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Extravagant spending a pervasive issue for Trinity, internal review says
Writer: Teri Sforza | 15 May 2012 | www.ocregister.com
Extravagant meal, hotel and limousine costs -- along with personal expenses charged to the company -- continued to be "a pervasive issue" for the Trinity Christian Center of Santa Ana, according to an internal review by an accountant that was never meant for outsiders' eyes.
"As stated earlier, control parties of a church are considered to work in a fiduciary capacity on behalf of their congregants and donors," said the March 3, 2011 compliance review by Guinn, Smith and Co of Irving, TX.
"The fiduciary duty carries with it the implication that funds will not be spent in an extravagant or unreasonable manner. In the 2009 review of credit card and travel expenses, extravagant meal, hotel and limousine costs were noted, and personal costs which were not reimbursed by the employee were also noted on hotel bills. This continues to be a pervasive issue for control parties of TBN."
"Control parties," translated, means exactly what you think it means: The bigwigs of the Crouch family, who control the world's largest Christian broadcasting empire and its nearly $200 million annual budget, as well as net assets of nearly $1 billion.
Swank Hotels
The review was signed by Donald E. Guinn , a certified public accountant with Guinn, Smith and Co., founded in 1975 "with the goal of providing complete financial, accounting and taxation services for ministries, non-profits and general business clients," its web site says.
"We're very familiar with issues and questions unique to religious nonprofit organizations and ministers' personal tax and housing allowance issues."
Some of Trinity's eyebrow-raising expenses, as identified by Guinn, included stays at the Ritz Carlton in New York:
"One control party's room dated 11/27/09 incurred $10,616.52 in charges for a 3 night stay at an average of $1538/night in charges. Another control party's room dated 6/20/10 incurred $16,432.42 in charges for 4 nights at an average of $4,108/night in charges (note the base room rate was $3737/night including taxes and fees)."
There was also a stay at the W Hotel in New York, where lodging and in room charges were $984.67 per day for a three-day stay (the Internal Revenue Service's per-diem for business travelers in New York City is $360 per day, Guinn points out); and there were excessive hotel phone bills at the Portofino Hotel Orlando on many occasions. "While the calls may have had a business purpose, a cell phone should likely have been used to avoid this excessive expense," Guinn wrote.
Expensive Eats
Spending on meals was also a bone of contention.
"As in prior years, we noted several charges where meals were shared several nights in a row with only family members, in the vicinity of TBN offices," Guinn wrote. "Although a general business purpose was listed on the receipt, the IRS could easily question the validity of a business purpose when the meal consisted of all family members eating near their homes and near the office at the expense of the exempt organization."
He also provided this chart as "a small sample representative of expenditures that might be considered extravagant:"
Other Issues
Guinn's compliance review of Trinity -- substantially less extensive than an audit -- is part of a declaration filed by Crouch granddaughter Brittany Koper in Orange County Superior Court in support of Joseph McVeigh, her uncle by marriage. McVeigh and Trinity are battling over a loan he received through Trinity companies.
Trinity maintains that this, and other documents in the Koper declaration, were stolen or altered, and is trying to keep them out of the public eye. 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 (more on that below).
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.
Guinn's review identified numerous other areas of exposure that could jeopardize Trinity's nonprofit status in the eyes of Uncle Sam, including:
- How Trinity compensates its big wigs.
"The organization's board should approve total compensation packages for anyone who has served on the board of directors within the last five years nd their immediate family members," Guinn wrote. "The minutes for 2008/2009 did not include authorization for these individuals' compensation packages. I recommend the board annually review and approve all elements of compensation ...and consider an outside compensation committee for recommendation to the board for review and approval."
- How it accounts for more than $1 million in vehicles it owns or leases.
"Automobiles owned by the organization, but partially used for personal activity is an issue that again came to my attention. Any personal use of the organization's vehicle, whether owned or leased, should have this use valued according to the methods prescribed by the IRS. The appropriate amount should be included on the employee's form W-2. It is important to note that when an employee does not document to the organization the business use of the vehicle provided to them, all use must be considered personal. We only received vehicle logs for a Suburban and a Red Ford Pick Up which are used at the Santa Ana production facility. The fixed asset ledger indicated $1,342,420.32 in cost for vehicles owned by TBN as of 12/31/09. I suggest that an attempt to document the vehicles at each location be made as soon as possible. In addition, a usage log should be kept with each vehicle."