Gospel for Asia Settles RICO Lawsuit; Agrees to $37-Million Settlement

In court documents filed today, Gospel for Asia settled with plaintiffs Garland and Phyllis Murphy by agreeing to set aside $37-million in a Settlement Fund to provide relief for donors as well as cover court costs and attorneys’ fees. GFA also agreed to have Dr. Murphy join the board of the organization. Murphy and GFA will also work together to designate a replacement for K.P. Yohannan’s wife who will go off of the GFA board. GFA also agreed not to appoint any other relative of Yohannan to the board.

GFA also agreed to create a board subcommittee which shall not include Yohannan in order to provide oversight for the organization’s compliance with the settlement. The mission organization also agreed to comply with Evangelical Council for Financial Accountability guidelines and seek readmission to membership.

Read the Settlement 

GFA continued to deny wrongdoing but nonetheless agreed to establish a stunning settlement fund of $37-million.  GFA will raise the $37-million as follows:

GFA-USA will fund the Settlement Fund as follows: (a) within thirty (30) Days following entry of the Preliminary Approval Order, GFA-USA will transfer $26,000,000 to the Settlement Administrator (via wire instructions provided by the Settlement Administrator to GFA-USA) to an interest-bearing escrow account; and (b) GFA-USA will raise $11,000,000 within twelve (12) months of the date of the entry of the Final Approval Order, which will be transferred to the Settlement Administrator (via wire instructions provided by the Settlement Administrator to GFA-USA) to an interest-bearing escrow account, on or before the end of the twelfth month after the Agreement is executed.

GFA Headquarters Will Be Held as Security

GFA may try to raise funds to pay donors via new donors. In order to make sure the funds are paid to the class members, the headquarters will be held in a deed of trust. GFA has to come up with the money since the main campus is on the line. From the settlement:

To the extent the funds to be raised under Section 4.2.2(b) are raised through donations, they shall be raised through solicitations for general ministry purposes. To secure the obligation of GFA-USA to fund the additional $11,000,000 to the Settlement Administrator, GFA-USA shall grant a deed of trust lien for the benefit of the Settlement Administrator against the GFA-USA campus, such deed of trust to be in the form attached hereto as Exhibit G (the “Deed of Trust”). At such time as the $11,000,000 is transferred to the Settlement Administrator pursuant to Section 4.2.2(c), the Deed of Trust shall be released.

This is a stunning outcome and should be a warning to all nonprofit organizations, especially megachurches. Donors are watching and want to know where those funds are going. GFA is spinning this already on their website but this is a staggering blow to an organization and group of defendants which once bragged that they were above reproach.

I will have more coverage of the settlement over the next few days.