Review Task Force Report – Interviews – Pages 54-67

Note: In early 2015, the ABC District Board of Directors initiated a Task Force to identify factors contributing to the CEF crisis. The scope of the Task Force mandate was broad and complex. It included analyzing not only financial and legal, but also underlying cultural, structural, and procedural principles and practices that helped set the stage for the current crisis. The Review Task Force said, “Identifying, understanding, and addressing these is vital to help our church walk wisely into the future.” This is pages 54 to 67.


JUNE 2009 TO AUGUST 2012

The following information was obtained from the 2012 Convention Workbook regarding the 2009 to 2012 triennium:

ABC District:
President: Rev. Donald Schiemann
BOD Members:
1st VP: Rev. Mark Ruf
2nd VP: Rev. Dr. Harry Haberstock
3rd VP: Rev. David Dressler
Rev. Wayne Lunderby, Rev. Keith Haberstock, Mr. Jim Kentel, Mr. Michael Gillingham, Rev. Phil Washeim, Mr. Greg Giese, Ms. Melanie Kuhn, Ms. Judith Burns, Mr. Harold Schmidt
EA Missions & Social Ministry: Rev. Glenn Schaeffer
EA Parish & School Services: Mr. Daryl Becker
EA Stewardship & Financial Ministry Services: Mr. Kurt Robinson

DSFM:
Mr. Greg Giese, Ms. Darla Hennig, Mr. Jim Kentel, Mr. Frank Kobie, Mr. Stan Lee, Mr. Brian Lewis, Mr. Dick Lutz, Rev. Mark Ruf, Mr. Harold Schmidt

Executive Committee (EC):
Mr. Jim Kentel, Mr. Daryl Becker, Pres. Don Schiemann, Mr. Kurt Robinson, Rev. Mark Ruf, Rev. Dr. Glenn Schaeffer, Rev. Harold Haberstock, Rev. David Dressler

EnCharis minutes list the following individuals as BOD members during these years: Rev. Richard Kraemer (2006-2010), Mr. Grant McMaster (2006-2013), Mr. Jim Werschler (2006-2013), Mr. Hans Heumann (2006-2015), Rev. Don Schiemann (2006-2015), Rev. Mark Ruf (2008-2015), Ms. Nicole Banville (2009-2011), Mr. Dave Schoepp (2011-2015)

  1. June 2009 EnCharis Meeting: Discussion regarding bank loan. Funds received from bank to be applied to CEF line of credit. MSC to apply for $8.5M bank loan.
  2. June 2009 EnCharis Meeting: The meeting agenda refers to the Canadian Affordable Seniors’ Living Society and lists its directors, including people who were also directors of District/CEF and EnCharis.
  3. July 2009 EnCharis Letter: Director resigned. New director suggested. Email vote to hire new director.
  4. TF Interview Statements: TF interview statements were that new members elected to the BOD in 2009 realized that District was struggling financially and that “this is a mess”, but thought that it could be figured out since POP was just an operations loss. Interviewees stated that there was no sense of how bad things actually were.
  5. September 2009 DIL Meeting: District currently has five different companies managing investments. By the end of this month all investments will be with one company.
  6. September 2009 BOD Meeting: First meeting of the new BOD after Convention elections. As per EC recommendation, MSC to accept the proposed department members and the proposed committees.
  7. September 2009 BOD Meeting: MSC to ratify loan to EnCharis for $250K for generator.
  8. September 2009 BOD Meeting: Resolution for a $360K loan to District to purchase condo in Chestermere for District/EnCharis staff to use instead of staying in hotels. $2500/month to be paid by EnCharis. Unclear from minutes whether this was MSC.
  9. November 2009 BOD Meeting: MSC to change CEF loan approval limits from $50K to $100K for staff, and from $100K to $250K for departments. (Note: TF interview statements were that this was to allow for small but urgent church loans without the need to convene a BOD meeting.)
  10. November 2009 BOD Meeting: MSC “to have District Office Executives present at Board meetings.”
  11. TF Interview Statements: Interviewees stated that it was recognized in 2009 that interest rates for depositors were too high. TF interview statements were that these could only be dropped over
    time in CEF as some deposits had five-year terms; this delay in dropping rates was not necessary for DIL.
  12. 2009 Audited Financial Statements: EnCharis mortgage receivable of $8.5M with a comparison to 2008 of $2M (amount buried in loans and mortgages receivable on 2008 financial statements). Mortgage loan in Plant Fund of $4.6M. Accrued interest (liability) of $2.1M. Amount payable to investors on demand is up to $89.4M. Inter-fund balance loans doubled to $15.5M. Interest income in 2008 was $1.8M, decreased by $2.3M to an Interest Loss. Management fees for DIL paid to DO/CEF increased from $92K in 2008 to $234K in 2009. District guaranteed a commercial mortgage loan of up to $9M to EnCharis; District was liable to pay any balance owing on demand to the commercial lender in the case of default by EnCharis. DIL loaned District $4.5M to purchase Strathmore property in 2009. Interest owed by EnCharis to District/CEF now totalled $60M and was indicated as an accounts receivable; that is, this interest looked like an asset on paper. As in 2002, 2003, 2004, 2005, 2006, 2007, and 2008, the auditor states that District’s financial statements did not record any amortization/depreciation of assets. This was not in accordance with GAAP. The auditor indicates that the effect of this is an overstatement of the financial picture in the amount of $538K. As in 2008, the auditor noted that the financial statements did not report investments at market value as per GAAP. If this were done, opening balance at February 2008 would decrease by $555K, balance at January 2009 would decrease by $4M, and excess of revenue over expense would decrease by $3.4M. The ending fund balance is listed as $7.4M. If GAAP had been followed, it appears this would have reduced the end balance by $538K (amortization) and again by $3.4M (market value), for a total decrease of almost $4M. It appears that the end balance for the year would have been $3.4M.
  13. February 2010 DIL Meeting: Slight concern noted about the level of investment without mortgages being applied for. Sitting around 20% invested, which is the maximum agreed upon. To be
    monitored.
  14. May 2010 BOD Meeting: EC brought motion to BOD that was MSC: that EA (Financial) be deployed in Calgary, continuing to serve as EA while providing leadership on EnCharis committee.
  15. May 2010 BOD Meeting: EC brought motion to BOD that was then MSC: a 1.4% increase to base salary was recommended for the DP and EAs based on the Consumer Price Index, as well as a “one step increase for” EA (Financial) and EA (Missions) “to bring them more in line with” EA (School) and DP.
  16. June 2010 EnCharis Meeting: Detailed reports from directors of Manor/Harbour, Plant/Property, and Human Resources. Also reports from Projects Manager and Workout/Executive Committee. Reviewed financial reports, strategic plans, and proposed organizational charts. Detailed strategic planning for ECHS and EMSS. MSC to approve strategic plan.
  17. June 2010 CFO Report to EnCharis BOD: CFO provided a Financial Statement Review of EnCharis records (Financial Statements, GST, Corporate Charity Returns, Tax Assessment, etc.). The following information was taken from this report:
    1. “Advertising and marketing fees of $206K were incurred in an effort to obtain a profitable occupancy rate in the Manor. It is my understanding that a significant part of this cost was for a workout retreat cruise for the management staff.” (Referring to January 31, 2007 Financial Statement)
    2. “Staffing & training costs were approximately $815K and consisted of the management team & administration staff.” (Referring to January 31, 2007 Financial Statement)
    3. “Staffing & training costs were approximately $1.29M and consisted of the management team & administration staff.” (Referring to January 31, 2008 financial statement.)
    4. A loss of $1.184M “as the management fees charged were not enough to cover expenditures for such. Increase in loan of $1.261M required to cover amount earned above management fees.” (Referring to the January 31, 2008 financial statement.)
    5. Net loss of approximately $65K over two month period, incurred as the Manor did not have full occupancy and thus did not have revenues to cover expenditures. (Referring to two month period ending March 31, 2008)
    6. Net income of $282K, but “this net income is superficial as EMSS was not required to pay rent to ECHS for the year estimated at $900K.” “If EMSS was required to pay the rent, a loss would have resulted of approximately $618K.” (Referring to year ending March 31, 2009)
    7. Net income of $145K for the year, but “this net income is superficial as EMSS was not required to pay rent to ECHS for the year estimated at $900K.” “If EMSS was required to pay the rent, a net loss would have resulted of approximately $755K.” (Referring to year ending March 31, 2010)
  18. September 2010 DSFM Meeting: MSC to present these recommendations to BOD from Audit Committee:
    1. Comply with GAAP. Present investments at fair market value. (TF Note: Audited financial statements repeatedly commented that District was not in compliance with GAAP.)
    2. “Obtain financial statements, asset listing, and an appraisal on EnCharis by October 31/2010. The financial statements do not have to be audited. The audit committee recommends that it be clearly outlined what the risk exposure to the ABC District is.”
    3. Investigate whether or not ABC District and DIL need to comply with new IFRS reporting. (TF Note: Alberta Securities was implementing IFRS, so legislation changes were taking effect in 2011.)
  19. November 2010 BOD Meeting: Management of CEF Market Investment Funds Portfolio to be turned over to one investment company.
  20. TF Interview Statements: Investments prior to this were through several different brokers and were now consolidated. TF interview statements were that this investment company had District develop policies in 2011 and these policies were then reviewed yearly and revised in 2013.
  21. November 2010 BOD Meeting: MSC to Audit Committee’s recommendations to the BOD subsequent to the review of the 2009-2010 financial statements, including:
    1. “Comply with GAAP in regards to reporting our investments at fair market value.”
    2. “That the BOD obtains financial statements, asset listing, and an appraisal on EnCharis by October 31, 2010. The financial statements do not have to be audited. The audit committee recommends that it be clearly outlined what the risk exposure to the ABC District is.”
    3. Investigate whether ABC District and DIL need to comply with IFRS (International Financial Reporting Standards). (TF Note: Alberta Securities was implementing IFRS with legislation changes taking effect in 2011. TF interview statements were that the necessary changes for compliance with Securities laws did not occur.)
  22. 2010 Audited Financial Statements: EnCharis mortgage receivable is again buried in loans and mortgages receivable. District has mortgage loan payable to DIL for the Strathmore property ($5.9M); DIL collected $361K interest for this. The property in 2010 was recorded at a value of $5.8M. Credit risk is sighted in the 14(c) note to the statements since 93% of
    mortgage receivable is due from EnCharis. Interest owed by EnCharis to District/CEF now totalled $61.2M and was indicated as an accounts receivable; that is, this interest looked like an asset on paper. As in 2002, 2003, 2004, 2005, 2006, 2007, 2008, and 2009, the auditor states that District’s financial statements did not record any amortization/depreciation of assets.
    This was not in accordance with GAAP. The auditor indicates that the effect of this is an overstatement of the financial picture in the amount of $688K. As in 2008 and 2009, the auditor noted that the financial statements did not report investments at market value as per GAAP. If this were done, opening balance at February 2008 would decrease by $4M, balance at January 2009 would decrease by $1.8M, and excess of revenue over expense would increase by $2.2M. The ending fund balance is listed as $6.8M. If GAAP had been followed, it appears this would have been reduced by $688K (amortization) and increased by $2.2M (market value), for an increase of over $1.5M.
  23. Task Force Interviews: TF interview statements were that the Harbour building at POP had been completed by this point, that no more money was needed, and that it was just an operations  loss.
  24. January 2011 EnCharis Report to District BOD: Manor/Harbour “generating an average of $128K per month for the last four months.” Details of assets owned by EnCharis given. Some  suggestions for debt repayment given.
  25. February 2011 DSFM Meeting: DSFM members encouraged to be in touch with EnCharis director (contact information was distributed) with questions about debt repayment.
  26. March 2011 BOD Meeting: Accountant “walked the board through the Directors Alerts issued by the Chartered Accountants of Canada regarding the new Canadian auditing standards.” Increased emphasis on the responsibilities of management and the board were noted.
  27. March 2011 BOD Meeting: DSFM update on EnCharis. EnCharis has a balanced budget this year and will be making monthly interest payments of approximately $130K.
  28. June 2011 BOD Meeting: Discussion as per DSFM Report. “Attention is drawn on the emphasis of matter, from a board standpoint is there any risk that relates to EnCharis in that there is
    transparency in regards to the financial statements?” “This year has been a clear up year…” EA (Financial) encouraged BOD to “read through the notes as they detail risk and offer great clarity”. Market values instead of book values would be used in the future due to new accounting rules. As well, buildings would now be amortized to reflect depreciation on financial statements.
  29. June 2011 BOD Meeting: Reference to recommendations auditors made to BOD for next year:
    1. Investment relationship – gains reported as loss
    2. Payroll – safeguards
    3. CEF – require that withdrawals of large amounts be in writing.
  30. June 2011 BOD Meeting: Possible accreditation issues from the Canadian Council of Christian Charities (CCCC) were noted. DP “has 1 vote of 13.” The district handbook lists the DP as a member of the BOD. “We will either have to change handbook or not gain accreditation.” Reported that the auditor “sees little issue with this due to the fact that the board is independent.” To be looked into.
  31. June 2011 DSFM Conference Call: Discussion of loan request from a Lutheran organization. “Questions and concerns were raised and addressed. A point was raised that the problem that this loan is addressing is not something that we can avoid.” MSC to recommend the BOD approve this loan with conditions.
  32. June 2011 BOD Meeting: Loan request for $4M from the Lutheran organization discussed. Questions from the BOD about this. Mr X “analyzed and sees it to be viable.” Mr X “has faith in the loan.” “This recommendation was not created lighted (sic),” Mr Y “commends the confidence of the dept members, the loan has also been reviewed legally.” MSC to approve the $4M loan with advancement of funds “dependent and conditional upon our obligation to our members of CEF and our obligations to meet their requirements,” as per the original DSFM recommendation.
  33. July 2011 Letter from EnCharis to Auditor: This letter appears to be in response to a concerns from an auditor, with the following points included:
    1. EnCharis “has paid a substantial sum to the auditors to identify areas of concern or areas where the integrity of the books may be in doubt. The Board feels it is reasonable to expect a professional opinion in that regard.”
    2. No others matters were identified which might alter the routines of the audit.
    3. All areas are monitored through the monthly financial reports. There are no lines of credit available, quick assets and liabilities remain constant, and long term debt is reducing as scheduled. The bank account is the melting pot where any variance to what is reported would quickly be evident. Furthermore, the auditors have not advised of any areas where fraud is of concern.”
  34. 34. September 2011 DSFM Meeting: Discussion of EnCharis. 189 residents and 188 staff. “Are we subsidizing EnCharis with our other ministries? EnCharis is at 5.5% while the rest are at 7%.” Discussion about taking over EnCharis’ bank loan, collecting the interest. MSC to recommend that BOD move CEF and DIL funds to cover EnCharis bank loan.
  35. September 2011 BOD Meeting: Special BOD meeting regarding the $4M loan discussed in the June 2011 BOD meeting. Minutes don’t give details, but concerns seem to have arisen and options were discussed. (DSFM Minutes from September 2011 report that it wasn’t a matter a making the loan, but of accountability and transparency from that organization.) “Main point we are already liable for this loan regardless of this motion.” MSC to advance the first draw of this money.TF interview statements were that only $1M of the money was forwarded in total.
  36. September 2011 BOD Meeting: MSC to “move the appropriate funds from CEF and ABC Investments to cover the EnCharis BMO loan” as per DSFM recommendation in September 2011 meeting. (TF Note: TF interview statements were that EnCharis had been paying their two bank loans. These were thus performing loans and District took them over, putting one in DIL and one in CEF.)
  37. November 2011 BOD Meeting: As per EC recommendation, MSC to approve salary increases for the DP and EAs for 2012, and to hold Consumer Price Index increase for salary at ‘0’ for possible changes at May 2012 BOD meeting.
  38. November 2011 BOD Meeting: A change in District bylaws was made to obtain CCCC accreditation, following up discussion at the June 2011 BOD Meeting. The DP’s role on the BOD was changed from ‘voting’ to ‘advisory’ and he was considered an ex officio member of all departments and committees.
  39. 2011 Audited Financial Statements: (Provided in fall of 2012. Refer to November 2012 Report to DSFM from the Chair of theAudit Committee for more information about this statement.) New Auditors. Summary of ECHS non-consolidated financial statements are included in the District financial statement package (in the notes section). The statement notes that District has $19M to $23M in unsecured loans to EnCharis, that total principal loaned to EnCharis is now $69.7M, and that 94% of District’s total loans are to EnCharis. Amount payable to depositors on demand is now $96.7M. District began to amortize its building and equipment this year though this still departed from GAAP because the change was made prospectively. Had GAAP been followed, a decrease of $511K would have resulted. The ending fund balance for District is listed as $5.7M. As in 2008, 2009, and 2010, the auditor noted that District financial statements did not report investments at market value as per GAAP. The auditor noted that DIL statements did not follow GAAP and DIL’s end balances were thus overstated by $1.8M. The 2011 Cash Flow statement is negative $1.4M+ and loans issued increased by $3M+. Donations from congregations were less than the cash required to pay basic expenses (missions for Synod, suppliers, employees). Interest received was less than interest paid. The auditor indicates that they were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. There were $69.7M in loans receivable from EnCharis, not including accrued interest. $6M of principal payments had not been paid. Financial information was not available from EnCharis.
  40. March 2012 BOD Meeting: TF interview statements were that there was an elated mood at a BOD meeting when POP wasn’t losing hundreds of thousands of dollars. TF interview statements were that the idea was that “it’ll be okay now” and that there was reluctance to look at the money that had been lost.
  41. TF Interview Statements: TF interview statements were that POP had a break-even year in 2011, but this was just for operations and POP still couldn’t pay CEF.
  42. March 2012 BOD Meeting: The BOD completed an evaluation and planned to give the new 2012 BOD some suggestions and information:
    1. The BOD “is a ‘governing’ board with ‘working’ departments.” BOD members sit on these departments. The BOD itself sets policies and does not do the work.
    2. Suggestion to discuss strategic planning at the first new BOD meeting consider ways to keep their vision on the agenda.
    3. Suggestion that BOD education needed to “focus more on specific skills, like how to read a financial statement.”
  43. 2012 Convention Workbook, BOD Report: EAs not listed as members of BOD. EAs are listed as members of the EC. Since the previous convention, the BOD met nine times (including one  meeting with the EnCharis Board/staff) and had four conference calls to discuss timely issues. “A number of meetings were conducted by the EC of the Board to consider matters needing more immediate attention and governance. Their actions were subsequently ratified by the Board.”
  44. 2012 Convention Workbook, DSFM Report, CEF: $101M of investments. $86M “loaned to the congregations, schools and entities of ABC District.”
  45. 2012 Convention Workbook, DSFM Report, DIL: $31M of investments. $23M “loaned to District congregations for building and renovation projects.”
  46. 2012 Convention Workbook, DSFM Report: Describes recently received notification from CCCC (Canadian Council of Christian Charities) that ABC District met standards for CCCC Seal of Accountability. Among other things, ministries meeting CCCC standards:
    1. have independently audited financial statements
    2. will provide their financial statements to any person upon request
    3. have an audit review committee that reports to the governing board
    4. carry on their activities with the highest standards of integrity
    5. have a declared stewardship policy which affirms “that no person receives a commission based upon gifts received by the ministry”
  47. 2012 Convention Workbook: MSC to amend the bylaws and change the DP’s status on the BOD from voting to advisory. (TF Note: This was required to attain CCCC approval.)
  48. 2012 Convention Workbook, Synodical Report to District: Reported loans from CEF in each District after lengthy description of problems with church workers’ pension plan.
  49. 2012 Convention Workbook, Seniors Ministry Committee: “The first Seniors’ Ministry Committee was formed in May of 1999, coming out of a District Seniors’ Task Force which had looked at the feasibility of providing housing for seniors…. Until 2002 the committee was active in providing information and support to congregations… providing educational opportunities… and in developing a manual on ministry to, with and by seniors. There was a push to reactivate the committee in 2009, and efforts to re-organize began in fall of 2009.” Surveys were sent out in 2010 and the Committee met in 2011. Areas of need based on survey results were at the congregational level. Members listed.
  50. 2012 Convention Workbook, EnCharis Report: EnCharis was formed “to oversee the ministry of Seniors Housing.” POP is the primary site (Village, Manor, Harbour) and EnCharis also oversees Shepherd’s Village. POP has 150 acres with 50 left to be developed. POP Church/School are on this site but operate independently from EnCharis. “The vision for this site was to provide a place where seniors could live in one community as they age, and as a community of faith, in ministry to one another.” “POP Village is an adults-only condominium development consisting of 174 duplexes and fourplexes where over 350 people live…” “Prince of Peace Manor is “a 155 unit independent living facility where housekeeping, food, social and recreational needs are met. An LCC Chaplain provides regular Bible studies and spiritual counsel. Healthcare services for all levels of care (except Long-Term care), are also provided under Alberta Health Service regulations.” “Prince of Peace Harbour is a 32 unit facility that serves the needs of people who have been diagnosed with dementia. Residents in the Village and Manor, who have been diagnosed with dementia, have been allowed to move directly into the Harbour, which has been wonderful for the spouse to remain actively involved with their spouse without the challenges of time and travel.” “Over the next few years, it is our hope to build additional facilities that enable us to provide care…” at POP. There are “close to 190 staff who also understand the mission and ministry of EnCharis…” Shepherd’s Village in Valleyview is “an adult only condominium with some 40 duplexes and fourplexes, and a 9 unit apartment block. This operation had its beginnings in the late 1990’s with the congregation in Valleyview spearheading the initiative.” BOD and senior management team of EnCharis are listed. (TF Note: This appears to be the first report of EnCharis to convention.)
  51. May 2012 BOD: Revisiting from November 2011, consumer price increases to salary were “willingly foregone” by DP and EAs “in an effort to show leadership as stewards of mission contributions.”
  52. 52. June 2012 EnCharis Meeting: “Our lawyer is continuing efforts to pursue possibility of lawsuit with MD of Rockyview over the sewer contract.”
  53. June 2012 EnCharis Meeting: EMSS profit for year is $226K on internal statements before audit adjustments. ECHS realized a small profit of $76K after debt/interest payments of $1.1M but before additional accrued interest of $3.27M and before amortization.
    1. “In stating the obvious:
      1. The existing operation cannot generate enough profit to pay all interest.
      2. Profit from property development/sale of property in a timely fashion is imperative.”
  54. June 2012 EnCharis Meeting: “ABC District auditor made two accusations that our internally prepared financial statements were out some $74M. We were unsuccessful in explaining the statements, and subsequently turned the matter over to “another company”. “We understand the statements as prepared, are now understood to the satisfaction of the District auditor.”
  55. June 2012 EnCharis Meeting: Discussion of Shepherd’s Village Ministries. “A break-even operation which owes ECHS over $2M in development costs and accruing interest.” Ownership issues include “no ministry purpose.” Maybe residents would be interested in taking greater role of managing, creating option to move to fee simple.
  56. June 2012 EnCharis Meeting: Detailed report to EnCharis Board from the director including discussion of utilities, sewer, and water. Utilities will continue to run at a deficit “until we get more users on our system.” Increased water/sewer charges to Village residents, meaning a 65% increase over three years, which still is only getting “into the realm what they would be paying elsewhere.” County water rights likely to cost $6M to $9M. Looking at potential partners for water line in the area. Infrastructure has and will continue to be costly, meaning that additional users are imperative to sustain this. Not suggesting that they need to be the ones to build/develop alone, but consider finding partners. “Every new facility built on this site will” reduce cost to run site on a percentage basis and create a “tie in fee to offset costs and growing debt.” Master Site Plan being worked on; can’t buy water from the County without “an approved site plan and you can’t get an approved site plan unless you can answer the water question.”
  57. June 2012 EnCharis Meeting: Discussed thoughts on project development. Motion passed to “present a business case to the District as to acquisition of water rights appropriate to the quantities required for the future planning of this site.”
  58. TF Interview Statements: It was stated that the idea of walking away from POP during this time was not seen as an option and would have been seen as a failure.
  59. TF Interview Statements: TF interview statements were that when BOD members raised questions about sharing information about financial difficulties during the 2009-2012 triennium, the response was “who would ring the bell” and not wanting to create panic.

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

One thought on “Review Task Force Report – Interviews – Pages 54-67

  1. Gordon Schultz

    Again there’s a lot here so I’ll just make a few significant points.

    Item #4: Old members of the BOD seem to have convinced themselves and the new members (less than half were new) that although they had finally “realized that District was struggling financially and that this was a mess … that it could be figured out because POP was just an operations loss.” They of course had “no sense of how bad things actually were.” Except that they had been told repeatedly.

    Just more of the same old. They were ignoring (willful blindness? Maybe it will go away on its own or solve itself? Maybe God will send his angels?) the massive accruing debt of POP and its inability to service that debt and began to consider that massive unserviceable debt as an asset on the books. Then of course everything would look good. As long as the operational budget of POP could be brought into the black then everything would be okay, so things really couldn’t be that bad. As the following items show, the debt continued to grow and they just continued to ignore it push it under the table.

    Item #12: “Interest owed by EnCharis to District/CEF now totalled $60M and was indicated as an accounts receivable; that is, this asset looked like an asset on paper.”
    Item #22: “Interest owed by EnCharis to District/CEF now totalled $61.2M and was indicated as an accounts receivable; that is, that interest looked like an asset on paper.

    Item #27 suggests suggests some repayment of debt but it is only a “will be” and item #28 suggests irregularities and item #41 states that there were no repayments.

    Item #39: “There were $69.7M in loans receivable from EnCharis, not including accrued interest. $6M of principal payments had not been paid. Financial information was not available from EnCharis.”

    Item #40: “There was an elated mood at a BOD meeting when POP wasn’t losing hundreds of thousands of dollars…the idea was that ‘it’ll be okay now’ and that there was reluctance to look at the money that had been lost.”
    Item #41: “POP had a break even year in 2011, but operations and POP still couldn’t pay CEF.”

    Item #54: “ABC District ABC District auditor made two accusations that our [EnCharis] internally prepared financial statements were out some $74M. We were unsuccessful in explaining the statements…”

    Item #58: “The idea of walking away from POP during this time was not seen as an option and would have been seen as a failure.”
    Item #59: “When BOD members raised questions about sharing information about financial difficulties during the 2009-2012 triennium, the response was ‘who would ring the bell’ and not wanting to create panic.”

    Again the decision to continue to hide the truth rather than to come clean and hope that somehow something (a miracle? angels? the market?) would happen to keep their asses covered and bring “success” out of their failure/incompetence/sin.

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