Tag: Gospel for Asia

Nationwide and Arkansas Class Certified in Gospel for Asia RICO Case

In a major development in the RICO lawsuit filed against Gospel for Asia in the Western District of Arkansas, Judge Timothy Brooks certified a nationwide class of people eligible to pursue a RICO claim against Gospel for Asia. He also certified a subclass of Arkansas donors. The specifics are below:

The judge gave GFA until October 10, 2018 to come up with a suitable plan for alerting donors about this action. This will give donors a chance to opt out of the class if they wish. I will report that process when announced here as well. For now, GFA donors can anticipate being contacted.

This is a significant milestone in this case and opens this action up to all donors (with the exceptions as noted in the judge’s order) since 2009. An exception not noted here are former employees of GFA who signed an arbitration agreement with GFA while employees. In another case involving former employees, a federal appeals court ruled that former employees pressing a RICO claim must submit to arbitration if that was a part of their contract. However, for all other donors, the class certification is a major development.

Read Judge Brooks’ Order

In a related development, Judge Brooks appointed a Special Master to oversee the discovery process. This had been anticipated since Judge Brooks had sanctioned GFA over their lack of response to discovery requests from the plaintiffs.

The Special Master is attorney David R. Cohen of Cleveland, OH. He will have freedom to inspect GFA’s documents wherever he believes is necessary to determine compliance.

I expected that GFA would have made an effort to settle before a Special Master was appointed. I suspect this is causing significant stress in Wills Point, TX and somewhere in Kerala, India.

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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

K.P. Yohannan’s Believers’ Church to Halt New Admissions to Caarmel Engineering College Amid Financial Crisis

According to the Indian newspaper The Hindu, Believers’ Church Caarmel Engineering College is closing amid a financial crisis. The news provoked a demonstration at the college on Monday. According to video posted on YouTube earlier this week (and embedded below), the college maintains the school is halting new admissions due to a financial crisis but that current students will be able to finish their programs. There were no promises made going forward. Thus, the future of the school is uncertain.

The Hindu report said students and parents were in a panic because the “college management said that they were unable to run the institution further due to financial crisis.”

Although I am not sure of the significance of this, the protest was triggered by the institution being excluded from the yearly allotment list published earlier this week.

Foreign Donations Helped Fund the Engineering School

Caarmel has been the recipient of Gospel for Asia -U.S. donations in the past. According to a filing in an Indian tax court, Gospel for Asia – India and Believers’ Church acknowledged that they used foreign donations for expenses at Believers’ Church Medical Center and Carmel Educational Trust (the trust which manages the engineering school). The quote below comes that court filing. Shri Venkitachalam represented GFA/BC:

On the contrary, Shri Venkitachalam, the ld.representative for the assessee submitted that both the assessees advanced funds to other registered trusts which have similar objects. According to the ld.representative, the assessee advanced funds to BCMET for construction of hospital building. BCMET is also a registered trust u/s 12AA of the Act. The ld.representative further submitted that Carmel Education Trust also a registered charitable trust u/s 12A of the Act was given funds by the assessee to carry out their charitable activities.

GFA/BC hoped to avoid paying taxes on the deflected income. The tax court had this to say about the income redirected to Caarmel and the medical college:

We have considered the rival submissions on either side and also perused the material available on record.It is not in dispute that substantial income of the assessee trust was not used by both the assessees for the purposes for which they were formed. (emphasis added)

This case in itself should help address issues in Murphy v. GFA. In that case, the Murphys assert that GFA didn’t use donations as donors intended. GFA acknowledged as much in their defense against the tax assessor. However, in all of the literature I have read about GFA, I have never read an appeal for donations to the Believers’ Church Medical College or the Caarmel Engineering College. These facilities charge medical fees and tuition. I suspect most GFA donors would be surprised to learn they exist.

In any case, it appears that Caarmel Engineering College is in some jeopardy. This video shows a vigorous protest and upset crowd over the situation.

UPDATE: If I am understanding the English of the speakers in this video, the closure may only be for one class year. The financial crisis may cause the school to fail to begin a class while they may be able to complete the work of classes underway. The situation does seem to be uncertain which has triggered a lack of trust in management.

At one point near the end of the video, a student asks why a financial crisis in Believers’ Church should effect the school since the school generates revenue through tuition.

With a little more digging, I found this video. At 53:53, a man who appears to represent Believers’ Church stands to read a statement which says essentially that Caarmel will not take new students during the 2018-2019 school year due to a “financial crisis” but the current students will be able to continue their studies.

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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.