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
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.
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
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?
In a May 14 2015 staff meeting, a Gospel for Asia staffer asked why GFA regularly asked for funds since so much money was just sitting in banks in India. I understand the point of the question. If GFA has millions sitting in banks unspent, then why bother donors for more money? To answer, GFA officials complained that all funds have to be spent on donor designations which can be tracked here and in India. This question and the answer are relevant because in the current RICO lawsuit, GFA defendants are now saying they are having great difficulty tracking down where the U.S. donations are spent. Questions about how funds have been spent are at the center of the federal fraud case brought by Garland and Phyllis Murphy against GFA.
GFA Told to Produce Documents
In a February court order, federal judge Timothy Brooks scolded GFA for insufficient answers to requests from plaintiffs for answers to questions about where funds have been spent. Specifically, Brooks wrote:
Furthermore, despite consistently telling donors for years that 100 percent of donations went for the purposes designated, now attorneys for GFA want to revise history. In the February 28 order, Judge Brooks summarized the discovery process and pointed out that GFA had originally promised to account for specific donations, but then noted that GFA had backed away from that stance (see footnote below). If GFA now claims they never promised to use donations for designated purposes, they will need to explain this very clear message to staff on May 14, 2015. In that meeting (a link to the audio is below), K.P. Yohannan and David Carroll said donations made for specific items were held until those items could be purchased. Carroll also added that GFA in Asia had reports to verify these expenditures.
GFA Staff Q&A Meeting
In this meeting, GFA founder, CEO, and Metropolitan Bishop of the Believers’ Church K.P. Yohannan, then COO David Carroll, and other leaders
addressed staff questions about controversies just beginning to swirl around GFA. To listen to the entire exchange, click through to the audio. Because GFA has threatened Patheos with legal action on previous occasions, I am hosting the audio elsewhere and will describe it below.
Initially, David Carroll read this question: “We always pray for more funds because we say the ministry could do so much more if we had it. Why is the ministry sitting on so much in India ($94 million per FC-6 reports)?” Carroll explained that the FC-6 reports are not audited financial statements and are required to show what money comes into India. He said GFA-USA has nothing to do with the preparation of the report.
He then said the funds going into India are restricted and have to sit in an account until the use can be fulfilled. He used the example of donations for bicycles. Funds given for bicycles have to sit in an account until they can spend the money on bicycles according to Indian law. Even if an earthquake happens in Nepal and funds are needed, those bicycle funds can’t be used for earthquake relief.
He said the balance in India was about $7 million, not the $94 million claimed by the questioner.
He said, “We cannot spend the money until we can spend it on the project for which it was designated and that’s important.”
Yohannan declared, “Absolutely every designation is fulfilled. If not, the guys who are responsible for it, the guys in India, they go to jail.”
Carroll finished the question by saying:
As a former auditor, I’m always wondering, so did the money that someone gave for a blanket for a cold person in North India, is that sitting somewhere, does somebody know about that blanket that’s given like that amount? And we’ve asked that question of our Asian office and they’ve said, ‘yes, we actually have a report that mirrors your report here.’ So yes, if a blanket was given here but it hasn’t yet been given because it’s warmer there or whatever the reason, then the money is sitting there and able to be accounted for when it goes out.
Why Is It So Hard Now?
When reassuring staff in 2015 that donations were being used as promised, GFA leaders were quite convincing. When addressing discovery in a 2018 RICO case, a federal judge appears to be frustrated with GFA’s inability to do what they promised. These inconsistencies were exposed months after the May 2015 staff meeting.
Later in 2015, the Evangelical Council for Financial Accountability did an investigation which ended with the expulsion of GFA from membership. In their September 2015 report*, the ECFA found that the GFA’s field partners banked foreign contributions for years while local funds went to meet designation from donors. Because of this procedure it was “extremely difficult for GFA to demonstrate that it has exercised appropriate control of the funds” donated by U.S. donors.
David Carroll told staff that GFA’s field partners had $7 million on account. ECFA’s report found the amount to be $186 million at about the time of the staff meeting. From the ECFA report:
Allegations were made that GFA had upwards of $150 million in partner field accounts, far more than necessary to provide appropriate operating reserves. During our visit on June 3, ECFA was informed that GFA field partner cash reserves were approximately $7 million. After ECFA requested detailed documentation of cash balances held by foreign field offices, on June 29, we discovered that GFA’s field partners had $259,437,098 on hand at March 31, 2014 and approximately $186 million in June 2015.
In the ECFA report, GFA acknowledged that solicitations are more specific than expenditures. I wonder if GFA’s attorneys have read this report.
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.
*This report was not made public by the ECFA or GFA, but was released to me by Gayle Erwin, former GFA board member who resigned from the GFA board over GFA’s misconduct.
Today, a federal judge in Western Arkansas ruled that one of the fraud and racketeering cases against Gospel for Asia will go to trial in 2019. U.S. District Judge Timothy Brooks set the date for a jury trial on April 15, 2019.
Despite numerous legal maneuvers by GFA’s lawyers, the Murphy RICO case will move ahead. This is a significant win for the plaintiffs since GFA has tried on multiple occasions to have this and another case thrown out. The earlier case involving another Arkansas couple, Matthew and Jennifer Dickson, has been stayed pending an appeal by GFA.
Read the scheduling order here.
The 10 page order in Murphy and Murphy v. Gospel for Asia sets the dates for discovery throughout the remainder of this year and 2018:
1. TRIAL SET FOR APRIL 15, 2019
The trial of this matter is scheduled for a three to four week JURY TRIAL in FAYETTEVILLE, ARKANSAS, beginning on APRIL 15, 2019, at 9:00 a.m. The case will be tried to an nine (9) person jury–unanimous verdict required. Counsel are directed to report to the Fifth-floor Courtroom by no later than 8:30 a.m. on the first day of trial unless otherwise notified.
2. FINAL PRE-TRIAL CONFERENCE
A Final Pre-Trial Conference shall be conducted pursuant to the provisions of Rule 16(e) on APRIL 2, 2019, beginning at 9:00 a.m.
3. AMENDMENT OF PLEADINGS
Leave to amend pleadings and/or to add or substitute parties shall be sought no later than OCTOBER 19, 2017.
4. EXPERT DISCLOSURES
(a) Class Expert Witnesses Plaintiffs’ deadline to provide disclosures and written reports for class experts pursuant to Rule 26(a)(2) is OCTOBER 15, 2017. Defendants’ deadline to provide class expert witness disclosures and written reports pursuant to Rule 26(a)(2) is NOVEMBER 30, 2017. The deadline to provide disclosures and reports of rebuttal experts (i.e. whose testimony will be offered solely to contradict or rebut the expert opinions offered by an opposing class expert) is DECEMBER 15, 2017. (b) Merit Expert Witnesses Plaintiffs’ deadline to provide disclosures and written reports for merit experts pursuant to Rule 26(a)(2) is AUGUST 31, 2018. Defendants’ deadline to provide expert merit witness disclosures and written reports pursuant to Rule 26(a)(2) is OCTOBER 5, 2018. The deadline to provide disclosures and reports of rebuttal experts (i.e. whose testimony will be offered solely to contradict or rebut the expert opinions offered by an opposing merit expert) is OCTOBER 19, 2018.
The scope of discovery may include both class and merits discovery. That said, discovery which clearly has no purpose other than for merits issues should be deferred until after the Court rules on class certification. The discovery deadline is NOVEMBER 16, 2018. The parties may conduct discovery beyond this date if all parties are in agreement to do so. To avoid later misunderstandings, such agreements should be reduced to a writing which describes the type, scope, and length of the extended period of discovery. That said, the Court will not resolve any disputes which may arise in the course of extended discovery. All discovery requests must be propounded sufficiently in advance of the discovery deadline to allow for a timely response. Witnesses and exhibits not identified and produced in response to Rule 26(a)(1) Initial Disclosures, and/or in response to subsequent discovery requests, may not be used at trial except in extraordinary circumstances. The Court will not grant a continuance because a party does not have time in which to depose a lay or expert witness.
6. MOTIONS DEADLINES (a) Class Certification Motions: The deadline to file class certification motions is JANUARY 19, 2018. < Responses to class certification motions are due not later than six (6) weeks after the motion is filed. < Replies are due not later than three (3) weeks after the response is filed.
A settlement hearing was scheduled for January 31, 2019 in the event that the parties decide to settle.
ORDER SETTING SETTLEMENT CONFERENCE
This case has been referred to the undersigned for a settlement conference. All parties and their lead counsel are hereby ORDERED TO APPEAR before the undersigned at the U. S. Federal Building, 35 E. Mountain, Fayetteville, Arkansas, in Room 210 at 9:00 A.M. on January 31, 2019. All participating attorneys must be of record. An insured party shall appear by a representative of the insurer with the complete authority to agree to a settlement up to the policy limits. An uninsured corporate party shall appear by a representative authorized to agree to a settlement. If a public entity is a party, all of the members of the board of the public entity, or a quorum of the entity, who have complete authority to agree to a settlement–or a representative given such authority by the board members–shall appear. The complete authority to agree to a settlement means that the representative must have the authority to make an independent assessment of the value of the case and proposed settlement terms as the settlement discussions proceed. Each party shall, before arriving at the settlement conference, ascertain in good faith the best settlement proposal that such party can make and be prepared, if asked by the undersigned, to communicate that settlement proposal to the under-signed in confidence. If no settlement discussions have taken place, the court encourages an exchange of demands and offers prior to the settlement conference.
K.P. Yohannan and his co-defendants will need to be in attendance for this conference.
GFA must now submit to scrutiny that the organization has been resisting. GFA has not published an audited financial statement since FY 2013 and lost membership with the Evangelical Council for Financial Accountability in October, 2015.
I believe the GFA action is one of the largest evangelical charities to face a lawsuit of this kind.
Under a straightforward application of the pleading standards, the Court should find the Dicksons allege facts sufficient to support each of their claims. Their Complaint leaves no doubt as to the nature of their allegations, and it is nearly impossible to imagine that Defendants need even a shred of additional detail to prepare their defenses. Accepting the allegations as true, and drawing all reasonable inferences in the Dicksons’ favor, there is no question that all Defendants are liable for the misconduct the Dicksons allege under each of their four claims. The Court should therefore deny the motions to dismiss, and this case should proceed to discovery forthwith.
In response to GFA’s demand that the Dicksons enter arbitration, the plaintiffs said GFA’s demand was based on an invalid and unenforceable employment agreement. The plaintiffs concluded:
Defendants have entirely failed to carry their burden of proving the existence of a valid arbitration agreement. The arbitration language in the Statement lacks consideration and is helplessly vague. Moreover, the Statement is palpably irrelevant to the dispute the Dicksons have brought before the Court for redress: the deliberate misleading of tens of thousands of similiarly situated donors resulting in Defendants’ enrichment. Rather than allowing Defendants to evade responsibility for their conduct based on the happenstance of the Dicksons’ former and terminated status as “members” of GFA, the Court—following well-settled precedent—should deny Defendants’ motion in its entirety.
In court filings Monday, Gospel for Asia denied all allegations of wrong doing, asked the court to compel the plaintiffs Matthew and Jennifer Dickson to enter into arbitration to settle their dispute and/or to dismiss the suit.
In February, Matthew and Jennifer Dickson brought sued GFA alleging fraud and mismanagement on behalf of themselves and the class of GFA donors. On Monday, GFA’s lawyers responded with denials, a motion to dismiss the suit and a demand that the Dicksons enter arbitration. The GFA legal response included signed agreements by the Dicksons while they were GFA employees which included a clause stating they wouldn’t sue over disputes but rather enter arbitration.
GFA’s response concludes:
Defendants [GFA leaders] pray that arbitration be ordered, or, alternatively, that judgment be entered that Plaintiffs take nothing by this suit against any of the Defendants, that class certification be denied, that all relief prayed for by Plaintiffs in this action be denied, and that Defendants be granted such other and further relief, at law and in equity, to which they may be justly entitled. DATED: April 15, 2016.
If Gospel for Asia wants to show change, then the board of directors should release the most recent audit…
In early March, Gospel for Asia’s board of directors (we still don’t know who they are) posted a statement to donors about how they are responding to GFA’s loss of ECFA accreditation and the resulting questions about their financial integrity.
In it, I find some good signs, if indeed the statements are accurate. GFA claims to have instituted new procedures to insure money is spent where it should be spent. However, on the down side, GFA claims that the allegations which led to the need for these changes are false. Shorter GFA: We never did anything wrong and we won’t do it again.
You can read the statement in full at the GFA website. Below, I intersperse my reactions throughout the statement.
Strengthening Our Commitment to You
Wills Point, Texas – March 10, 2016: A positive effect of a malicious internet attack—and a subsequent series of false accusations—against Gospel for Asia has been the overall review and fine tuning of our administrative and financial processes in order to insure we are above reproach.
My carefully documented posts since April 2015 have been vigorous but not malicious. I have all along the way asked for comment and information from Gospel for Asia. GFA stopped responding to me in May of last year. At one point, a rumor was spread that I was offered a chance by GFA leaders to go to Texas and see the operation. That was false but I indicated that I would be willing to do that. There has been no effort to set the record straight with me or any other Christian media source. Christianity Today, World, Christian Today, etc. have all tried but gotten no answers of substance.
GFA board of directors, I ask you, what allegations are false? You keep saying that publicly and privately but you don’t provide evidence. The ECFA report documents numerous problems, many of which came from this blog. If you are going to make an allegation like that, you should be prepared to back it up. I have provided documentation via publicly available documents, internal budgets, staff meeting disclosures, etc. On the other hand, you have answered with denials without evidence.
The fact that you continue to spin what is obvious to everyone is not a good sign that you are actually following through with all of the “fine tuning” you claim. If you can spin this, then there is no assurance that you are doing what you say you are doing. For years, GFA promised to be following ECFA guidelines. You were not doing that. For years, GFA promised to follow the guidelines of the Office of Personnel Management. You did not comply which resulted in the OPM evicting you from the Combined Federal Campaign. Did you forget about that? Donors are not going to forget. If you really want to fine tune, then stop blaming the messenger for false allegations when it is obvious that many of the allegations have already had consequences in the real world.
On February 12, the board of Gospel for Asia issued a statement regarding our relationship with ECFA. Over Gospel for Asia’s thirty-six-year history with ECFA, our ministry underwent a number of reviews, all of which we passed, but our most recent review (which ECFA initiated as a direct result of false accusations originating on the internet) cited several recommended areas of improvement. Gospel for Asia contested ECFA’s conclusions, but simultaneously values our relationship with ECFA, especially as a founding member of the organization.
Seems pretty clear in this statement that it is fine with you to accuse media of making false allegations but then to ingratiate yourself with ECFA. When I make a claim, you call it a “false allegation.” When ECFA includes the same information in their review and validates my work, you change your tune.
Have you forgotten about your former board member colleague, Gayle Erwin? Erwin was a part of the GFA board for 30 years. He pulled back the curtain and validated media reports. In fact, he provided even more detail about how the board was misled. Are his allegations false? If so, please explain.
Compliance with ECFA standards are a benefit—but not a requirement—for a charity to operate ethically and legally. Even so, Gospel for Asia is working to comply with recommendations made by ECFA.
Today, Gospel for Asia, is pleased to announce we as a ministry have implemented—or are well on our way to implementing—each of these recommendations for improvement.
Some of the changes being implemented include the following:
While Gospel for Asia has always undergone an annual and independent financial audit from a reputable firm, the ministry has now contracted a new auditing firm that ECFA specifically recommended. This firm is well equipped to assist Gospel for Asia in navigating the increasingly complex demands presented by the varying international environments within which we operate.
The aforementioned audit—which is underway—has identified additional safeguards that can be applied to GFA’s accounting and reporting processes. Till now, Gospel for Asia has fully implemented approximately forty percent of these recommendations, and is in the process of implementing all of the recommendations.
In order to assess our overall operations and management, we have engaged a national non-profit expert to conduct an additional management review and in turn recommend changes to policies, procedures and practices throughout the entire organization.
With the help of the auditors and experts referenced above, we have created—and are in the process of implementing—an improved agreement with our field partners. This will allow GFA to more efficiently deploy resources and better communicate regarding the use of all resources.
We are in the process of adding more staff to key administrative and financial divisions in order to strengthen our overall operations.
We believe these changes will strengthen our work and insure that all of it is accomplished according to standards that are above reproach.
Gospel for Asia remains undaunted in its mission to bring the love of Christ to those who have yet to hear his name. We believe the best is yet to come and that now, more than ever before, is the time to share the love and message of Christ among the world’s least reached. These changes will allow us to be even more effective.
If you really are doing these things, then show some good faith to the public by releasing the now completed audit. If you want to demonstrate that you have turned over a new leaf, then release the audit. I know you have been asked for it and have denied the request. It is business as usual at GFA. You have it but you won’t release it.
GFA board members, you need to realize that donors don’t have to support GFA. There are other organizations which are more transparent and more focused. You must earn the trust of donors again. This spin job isn’t a good start. Just saying you are going to do things doesn’t cut it anymore. You must do something to demonstrate you have learned something.
Gospel for Asia defendants K.P. Yohannan, Gisela Yohannan, Daniel Punnose, David Carroll, and Pat Emerick have requested until May 9, 2016 to respond to the RICO lawsuit filed on behalf of former GFA donors Matthew and Jennifer Dickson.
In February, the Dicksons filed a racketeering suit against the leadership of Gospel for Asia alleging misuse of funds and fraud (click link for the suit and more information).
The entire document is here.
UPDATE: Although the defense requested 60 days to prepare a response, the judge shortened the period to end April 15. In exchange for the extension, the defense agreed to accept service on the suit on behalf of K.P. Yohannan who apparently is still out of the country. GFA’s defendants are being represented by Locke Lord, a prominent law firm in Dallas.
The Order on Motion for Extension of Time to Answer is below:
Steve Buist reporter for the Hamilton Spectator has written a major expose’ of Gospel for Asia. Published today, a shorter version will also appear in the Toronto paper tomorrow. The headquarters for GFA-Canada is in Hamilton so the story is a local and national one there.
In the story, GFA-Canada Director Pat Emerick denies one of the first claims told to me by GFA-US COO David Carroll. Emerick denied that Canadian donations had been lumped together with American donations:
“There has been no mingling of funds and field partners can absolutely account for the originating source of all deposits,” Emerick stated.
“All funds sent to the field have been accounted for separately in annual reports to the respective international boards as well as according to national accounting standards in the receiving countries,” Emerick stated.
He is not exactly answering the question. The fact is that Canadian funds were not reported to the Indian Home Ministry as coming from Canada. In May 2015, Carroll told me that Canadian funds were lumped in with American funds. He said there was no requirement for them to be reported separately.
The Canadian funds were combined with U.S. funds by our auditor in India for various accounting reasons. There is no requirement that they be reported separately.
Buist’s assessment is that the funds were combined without proper reporting.
Meanwhile, Gospel for Asia officials in the U.S. told an American evangelical financial accountability group last summer the charity didn’t exert any control over its Indian affiliates and how they spend the money.
Taken together, it means Canadian donations were lumped in with the American donations sent to India but the American charity didn’t exercise any control over the Indian affiliates receiving the money.
This would appear to be in violation of the CRA’s rules that state the Canadian charity must maintain control and direction of its donations and be able to account for how they have been spent, even when done through an intermediary.
Buist covers the waterfront and cites Bruce Morrison and me on a variety of financial matters. The entire class action suit is embedded online.
Readers of this blog will recognize much of the facts but Buist does a very fine job of weaving it all together in one place.
STATEMENT FROM GOSPEL FOR ASIA BOARD ON RECENT DEVELOPMENTS
Wills Point, Texas – February 12, 2016: In the fall of 2015, the Evangelical Council for Financial Accountability (ECFA) revoked Gospel for Asia USA’s membership, after a 36-year relationship. ECFA is an organization that provides accreditation to Christian nonprofits in the U.S. based on their “standards for financial accountability, transparency, fundraising and board governance.” ECFA accreditation entitles a ministry to use the ECFA seal, but the loss of accreditation does not mean that the organization is guilty of illegal or unethical behavior. It simply means the organization no longer meets the standards chosen by ECFA to entitle an organization to the ECFA endorsement. Gospel for Asia was a founding member of ECFA, so an endorsement by ECFA is and remains a great honor to us. However, many very reputable organizations are not members of ECFA because they do not meet their rules for membership or they have chosen not to meet them, but Gospel for Asia has always valued our endorsement by ECFA and therefore made efforts to remain in good standing for 36 years.
Our change in status with ECFA caused concern by some and raised questions about financial accountability of Gospel for Asia. ECFA’s decision was made after conducting a special review of Gospel for Asia, and we respect ECFA’s evaluation. Our response was to begin a focused review and to implement the ECFA’s recommended improvements.
For more than 30 years, Gospel for Asia has served in some of the most complex environments in the world. Some of the questions raised relate to measures Gospel for Asia felt forced to take to continue our work in hostile environments where very real threats exist to Christians of all kinds, new believers and international humanitarian organizations. Gospel for Asia has always had “enemies” who didn’t want our mission to continue, but sometimes our biggest challenges have related to managing the complex economic and political environments within which God has called us to serve.
Most of ECFA’s issues resulted from us growing more quickly than our processes and procedures were able to accommodate while we were simultaneously navigating unbelievably complicated circumstances in sometimes dangerous and confusing environments. Over the course of these challenges, we made some good decisions and some bad ones and sometimes we didn’t have the right counsel or any counsel at all.
We willingly accepted—and appreciated—ECFA’s concern because our processes and procedures needed improvement, and in some cases, we were still operating like a small organization as opposed to an organization of our size and influence. We have always welcomed ECFA’s efforts to help us improve.
We learned of the lawsuit when reporters began to call us. It’s worth noting, the first to post anything related to the lawsuit was a blogger who has leveled a relentless attack on Gospel for Asia for months.
We appreciate the role and responsibility—and often good intentions—of journalists in the “new media” and in traditional media, but we have been grieved to discover that too many of them have chosen to consider us “guilty until proven innocent” as opposed to “innocent until proven guilty.”
We must take the time to fully understand the nature of the accusations being leveled against us, and then we will respond accordingly. The issues surrounding our change in status with ECFA have been misunderstood, but regardless of viewpoint, we have taken and will continue to take a focused approach to implement suggested changes to our operations.
We will fully cooperate with the law and are in the process of securing specialized legal counsel to help us and our other legal advisors navigate this new challenge.
We consider it a blessing to finally have the opportunity to bring this matter to full resolution through an impartial arbiter, and you can rest assured that in the meantime we will continue operating on behalf of some of the world’s most desperate people in some of its most complex environments. We hope you will pray for us, for these ongoing challenges are certainly also challenges and distractions to our mission.
The staff leadership of Gospel for Asia are working diligently to handle all of this responsibly and with integrity. We will come out of this stronger.
We thank our committed staff, our donors, prayer partners and friends, for walking with us all these years, especially during this challenging season.
As the Board of Directors, we take our responsibility seriously and we have full confidence in the ministry of Gospel for Asia.
—Board of Directors of Gospel for Asia
This statement mentions “a blogger.” Note to GFA board: I have a name. Furthermore, I have an email address. GFA’s David Carroll has it. He stopped answering my emails in May 2015. Is that what you wanted him to do? I just sent an email to Taun Cortado asking for comment on the allegations in the lawsuit. Instead, you respond to me via other sources.
I have sent many emails to board member Francis Chan with questions about the unaccounted for funds. Chan has not replied. Why not? Is it easier for you to accuse bloggers of misrepresenting facts or having bad motives? This is a losing strategy. Most people can see through it when you answer a charge with an ad hominem attack. Instead of attacking me, you should try talking.
If there is information you believe I am missing, please do what a responsible organization would do — contact me and let’s talk. It is unseemly for you to continue to blame the messenger. If there are answers to the many unanswered questions, then you are to blame for failing to communicate them.
You fail to mention the testimony of your former colleague Gayle Erwin. Remember him? He was on the GFA board and pulled back the curtain.
Former donors are speaking out. Former Canadian board members are speaking out after being improperly dismissed. The Office of Personnel Management found you guilty after an investigation.
The ball is in your court.