After a thorough investigation of several months duration, independent forensic auditor Robert D. Johnson, CPA, P.C. today issued a report surrounding the allegations of financial mismanagement, fraud, and theft at Grace Church & St. Stephen’s. His findings concluded that the Parish rector, the Rev. Donald Armstrong, is innocent of allegations of fraud and theft.
The forensic audit was initiated by the vestry in direct response to the Episcopal Diocese of Colorado’s investigation and presentment against Fr. Armstrong. Since 2003 relations between the conservative parish and the diocese have deteriorated over the revisionist theology of The Episcopal Church, creating a tenuous standing within the mainstream of the biblically faithful worldwide Anglican Communion. Grace Church has chosen to remain in the Anglican Communion.
The Rt. Rev. Robert O’Neill, Episcopal Bishop of Colorado, suspended Fr. Armstrong from ministry within the parish during the Christmas season of last year pending completion of an investigation of financial mismanagement. After several frustrated attempts by the vestry over the course of months to mediate in a situation that it viewed as politically motivated, the vestry determined that the Episcopal Diocese’s investigative and ecclesiastical judicial process was fatally compromised.
Is that the SS O’Neill I see slipping under the waves?
I don’t see that this completely solves the problem. If I had been writing the press release, I would have included information to back up the independence of the auditor, rather than the declaratory statement included. Since the vestry has been such a strong supporter of Fr. Armstrong, anyone they hire is going to be scrutinized closely, and the report issued will be parsed to determine if it’s a true independent audit or a whitewash. I don’t see this report as making the issue go away; it will simply be part of the exhibits submitted during the litigation, and the auditor can expect tough questions concerning his independence from the diocesan attorneys.
And, since any auditor who hasn’t been living in a cave lo these past few dacades knows that his/her work will be fly-specked during a trial, (s)he’s going to be very careful performing said audit.
The air is going out of O’Neill’s case, and he knows it.
Any comment from the Episcopal diocese?
Does anyone have any information about 815’s part in this? I hope they stayed out of it and will let Bishop O’Neill hang out to dry on is own.
It is bad enough for a Bishop to make accusations or to accept unworthy accounts of a priest in his diocese, but worse for him to have accepted the false accusations as basis of fact and without independent investigation.
Rob O’Neill’s response is [url=http://www.coloradodiocese.org/06_newsandevents/PDFs/10_23_audit_release.pdf ]here[/url].
I would like to know when O’Neill will open the diocese’s books to an independent financial audit. O’Neill proudly announced “balanced budget” that conveniently left out the biggest ticket item, the fees for Kobe’s lawyers. And he accused Father Armstrong of poor accounting! Did no one call him to task for this accounting flim-flam at the recent diocesan convention? Has anyone ever heard of greater heights of hypocrisy?
Well, from the linked response from +O’Neill, he is apparantly sticking to his guns, though in fairness, he had not yet seen the results of the forensic audit at the time his press release, was released to the press …
Let’s see what he says tomorrow, but if he does backtrack now, there will be a plentifully large helping of crow pie for him to devour.
Yes, Scotsreb, plentiful. Is Don Williams online tonight?
The question is why O’Neill didn’t wait to see the results before issuing his own press release. Could it be he prefers prosecution of his vendetta over quiet reflection upon the facts?
I’m so shocked! LOL!
It sounds like Fr. Armstrong has a case for defamation of character against Bishop O’Neil.
While I am glad that the rector has been cleared of the charges, am I the only one who is troubled that apparently the Vestry granted the charismatic Rector of this large, wealthy church several quite extraordinary financial perks, e.g., ‘scholarships’ for his children, and the use of the discretionary fund to pay parking tickets for those visiting Grace Church? It makes me queasy, as still another example of semi-secret ‘side deals’ going on for clergy in certain congregations.
I’ve personally witnessed ‘sweetheart deals’ between clergy and Vestry. The most egregious example of which I know is the retiring Rector who wangled his worshipful Vestry into granting him and his wife a life tenancy in the Rectory. The lady lived, with rent, repairs and all utilities paid, until age 102 or so!
While I totally support him theologically, the mess in Colorado still leaves a stench. For example, why on earth should Fr. Armstrong’s children receive ‘scholarships’ from Vestry/clergy-controlled funds? It would have been appropriate for Fr. Armstrong to have stepped up to pay for his children’s educations on his own. Good heavens, many colleges offer the children of clergy excellent scholarships. I’m sure his wages at Grace were among the highest in the country. The
‘scholarships’ cast a large shadow on him, his Wardens and the Vestry (although seeing a personable Rector thrust the majority of a Vestry in his/her pocket is nothing new. And it happens all the time with Bishops and Standing Comms!)
It would be loverly to see the bishop’s personal finances picked apart! But the audit has revealed swarmy financial behavior on the part of both Fr. Armstrong and the Vestry he obviously controlled. He is not the first, nor the last — and the Bishop is very probably in the same position.
This “independent” audit is a joke. The same people facilitating his fraud are paying for it. Did the auditor even look at the court records. I look forward to the criminal investigation.
I am somewhat surprised. I thought that there would probably be some difference of opinion between accountants but I see none. There was failures in process that were corrected. These are unavoidable. Ever talk to a IRS agent?
The character of Fr. Armstrong has been minutely been studied by those close to him and broadly reported. We have heard, ourselves, his transparent statements. Sure, he could be a good hustler but there never was the right kind of evidence to even cause me immediate concern.
We have also heard of the vindictiveness and disdain of Bishop O’Neil. We have read his reports. His character has also been exposed.
I guess I shouldn’t really be surprised.
Yes, Brian, we all know your prophetic talents. LOL!
I’m glad that the auditor reached so many favorable conclusions about Fr. Armstrong. But Stand Firm readers should bear in mind that “innocent of fraud and theft†leaves open the possibility of noncriminal impropriety or irregularity.
In summarizing the auditor’s report, the parish press release states that “the educational scholarships were approved by the governing wardens and treasurer with full acceptance of the vestry by vote approving the operating budget.â€
This language implies that the vestry did not specifically authorize the scholarships (whether by themselves or as part of Fr. Armstrong’s employment contract) but instead approved a parish operating budget that included the scholarships. If so, and if there are no other relevant facts, this seems like poor governance process. I question whether it would satisfy the standards of regularity applicable to a business corporation, much less the standards a Christian organization should follow.
_ _ _ _ _
My concerns in brief outline:
— Providing scholarships to Fr. Armstrong’s children is a self-dealing transaction. Fr. Armstrong is on both sides of the deal: (1) as rector and chair of the vestry, and (2) as a parent who benefits from having the parish pay his children’s tuition.
— Under corporate law, self-dealing transactions need approval from a disinterested majority of the board, voting with knowledge of all relevant facts.
— The wardens and treasurer have no inherent authority to grant scholarships to the rector’s children. They can do so only if the vestry expressly authorized to grant such scholarships or increase the rector’s compensation. The vestry needs either to approve the scholarships itself or to authorize someone (e.g., the wardens) to do it.
— Approving a parish operating budget that includes money for the scholarships is at best a poor substitute for specifically approving the scholarships. Budgets raise plenty of issues of their own, and budget deliberations have caused more than a few vestry members’ eyes to glaze over. This process context is not conducive to assuring that self-dealing transactions get proper disclosure and deliberation. It also tends to put any vestry member with concerns about the transaction on the defensive—as if he or she doubted the rector’s value or integrity. All in all, that is not the right way to approve self-dealing.
_ _ _ _ _
In this comment I’ve sought to explain what, based on what I’ve read thus far, I still have questions about whether the scholarships received proper approval. Perhaps additional facts would assuage my concerns. I look forward to hearing them.
[Also posted on Stand Firm]
Little Cabbage (#12) said “…am I the only one who is troubled that apparently the Vestry granted the charismatic Rector of this large, wealthy church several quite extraordinary financial perks, e.g., ‘scholarships’ for his children,….”
Well Little Cabbage, Anglican priests are often married men with wives and children.
Many Anglican priests could have made much larger amounts of money in the secular world, particularly those who have been very successful in carrying out the Great Commission, but who have eschewed a much greater worldly remuneration and in so doing are not able to fulfill their parental obligations as most of us think that they should able to do.
When a parish or a diocese seeks to help the children of such priests, it is only doing so in order to compensate for the sacrifice that a priest’s vocation for Christian ministry has placed upon his family.
This compensation is an open and kindly provision for the priest’s children. It is a way in which that part of the Body of Christ represented by a parish or diocese says ‘thank you’ to that priest for his sacrifices in the name of Christ.
[blockquote]This “independent†audit is a joke. The same people facilitating his fraud are paying for it. Did the auditor even look at the court records. I look forward to the criminal investigation. [/blockquote]
That sounds like nothing so much as O’Neill’s audit, except his guys didn’t have access to all the documents that the parish’s auditors had, notwithstanding their even more sweeping conclusions.
I’d wager O’Neill’s counting on Armstrong’s+ robust Christian ethic against lawsuits to shield him from a defamation lawsuit. Of course, this ‘bishop,’ having a much more attenuated faith, feels under no such restriction.
In many tangled civil and criminal cases, each side hires its own “experts,” be they handwriting experts, accountants, doctors, scientists, psychologists, automotive engineers, whatever. They often give conflicting interpretations of facts. It was no surprise that forensic auditors on both sides here had opposing conclusions.
But where is the “impartial” third party (judge or jury) to choose which side is right? If the feds and the county decide there is an insufficient basis to pursue criminal charges, then what? If there is to be a determination, either Rev. Armstrong or the diocese and/or loyal minority must sue in civil court. There are good reasons why both sides would want to avoid this. The matter likely will be left dangling, with each side claiming vindication, while the diocese goes to court to claim the parish property, and attention shifts to that conflict.
Back to the Grace and St. Stephen’s forensic audit for a moment: it appears the auditor had to rely on the word of individual wardens and staff members close to Rev. Armstrong to vouch for authorization of major disbursements to the clergyman. I wish the arm’s length could have been longer.
Exactly what financial controls and procedures were in place that would permit “the wardens” and the treasurer to give considerable scholarship amounts to the pastor’s children and large loans to him? I don’t know how the authorization and disbursement system works in large churches, but this seems like vestry territory to me. I see that the vestry apparently approved the total budget package figure for scholarships, but the details were left to several individuals and the pastor.
When were the loans repaid?
Will a fuller report of the auditor’s findings that address the Betzer claims be made public?
Anyone know?
w.w.
Here’s the Colo. Springs Gazette story from Wed. 10-23-07:
[url=http://www.gazette.com/articles/grace_28834___article.html/armstrong_audit.html]Gazette[/url]
w.w.
At least one Grace Episcopal Church member is skeptical of Johnson’s audit.
“If there was not sufficient evidence to indicate problems, police and IRS investigations would not have proceeded,†said Clelia deMoraes, Grace Episcopal senior warden.
This and the fact that they used a no-name CPA versus a well-respected forensic accountant used by the Diocese is why we’ll see the soon-to-be Mr. Armstrong charged.
“This and the fact that they used a no-name CPA versus a well-respected forensic accountant used by the Diocese is why we’ll see the soon-to-be Mr. Armstrong charged.”
Care to put a date on that?
To 12, Little Cabbage and 17, AnglicanFirst, as a former treasurer of a large parish, I see nothing unusual about such added financial payments. Especially is a parish is an up-scale community, it may be difficult for the rector to afford housing in the same community as the church and afford to send the children to college. I have seen instances of loans, house purchases and lease-back, supplemental payments, etc., that are needed to support the clergy. These were always above-board and approved by the vestry.
When I worked for the State of Florida a major accounting (big 8 at that time) firm gave an insurance company a clean opinion. Fortunately for the major firm the regulators never saw the opinion to rely on it. Several days later, due to the integrity of their treasurer who refused to sign the company’s statutory financial statements, the company admitted a 9 million dollar insolvency. Our no name forensic auditor ripped the “clean opinion” to shreds and we obtained a 20 million dollar judgment against the owners of the company. It was never paid of course as they had spent all the money.
Brian from T19, the diocesan “audit” is a joke. The same people claiming there is fraud are paying for it.
[blockquote] This and the fact that they used a no-name CPA versus a well-respected forensic accountant used by the Diocese is why we’ll see the soon-to-be Mr. Armstrong charged. [/blockquote]
Armstrong+ will be charged with a violation of the No-Name Forensic Accountant Act? Say Brian, wasn’t Arthur Andersen a “well-respected” accounting firm when they worked for Enron?
LittleCabbage: Could you provide us with the names of vestries and churches that provide “sweetheart” deals for their clergy? After thirteen years without any raise or cost of living increase in either stipend or housing allowance, I’d love to make myself avalable.
When this first came to light with Armstrong’s inhibition in Dec. 2006, I thought the bishop was attacking Grace because it was conservative. I can tell you the exact time I started to doubt that: At an “emergency” parish meeting on January 21, 2007, someone asked the vestry how much money ACI owed Grace. The vestry answered that ACI was independent and owed no money to Grace. We were also told that we had no handout of the budget or expenditures of the parish because the financial records had been ceased by the bishop and not returned. A few days later, we received a letter from the bishop stating that his office had returned the records to Grace in Oct. 2006. At the annual meeting on Jan. 28, just one week after telling us they had no access to any information, the vestry distributed detailed handouts of the previous year’s expenditures, with no explanation of where the information came from or, if the bishop had them as they claimed the previous week, how they were miraculously returned or found. The vestry then stated that ACI owed $170,000, which would be repaid over a 10-year period. (This from a bunch of guys sitting around computers all day! LOL, Drs Radner and Seitz) Again, no explanation of the discrepency–even if the bishop had kept the records as the vestry claimed, that much money is a lot to slip the mind from one week to the next. ACI claimed they had no idea they had received this money from Grace, and then it was announced that the debt was “forgiven”; again no explanation of where the money went if ACI–godly scholars all around–never saw it. I smelled a rat and it wasn’t in Denver. Godly, orthodox ministers whom I trust have warned me to stay far from Grace CANA–and I will.
#28, your post seems very one-sided, plus you don’t identify yourself. I have to wonder if your supposed knowledge of all these things comes from your somehow being involved. Are you still a member of Grace?
Involved in what? I was involved in the parish until this came out. I am telling you why Ileft. If that’s “one-sided,” well, of course–it’s my reaction to what I heard. It was not only disturbing–it was frightening. It makes me ill right now to think about it.
Irenaeus, thanks for your post #16 above. Your language is much more condcise and professional than my earlier one, although it seems we are thinking along the same lines.
I just don’t think we’ve heard the last of this one, alas.
And I look forward to the investigation of O’Neill’s ‘perks’. (As if there will every be one!)
#30, you can “hear” a lot of things at a church, or anywhere else for that matter, that are just hearsay and gossip. Repeating these things risks spreading false rumors. Are you saying that you personally asked or personally heard vestry members being asked questions that they refused to answer? Are you saying that you personally saw the letter from the Bishop stating that he had returned the documents in question a year ago? Some things that you state sound somewhat difficult to believe, and I would suspect that people who were on the vestry probably have an explanation or different version of events.
I was not the only person at Grace who received this letter from the bishop (so, yes, I read it). And the meetings were open to all (the first was in the Great Hall and the second was in the sanctuary) and, yes, I was there. And I didn’t say they refused to answer questions. The thing that caused me to lose faith was hearing different answers a week apart.
Suwatchalapin, you said “At the annual meeting on Jan. 28, just one week after telling us they had no access to any information, the vestry distributed detailed handouts of the previous year’s expenditures, with no explanation of where the information came from or, if the bishop had them as they claimed the previous week, how they were miraculously returned or found.”
Are you saying that nobody asked for an explanation or that none was offered? If nobody asked, then why didn’t they? If they did, what was the answer?