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Confidential memo: 'TBN practices ... violate the IRS Code'

Insiders have apparently been ringing warning bells over how the nonprofit Trinity Christian Center of Santa Ana spends its millions for quite some time -- but when the granddaughter of Jan and Paul Crouch started getting serious about running a tighter ship, her family turned on her and ultimately called for her head a la John the Baptist, according to explosive documents recently filed (and promptly sealed) in Superior Court.

"We know this is a lot at once, but Michael and I feel it's in TBN's best interest to get these issues resolved to protect the ministry," Brittany Koper wrote to her grandfather, Paul Crouch, in a confidential memo dated Aug. 30, shortly after she and husband Michael Koper were appointed treasurer and secretary.

That is among a trove of internal emails, CPA reports, invoices and memos detailing questions about Trinity's spending which reveal, among other things, that grandma Jan Crouch can have a bit of a potty mouth

Trinity maintains these documents were stolen or altered, and is trying to keep them out of the public eye (and off of this blog -- but more on that later today). The assertions in the Koper filing are "untrue, defamatory, and attempts to use documents that appear to be stolen," Trinity attorney Colby May told us by email.

Koper's attorney, Tymothy MacLeod, said the documents are what they are, that Koper signed no confidentiality agreement in her last position with Trinity, and has stolen nothing.

The documents causing all the headaches assert that:

• Some $50 million flowed to Matthew Crouch's movie company, Gener8xion, over a decade. "Since Matt went on the (Trinity) board in 2007, $4.5M dollars has flowed to Gener8xion mostly under your signature," says an email from Paul Crouch Jr. (Brittany's father and Matt Crouch's brother) to Jan Crouch, his mother, who was shocked. "Including $1.2141 for a Jesus/Les movie that doesn't exist. (And may never get going until a script is approved.) That is a clear violation of not only TBN policy, but we have been warned by (accountants and attorneys) Jim Guinn, Colby May, John Casoria and Greg Goodyear that this could even threaten the 401(c)(3) tax status of the network."
• Tens of thousands of dollars of expenses were charged to the company's American Express card without documentation -- including $60,000 from one high-up over a single three-month period, and $15,328 at Harley Davidson Orlando, "with no business purpose indicated."
• Hotel stays exceeded $4,000 per night, and frequent meals attended by only family members cost up to $212 per person.
• Invoices for more than $8,000 of goods from Sam Moon, "wholesaler of women's handbags, jewelry and accessories," were paid to Matt Crouch's wife, Laurie, apparently twice, by different corporate arms of Trinity.
• Worries were also expressed over the free "parsonages" that Trinity provided to all of its directors and other officers "without proper reporting;" "the 'rent' fraudulently paid by TBN to my grandparents, Paul Crouch Sr. and Janice Crouch, for the fictitious 'use' of their home;" and payment by Trinity to cover her grandparents' living expenses, according to the documents.

We at The Watchdog got hold of the records during a 24-hour window when they were public. Trinity asked that they be sealed until a hearing can determine whether they are stolen or forgeries. Machinations on that issue continue in court today, including an attempt by Trinity to stop the Register from publishing what's in them.

We'll be telling you about what's in the documents in greater detail coming days.

Some Background

We've been telling you how Koper accused the world's largest Christian broadcaster of unlawfully distributing charitable assets worth more than $50 million to its principals — and of firing her as its finance director, and beginning a campaign of "malicious retaliation" against her and her family, for refusing to go along with the scheme.

Trinity paints a very different picture — saying it was Koper and her husband who committed financial misdeeds. It maintains that the couple embezzled money, forged documents and misappropriated funds to the tune of some $400,000. An earlier suit on these allegations was dismissed, but a new suit revives them.

"(S)everal of the documents appear to have been fabricated or altered by Koper," Trinity attorney May told us. "That is a very serious concern, and until I can determine authenticity, let me properly reiterate what I have said previously: Trinity takes its financial stewardship seriously, and this is why it conducts two separate comprehensive and independent annual reviews. The first review covers all financial procedures, transactions, and record keeping in order to insure GAAP and FASB (Financial Accounting Standards Board) compliance. The second covers IRS compliance. Trinity properly responds to these audits every year."

Trinity is the largest Christian broadcaster in the world, subscribing to the "Have a need? Plant a seed" philosophy. Its donors believe that sending money to the network reaps larger rewards later on. Trinity spent $194 million in 2010, and had close to $1 billion in assets, according to its last tax return.

This paperwork was filed by Koper in support of Joseph McVeigh, her uncle by marriage. McVeigh's complaint against Trinity and its lawyers -- of malicious prosecution in connection with a loan he received through Trinity companies -- is one of a swirl of suits and countersuits between the parties.

Some of the documents in the Koper stash, if authentic, may make it harder for Trinity to argue that Koper had ill-intent from the beginning. An email from Jan Crouch to family members noted, in caps (which she apparently uses when agitated),

"BRITTANY BEGAN THE RESEARCH WITH DON GUINN (a C.P.A.) AND CAME TO PAPA AND ME WITH A LOT OF THINGS THAT HAVE TO BE STOPPED AND MADE RIGHT SHE DID A GOOD WONDERFUL NEEDED SEARCH AND WE WILL DEAL WITH ALL OF THIS LETS START TODAY CHANGING EVERYTHING THAT IS WRONG"

More soon.