I made this appeal a year ago. I’ve not posted about it until now due to personal limitations and the need to cover other stories over the past year. Aronson LLC is the firm that has audited Sovereign Grace Ministries for the last 25-30 years. They have not been willing to answer my questions or respond to the evidence I have presented demonstrating fraud, private inurement (i.e., illegal or unethical personal gain) and the illegal use of funds.
Here is my email correspondence with them. It is self-explanatory for the most part. I’ve added a few comments here and there in brackets [ ]. From my perspective, their lack of willingness to respond and provide information raises concerns about their determination to carry out the audit of Sovereign Grace Churches, Inc. with all due diligence.
From: Brent Detwiler [mailto: abrentdetwiler@gmail.com]
Sent: Thursday, April 30, 2015 8:16 AM
To: info@aronsonllc.com
Subject: Need to Investigate Sovereign Grace Ministries - Request for Contact Information
To Whom It Concerns,
Aronson LLC has audited the financial statements for Sovereign Grace Churches, Inc. (formerly Sovereign Grace Ministries) for a very long time. I served on the SGM Board of Directors from 1982-2007 and also on its Audit Committee. During those years, I worked with Craig Stevens during the annual auditing process.
Recently, I came across information of a very disconcerting nature regarding the deceitful raising of monies from SGM churches by Paul Buckley, Chairman of the Board; Mark Prater, Executive Director; and Tommy Hill, Director of Finance and Administration. I’d like to send this information to the Partner and Auditor responsible for the SGM account. Would you kindly supply me their name(s) and email address(es) so I can forward the relevant information?
Thanks for your attention to this request. Please confirm you have received this email.
Regards,
Brent Detwiler
From: Rob Eby [mailto:REby@aronsonllc.com]
Sent: Tuesday, May 05, 2015 5:35 PM
To: abrentdetwiler@gmail.com
Subject: Sovereign Grace Ministries
Dear Mr. Detwiler,
Your email implied fraud and illegal activity. Any suspected fraud and illegal activity should be reported to legal authorities. In addition, you should consider sending your concerns in writing to Mr. Jonathan Payne, Chair of the Audit Committee at jon@rhchurch.com. I will contact Mr. Payne to inform them of your possible communication.
Sincerely,
Rob Eby, CPA, CGMA
Partner
Aronson LLC
805 King Farm Boulevard, Suite 300
Rockville, MD 20850
301.231.6291 Direct Line
301.222.8238 Direct Fax
301.231.6200 Main Line
301.231.7630 Main Fax
From: Brent Detwiler [mailto: abrentdetwiler@gmail.com]
Sent: Tuesday, May 05, 2015 5:53 PM
To: Rob Eby
Subject: RE: Sovereign Grace Ministries
Dear Mr. Eby,
Thank you for your response. It is appreciated.
I have reported this to law enforcement but you also need to be made aware since your firm does the financial audit. Would you agree?
I have also sent this information to Mr. Payne. Unfortunately, there are good reasons to believe he is actively covering up the unethical and possible illegal activity and taking no action against the Chairman of the Board, Executive Director or Director of Finance and Administration. In addition to the Audit Committee, Mr. Payne is on the Board of Directors (a.k.a. Executive Committee) for Sovereign Grace Churches, Inc. He works on behalf of, and in conjunction with, the Chairman of the Board. An obvious conflict of interests exists.
Would you like more information substantiating my concerns?
Brent Detwiler
From: Brent Detwiler [mailto: abrentdetwiler@gmail.com]
Sent: Thursday, May 07, 2015 7:52 AM
To: Rob Eby
Subject: RE: Sovereign Grace Ministries
Dear Mr. Eby,
Would you kindly supply a response to my questions below?
Thanks,
Brent Detwiler
From: Brent Detwiler [mailto: abrentdetwiler@gmail.com]
Sent: Wednesday, May 13, 2015 4:52 PM
To: Jeffery Capron
Cc: Rob Eby; Craig Stevens
Subject: Interest in Evidence & Willingness to Investigate
Dear Mr. Capron
I am writing you since I’ve not heard back from Mr. Eby (see emails below) regarding an interest in receiving “information of a very disconcerting nature regarding the deceitful raising of monies from SGM churches” by top executives.
In your Independent Auditor’s Report for FY 2012-2013 you say in part,
“Management [Sovereign Grace Ministries, Inc.] is responsible for the … fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. … Our [Aronson LLC] responsibility is to express an opinion on these financial statements based on our audits. … An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.”
As noted, “the auditor’s judgment” has a bearing on the “procedures selected” in order “to obtain audit evidence.” With this in mind, I hope you have been following the well documented ethical demise of Sovereign Grace Ministries over the past 10-15 years. It should inform how you do audits in the future and raise concerns about information SGM has provided you for past audits.
In this regard, I hope Aronson LLC is committed to due diligence in the obtaining and assessing all available evidence that may demonstrate unethical, fraudulent or illegal activity by the officers, leaders or employees of Sovereign Grace Churches, Inc. I am willing to assemble the evidence in my possession as a service to your company and for the public good. Please let me know if you are interested in the evidence and willing to do an investigation in order to determine if there has been “material misstatement…whether due to fraud or error.”
Sincerely,
Brent Detwiler
From: Brent Detwiler [mailto:abrentdetwiler@gmail.com]
Sent: Monday, August 31, 2015 8:59 AM
To: Jeffery Capron <JCapron@aronsonllc.com>
Cc: Rob Eby <REby@aronsonllc.com>; Craig Stevens <CStevens@aronsonllc.com>; Jon Payne <jpayne@sovgracechurch.com>
Subject: Interest in Evidence & Willingness to Investigate
Mr. Capon,
In my last correspondence with you on May 13, I asked the following. “Please let me know if you are interested in the evidence and willing to do an investigation in order to determine if there has been ‘material misstatement…whether due to fraud or error.’” You never responded to my questions.
Sovereign Grace Churches closes it books today for the fiscal year 2014-2015. Your audit follows. As I’ve previously stated, “I hope Aronson LLC is committed to due diligence in the obtaining and assessing all available evidence that may demonstrate unethical, fraudulent or illegal activity by the officers, leaders or employees of Sovereign Grace Churches, Inc.” That is your responsibility as its auditor as I understand it.
To that end, I am providing the attached evidence regarding the “hush fund” set up by Mark Prater (Executive Director), Paul Buckley (Chairman of the Board) and Tommy Hill (Director of Administration & Finance) to make your job easier. You should also read Hush Fund Set Up by Top SGM Leaders to Meet the Demands of a SGM Pastor Whose Son Was Sexually Abused.
I trust you will address this serious matter in your management letter and notes that accompany the audit when it is completed later this year. You may also find it necessary to inform the Internal Revenue Service of wrong doing once you have done your research and written up your findings.
Sincerely,
Brent Detwiler
Attached: Aronson – Evidence Regarding Use of Hush Fund
[Comment: Nothing was mentioned in the management letter or notes regarding the “hush fund” set up to prevent the sexually abused boy and his family from jointing the lawsuit against C.J. Mahaney and Sovereign Grace Ministries.]
From: Jeffery Capron [mailto: JCapron@aronsonllc.com]
Sent: Wednesday, September 9, 2015 9:07 AM
To: Brent Detwiler abrentdetwiler@gmail.com
Cc: Rob Eby <REby@aronsonllc.com>; Craig Stevens <CStevens@aronsonllc.com>; Jon Payne jpayne@sovgracechurch.com
Subject: RE: Interest in Evidence & Willingness to Investigate
Mr. Detwiler – I appreciate that you wish to pursue your points of view, but I ask that you consider that our firm is not in your employ and has strict professional guidelines that we have followed and continue to follow.
Please be assured that to the extent that they are relevant, we will take into account the comments you have provided in any audit activities we undertake. We are committed to the scope of our audit engagement.
I have previously provided you with some suggested contacts for you to approach with your concerns. I am happy to do so again if that is helpful to you. Thank you.
Jeffery P. Capron, CPA
Managing Partner
Aronson LLC
301.231.6273 Direct Line
301.222.8297 Direct Fax
From: Brent Detwiler [mailto:abrentdetwiler@gmail.com]
Sent: Wednesday, December 9, 2015 8:36 AM
To: Jeffery Capron JCapron@aronsonllc.com
Cc: Rob Eby <REby@aronsonllc.com>; Craig Stevens <CStevens@aronsonllc.com>; Jon Payne <jpayne@sovgracechurch.com>; jon@rhchurch.com
Subject: RE: Interest in Evidence & Willingness to Investigate
Hello Mr. Capron,
In your last email to me dated September 9, 2015, you said,
“I have previously provided you with some suggested contacts for you to approach with your concerns. I am happy to do so again if that is helpful to you. Thank you.”
In fact, that is not the case. You can review our correspondence for verification. On one occasion, Mr. Eby said,
“Your email implied fraud and illegal activity. Any suspected fraud and illegal activity should be reported to legal authorities. In addition, you should consider sending your concerns in writing to Mr. Jonathan Payne, Chair of the Audit Committee at jon@rhchurch.com. I will contact Mr. Payne to inform them of your possible communication.” (Rob Eby, May 5, 2015)
As you know, I had already sent my concerns to Mr. Payne before Mr. Eby suggested the idea. Here is what I wrote Mr. Eby in reply.
“I have also sent this information to Mr. Payne. Unfortunately, there are good reasons to believe he is actively covering up the unethical and possible illegal activity and taking no action against the Chairman of the Board, Executive Director or Director of Finance and Administration. In addition to the Audit Committee, Mr. Payne is on the Board of Directors (a.k.a. Executive Committee) for Sovereign Grace Churches, Inc. He works on behalf of, and in conjunction with, the Chairman of the Board. An obvious conflict of interests exists.” (Brent Detwiler, May 5, 2015)
In any case, I have not received suggested contacts from you and only a vague recommendation from Mr. Eby to contact “legal authorities.”
Therefore, I would appreciate your promised help in providing contacts to approach with my concerns. Please be specific. For instance, please provide names and phone numbers of specific individuals in law enforcement or in the IRS that you know, or know of, that I can contact to make sure Sovereign Grace Churches, Inc. is investigated, not only by you, but by other agencies with proper jurisdiction. I assume such contacts are readily accessible to you given the nature and scope of work done by Aronson LLC.
Thanks for your assistance.
Brent Detwiler
[Comment: Mr. Capon, the Managing Partner for Aronson LLC, never provided the contact information he promised.]
From: Brent Detwiler [mailto:abrentdetwiler@gmail.com]
Sent: Monday, December 14, 2015 5:40 PM
To: Jeffery Capron JCapron@aronsonllc.com
Subject: Follow Up on Contact Information
Importance: High
Mr. Capron,
Would you please send me the contact information this week if all at possible? I’d like to approach them with my concerns after Christmas but before New Year’s.
Please feel free to have your secretary forward me that information. If I have questions, I’ll get back to you.
I really do appreciate your help. These are important matters. Sovereign Grace cannot be allowed to deceitfully solicit monies that come from donors in order to silence a victim of sexual abuse and keep them from joining a lawsuit.
Brent
[Comment: I did not hear back from Mr. Capon so I wrote him again and broaden my presentation of evidence. Specifically, I supplied him with evidence regarding private inurement. That is, unethical and/or illegal ways in which C.J. Mahaney, Bob Kauflin, Marty Machowski, and Gene Emerson were benefitting financially from the ministry. I told him I had more information that I’d like to share with him. He was not interested because he never got back to me.]
From: Brent Detwiler [mailto:abrentdetwiler@gmail.com]
Sent: Tuesday, December 22, 2015 2:30 PM
To: Jeffery Capron JCapron@aronsonllc.com
Cc: Rob Eby <REby@aronsonllc.com>; Craig Stevens CStevens@aronsonllc.com
Subject: Private Inurement
Mr. Capron,
There is one other issue I’d like to bring to your attention. It concerns private inurement by parties related to Sovereign Grace Churches, Incorporated (SGCI). I addressed this issue when I was on the SGM Board of Directors and worked on policies to hedge against it. Those policies were approved but I don’t think C.J. Mahaney and others like him followed them.
For instance, people were writing or editing books or songs on company time when it wasn’t part of their job description, then getting the royalties. For example, C.J. used Kevin Meath to edit his books on company time according to my understanding. I don’t think C.J. paid for Kevin’s services though he profited from them. These incidents, and ones like them, should be investigated by your firm. All of C.J.’s books (and his wife, Carolyn’s) are promoted and sold by SGCI. He should not profit from their sale if they were written on company time which is what I observed contrary to our policy. I am glad to talk further with you about this matter.
As you know it is not enough to have policies. C.J. had policies but did not follow them. For example, our vacation policy. He deeply resented being held accountability for the excess number of days he took off. He also asked us to pay for a plane ticket for his son, Chad. See The Lesser to Greater Argument: A Classic Example of C.J. Mahaney’s Abusive Leadership in evidence thereof.
In stark contrast, Mark Altrogge wrote songs on church time but immediately changed his practices when the problem was pointed out, and wrote songs only on evenings and weekends from then on. Others not wanting to change their practice, resented Mark according to sources.
That’s why we have auditing firms like Aronson LLC. As part of your audit, you should make sure sound policies are in place and actually being followed. The latter is crucial. Let me illustrate from the present.
Bob Kauflin is employed by Sovereign Grace Churches, Inc. as the Director of Sovereign Grace Music. Here is his job description.
“As the Director of Sovereign Grace Music, Bob works with our Regional Leaders to serve, develop, and recruit individuals in Sovereign Grace churches who lead and write songs for corporate worship. He also oversees the production of our albums. Bob is the author of Worship Matters and True Worshipers, both published by Crossway. You can follow Bob on Twitter or check out his blog.”
As one of six directors on the powerful Leadership Team, Kauflin has other responsibilities that far exceed his involvement with music. See pages 67-70 in the Book of Church Order (Fourth Edition) for his full job description.
Here is an excerpt.
“Within Sovereign Grace, the Leadership Team constitutes men that the churches of Sovereign Grace recognize and designate for specialized tasks, such as leadership in mission, pastoral training, and administrative functions for the wider ecclesiastical body. … To facilitate and lead as a team in executing the central aspects of our mission according to the values of Sovereign Grace under the oversight of the Executive Committee in partnership with our churches, their elders, and the Regional Leaders.” (BCO, p. 67)
In this role, he is surrounded by friends who cannot be trusted due to a manifest lack of integrity. For example, Mark Prater, the Executive Director; and Tommy Hill, the Director of Finance & Administration. Both of these men worked to set up the “hush fund” in order to silence a victim of sexual abuse. I’ve written you about this at length. As such, I have little confidence the Leadership Team will follow the law as it pertains to 501(c)(3) Non-Profits which prohibits private inurement (personal gain or enrichment) by employees or related parties.
Let me explain further. Bob appears to benefit financially from the promotion of his books, songs, productions, conferences and concerts on the Sovereign Grace website. That’s assuming he receives royalties and/or honoraria for work done on Sovereign Grace time in addition to his salary. If so, this presents a serious conflict of interest and constitutes private inurement in my opinion.
For example, did Bob write his two books, Worship Matters and True Worshippers, after work hours or during work hours? Did he use Sovereign Grace staff? Is there a verifiable written log for when and how he wrote the books that has been reviewed by your firm?
Obviously, if written on Sovereign Grace time, he should receive no book royalties. It was part of his job to produce that kind of material. If written on his own time, then royalties are fine, but he should not be influencing SGCI in any way in order to have his books promoted on the Sovereign Grace website since he benefits from their sale.
Here are a couple of examples of promotion. Bryan DeWire worked closely with Bob and was the Communications Manager for SGCI. He promoted the sale of Bob’s books. Did Bob influence him to this end? You need to found out.
15 Gems from Worship Matters
October 23, 2014 by Bryan DeWire
Graham Harrison on Seeking God’s Presence
June 6, 2015 by Bryan DeWire
The same is true as it pertains to music royalties and honoraria. In fact, I was prompted to write you about these matters after reading the post, “Prepare Him Room Album Tour” by Marty Machowski on the Sovereign Grace blog a week ago.
Marty and Bob are close friends. They promote each other and each other’s products. Marty is also closely tied to Mark Prater and other top leaders in SGCI. Three of Marty’s books are promoted on the Sovereign Grace website and linked to Amazon.com for sale. So are Bob’s.
Both of these men have tremendous access to the public via SGCI in order to promote and sell their products. They have clearly taken advantage of that access in order to sell their materials.
See for example,
Prepare Him Room Q&A
October 14, 2014 by Bryan DeWire
See especially,
Prepare Him Room Album Tour
December 9, 2015 by Marty Machowski
In this latest example, you should investigate the arrangement between Marty and Bob and Mark in promoting the tour. For example, here is what Marty said on the Sovereign Grace blog that featured his post on December 9.
“I can still remember talking to Bob about the possibility of writing a new Christmas album to go along with my Prepare Him Room family devotional and curriculum. The thought of partnering with Bob on a musical project excited me, but the final product exceeded my greatest expectations.”
To be certain, all of this is a money making venture. Prepare Him Room links to New Growth Press so the reader can buy Marty’s book. This is wrong and a clear case of private inurnment from my perspective – he is using the non-profit (SGCI) to profit as an insider with connections.
I’d also recommend you read, Sex Abuse Victim Asserts Prominent SGM Pastor Marty Machowski “Threw My Children & I to the Wolves” from October 31, 2014. It is relevant because it pertains to his legal and ethical integrity.
You can also go to the link for Sovereign Grace Music and find the following promotion.
“This album accompanies Prepare Him Room: Celebrating the Birth of Jesus Family Devotional, a hardcover book that includes the lyrics for each song. It can also be used with the four-week Sunday school Advent curriculum, Prepare Him Room: Celebrating the Birth of Jesus in the Classroom, geared to children ages 3-12. Both resources by Marty Machowski are designed to build gospel hope and enduring theological depth into your celebration of Christmas.”
In the same vein, you had to buy tickets in order to attend the Prepare Him Room concerts last week, where you could also buy Marty’s Prepare Him Room book and the Prepare Him Room album on which Bob has three songs. The question is, who pocketed the proceeds from ticket sales, product sales, etc.? Does any of the profit kick back to Bob or Marty?
Let’s be clear. Bob and Marty are being allowed to promote their products via SGCI. That’s fine provided neither of them receive royalties generated by sales; and in Bob’s case, he receives no compensation in the form of bonuses or honoraria for conducting the Christmas concerts in multiple Sovereign Grace churches on behalf of Sovereign Grace Music.
I am also concerned for the fact that two of the six vocalists on the Prepare Him Room album are Bob’s children, Devon and McKenzie. I presume they were hired and paid a recording fee. I assume they were also paid a performance fee for the concerts last week. It’s possible they are the best qualified singers/musicians available to SGCI but you should determine if objective criteria were used in their selection. Bob should have had no say or influence in those decisions. Do you know if that was the case?
In the same regard, you should ask Bob about his personal blog and website which is separate from the SGCI blog and website. This is important. It is called “Worship Matters: Resources for Music, Worship and More from Bob Kauflin.” Here is the link. http://www.worshipmatters.com/. His SGCI job description refers to the blog as “his blog.” That implies he is the owner or proprietor. Here are some important questions that need to be answered.
Does Bob write and maintain this site solely on his own time or does he do it on SGCI time and with the help of SGCI staff or staff from Sovereign Grace Church of Louisville (SGCL)? Similarly, did Bob or SGCI pay the company, Woo Themes, to create and design the site? Further, who pays WordPress for powering the site? As auditors, you well-know these are crucial questions. Simply put, has Bob paid all the expenses related to the site, does he write and maintain the site on his own time, and does he do this without assistance from SGCI and SGCL staff?
There is no question Bob uses Worship Matters to sell his books and songs; and promote his productions, conferences and concerts. That is fine provided he wrote all his books and songs on personal time and does Worship Matters on personal time (which is no small thing – check out the site). Under that arrangement, he is entitled to make money off the site for products he created on his own time. It a personal business run on personal time. I am concerned, however, that is not the case. For instance, he says,
“From 1985 until the present I’ve been involved with the music of Sovereign Grace Ministries as a songwriter, producer, arranger, and executive producer.”
See http://www.worshipmatters.com/my-music/
Therefore, you must determine if Worship Matters is a for-profit company or a non-profit 501(c)(3) organization. And if a non-profit, is it part of SGCI or separate from SGCI? That is easy to determine. Just ask Bob for his Articles of Incorporation and by-laws.
It is also fine for Bob to promote his productions, conferences and concerts provided he does not receive double compensation in the form of “bonuses” or honoraria for doing work that is part of his job description as Director of Sovereign Grace Music and for which he is already compensated in the form of a salary. This is easy to determine. Just ask Bob for his tax returns and a listing of all bonuses and honoraria he has been paid.
Specifically, you should find out if Bob receives honoraria for leading the Sovereign Grace WorshipGod conferences? I hope not. That would be against the law. Leading these conferences is part of his normal job description (see below) as Director of Sovereign Grace Music. He should not be paid twice. Do you know if he is paid honoraria for these events?
“Thanks for stopping by. I currently serve as the Director of Sovereign Grace Music for Sovereign Grace Churches. In that role I seek to equip pastors and musicians in the theology and practice of congregational worship, and oversee Sovereign Grace Music albums.”
See http://www.worshipmatters.com/my-music/
One other point. Bob says the following about the royalty arrangement with SGCI on his website.
“Full Disclosure: If clicking through an item on my blog takes you to Amazon.com and you end up purchasing something, a small percentage of that sale will go to Sovereign Grace Churches. I direct people to vendors other than Amazon as well.”
See http://www.worshipmatters.com/about/
Bob added this disclosure because people did not want to buy Bob’s books if proceeds went to Sovereign Grace Churches, Inc. given the conspiracy to commit and cover up child sex abuse by some of its leaders, churches and members.
This statement shows a formal agreement between Bob and SGCI regarding the payment of book royalties to SGCI. It says nothing about book royalties paid to Bob though I think that can be assumed.
Why? Because no royalties would be paid to SGCI if Bob wrote the books on his own time. Therefore, I assume he wrote the books on SGCI time. If that is the case, he should not be paid royalties. All proceeds should go to SGCI. And yet, I’d bet Bob also receives royalties.
Bob doesn’t say anything about the royalty agreement for music on his website. His “full disclosure” is not a full disclosure. That is, how much goes to SGCI and how much goes to him. Music is purchased directly from SGCI – not via other venders like Amazon.com. That means SGCI and/or Bob make more money because the royalty rate is higher.
Bob is a wealthy individual. He did not acquire this wealth on a pastor’s salary or a worship leader’s salary. It came from other sources. For instance, Bob worked for me from 1991-1997. During that time, he made roughly twice as much money from music royalties as he did from his pastor’s salary. During that time frame, he wrote songs for the Christian group, GLAD, on his own time. That was our arrangement. It was clean. It was legal.
[Comment: Here is a video of the opulent house Bob bought when he moved to Louisville in 2012.]
In 1997, Bob started working for C.J. Mahaney. I just want to make sure he has acquired all his wealth since then by legal means. I also want to make sure you are informed so you can purposely audit Sovereign Grace Churches, Inc. as a non-profit entity for private inurement as it pertains to past and present employees like C.J. and Bob. This is your legal and fiduciary responsibility especially when legitimate concerns are brought to your attention.
In this regard, you should talk to Pat Ennis, Bo Lotinksy, Mark Altrogge, Kevin Meath Tawn O’Connor and others about the private inurement they may have observed while employees of Sovereign Grace Ministries. Let me know if you need their contact information. Your auditor, Craig Stevens, knows Pat and Bo well. They were both Executive Directors. He likely knows Mark, Kevin and Tawn too. I have reason to believe these individuals, and others, possess information helpful to you in carrying out your audit with due diligence in the probable discovery of private inurement – past and present.
Sovereign Grace Ministries used to be open and honest about financial matters. That definitively changed in July 2011 when C.J. Mahaney and Tommy Hill decided to cover up C.J.’s compensation and benefits contrary to our long term practice. See The Need for an Independent Board of Directors & Financial Accountability in evidence thereof. As I’ve said, and proved on countless occasions, the leaders of Sovereign Grace Churches, Inc. cannot be trusted.
I’d also like to know if Bob is paid a bonus, honoraria, stipend or salary by Sovereign Grace Church of Louisville for worship leading and pastoring. Here is his job description on the church website.
“Bob oversees the music of Sovereign Grace Church of Louisville and helps provide pastoral care. His full time job is serving as the Director of Sovereign Grace Music.”
See http://sgclouisville.org/sovereign-grace-church-louisville-our-pastors
This paragraph implies he is not paid for his church work since his “full time job” is with SCGI. I think this is likely a false impression. In all probability, Bob is paid monies by the church in some form. That is fine provided the compensation is reasonable. What isn’t fine, is giving the public the opposite impression if he is in fact compensated.
One thing is certain. Bob has a lot of different revenue streams. It is up to you to determine if they are in keeping with IRS regulations for non-profits.
I’d also like to bring to your attention another clear example of private inurement from my vantage point. It concerns Gene Emerson. He was the senior pastor of Kingsway Community Church until recently. Gene was arrested in May and sentenced in July for soliciting a prostitute who was a female undercover cop. See the following.
Gene Emerson, Former Regional Leader for SGM, Found Guilty for Solicitation of Prostitution (August 22, 2015)
Gene Emerson’s Summons, Sentence & Court Order for HIV Testing (August 29, 2015)
Gene was also a member of C.J. Mahaney’s apostolic team (i.e. the Leadership Team of Sovereign Grace Ministries) from 2008-2011. During those years, he acted with great treachery and carried out evil assignments given him by C.J.
See An Open Letter to the Sovereign Grace National Council of Elders Regarding Gene Emerson (October 27, 2015) in evidence thereof.
In 2005, Kingsway Community Church moved into their own facility. In 2007, people began to leave the church. Gene got C.J. (who was President & Chairman) and the Board to loan the church 100k in 2007 and 60k plus in 2008 to help cover the mortgage. That was unprecedented.
People continued to leave the church at an accelerated rate from 2009-2011. During those years, Gene got the Board (i.e., C.J., Dave Harvey, Joshua Harris, & Jeff Purswell) to forgive 30k in 2009, 20k in 2010, and 10k in 2011. More people left thereafter. Once again, Gene got the Board to forgive an additional 10k in 2013.
Your firm documents all these transactions and their favorable terms (i.e., interest rates and maturity dates) in your fiscal year 2013-2014 audit.
Sovereign Grace Churches, Inc.
Audited Financial Statements and Supplementary Information
Years Ended August 31, 2014 and 2013
Notes to Financial Statements
Page 16
Notes receivable consisted of the following at August 31 [2014]:
Note from a member church dated September 2007, in the original amount of $100,000 with an original maturity date of August 2017. Interest accrued at 5%. An addendum dated October 2008 increased the balance to $159,826 with interest accrued at 2.40%. A second addendum dated September 2009 extended the maturity date to August 2019 with interest accrued at 3.68%. A subsequent addendum dated September 2013 reduced the interest rate to 3% and restated the terms as 44 months [April 2017]. Sovereign Grace Churches, Inc. forgave $30,000 of the note receivable in August 2009, $20,000 in February 2010, $10,000 in August 2011, and $10,000 in August 2013. The note is unsecured.
No domestic church ever received this kind of lavish and favorable treatment in the form of multiple loans, generous terms constantly re-negotiated and the repeated forgiveness of large sums of debt. Churches were required to pay back their loans in full in most every situation. Check your audited financial statements.
In my opinion, C.J., Dave, Joshua and Jeff rewarded Gene for his universal defense of SGM (in particular C.J.) and diabolical attack on me. He was a pit bull for SGM wherever he went. Not all pastors were treated the same. Those C.J. liked, received financial favors. Gene was a prime example.
By the way, why don’t you reveal the names of the churches that receive loans, etc. in your audited financial statement? That would mitigate against private inurnment and the favoring of pastors with status like Gene Emerson. Everyone reading the audit would know who is getting money from SGCI (and not getting money by deduction). I think that information should be divulged to donors.
Finally, let me bring to your attention an example of fraud. It is documented in SGM Uses “Strategic Global Projects” to Fraudulently Raise Money. Here is an excerpt but you should read the article in entirety.
SGM Uses “Strategy Global Project” to Fraudulently Raise Money
July 4, 2014
Last year, SGM did not attempt to raise funds from individuals so great the loss of trust. This year they are back at it. In order to do this they produced a fund raising brochure called “Hope Abounding.”
The brochure highlights “Strategic Global Projects” in Cuba, the Philippines, South Korea, Zambia and Mexico. Far more time and attention is given to these five projects as a motivation for giving than anything else in the brochure! It’s a fundraising gimmick.
Mark Prater, Tommy Hill, et al. know they can raise far more money by drawing attention to World Missions than Jeff Purswell teaching nine students in the Pastors College or Bob Kauflin making another album. But this is a fraudulent way to raise money.
What Prater and Hill don’t tell prospective donors is the budget for World Missions has been cut from $973,285 in 2012 to $364,553 in 2013 to $173,100 in 2014. That’s a reduction of $800,185 over two years. In other words, SGM is investing next to nothing in World Missions this budget year and yet World Missions is hyped in the fund raising brochure. It’s a scam. …
If Mark Prater, the Executive Committee, the national Council of Elders, and the Leadership Team were honest they would have made it clear in “Hope Abounding” that SGM is hardly giving any money to World Missions in 2014! Therefore, don’t give to SGM with that misconception in mind! Instead, give to SGM in order to the cover the estimated budget deficit of $308,000 for our practically defunct Pastors College!
One last point. It is a marketing ploy to refer to these international involvements as “Strategic Global Projects.” It they were strategic global projects, Sovereign Grace Ministries would be investing strategic global money!
Instead, Cuba, the Philippines, South Korea, Zambia and Mexico are being used to raise “global money” to fund SGM in the United States. These five nations will receive next to nothing in aid or assistance.
Mr. Capon, your firm has a lot of work to do. Sovereign Grace Churches, Inc. is no longer trustworthy. It hasn’t been since 2004. This year you must do a far more extensive audit given the evidence I have provided you. Dick Wolohan was our initial Comptroller from 1983-1995. Craig Stevens’ knew Dick well. Back then Dick advised us (i.e., the SGM Board) to change auditors every 3-5 years in order maintain independence and make sure audits were done with due diligence. In fact, that is one of the reasons we switched to Aronson LLC if I remember correctly. That was 25-30 years ago.
In pointing this out, I am not implying or impugning any legal guilt. I point it out because human nature gravitates towards ease. It is natural to do a quick and clean audit using standard procedures with long standing clients you like and trust. I’d encourage you to do this year’s audit as though your first one and with a strong dose of suspicion. There is a lot for you to uncover from the past and present.
In closing, would you please answer the following simple questions for me?
1. Does Sovereign Grace Churches, Inc. have written policies to prevent private inurement in relation to hiring practices, salary setting, the giving of gifts, the awarding of bonuses, the payment of honoraria and royalties, the creation of products on personal time versus non-profit company time, and the promotion of products that financially benefit employees, related parties, or well-connected leaders in the denomination?
2. If so, are these policies available to donors and where can they be viewed?
3. Given the evidence I’ve already provided, will you cite the Board of Directors in your audit for setting up a “hush fund” with monies acquired under false pretense from pastors and churches?
4. Given the information above, will you investigate the Board of Directors for fraudulently raising monies from donors in the “Hope Abounding” mission’s presentation?
5. Given the information above, will you investigate the Board of Directors for apparently rewarding Gene Emerson with financial favors?
6. Given the information above, will you investigate individuals like C.J. Mahaney, Bob Kauflin and Marty Machowski to make sure they have not, and are not, benefitting from illegal or unscrupulous means contrary to the law for non-profit charitable organizations or churches?
7. Finally, will you provide the contact information you promised me so a wider investigation of these issues can be done?
I look forward to your response and would welcome the opportunity to talk with you via phone about these matters. You can reach me at 704-497-7986.
Sincerely,
Brent Detwiler
[Comment: Mr. Capon did not answer any of these questions. Nor did he express any interest in talking with me about additional evidence and information in my possession. I never heard from him and therefore ended my attempts to help his firm understand the serious financial issues surrounding SGCI.]
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