U.S. District Court of Western Arkansas Rules RICO Case Can Proceed Against Gospel for Asia

In April 2016, Gospel for Asia’s celebrity attorneys asked the Western Arkansas District Court to either dismiss the RICO suit against them or to require plaintiffs Matthew and Jennifer Dickson to submit to binding arbitration.  Today, the court declined to dismiss the case. Furthermore, they declined to require the Dicksons to enter arbitration, ruling that their employment contract did not envision a case such as this.
In short, the RICO suit against Gospel for Asia will go forward. From the court order:

Plaintiffs’ complaint is sufficiently pled to overcome the hurdles posed by Defendants’ motions to dismiss, and this case must proceed to discovery.
III. Conclusion
IT IS THEREFORE ORDERED that Defendants’ motion to compel arbitration (Doc. 23) is DENIED.
IT IS FURTHER ORDERED that Defendants’ motions to dismiss (Docs. 25 and 27) are DENIED.
IT IS SO ORDERED this 18th day of January, 2017.
/s/P. K. Holmes, III P.K. HOLMES, III CHIEF U.S. DISTRICT JUDGE

Over the next several days, I hope to review my posts concerning GFA from 2015 which should give some indication of what discovery will be like for the defendants.

Gospel for Asia Loses More Support

Debbie Roy is a blogger who not only supported Gospel for Asia financially but also used her blog to promote the group.
No longer.
Yesterday, she revealed that she has stopped supporting the group and even repented that she had done so in the past.
A portion of her remorseful post:

I have only lately learned of these matters and I am so very sorry for any amount of money you may have lost on account of my endorsements. It is always a heart wrenching thing when a Christian organization which has had so much respect in the past, goes off the straight and narrow. Just today I have watched a few videos which confirm my decision, and I have repented of my support for GFA. You, of course, are free to do as you please, but I must be honest with you all. I do believe that God looks at our hearts, and before Him no donation is ever wasted. But we must choose wisely who handles the money God gives us to use for Him.

Go read the rest at Sistersreachout.com.
It is worth pointing out that the GFA web page which features bloggers for GFA is now empty.  No links to blogs can be found.
I was made aware of this blog by another former donor who I will write about in a future.
 

Gospel for Asia Appears to be Saving for a Very Rainy Day

In a recent staff meeting (May 14, 2015), Gospel for Asia leaders told staff that they had $7 million in cash balance in India. Responding to a question from a staffer about why GFA is sitting on so much cash in India, COO David Carroll answered:

That account will tend to build up over the year, it will ebb and it will flow and it will go down as money is spent. Currently, is there 94 million dollars in there or someone asked is there $150 million dollar fund on the field? No, currently the balances from what I understand from India are around 7 million dollars in that particular, those particular accounts. The reason that they are there is because we have to report all foreign contributions that come in. Money will swell and as we spend the money the money will go. We cannot spend the money until we can spend it on the project for which it was designated.

This puzzled me because it seems to contradict the financial contribution reports filed with the Indian government every year. Something isn’t adding up when one compares Carroll’s information to what is filed with the Indian government.  According to the most recent report showing GFA’s use of foreign contributions for the Indian fiscal year ending March 31, 2014, GFA alone had $54,929,800 listed as a cash balance. If you include the other entities that receive money from U.S. based GFA controlled limited liability corporations, the balance swells to $158,165,400.*

GFA and Believers’ Church both receive money from several LLCs with Texas addresses (e.g., see this list). Two other groups do as well: Last Hour Ministry, and Love India Ministry. The image below shows the cash balances for each of those organizations in India. These numbers do not include U.S. operations, which are likewise substantial.
FYE2014CashBalancesGFA
Carroll is correct that funds designated for a particular purpose cannot be used for another purpose and so if GFA receives a lot of money for something that is not needed on the field, then they have to wait until they need it to spend it. The report filed with the Indian government provides a reasonable amount of detail about where funds have been and are designated to be spent (see the entire report here). See below:
gfa2014FYEbalance
Note the red boxes on the right side of this chart. The cash balance GFA reported to the Indian government was (in rupees) 3,288,264,488.79. Using the exchange rate on  March 31, 2014, this converts to $54, 929,800. Similar calculations led to the image above showing over $150 million. Also note that the previous balance was (in rupees) 2,984251885.50. At the March 31, 2013 exchange rate, that converts to $54,601,600 as a cash balance in 2013.

Donors might have a lot of questions after reviewing this information. For instance, what is a Corpus Fund, and why was $21,512,100 sitting in it as of March 31, 2014? It doesn’t appear that any foreign funds were spent on welfare of widows and orphans. There may be perfectly good explanations for all of the questions raised by these reports. However, given GFA’s promises, the massive amounts of money involved, and the other issues identified of late, there is no reason the public and staff shouldn’t ask.

To explore these reports, go to the foreign contributions portal, and then click on the years of interest. All data are not available for 2014-2015 as yet, so click 2013-2014 for the most recent data. Then also click on “Kerala” for the state and hit submit. There you will see all of the charities operating in Kerala. Find Gospel for Asia, Believers’ Church, Love India Ministry, and Last Hour Ministry. Historical exchange rates can be found here.

*I am using exchange rates from March 31, 2014.

Gospel for Asia Tells Staff Carrying Cash to India is Legal But They Won't Do it Anymore

Cash
Image courtesy of sheelamohan at FreeDigitalPhotos.net

Last week, I reported the testimony of several former Gospel for Asia students and staffers who told me that GFA asked them to carry envelopes of cash into India.Some groups may have carried as much as $135,000 in cash to India via individual envelopes of cash packed in luggage or backpacks. According to U.S. law, more than $10,000 leaving or entering the country must be declared and cannot be split up among co-travelers to evade declaration. No source I spoke with filled out any customs forms to declare the cash as required by law.
I asked GFA COO David Carroll for comment or explanation before that article was published with no response. I have reached out again this week but have not heard back.
In the mean time, I was given audio of a staff meeting which took place last week after my article was published where GFA leaders Carroll, KP Yohannan, and Danny Yohannan answered a staff question about the practice of various GFA travelers carrying money to India. In the meeting, the leaders acknowledged that students, pastors and staff had carried cash to India. Even though staff have complained for months, the staff were just informed last week that GFA leaders have decided to discontinue it. Listen to the segment in response to a question from a female staffer:
(Author’s note: During the week of November 13, 2015, GFA, through attorneys, demanded the removal of the audio from this post. Even though the use of the audio is in keeping with fair use of the material, I decided to post a link to the audio rather than embed it.)
Listen to the segment of the May 14, 2015 staff meeting (click the link)
Transcript:

Female staffer: Ok, so the money regarding the students taken over to India, you know we have to carry the money over. How is that audited? Because if I lost my backpack, all that money would have been lost, and that’s money from sponsors and donors. So why is that put in place, and if it was lost, how would you track that?
David Carroll: That’s a good question and actually that was going to be one of the next questions that we answered because someone wrote a very emotional question about that and said why we were endangering students by having them carry the money to India, and I just want to say that for whoever asked the question that I’m sorry we’ve given you, truly sorry that we’ve given you the impression that we were endangering students. A couples things you should know we would never endanger students or anyone else, we’ve had pastors carry money, we’ve had staff carry money, we’re always looking for ways to get money into India because the reality is that it’s getting more difficult to do that, and we are looking for other ways that we’re able to do that. But we checked with our auditors before we ever would allow such a practice. We actually called Bland Garvey, they’re our audit firm and said this is what we’re planning to do, this is what we are intending to do, and they told us how we get it receipted they said it’s completely legal, you’re under all limits, you need to get receipts, there need to be receipts here, there need to be receipts there which Lori has receipts from here. The Indian side also account for that money as received. If you were to lose it, they couldn’t receive it, and in that case, we would say it’s lost basically. We would have to tell the auditors we gave it and it didn’t get to the other side and I’m sure they wouldn’t be very happy, but is it receipted on the other side as received, and accounted for? Yes, it is on the other side of the pond.
So, we have stopped that practice, we feel that it put more emotional burden on people than we realized and then we wanted to and so…
KP Yohannan: It is a perception problem also. Like when I go to Burma and Nepal, I carry quite a lot of travelers checks and get into the country and cash it into local currency and I give it and then the border department, they account for that money in the local Burmese currency or wherever I’ve been to so (?). It’s a legal thing, you cannot carry any more than $5000 and not declare it but when you get India, Nepal, Burma, you can cash it, you can burn it, you can eat it, you can throw it away, you can give it, it is a local currency you are giving it and so receipts are accounted in the book are reported to the government (?) and that is an absolute thing because what I am trying to say, it’s not trying to be under the radar, or illegal smuggling money into the country, nothing like that.  
Carroll: We had heard that one explanation you were given was that the tax rate is high, which would indicate that we’re trying to avoid tax on the money and that’s not the case. I’m sorry if that got skewed but that’s not the case. It’s actually reported on the other side legally so we can do everything we’re supposed to do in reporting that money to the Indian government.
Yohannan: But we don’t do that anymore.
Carroll: We’ve stopped the practice.
Danny Yohannan: We are always looking for legal ways to bring resources into the ministry, but also over there we’re trying to be as responsible to even raise funds on that side…

Shorter GFA: We did nothing wrong and we won’t do it again.
Several questions come to mind. If GFA is not trying to be “under the radar” then why are students given $4500 each? In India, customs would need to be informed in individuals bring in $5000 or more. Clearly, more than $5000 at a time was sent from Texas to India (the smallest group I have heard about so far is 10 people = $45,000; largest was 30 – $135,000). Thus, structuring the transfer among the students to avoid informing the Indian officials seems to be flying under the radar. Furthermore, on the U.S. side, the law requires aggregate amounts more than $10,000 to be declared. If there is no desire to hide the full amount being sent from Texas to India, then why give each member of the group $4500? Why give cash to students, ministry partners and pastors at all? Why not have the GFA staffer in charge simply declare the entire amount when leaving the U.S. and when arriving in India?
It is hard to understand the reason that GFA needs to get money to India. GFA sends millions to India through established channels. It seems hard to understand why donor funds have been risked in this manner.
None of my sources recall getting receipts in India.
A new source told me that a group of between 20-30 people traveled to India in April, each carrying $4500. If GFA has discontinued the practice, it happened just recently. At this point, very little of the explanation given by GFA can be verified. Emails to Bland Garvey and David Carroll have gone unanswered. However, it is now clear that GFA has been moving large amounts of cash from Texas to India via students, staff and pastors.
 

Money Travels With the Passengers on Gospel for Asia Mission Trips to India

Cash
Image courtesy of sheelamohan at FreeDigitalPhotos.net

Gospel for Asia sponsors frequent “vision trips” to India. These trips help inspire donors and prospective ministry workers to give time and money to the work of GFA. In Texas, GFA runs a School of Discipleship and the students at the school often go as a group to India as a part of their work. According to some former GFA travelers, they pack more than cameras and a toothbrush.
For over two years, some GFA travelers to India have been packing envelopes of cash designed to be taken into India and given unopened to GFA headquarters in Kerala, India.  According to my sources, GFA staff in Texas have on multiple occasions given GFA travelers sealed envelopes filled with cash and said that the envelope contained $4500. The travelers — who were traveling together in groups of various sizes — were told the figure of $4500 was designed to avoid the need to declare the cash in India. Amounts of $5000 or more must be declared upon arrival. According to federal law, any amount of cash may be taken out of the country, but amounts of $10,000 or more must be declared when leaving or entering the U.S. According to my sources, the GFA groups were carrying far more than $10,000 per trip.
Over the last several days, I have spoken to five GFA travelers* who carried money to India in this manner and have examined GFA source information which described the practice.  The sources said that most if not all members of their groups carried the envelopes filled with $4500. For instance, a group of ten people carried $45,000. I asked GFA COO David Carroll for comment but he has not replied.
Pushing the Envelope
One individual told me that a GFA leader told a group of travelers that taxes were high in India and by taking undeclared cash, the ministry would benefit. According to all sources, each individual in the GFA groups received a sealed envelope from GFA leaders in Texas. I was told that one group had ten people carrying cash ($45,000 at one time) and another source said there were 30 travelers in a group (a maximum of $135,000). The travelers were told that each package contained $4500 and that each member of the group would turn in the envelope to a GFA leader in Kerala, India. The money did not belong to the travelers and was not to be used for expenses. The envelopes were to remain sealed and turned over to a GFA leader at headquarters or a Synod office for the Believers Church. Some specifically named Siny Punnose, who works in finance for GFA in India. Some groups consisted of students, some of ministry partners, and at times, pastors have been asked to carry funds.
All sources felt odd about taking the money. One person said fear of losing it or having it stolen was a constant preoccupation. They worried they were doing something that didn’t sound right. Even though the leaders assured them that the practice was fine, it still didn’t seem right.
And, in fact, the travelers may have been right to worry.
Currency Structuring
One may leave or enter the United States with any amount of cash. However, a person who has $10,000 or more must declare it on a form designed by Customs and Border Protection when leaving or entering the U.S. As a recent CBP press release says, one may not split it up and have others carry it for you. In this case, GFA asked the travelers to carry much more than the $10,000 limit in total.

If travelers have someone else carry the currency or monetary instrument for them, they must file a currency report for the entire amount with CBP.  Failure to report may result in seizure of the currency and/or arrest.

Another CBP press release tells of an Italian man who attempted to come into the country with more than $10k along with “co-travelers.”

During a secondary inspection, the man, who arrived from Italy, reported possessing $11,700. It was later discovered that the man had given money to two co-travelers in order to evade currency reporting requirements, an illegal practice known as currency structuring. In total the cash added up to $24,644. CBP officers seized the money, issued the man a $1,000 penalty, and then returned the remaining cash back to the man.

The reporting requirements apply to travelers leaving and entering the country.

International travelers who arrive or depart the United States in possession of more than $10,000 or equivalent foreign currency are required to report all currency to CBP officers and complete a Treasury Department Financial Crimes Enforcement Network (FinCEN) form. (emphasis added)

Federal law appears to forbid such undeclared money moves without declaration. None of my sources report any forms filed. Note that the relevant federal law forbids aiding, commanding, or requesting such moves in the aggregate:

§ 103.23 Reports of transportation of currency or monetary instruments.

(a) Each person who physically transports, mails, or ships, or causes to be physically transported, mailed, or shipped, or attempts to physically transport, mail or ship, or attempts to cause to be physically transported, mailed or shipped, currency or other monetary instruments in an aggregate amount exceeding $10,000 at one time from the United States to any place outside the United States, or into the United States from any place outside the United States, shall make a report thereof. A person is deemed to have caused such transportation, mailing or shipping when he aids, abets, counsels, commands, procures, or requests it to be done by a financial institution or any other person. (emphasis added)
(b) Each person who receives in the U.S. currency or other monetary instruments in an aggregate amount exceeding $10,000 at one time which have been transported, mailed, or shipped to such person from any place outside the United States with respect to which a report has not been filed under paragraph (a) of this section, whether or not required to be filed thereunder, shall make a report thereof, stating the amount, the date of receipt, the form of monetary instruments, and the person from whom received.

I am not an attorney and realize that there may be some unknown facts which make this all fine. However, it seems strange to me. GFA can wire money to India and does so frequently. There are many other ways to get money to the field which can be verified transparently. If these travelers are accurate in their reports, GFA is causing hundreds of thousands of dollars in cash to be transported without declaration. This practice seems risky and fraught with many negatives and potentials for abuse.
I want to repeat that on Tuesday I asked GFA’s David Carroll for comment and explanation.
*All sources spoke on condition of anonymity for fear of retaliation from GFA. None of the people I spoke with are affiliated with the GFA Diaspora.

Gospel for Asia Does Not File a 990 Because It is a Religious Order

Donations to Gospel for Asia are tax deductible but the organization doesn’t file 990 forms because they are a religious order. In response to my question, Gospel for Asia’s COO David Carroll answered as follows:

Also, to understand the level of commitment asked of staff and the ways in which we operate, it is helpful to recognize that we are a “religious order” and not merely a ministry. Religious orders must meet certain criteria according to the Internal Revenue Service. All potential staff members are fully briefed on these requirements, including a commitment to “live under a strict set of rules requiring moral and spiritual self-sacrifice and dedication to the goals of the organization.” (IRS Rev. Proc. 91-20, 1991-1 C.B. 524, Sec. 3). The IRS also stipulates that employees “make a long-term commitment to the organization (normally more than two years).”
In the spectra of religious orders, Gospel for Asia would likely afford the highest level of independence and freedom from leadership interference in personal decisions. As a religious order, Gospel for Asia is exempt by the IRS from having to file an annual Form 990. However, it’s worth noting that being a religious order imposes a very modest compensation scale on our ministry.

Based on the following description, I thought the group was a 501(c)3 organization required to report on IRS 990 forms.

GFA is a well-established international mission organization deeply committed to seeing lives and communities transformed through God’s Word and compassion. We are a bridge and servant of the Church to fulfill the Great Commission of our Lord by transforming lives and communities through Christ’s love among the most unreached in our generation. We are a movement dedicated to glorifying the name of Jesus Christ and to proclaiming His grace and love to those who desperately need to hear it.

On the Frequently Asked Questions page, the religious order question is addressed:

I hear GFA is a religious order. What does that mean?
GFA is officially recognized in the United States by the IRS as a protestant/evangelical religious order, much like Wycliffe, Open Doors, U.S. Center for World Mission, Cru (Campus Crusade for Christ), Operation Mobilization, Living Waters and other Christian ministries. That means GFA has the following characteristics defined by government law:

  • Members of the organization normally live together as part of a community and are held to a higher level of moral and spiritual discipline than that required of lay church members.
  • Members of the organization work or serve full-time on behalf of the religious, educational, or charitable goals of the organization.
  • Members of the organization participate regularly in activities such as public or private prayer, religious study, teaching, care of the aging, missionary work, or church reform or renewal.
The result is that the information normally contained on a 990 isn’t easily available.
One reason I wondered about the 990 form is because I am trying to get some understanding of this massive organization. The group claims it must keep the financial information private because of concerns over persecution. However, I have learned that much of the information about GFA’s work in India is reported yearly to the Indian government. The information is also available to the public (see this post for instance).
Stay tuned…

Gospel for Asia Faces Allegations of Misconduct; GFA Board Investigation Found No Wrongdoing (UPDATED)

GFA LOGOGospel for Asia is a large missionary organization which supports direct evangelism, child sponsorships, Bible colleges, education, disaster relief and several other ministries. Their assets are substantial but, at their request, I am not going to address how much money they take in.* The 990s are not available on Guidestar and so it is very difficult to find out specific information about the financial situation.

GFA describes itself as a missionary organization and a church. What GFA calls The Believer’s Church is based in Wills Point, TX and apparently consists of the various churches planted around the world. According to the church website, the church has “over 2.4 million members scattered throughout 14 nations.”

According to the organization website, GFA was founded by K.P. Yohannan. Yohannan is the head of GFA and The Believers’ Church and uses the title Metropolitan Bishop of Believers’ Church.

Dr. K.P. Yohannan, the Metropolitan Bishop of Believers Church, was born and brought up in Niranam, Kerala. Niranam has immense historical significance in the tradition of Saint Thomas, a disciple of Jesus Christ who planted the first church there in AD 52.

In June of 2014, a group of 30 former employees sent a letter to Gospel for Asia with five allegations. The full letter is linked here. According to the former staff group, GFA replied with a defensive and, to my eye, threatening letter. In September 2014, a follow up letter was sent, this time with nearly 80 signatures. GFA responded again on March 26, 2015 with results of an investigation. In short, they considered the matter closed.

In summary, the five basic allegations are below.
1. GFA leadership practices and teaches a false view of spiritual authority.

2. GFA leadership prioritizes ministry over family, and teaches the same.

3. GFA leaders lie or intentionally deceive people in order to “protect” the ministry.

4. GFA practices unbiblical shunning.

5. GFA prohibits or discourages staff involvement in bible studies, small groups and local churches.

My purpose with this post is simply to report that there has been an ongoing effort by nearly 80 former employees to communicate these charges to Gospel for Asia since June 2014. According to GFA, an investigation found no wrongdoing but this response from GFA has not been sufficient for the former staffers.

I was alerted to this matter by a former donor earlier this month. Since then, two more donors have contacted me with similar concerns.

Apparently, during April, some GFA leaders have contacted individuals in the former GFA staff group (GFA Diaspora) with offers to talk about personal matters. J.D., the Diaspora’s spokesperson, said that no apology has come officially from GFA. According to the spokesperson, a more systematic response from GFA is needed to fully address the problems. Even so, the former employees do not wish to harm GFA. Speaking for the entire group, J.D. said:

It is not our intention to harm GFA or its staff in any way. From the beginning, our hope in addressing these matters has been to see repentance and change.

In response to my inquiry, GFA Chief Operating Officer, David Carroll, sent the following statement.

Gospel for Asia was disheartened to receive a letter dated June 17, 2014 from a group of former employees expressing concerns with our leadership team. We value the well-being of our staff and don’t take criticism lightly. After unsuccessfully trying to seek biblical reconciliation with every signer of the letter, our board launched a formal inquiry into the complaints outlined by the former employees. Gospel for Asia President and Board Chair K. P. Yohannan and his family members, also members of the board, recused themselves from participating in the investigation to ensure a fair and unbiased process. At the same time, our leadership team examined our HR policies and procedures, making improvements wherever possible, and affirmed the freedoms afforded to those called to the work of Gospel for Asia. While the board investigation concluded that there was no wrongdoing on the part of leadership, we recognize that, as humans, our leadership is not always going to be perfect. At the same time, our motivation has always been to reach as many people as possible in Asia with the Gospel of Jesus Christ and grow in our ability to reflect the character of Christ in our own organization. Regarding those former employees with unresolved concerns, it is our ministry’s desire to reconcile when possible and disagree in love when necessary, so that we might stand together in our commitment to spreading the Gospel throughout Asia.
— Gospel for Asia COO David Carroll, on behalf of the leadership team

As is clear from the letter, some of the concerns expressed over the past 10 months relate to GFA’s accountability to donors. In the coming days, I will report more information regarding transparency and the concerns of donors.

*Gospel for Asia is a charter member of the Evangelical Council for Financial Accountability. On the ECFA GFA page, this caption tells why the financial information isn’t available:

Due to international security concerns, Gospel for Asia has requested that their financial information not be posted on the Internet. To receive a copy of their audited financial statements, please contact Gospel for Asia directly.

I did contact GFA directly and received a copy of an audited financial statement.

UPDATE: In 2015, former board member Gayle Erwin allowed me to publish his unedited report of his investigation of Diaspora’s concerns. His report contradicts the statement from GFA.