A month ago, I asked Gospel for Asia how they planned to distribute donor funds to flood victims in Kerala, India. In 2017, Gospel for Asia’s comparable organization in India (now called Ayana Charitable Trust) and their ecclesiastical arm (Believer’s Church) lost registration with the Indian government to accept foreign contributions. Thus, these groups can’t accept any of the funds now being raised by K.P. Yohannan from foreign donors. GFA very deliberately is raising these funds on the organization website and on social media. If GFA is giving these funds to another nonprofit in India, why can’t GFA simply inform the donor public about this?
When I asked GFA’s public relations firm, I was told:
GFA has headquarters in Kerala, India. Volunteers are actively rescuing, feeding those affected by flooding and providing other supplies.
However, InChrist Communications did not respond when I asked how those headquarters could accept funds when the registration to accept foreign funds had been revoked.
The later a friend of the blog was told that funds were being sent to Believers’ Church in India. Furthermore, the GFA representative said it could not be guaranteed that the donated funds would actually get to flood victims since GFA has no control over Believers’ Church. Actually, this explanation doesn’t make sense because Believers’ Church cannot legally accept foreign contributions.
Saying One Thing and Doing Another
When Compassion International lost their registration with the Indian government, they left the country. GFA has never addressed their loss of registration, nor why they continue to raise funds to send to India when the organizations they claim to support can’t take them. This is an issue for more than flood support. GFA has continued to raise support for sponsored children, missionaries, and all sorts of activities. GFA is telling the public they are doing something that the Indian government says can’t be done. If GFA is getting donor funds to the intended targets, GFA should disclose how they are doing that.
It is a mystery to me why investigative reporters have not taken up this issue. If there is an easy way around this issue, then why didn’t Compassion International use it? While there may an explanation, given GFA’s size and current legal difficulties, it seems like they should have to be more accountable.
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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.
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.
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 calledAyana 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.
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
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.
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 to the staff and to the public. I wonder if they knew all along that it was illegal to send cash into India through student backpacks, thus exposing college students to criminal charges.
On February 16, 2018 a hearing was held in Fayetteville AR before federal Judge Timothy Brooks in the case of former GFA donors Garland and
Admirer kissing the hand of K.P. Yohannan. From his 2017 birthday video.
Phylliss Murphy v. Gospel for Asia, K.P. Yohannan, Gisela Punnose, David Carroll, and Pat Emerick. The Murphy’s complaint accuses GFA and named defendants of conspiring to defraud donors and misrepresent the way donated funds have been spent.
This hearing was convened to resolve an ongoing dispute regarding the discovery of evidence in the case. While the transcript is long (over 90 pages), if you donate to Gospel for Asia or are considering it, you should read it.
The context for the hearing is the claim by former GFA donors Garland and Phylliss Murphy that GFA diverted funds away their intended purpose. At this point in the case, the Murphys and their attorneys have requested documents which would demonstrate a link between donations and expenditures. Over several months, GFA attorneys have promised such evidence but have not provided it. The reason Judge Brooks called the hearing was to resolve the situation.
Judge Brooks actually asked the following question in the hearing:
I’ve next got a question for everyone. Will you please raise your hand if you’ve ever seen the movie “Groundhog Day.”
He explained:
I feel like I am Phil Connors who was portrayed by Bill Murray in the movie “Groundhog Day” in dealing with this discovery dispute; and I am of the view, having read the motion and the response, that the defendants, at least in their answers — their answer to these requests for admissions, and in their response to the motion for sanctions, are like all of the people that Phil Connors was dealing with in the movie “Groundhog Day.”
He woke up every day repeating February 2nd, over and over again, but the people that he was interacting with in the plot of this movie didn’t realize that; and 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.
Judge Brooks had already ruled twice that GFA needed to produced documents in response to questions from the Murphys about where money was spent. They have failed to do so. By this hearing, Judge Brooks summarized the situation:
Plaintiffs now once again seek answers to the same questions that they’ve been asking for months: Was donated money diverted to other causes and do defendants have information or documents that would prove how the money was spent.
This is the crux of the case. If GFA defendants would like to clear their name, they could produce evidence which shows how donations were spent. They haven’t done so. As I pointed out in December of last year, GFA is dragging this out. Anyone who says differently simply isn’t dealing with the case documents.
Donors should ask GFA why a federal judge is exasperated over GFA’s inability to document how donations are spent.
GFA Staff Authorized Transfer of Money from Canada to India to the U.S.
Source TT Architects website
A stunning revelation in this transcript is the disclosure that GFA’s former Chief Operating Officer David Carroll and CEO K.P. Yohannan allegedly had wire authority to move $20 million dollars from India to Texas, presumably for the completion of GFA’s headquarters. Staff were initially told that an anonymous donor gave those funds. Then in May 2015, Carroll told staff that one of GFA’s field partners in India took out a loan for nearly $20 million and sent it to Texas. Carroll and Yohannan told staff that the decision to give the funds was made by the Indian leadership without any influence from Yohannan. According to Yohannan, he had no authority over the decision.
In the February hearing transcript, plaintiffs’ attorney Mark Stanley presented evidence which contradicts this narrative. Here is the relevant portion of Stanley’s testimony.
MR. STANLEY: They [GFA’s attorneys] say that the defendants [GFA] don’t control these third-party entities. I have two documents, if I might — let me find them — showing just the opposite. Here’s one. This document is 2015, April 2015, produced by them from Reverend Dr. K. P. Yohannan, president, asking them to transfer Canadian dollars, or CAD — I don’t know. CAD, those are cash deposits — for Gospel For Asia (India), for further credit to Gospel For Asia (India). These are from — remitting it to the state bank of India in Canada, and I can show you that account number is Gospel For Asia (India). I have the accounts for that. That’s K. P. Yohannan doing that.
David Carroll says he has no control over it. I’ve got David Carroll requesting a document — sorry. There it is. This is David Carroll who says, “I have no control over the field partners,” right? “We have no control; we have nothing to do with them”; yet, David Carroll sends a letter to Sarah Billings from the Royal Bank of Canada asking them to transfer $20 million from Gospel For Asia (India) to GFA’s account in the United States, signed David Carroll, CEO, Gospel For Asia. How could he authorize money coming out of a Gospel For Asia (India) account? We know it’s a Gospel For Asia (India) account because it’s account number — 489 is the last four digits. Here it is. There’s a statement from the Royal Bank of Canada, Gospel For Asia (India), care of Teresa Chupp, in Carrollton — that’s their old address before they moved to Wills Point — for Gospel For Asia (India), and there’s the account number.
So clearly the spin that they have been told that these folks have no control over the field partners is simply not true. They have control over it. They have wire instructions, wire authority. K. P. Yohannan is the metropolitan of that. You read the constitution from prior hearings. It talks about all of his roles in the constitution.
All of these folks, Mr. Carroll, Reverend Carroll, Mr. Emerick, the Reverend Emerick, all the others have sworn total loyalty to K. P. Yohannan. His niece, Siny Punnose also have sworn loyalty to K. P. Yohannan. They have absolute control of that.
According to Stanley, he has documentation that K.P. Yohannan authorized the movement of funds from the Canadian GFA to GFA-India. He also claims documentation of David Carroll authorizing a transfer of $20 million from the India field partner back to the United States organization. If Stanley’s representations are as they seem, this information contradicts what the Evangelical Council for Financial Accountability said they were told by GFA’s leaders and it contradicts what GFA leaders told staff in 2015.
What Did GFA Tell ECFA?
Beginning in May 2015, the ECFA began talking to GFA leaders, some of whom are now defendants in this fraud case, about alleged violations of financial management policies. In contrast to the evidence presented in the February 16, 2018 hearing, GFA told ECFA representatives that GFA leaders in the U.S. had no control over the field partners in India.
From the ECFA letter to GFA:
During our review on June 3, ECFA staff raised questions regarding GFA’s oversight and control of funds sent to foreign field partners. GFA’s staff indicated that the foreign field partners are completely independent organizations and therefore GFA did not exercise any direct control over field partners. GFA staff also indicated that they did not have a foreign grant process in place to oversee the use of funds.
The ECFA letter specifically refers to the near $20-million transfer of cash. From the letter:
GFA’s financial statements do not appropriately report transactions with foreign partners. During our review on June 3, GFA staff indicated that funds transferred to GFA India were actually transferred to a number of related entities instead of the single entity reflected in the 2013 audited financial statements. Additionally, on August 24 we learned that GFA received a $19,778,613 donation from GFA India, which was classified as a related party elsewhere on the 2013 audited financial statements (also see #8 below). On August 27, GFA staff confirmed that this donation was neither disclosed in the footnotes of the 2013 financial statements as a related-party transaction nor to the GFA board of directors. This inconsistency within the financial statements and lack of disclosure to the GFA board of directors about a significant related-party transaction appears to violate ECFA Standards 2, 3, and 6. On July 20, ECFA was informed that GFA engaged a new audit firm and they are in the process of reviewing related-party transactions.
The ECFA report letter then pointed out the impropriety of moving funds from India which had been given originally as donations exclusively for mission work in Asia.
Use of funds restricted for the field for other purposes. On June 3, ECFA discussed GFA’s claim that 100 percent of field funds are sent and used in the field. GFA staff confirmed that this was accurate. On August 24, ECFA was informed that GFA India made a gift to GFA of $19,778,613 in 2013 to complete GFA’s new office. On August 27, GFA’s staff confirmed that the funds relating to this donation were originally received by GFA as gifts restricted for the field and GFA transferred to field partners to fulfill donor restrictions.
Two important issues are raised:
A. Reallocating gifts donated for field purposes and using them to pay for headquarters construction appears to be a violation of ECFA’s Standards 7.2. GFA staff stated in a recorded GFA staff meeting that you approached the field partner and explained that GFA could borrow the funds in the U.S., at less than desirable terms, for the headquarters construction. However, a gift from the field partner, in lieu of GFA borrowing the funds, would allow GFA to complete the new headquarters and thereby save interest. Therefore, GFA would be able to send more money to the field in future years. ECFA believes that the potential savings resulting from the GFA India gift is an inadequate basis to reallocate gifts donated for field purposes.
B. Reallocating gifts donated for field purposes contradicts GFA’s claim that 100 percent of funds are sent to the field. In fact, a significant amount of donations restricted for the field made a circuitous trip back to GFA and were used for the headquarters construction, as though they had never gone to the field. This appears to be a violation of Standard 7.1.
In a GFA staff meeting, GFA indicated the field partner took out a loan to cover the use of the $19,778,613 gift and GFA staff confirmed on August 27 that India-generated income was used to repay the loan. Our review of the board minutes did not indicate the GFA board had approved, or even been notified, of the $19,778,613 reallocation of donor-restricted gifts.
Now we learn from attorney Stanley that the funds may have simply been transferred by GFA leaders in the U.S. from GFA-India’s Royal Bank of Canada account. Was the office complex finished via a gift from GFA-India? Or did GFA defendants simply transfer $20-million of donor money from one account to another? In either case, plaintiffs attorney presented evidence to allege that GFA leaders had sufficient control to authorize the transfer of funds which were not subsequently spent as intended by donors.
Other Misrepresentations Revealed
There are other revelations in this transcript which I will detail in future posts. For now, I will conclude by repeating my advice to donors to read this document as well as the ECFA report. Some of the same issues which led to the removal of GFA from the ECFA membership are still current today and have come to the attention of the presiding federal judge in this case. Although the trial isn’t slated until next year, consumers and donors can use the evidence available to make their own judgments now.
