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Bankruptcy filings show generous pay for relatives of Crystal Cathedral founder

As revenue plummeted at the Garden Grove mega-church this year, and employees and vendors went without pay, the church paid more than $1.8 million to 23 insiders and Schuller relatives.

December 03, 2010|By Abby Sewell and Nicole Santa Cruz, Los Angeles Time

Financial documents filed Wednesday in the Crystal Cathedral bankruptcy case show generous compensation paid to insiders and family members of founding minister Robert H. Schuller in the year before the Garden Grove-based mega-church filed for Chapter 11 bankruptcy protection.

During the same period, revenue plummeted, and church employees and vendors — from choral members to the livestock company that provided animals for its elaborate productions — were laid off or went without pay.

The church paid out more than $1.8 million to 23 insiders and members of Schuller's family in the 12 months leading up to the Oct. 18 bankruptcy filing, according to the financial statements. That sum included $832,490 in tax-exempt housing allowances given to eight people and payments to all five of Schuller's children and their spouses.

Jim Coleman, the president of Crystal Cathedral Ministries, declined to comment.

"I don't have knowledge of the documents you mentioned," he said. Other church representatives could not be reached.

Documents: Read key filings in the bankruptcy case

The church's financial records, which were kept private until the bankruptcy proceedings forced public disclosure, are beginning to paint a picture of how the church conducted business and the extent to which Schuller family members and insiders were compensated.

Don Neuen, a former 10-year choral conductor at the church, said that the news of salaries and housing allowances is shocking and heartbreaking.

"It erodes my trust in the family that they would do this, [while] owing other people," Neuen said.

The U.S. Trustee overseeing the bankruptcy proceedings has already questioned the redundant duties of some church insiders and family members and said there was "no justification whatsoever" for the $132,000 housing allowance paid to Chief Financial Officer Fred Southard. Southard has said the allowance was a benefit he is entitled to as a minister ordained by the Crystal Cathedral.

Federal tax law permits churches and other religious organizations to give housing allowances to ordained, licensed or commissioned ministers who perform certain duties, though it is unclear if the eight housing allowance recipients met those criteria. The allowances are exempt from federal income tax.

The newly filed documents show that in addition to Southard, at least three others received housing allowances of more than $100,000: Schuller's son-in-law Paul Dunn, who writes and directs the annual Glory of Christmas and Easter pageants; Schuller's daughter Carol Milner and his son Robert A. Schuller, who left the church in 2008.

Founder Robert H. Schuller also received an allowance, as did Coleman, who is Schuller's son-in-law; James Penner, another son-in-law who produces the "Hour of Power" television program; and Southard's son-in-law William Gaultiere, a part-time pastor.

Over the years, some critics have contended that the church gave money to family members, who in some cases performed seemingly little work. Those claims have never been verified because as a religious nonprofit, the church is not required to file tax statements or make its finances public.

Dunn, the pageant director, who lives in Hawaii, received more than $300,000 in housing allowance and vendor payments in the last year and was still owed $64,758, according to the financial statement filed Wednesday.

The latest records show that all five of Schuller's children and their spouses collected payouts from the church as either employees or vendors. The payments, which total about $1.2 million, helped support expensive homes. Milner and her husband, Timothy, own houses in Orange and Boulder, Colo., both valued at more than $1 million. The Dunns own at least two properties in Hawaii; and the Laguna Beach home of Robert A. Schuller is valued at more than $1 million as well, according to property records.

While the family members continued to collect pay, revenue was flagging dramatically. From January 2010 to Oct. 18, when the church filed for bankruptcy, Crystal Cathedral reported $22.3 million in revenue, down from $41.2 million in 2009 and $54.6 million in 2008.

Financial statements show the church sold properties in San Juan Capistrano and Big Bear Lake in the last two years — bringing in $22.5 million from the Rancho Capistrano sale in May. Family members took a pay cut in August, but it was not enough to turn the finances around.

The church owes creditors $48.5 million, according to the document.

It's not uncommon for family members to be on the payroll of a church or charity, said Dan Busby, president of the Evangelical Council for Financial Accountability, a voluntary member organization of churches. Crystal Cathedral is not a member.

But Busby said the fact that the board is made up primarily of family members and employees makes the compensation more questionable. Busby's organization requires its members to have majority-independent boards, meaning that most of the directors are not staff or family members of staff.

"It's more difficult to demonstrate that transactions or decisions are being made in the best interest of the church or other charity when the majority of board members are insiders," he said.

Christina Wilcox, a former choir singer, said she stayed with the church choir until Easter, going months without pay while many of the other professional singers left. Wilcox said she stayed partly in the belief that she would eventually be paid and partly because she wanted to see the choir survive.

"We would ask, 'Are [the family members] paying themselves, are they taking a cut in salary, or are we being the ones asked to sacrifice?" she said.

abby.sewell@latimes.com

nicole.santacruz@latimes.com

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