Tens of Thousands in Cash Missing
The official minutes of the extraordinary Administrative Committee meeting, confirm that "tens of thousands
of dollars" from the general fund, as well as from other designated accounts, are missing. The minutes were released to members of the Metropolitan Council this past week.
At the four hour "emergency" meeting held March 16, 2006 in Syosset, the Metropolitan announced that the Chancellor, Fr. Robert Kondratick had been summarily dismissed that morning, his voluntary resignation having been sought and refused "a number of times" during 2005. The Metropolitan also announced that given allegations of financial misconduct the ongoing audits would be widened and that an investigation into the financial administration of the OCA was being conducted by the law firm of Proskauer Rose LLP
"to prepare for anticipated possible regulatory investigations or litigations arising out of the allegations."
Members of the Administrative Committee present included Metropolitan Herman, chairman, OCA Acting Treasurer Fr. Paul Kucynda, secretary, Fr. Gregory Safchuk, Fr. John Onufrey, Ms. Alice Woog and Mr. Richard Kornafel. Also present at the meeting were Mr. Stephen Lamos of the accounting firm Lambrides, Lamos and Moulthrop LLP, and two attorneys from the legal firm of Proskauer Rose LLP, Ms. Sara Gold and Ms. Celia Passaro.
The Auditor's Findings
What the minutes reveal of the financial administration at Syosset are shocking:
"Mr. Lamos spoke of the Year 2004 Independent Audit and issues related to it. In order to establish the opening balances on all 2004 accounts and on restricted accounts in particular he had to research as far back as 1998 and 1999. Using the balances available from the audits and the compilations reports, Mr. Lamos was able to establish the opening balances for 2004. Thus far, he found that during that period, tens of thousands of dollars were withdrawn in cash from the general fund and also from designated accounts for distribution in other countries and domestically. He especially questioned the domestic distribution of funds in cash. There is no documentation for these distributions."
In a related development, OCA News has learned from other sources that these "undocumented" cash withdrawals were usually in sums just below $10,000. This pattern is revealing because under federal law, banks must fill out reports of all cash transactions involving $10,000 or more. The Internal Revenue Service and other law enforcement agencies regularly review such reports of suspicious transactions. Furthermore, it is illegal to structure financial transactions to evade the $10,000 reporting requirement.
The Metropolitan has publicly announced that the full 2004 & 2005 audits will be made public after review
by the Synod and Metropolitan Council.
New Details of the Chancellor's Dismissal
No less startling is the disclosure of a five-year battle of wills between the Metropolitan and his former Chancellor, resulting in the latter's abrupt termination:
"(The Metropolitan) reported that when he was elected Primate of the Orthodox Church in America in 2001, he appointed Father Kondratick as his Chancellor.
He anticipated that Father Kondratick's activity as Chancellor would comply with his directives and not function with the degree of autonomy that was permitted by his predecessor. Unfortunately, the Chancellor on numerous occasions did not comply with the Metropolitan's requests. In some instances, his actions directly contradicted the directives of the Metropolitan. During 2005, the Metropolitan asked for Father Kondratick's resignation a number of times. This was refused.
A letter dated March 15, 2006 from Father Kondratick's attorney, Harry H. Kutner, Jr., was hand delivered to the Metropolitan's office. It was marked 'PERSONAL & CONFIDENTIAL - NOT TO BE RELEASED'. Its content was filled with false accusations and other statements intended to intimidate the Metropolitan.
The Metropolitan's response to Mr. Kutner's letter was offered in the morning of March 16, 2006, when he presented a letter of termination to Father Kondratick in the presence of Archpriest Paul Kucynda and Mr. Robert Kornafel.
Metropolitan Herman asked Mr. Kornafel to be present when he presented Father Kondratick with his letter of termination because of Mr. Kornafel's business experience particularly in relationship to personnel issues."
Proskauer Rose Explains Role
While the financial and administrative turmoil in Syosset to some may seem to be of no immediate consequence to parish life in the OCA, the statements of Proskauer Rose at the Administrative Committee meeting make clear that that the investigation affects each and every member of the OCA:
"Ms. Gold explained that the investigation was being conducted to prepare for anticipated possible regulatory investigations or litigations arising out of the allegations. Since the Church is a not-for-profit legal organization with a 501.C.3 tax exempt status, the Church must act responsibly within the United States of America and conform to the required legal expectations that come with this status.
When allegations are made, the Church must be in a position to show that the allegations have been responsibly investigated. The Church would be vulnerable to a number of government agencies if it does not conduct this investigation in a timely manner. For these reasons, there is no other option than to do an internal investigation with the guidance of appropriate legal counsel.
Allegations have been made by members of the Church concerning the management of Church finances. As such, the Church is obligated to respond to the allegations so as not to risk losing its present status as a not-for-profit legal organization. Since most of the dioceses, institutions and parishes of The Orthodox Church in America enjoy their federal tax exempt status via the umbrella tax exemption of The Orthodox Church in America, the loss of this status could have far reaching implications."
In addition to the Metropolitan's decisions to terminate the Chancellor, widen the audit and engage Proskauer Rose, the Administrative Committee made two other major decisions:
1). In view of the growing debt of the OCA, now estimated at close to $2 million, the committee agreed: "To authorize the (Acting) Treasurer to continue his attempts to secure a loan to cover the outstanding debts and to restore the restricted funds to their appropriate levels."
(Read about the diversion of "restricted funds" here)
2) As was proposed earlier by the Acting Treasurer, the Administrative Committee agreed: "To circulate this information to all members of the Metropolitan Council and then follow up with a conference call to give them the opportunity support or reject the proposal."
(Read the earlier proposal here)
The Committee agreed to give "serious consideration to the suggestion of Mr. Lamos that the Martin Drive property be sold at the appropriate time with the proceeds used to repay a part of the loan". The Martin Drive property is the church-owned residence of Fr. Kondratick. Fr. Kondratick has been informed that he must vacate the premises by June1st.
The Committee meeting concluded with promises by the Metropolitan that "affirmed his desire to learn from the past, correct our mistakes and make serious plans to move forward." Significantly, the Primate rejected the secretive, highly centralized administrative pattern of the OCA's recent past by affirming that: "Every effort will be made to be inclusive of all members of the Church as we move forward."
- Mark Stokoe
(Read the official minutes of the Extraordinary Administrative Committee Meeting in full here)