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.

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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.

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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.

Gospel for Asia UK Says K.P. Yohannan is Not on Believers’ Church Board, Church Constitution Says Otherwise

Obviously, Gospel for Asia founder and CEO K.P. Yohannan wants people to believe he doesn’t sit on any boards of Believers’ Eastern Church in India. Even though he is the Metropolitan Bishop of the church, he told his own staff and the Evangelical Council for Financial Accountability that he wasn’t in authority. Now I have found a financial statement filed in the UK where he claims he isn’t on BEC’s board (see note 10). See below:

10 TRANSACTIONS WITH DIRECTORS/TRUSTEES AND RELATED PARTIES
During the period, none of the Trustees of GFA World received emuneration from the Charity (2015 anil).

On 18th October 2016 a donation of F1,660,000 was made to Believers Church India to further the Charity’s objectives. Kadappilaril Yohannan Punnose, is Metropolitan Bishop of Believers Church, which is GFA World’s primary recipient of funds. Whilst he does not sit on the Board of Believers Church and receives no remuneration from Believers Church, he does exercise spiritual oversight through his role as a member of Believers Church’s Council of Bishops. Daniel Punnose is the son of Kadappilaril Yohannan Punnose and is an ordained minister and is a Bishop of Believers Church (among many), but has no formal leadership role in Asia. He is not on the Board of Believers Church and receives no remuneration from Believers Church India.

Gospel for Asia (US) funded a number of radio broadcasts in the UK and provided some administrative support for many of the appeals and communications with supporters in the UK. Kadappilaril Yohannan Punnose and Daniel Punnose are both members of the Board of Gospel for Asia (US) and received remuneration from Gospel for Asia (US) for their services.

On 24th May 2016 a donation was made to Gospel For Asia (US) for 282,000 for two months of “Road to Reality” radio broadcasts in the US. Two of the trustees of GFA World are also trustees of Gospel for Asia (US), and as such were not present in the meeting where the decision was made to make the grant

I have demonstrated repeatedly that Yohannan is referred to as the head trustee, the final authority, and the one who inaugurates the Bishop’s Council in church documents. The church Constitution makes this extremely clear:

FOrmer GFA COO Appeared to Admit What Seems Obvious

In a February hearing, an email from former Gospel for Asia COO David Carroll to Yohannan was quoted by attorney Marc Stanley. Atty Stanley represents Garland and Phyllis Murphy who are suing GFA and various officers of the organization alleging fraud and misuse of funds. In this citation, Carroll reminds Yohannan that they have told the public Yohannan has nothing to do with finances and is only the spiritual head but implies such a representation isn’t true.

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.

To the charity commission of the UK, GFA World with K.P. Yohannan sitting on the board, again claimed something that is contradicted by the organization’s founding trust documents, the church’s constitution, and many court documents in India. More recently, we have this statement from a former COO.

Perhaps, there is an explanation. The burden is on GFA and Rev. Yohannan to offer it.

Plaintiff’s Lawyer in the Gospel for Asia Fraud Case: Show Us Where the Money Went

“There is a blogger that regularly blogs. I’m certain that there will be something about this hearing on his blog because he follows the PACER regularly in everything that comes out, and there are a group of people that are — they — it’s a little bit of a family feud between these ex-employees and GFA.” – Robert Mowrey, attorney for Gospel for Asia, May 16, 2017.

On May 16, a hearing was held to set the calendar and procedures for the racketeering (RICO) lawsuit against Gospel for Asia brought by Garland and Phyllis Murphy (See this for an earlier post on that hearing).

I have secured a copy of the transcript of that hearing and plan to bring out some highlights over the next few weeks. I have plenty of time since the hearing isn’t slated to happen until 2019. One hopes GFA’s leadership will not use donor funds to drag this case out that long, but it appears that GFA and GFA’s well paid lawyers plan to do exactly that.

At the beginning of the hearing, the judge in the case, Timothy Brooks, summarized the allegations and GFA’s denials of the charges. Then the judge gave the Murphy’s lead attorney, Marc Stanley, a chance to present his own summary. Stanley made the situation simple: Show us where the money went.

MR. STANLEY: Thank you. Thank your Honor. I think the Court summarized the case pretty well, and what I thought would be important for today is sort of defining the different approaches of the two sides in discovery and where we’re trying to go with the case based on the allegations.

From our case, it’s pretty simple. It’s what did the defendants promise the plaintiffs. So, for instance, “Will you give me a thousand dollars for a Jesus Well?” “Yes, I’ll give you a thousand dollars for for a Jesus Well.” That’s the first one.
What did the plaintiffs give and then what did the defendants do with the money? “I give you a thousand dollars; show me it went to a Jesus Well.” Not hard to figure out. Either it did or it didn’t; either they can show it or they can’t.

And then, third, we’ve alleged a RICO conspiracy and fraud because what we allege happened is that a lot of this money did not even go to the field and a lot of this money went into for-profit enterprises like a hospital, a chain of hospitals, chain of educational facilities, a media empire, a soccer team in Myanmar, a railroad plantation. For a long time, there was $287 million on deposit in banks in India; there was $130 million in deposit in Hong Kong. And so what’s going on there?
We allege a RICO conspiracy. The kingpin is K.P. Yohannan, who is the chairman of Gospel for ASIA, Inc., but he’s also the metropolitan of Believers Church, and the metropolitan is sort of like a pope there. The constitution’s very clear — the constitution of the church — that the metropolitan, by virtue of his office, is the president and final authority of the church government, including the managing trustee, the president of all trusts and societies of Believer’s Church, and the custodians of Believers Church at large. And it goes on and on to say he has the ultimate authority of everything that goes on with the church. The properties are in his name, K.P. Yohannan’s name, a lot of the businesses and the properties there. It’s not just Believers Church. There’s also Gospel for Asia-India. There’s also Bridge of Hope Trust. There are a whole bunch of folks that we’re just finding “Gospel for Asia 75 LLC, Gospel for Asia 275 LLC, there’s Way of Hope LLC. We’ve got entities all over. It’s almost like the Enron transactions that we’re trying to unravel.
There’s — we’ve got entities in Germany that formed an alliance with Canada. We’ve got money allegedly going to Sri Lanka and other places. And so what we’re trying to find out is what did the plaintiffs give, what was promised, what did they give and what did defendants do with it. Did it line someone’s pockets; and if that’s the case, then we want them to give it back.

Now, you also said, you mentioned that the defendants’ contention was that all monies were used as the donors specified. If that’s the case, we lose.

This is an easy case. Just show us that the money that came in to Gospel for Asia — right now. I mean, they can — if that’s the case, they could show us tomorrow: The money that came in for Gospel for Asia was spent exactly as the donors said — “we dug this many wells, we bought this many camels, we did whatever else” — and we lose.

It’s not a hard case for that kind of discovery to do it. They should have records of showing, as fiduciaries of the money, what they did with the money.

As Stanley pointed out, GFA could do this tomorrow. The barrier to discovery is GFA. The primary reason GFA is in the situation they are in is because they won’t do the reasonable thing and show the donors where the money went.

Does Believers’ Church Follow The Church Constitution?

Later in the proceedings, Robert Mowrey, one of GFA’s lawyers said K.P. Yohannan doesn’t have control of matters in India’s Believers’ Church. According to Mowrey:

Mr. Stanley has mentioned over and over how K. P. Yohannan just controls everything. There are many — there are entities in India: The Believers Church, GFA-India. K. P. Yohannan is not on the board of those entities. Is he the metropolitan? Yes, he is the Metropolitan of Believers Church. Does that mean he has access to all of their records? No, it doesn’t.

Now, Mr. Stanley doesn’t believe that. Mr. Stanley thinks that whatever K. P. Yohannan wants, he can get; but we have no problem in producing everything we can with respect to the entities that he has sued. But when it comes to wholly separate entities in India, that’s where the rub is.

Believers’ Church may have altered documents over the last year but at the time the Murphys donated to GFA, Yohannan most certainly was considered the head of the church for spiritual and temporal matters according to the church Constitution (see also this source). He also sat/sits on the boards of many other Believers’ Church entities (see this post for more information).

I think this will be difficult for GFA’s lawyers to explain.

Stay tuned for more GFA posts from the blogger who regularly blogs.