs to the Church.

Based on their review of documents and GFA’s statements about Yohannan, ECFA came to the following conclusion:

Based on this level of oversight and control as well observed during our review, ECFA staff questions whether GFA has a sound basis to disclaim any control over the activities of field partners.

In some respects, the ECFA investigation was a preview of the Murphy case. If the RICO case turns out like the ECFA investigation, GFA might want to consider a new legal strategy.

The American Lawyer Reports Gospel for Asia’s Sanctions

Given the size of Gospel for Asia, I expected Christian media to report on the sanction imposed on GFA by federal Judge Timothy Brooks in the RICO lawsuit last week. Judge Brooks scolded GFA’s lawyers for abusing the process and for treating discovery as a “shell game.” He announced his plan to appoint a Special Master to oversee the discovery process in the case.

Outside of this blog, the only other coverage of Judge Brooks’ drastic action is in the American Lawyer. This publication focused on the fact that the legal team representing GFA is fronted by high profile attorney and former Bush administration Supreme Court nominee Harriet Miers.

GFA issued a terse statement to the publication, saying that they strongly disagreed with the Court’s rulings.

The article neatly summarizes the case as well as GFA’s stall tactics up to now. Regular readers should be familiar with the details but give the American Lawyer some love and move on over to check it out.

Federal Judge Sanctions Gospel for Asia in Fraud Case

On June 4, federal Judge Timothy Brooks sanctioned mission giant Gospel for Asia in the ongoing fraud case of Murphy v. Gospel for Asia for failure to produce evidence as requested multiple times by the court. The court found that GFA “needlessly squandered the resources of the parties…and put an ‘extraordinary drain on the Court’s resources,” and that GFA’s “abusive conduct in this case since August constitutes a willful violation of its discovery orders.”

Judge Brook’s Order

In sanctioning GFA, Judge Brooks will require GFA to pay for a Special Master to oversee the gathering of evidence.  In the process, this attorney will have the ability to appoint a forensic accountant and will have access to all pertinent GFA records and communications.

Setback for Gospel for Asia

This is a major setback for GFA. For several years, GFA has been defending itself by saying that all funds are spent as donors intend. However, now after months of telling Judge Brooks that this can be proven, GFA is no closer to producing the evidence.

In his order, Judge Brooks accuses GFA of evasive tactics and warns them that discovery is not a shell game. Furthermore, he denied GFA’s claims that they have no control over entities in India. He pointed to documents demonstrating wire transfers between entities, the fact that Yohannan’s family members sit on many boards in common, Yohannan’s prominent status in Believers’ Church and prior ability to get financial documents from organizations they say don’t control.

Judge Brooks had strong words for GFA saying that they had failed to “obey clearly worded directives issued by this Court and to respond in good faith to Plaintiff’s discovery requests.” The federal judge has found GFA’s behavior in litigation to be far from what was promised by spokesman Johnnie Moore in 2016:

Gospel for Asia is 100% focused on continuing its work around the world while working very hard to put an end to the false accusations being continually made against the ministry. Gospel for Asia can document the legal and ethical use of funds donated and clearly answer every question…

As Judge Brooks pointed out in his order, GFA has had many chances to document their use of funds but has stalled all along the way. Now, they face sanctions in federal court and the appointment of a Special Master.

 

 

Gospel for Asia UK Says K.P. Yohannan is Not on Believers’ Church Board, Church Constitution Says Otherwise

Obviously, Gospel for Asia founder and CEO K.P. Yohannan wants people to believe he doesn’t sit on any boards of Believers’ Eastern Church in India.  Even though he is the Metropolitan Bishop of the church, he told his own staff and the Evangelical Council for Financial Accountability that he wasn’t in authority. Now I have found a financial statement filed in the UK where he claims he isn’t on BEC’s board (see note 10). See below:

10 TRANSACTIONS WITH DIRECTORS/TRUSTEES AND RELATED PARTIES
During the period, none of the Trustees of GFA World received emuneration from the Charity (2015 anil).

On 18th October 2016 a donation of F1,660,000 was made to Believers Church India to further the Charity’s objectives. Kadappilaril Yohannan Punnose, is Metropolitan Bishop of Believers Church, which is GFA World’s primary recipient of funds. Whilst he does not sit on the Board of Believers Church and receives no remuneration from Believers Church, he does exercise spiritual oversight through his role as a member of Believers Church’s Council of Bishops. Daniel Punnose is the son of Kadappilaril Yohannan Punnose and is an ordained minister and is a Bishop of Believers Church (among many), but has no formal leadership role in Asia. He is not on the Board of Believers Church and receives no remuneration from Believers Church India.

Gospel for Asia (US) funded a number of radio broadcasts in the UK and provided some administrative support for many of the appeals and communications with supporters in the UK. Kadappilaril Yohannan Punnose and Daniel Punnose are both members of the Board of Gospel for Asia (US) and received remuneration from Gospel for Asia (US) for their services.

On 24th May 2016 a donation was made to Gospel For Asia (US) for 282,000 for two months of “Road to Reality” radio broadcasts in the US. Two of the trustees of GFA World are also trustees of Gospel for Asia (US), and as such were not present in the meeting where the decision was made to make the grant

I have demonstrated repeatedly that Yohannan is referred to as the head trustee, the final authority, and the one who inaugurates the Bishop’s Council in church documents. The church Constitution makes this extremely clear:

FOrmer GFA COO Appeared to Admit What Seems Obvious

In a February hearing, an email from former Gospel for Asia COO David Carroll to Yohannan was quoted by attorney Marc Stanley. Atty Stanley represents Garland and Phyllis Murphy who are suing GFA and various officers of the organization alleging fraud and misuse of funds. In this citation, Carroll reminds Yohannan that they have told the public Yohannan has nothing to do with finances and is only the spiritual head but implies such a representation isn’t true.

We can say all we want that we don’t have anything to do with the Believers Church or the field and that you are only the spiritual head of the church and that finances are handled by others but you, but as a practical
matter, that will not hold up.

To the charity commission of the UK, GFA World with K.P. Yohannan sitting on the board, again claimed something that is contradicted by the organization’s founding trust documents, the church’s constitution, and many court documents in India. More recently, we have this statement from a former COO.

Perhaps, there is an explanation. The burden is on GFA and Rev. Yohannan to offer it.

In 2015, Gospel for Asia Privately Feared Investigation of How Donor Funds Were Spent

This post is the second in a series covering a February hearing in Murphy v. Gospel for Asia. Former donors, Garland and Phyllis Murphy are

K.P. Yohannan in his Metropolitan garb. From Believers Church Facebook page.

suing the leaders of Gospel for Asia in federal court claiming that GFA did not use donor funds as donors intended. Recently, the transcript of the hearing became available. If you are a GFA donor or are thinking about being one, you should read it. It is available via this link with commentary in my first post on the topic. This post discloses the concerns GFA leaders had about being investigated even as they were telling the public they were no problems.  
One of the bombshell revelations in the February hearing is the disclosure of an email from David Carroll to K.P. Yohannan which suggests that both men may have misled GFA staff members in May 2015. The Murphys’ attorney Mark Stanley read the email into the record. According to Stanley, in May 2015 then GFA COO David Carroll wrote to GFA founder K.P. Yohannan about his concerns over financial reports and truthfulness. From page 64 to page 68 of the transcript, attorney Stanley cited the email with his comments interspersed throughout. David Carroll’s words are in quotes. I have reproduced Stanley’s testimony below.
Click this link to read the segment of David Carroll’s email to K.P. Yohannan without attorney comment

MR. STANLEY: What’s really interesting to me also, if I might just take one second and read pretty much one of the key documents in the case. This is an e-mail from Reverend Carroll, David Carroll, to K. P. Yohannan, and I think it’s really important because it really will put it back into perspective what’s going on: “Sir, I need to share with you where I am over this situation.” I’m right here. “I will try to summarize for brevity sake. We have a saying in our country: The numbers don’t lie. The published FC-6 reports” — which they rely on quite a bit in their answers, if you recall — “show westerners that we have either sent money to the field raised for National Ministries and Bridge of Hope to fund the hospital and the corpus fund, or our FC-6 filings are filed wrong. Either way, this is a huge problem. It appears to those reading these that we might have been dishonest to the donors (fraud), or been dishonest to the Indian government, (a PR nightmare at least). Sister Siny’s report below will, in my opinion, do little to satisfy those who are printing out and analyzing our FC-6 reports. I am sorry for not expressing more confidence than this. I think we may have used money raised for National Ministries and Bridge of Hope for the hospital,” [Stanley remarks] which they told us did not happen.
“I think that India feels that we raise money and send it” –[Stanley remarks] by the way, Mr. Mowrey said that in a prior hearing, that none of the money went to the hospital. “I think that India feels that we raised money and sent it to them and they can legally use it any way they deem fit. I hope that I am wrong, but I am doubtful.” [Stanley remarks] This doesn’t sound like someone who has already got accountability, knowing how they spent the money.
“I also don’t think that it is an intentional wrong, but if I am correct, it is a huge wrong. We’ve spoken at hundreds of churches with tears asking for the National Ministries and Bridge of Hope support, and the FC-6 that is public says that we sent much of that money for the hospital and the reserve corpus funds.” Next page.
MR. MOWREY: Could he read the rest of that letter, your Honor?
MR. STANLEY: I am.
MR. MOWREY: Okay. Good.
MR. STANLEY: “It doesn’t matter that we have now moved the money out of the corpus fund” — [Stanley remarks] this is now after the ECFA thing — “because of public FC-6 reports” — I’m sorry. It’s backwards. Sorry. That’s not right, either. That’s right.
“It doesn’t matter that we have now moved the money out of the corpus fund because according to the public FC-6 reports, we have been building them up for years. Moving the money only serves to confirm the feelings of guilt to outsiders.”
Again, they have not been spending the money. They have been building up the corpus funds for years. “I think the only way for us to handle the inquiries raised by Bruce and others is to refer them to our Indian office. Mr. Throckmorton” — that’s the blogger — “(unless a miracle happens) will get this information and may even begin an investigation of us. We can say all we want that we don’t have anything to do with the Believers Church or the field and that you are only the spiritual head of the church and that finances are handled by others but you, but as a practical matter, that will not hold up. Can the field find a way out of this situation? I too am very nervous.”
“I have always believed in total accountability of the field, yet the FC-6 reports provide numbers that, as a former auditor, I cannot just explain away with a simple explanation. I, and the world, will need numerical proof now, and I do not have the ability to get it from the USA end. Only the field can explain it, and I am in the hot seat in this crisis and I feel a lot of pressure.”
[Stanley remarks] I would point out, Judge, this was in 2015, May of 2015, almost three years ago. You pointed out that our discovery was served in August. ECFA asked them for this information in May of 2015. They’ve had three years to compile this information, and they just don’t have it because it doesn’t exist. Nobody ever tracked the designations because they were simply spent out on the — once they were sent to the field, they were done with it. There was no accountability. It goes on to say, “If I say, well, it is not my problem, it’s a field problem, it’s as good as saying we are guilty of misappropriation,” [Stanley remarks] which is true. If I say “The FC-6 reports are filed inaccurately on purpose, due to the hostile environments we work in, it gets the field in trouble and turns the attention to them. I get the feeling that, although we are not financially dishonest, we are financially reckless. The stockpiling of money in the RBC — [Stanley remarks] Royal Bank of India account — “and then the hurried transferring of it to the field, the Hong Kong account, et cetera. Sir, may I please have my name taken off of the RBC account as soon as possible?”

First, let me say that a miracle didn’t happen, if you know what I mean.
David Carroll expressed anxiety about accountability in this email. He acknowledged that either donor funds were diverted from Bridge of Hope and National Ministries to the Believers’ Church Medical Center or the reports were filed incorrectly with the Indian government. There seems to be little doubt that the funds were used for the hospital as I first reported in May 2015. Carroll was fearful that Bruce Morrison and/or I would launch an investigation into the obvious discrepancies. He was right about that. In response to us, he refused to answer any questions and denied any problems.
Furthermore, in a telling admission, Carroll said to Yohannan:

We can say all we want that we don’t have anything to do with the Believers Church or the field and that you are only the spiritual head of the church and that finances are handled by others but you, but as a practical matter, that will not hold up.

GFA leaders told ECFA that they had no control over Believers Church. See yesterday’s post for a run down of what GFA told ECFA about that. In addition, K.P. Yohannan told his Texas staff in May 2015 that he didn’t sit on any boards and had no authority in India. David Carroll was sitting right beside him. This email suggests that he knew it wasn’t accurate when Yohannan said it.
Publicly, GFA said they were operating in accord with the law, ECFA standards, and best practices. However, behind the scenes we now learn that there was worry, pressure, and a more candid assessment of the situation even as the confident and sunny messages were being disseminated.
What should we believe now?