Murphy v. GFA – Warren Throckmorton

Was Gospel for Asia Vindicated by the RICO Settlement?

Reading the Gospel for Asia press release about the settlement of Murphy v. GFA (RICO lawsuit), one might think GFA came away vindicated. In the settlement document, GFA proclaimed their innocence and both parties agreed that all funds given by donors “to the field” went “to the field.”

Read the Murphy v. GFA Settlement

However, GFA still isn’t being transparent with the public on multiple counts. The “field” is a big place and just because funds get to Asia doesn’t mean they were spent as designated by donors. In the course of discovery, we learned that GFA interprets “the field” as being the banks where funds are deposited after they leave GFA in Texas. Yes, funds were sent to “the field” but that doesn’t mean donor intent was honored once those funds left Wills Point, TX. The plaintiffs did not stipulate to that, nor did the settlement document attest to that.

In the past, I have provided evidence that GFA has collected funds to send to Asia but used them for purposes other than intended by donors. A tax court in India also asserted the same thing. Then, there is the matter of $20-million which came back from Asia to help finance the Texas headquarters. Donors did not give $20-million to finance a compound in Wills Point, but at least some of those funds first went to the field before they came back to Texas for purposes other than what donors intended.

Furthermore, GFA still isn’t being transparent with donors about the charity registration situation in India. GFA and Believers Church in India lost their registration status in India and cannot directly take foreign contributions. No doubt GFA is sending funds to shell organizations in India but this flaunts the law there. I and others have repeatedly asked GFA how Bridge of Hope and flood relief funds are getting to Indian recipients, but they have given false answers. If GFA is actually going to try to get membership again in the Evangelical Council for Financial Accountability, the organizational leaders will have to be accountable to the public.

Although most of the GFA board remains intact, Garland Murphy and one more outsider will join the board soon. In addition, a subcommittee of the board –which does not include Yohannan or his son — will report to the federal judge for three years. All of this should make the board more transparent. When GFA will not answer questions or provide answers, I know two board members who will have no incentive to keep any secrets.

More than transparency, I hope the board becomes independent. The board will be required to learn about fiduciary responsibility and act accordingly. Given the precarious place K.P. Yohannan has taken GFA in recent years (loss of ECFA and NRB memberships, loss of recognition with federal government’s giving campaign, RICO lawsuit, etc.), I have to believe any reasonable board would have to look at his status as CEO. The track record isn’t good. Perhaps it is time for the board to act in the interest of GFA.

In short, GFA lives on but has not yet been vindicated.

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.

For all Gospel for Asia articles, click here.

Like this article and want to see more like it? Support this blog at Patreon.com.

[email-subscribers namefield=”NO” desc=”Subscribe to receive notification of new posts.” group=”Public”]

Image Fair use, GFA Facebook page

K.P. Yohannan at Global Anglican Future Conference as a Delegate

Always the colorfully dressed Metropolitan, leader of Believers’ Eastern Church and CEO of Gospel for Asia K.P. Yohannan served as a delegate at the recent GAFCON 2018.

GAFCON stands for Global Anglican Future Conference and was initiated after the U.S. Episcopal Church consecrated gay man Gene Robinson as a bishop in 2003.

K.P. was featured in an article about the fashion on display at GAFCON.

The extravagantly-coiffured are not limited to the ladies – a couple of Anglican males would give the sisters a run for their shekels. It has been whispered that there will be a competition for the most outstanding beard – a tip that came three months late for me. Seemingly set for any time, any day, any place, the Indian Metropolitan, the Most Rev. K.P. Yohannan, from Believers Eastern Church in Kerala, on the Indian eastern seaboard, would be hard to beat, being imperial in both attire and beard. Yohannan’s bright red cassock, white mane, and genteel character make him an instant attraction for those seeking trip-defining photos to take home.

Apparently, Believers’ Eastern Church is considered to be an Anglican church. GFA has always portrayed their work as evangelical and Believers’ Church as evangelical.

GFA recently had a petition for writ of mandamus denied by the 8th District Court of Appeals in their fraud case Murphy v. GFA. The practical impact of the Court of Appeal’s action is that a special master will be appointed to open GFA’s records and oversee discovery in the case. GFA had been sanctioned by the federal judge in the case for abusing the discovery process and failing to provide documentation of how donations had been spent in keeping with donor intent.

For more on Gospel for Asia see this link: Gospel for Asia

Like this article and want to see more like it? Support this blog at Patreon.com.

Images: GAFCON logo – GAFCON.com; K.P. Yohannan – Embedded via Flickr

ECFA Report: Gospel for Asia Solicited Funds for Narrower Purposes Than the Eventual Expenditure of Funds

Since 2015, I have investigated the mission giant Gospel for Asia. First privately and then publicly, former employees of GFA sounded alarms about financial and personnel management. A former donor alerted me to the situation and eventually numerous insiders in India and the U.S. came forward with information about the second largest mission organization in the U.S.

At present, former and current leaders of GFA are defendants in two lawsuits which allege that they conspired to defraud donors by using donations in ways contrary what donors intended. One case is stalled in federal court but the other — Murphy v. GFA — is moving forward.

At the heart of Murphy v. GFA is the allegation that GFA didn’t use donations as donors intended. The judge in the case, Timothy Brooks, ordered GFA to produce documentation which could address this basic allegation. Because GFA has not produced documentation responsive to Brooks’ requests, he signaled his intention to appoint a Special Master to oversee the discovery process.

Although the federal suit is potentially more serious, GFA has been investigated on these allegations before. In 2015, the Evangelical Council for Financial Accountability investigated GFA’s financial dealings and eventually evicted GFA from membership due to multiple violations of ECFA standards.

The ECFA Investigated GFA’s Financial Accountability

Prior to removing GFA, the ECFA prepared a report of their investigation which was provided to GFA board members. The report was written in the form of a letter dated September 2, 2015 to GFA founder and president K.P. Yohannan. Former board member Gayle Erwin provided it to me after his resignation from GFA’s board.

Periodically over the next few weeks, I am going to highlight aspects of the ECFA report which are relevant to issues raised in Murphy v. GFA. This is especially relevant to the decision of GFA attorneys to ask the 8th District Court of Appeals to force Judge Brooks to withdraw his sanctions and not appoint an attorney to oversee the discovery process.

Since the key issue in the case is about how GFA spent donor funds, I will start with what the ECFA found on this question. On page 4 of the letter, ECFA’s representative wrote:

6. 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.

The Murphys donated $34, 911 to GFA between 2009 and 2014. According to the information provided by GFA to the ECFA, expenditures were not tracked by specific item accounts until at least after August 2015. GFA led donors to believe their donations would go for one of 38 items, but GFA did not track the way those funds were spent to know if the funds were spent as intended. “Community Development” is a label which could obscure many activities and allow GFA’s field partners to spend money on things not contemplated by donors. This admission by GFA staff, some of whom are defendants in Murphy v. GFA, seems particularly relevant to the discovery process but has not been disclosed to the Court by GFA’s attorneys.

Thus, I am left wondering which account is true – the one in the ECFA report or the one offered by GFA attorneys in various Court pleadings. To the ECFA, GFA staff claimed field partners in India didn’t track expenditures by specific items accounts. In their filings, GFA attorneys have indicated that documents in exist in India. In the recent writ of mandamus to the 8th District Court of Appeals, GFA attorneys wrote:

There are millions of such documents spread over 12,000 locations in almost every part of India. SASA00718-SA00720. Plaintiffs have made no effort to inspect those documents. Petitioners also secured and produced over 60,000 pages of bank statements, ledgers, and summaries from the field. (p. 16)

Presumably, when this case gets to trial, the ECFA report will be entered into evidence. It might be that ECFA staff who were involved will be deposed. Eventually, the admissions made by GFA staff regarding the same questions at issue in this trial will come out.

Federal Judge Sanctions Gospel for Asia in Fraud Case

On June 4, federal Judge Timothy Brooks sanctioned mission giant Gospel for Asia in the ongoing fraud case of Murphy v. Gospel for Asia for failure to produce evidence as requested multiple times by the court. The court found that GFA “needlessly squandered the resources of the parties…and put an ‘extraordinary drain on the Court’s resources,” and that GFA’s “abusive conduct in this case since August constitutes a willful violation of its discovery orders.”

Judge Brook’s Order

In sanctioning GFA, Judge Brooks will require GFA to pay for a Special Master to oversee the gathering of evidence. In the process, this attorney will have the ability to appoint a forensic accountant and will have access to all pertinent GFA records and communications.

Setback for Gospel for Asia

This is a major setback for GFA. For several years, GFA has been defending itself by saying that all funds are spent as donors intend. However, now after months of telling Judge Brooks that this can be proven, GFA is no closer to producing the evidence.

In his order, Judge Brooks accuses GFA of evasive tactics and warns them that discovery is not a shell game. Furthermore, he denied GFA’s claims that they have no control over entities in India. He pointed to documents demonstrating wire transfers between entities, the fact that Yohannan’s family members sit on many boards in common, Yohannan’s prominent status in Believers’ Church and prior ability to get financial documents from organizations they say don’t control.

Judge Brooks had strong words for GFA saying that they had failed to “obey clearly worded directives issued by this Court and to respond in good faith to Plaintiff’s discovery requests.” The federal judge has found GFA’s behavior in litigation to be far from what was promised by spokesman Johnnie Moore in 2016:

Gospel for Asia is 100% focused on continuing its work around the world while working very hard to put an end to the false accusations being continually made against the ministry. Gospel for Asia can document the legal and ethical use of funds donated and clearly answer every question…

As Judge Brooks pointed out in his order, GFA has had many chances to document their use of funds but has stalled all along the way. Now, they face sanctions in federal court and the appointment of a Special Master.