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09.01.06 Latest News

OCA Gets Court Approval With Misleading Submission

With the September 3rd deadline looming for OCA, New York Deputy Attorney General Valerie Singleton has endorsed the application submitted to her by OCA’s attorney Jon Ward seeking approval to borrow $1.7 million from the Honesdale National Bank. Judge Joseph Spinola, without a court hearing, signed the application on August 18th.

The 24 pages of documents, together with 14 exhibits, filed with the Court are now on record at the Nassau County Courthouse in Mineola, New York (Index 06-13383). The documents reveal many previously unknown details about the current debts and assets of the OCA.

Sadly, and most disturbing, there are two gross misrepresentations of facts.

The Approval

First the details. In his order, Judge Spinola wrote:

“It Is Further Ordered, Adjudged, And Decreed, that the Church shall dispose of the proceeds of the loan as follows:

A. To pay off a $500,000.00 line of credit owed by the Church to Commerce Bank;

B. To repay an internal debt of the Church in the amount of $42,880.00 owed by the Central Administration of the Church to the Church’s Fellowship of Orthodox Stewards;

C. To repay an internal debt of the Church in the amount of $85,000.00 owed by the Central Administration of the Church to a master endowment fund maintained by the Church with Smith Barney.

(Editor’s note: It is not clear to what fund this money is owed. Fr. Kucynda might be referring, as in a recent memo to the Metropolitan Council, to “collateral used [for the 2003 line of credit] were Restricted Endowment Funds.  As such, they are presently managed by Kane Anderson for Smith Barney.  If we approve the loan, these funds will be transferred to the management of Wachovia Securities under the direction of the Investment Committee of the Church.” An Investment Committee is currently under discussion as part of the Best Practices reforms.)

D. To repay an internal debt of the Church in the amount of $30,000.00 owed by the Central Administration of the Church to the Church to a fund established by the Church for the purpose of providing relief to the victims of the Chechan civil war in Russia;

E. To repay an internal debt of the Church in the amount of $13,000.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of paying medical expenses for Alaskan clergy and their families;

F. To repay an internal debt of the Church in the amount of $140,000.00 owed by the Central Administration of the Church to the All-American Council of the Church for costs associated with holding the meeting of the All-American Council of the Church in Toronto, Canada, in 2005;

(Editor’s note: This is not entirely accurate as the bill has already been paid by St. Tikhon’s monastery. According to an earlier statement of Fr. Kucynda to the Metropolitan Council: “In late 2005, the bill was still due to the Sheraton Toronto for the All American Council expenses.  They were in process of bringing legal action for this amount due, therefore, St. Tikhon’s Monastery lent the funds to pay the bill immediately, knowing that they would be reimbursed by the OCA.”)

G. To pay outstanding invoices in the amount of $287,560.00 from vendors of goods and services of the Central Administration of the Church;

(Editor’s note: According to documents received by the Metropolitan Council this included debts to:

“Fr. David Brum                    $18,483.46
Fr. Kishkovsky                        $10,326.85
David Lucs                              $ 7,466.23
Fr. Alexander Vallens             $ 1,903.00
Alice Woog                              $ 1,946.43
Bishop Nikolai                         $ 2,139.04

Church of Finland                   $10,765.00
Diocese of Eastern PA            $ 1,812.14

( for Fr. Vansuch’s health insurance )
Orthodox Health Plan             $16,041.25

(Health Insurance)
St. Tikhon’s Bookstore            $ 2,116.50

East Norwich Inn                   $ 2,384.86
FOS Tours & Travel              $ 1,964.49
Glen Cove Power                   $ 1,129.65

(Grounds equipment repairs)
Guide One Insurance             $11,918.05

(liability, auto, workers comp, property insurance)
Village of Oyster Bay Cove    $24,667.32   

(2004 & 2005 community services in lieu of taxes)
J&M Auto Repair                    $ 2,740.70

(snow plowing & auto repair)

Konsen & Hostelly                    $ 5,905.43 (accountants)
La Lame                                     $ 8,735.36

(ecclesiastical fabrics makers)
Lambrides, Lamos & Mouthrop $30,205.00 (accountants)
Russin & Vecchi                         $ 3,048.37

Magellan Behavioral                  $ 4,809.00

(Personal Assistance Program)
Meenan Oil                                 $ 2,662.69
Paetec Communications             $ 1,454.58

(Long Distance telephone)
Postage by phone                       $36,183.29

(Postage meter)
Roger Printing                           $ 1,345.00
Sandwire                                    $32,145.00

(computer services)
Scarsella’s Florist                      $ 1,570.96
TSO General                             $14,220.00

(printing)

Subtotal                                    $260.089.65”

The MC document also lists an unidentified amount for “several smaller utility bills”. For the above total to reach $287,560.00, the “several smaller utility bills” must total $26,870.35. )

H. To repay an internal debt of the Church in the amount of $87,560.00 owed by the Central Administration of the Church owed by the Central Administration of the Church to a fund established by the Church for the purpose of establishing and supporting new missions;

(Editor’s note: This is the Annual Missions Appeal)

I. To repay an internal debt of the Church in the amount of $151,940.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of supporting the Church’s three (3) seminaries located in Alaska, Pennsylvania, and New York;

J. To repay an internal debt of the Church in the amount of $41,750.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of providing charitable support to parishioners and clergy of the Church;

K. To repay an internal debt of the Church in the amount of $16,600.00 owed by the Central Administration of the Church to a fund established by the Church to provide Christmas gifts to orphans in Europe (predominately Russia, Albania, Poland, and Slovakia) Mexico and Alaska; (Editor’s Note: This is the Annual Christmas Stocking Appeal)

L. To repay an internal debt of the Church in the amount of $90,590.00 owed by the Central Administration of the Church to a fund established by the Church to provide funding to New York City firehouses after 9/11;

M. To repay an internal debt of the Church in the amount of $34,640.00 owed by the Central Administration of the Church to a fund established by the Church to assist victims of the 2004 school massacre in Beslan, Russia;

N. To repay an internal debt of the Church in the amount of $13,920.00 owed by the Central Administration of the Church to a fund established by the Church to assist victims of recent hurricanes in Florida;

O. To repay an internal debt of the Church in the amount of $3,300.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of making donations to International Orthodox Christian Church Charities, a charitable organization that, among other things, donates funds for the release of hostages taken in Chechnya, Russia;

P. To repay an internal debt of the Church in the amount of $27,500.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of publishing religious educational materials for the Church;

Q. To repay an internal debt of the Church in the amount of $52,800.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of awarding scholarships to needy seminarians;

R. To repay an internal debt of the Church in the amount of $7,960.00 owed by the Central Administration of the Church to a fund established by the Church to support summer seminary work;

S. To repay an internal debt of the Church in the amount of $270.00 owed by the Central Administration of the Church to a fund established by the Church to fund special meetings of the chaplains at the meetings of the All-American Council;

T. To repay an internal debt of the Church in the amount of $25,000.00 owed by the Central Administration of the Church to a fund established by the Church for the purpose of supporting four (4) orphanages in Russia;

U. To pay the closing expenses of the mortgage loan estimated to be $47,490.00; and

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED, that a copy of this signed Order shall be served upon the New York State Attorney General, and that the New York State Attorney General shall receive written notice that the transaction described herein has been completed, if the transaction has been abandoned, or if it is still pending ninety (90) days after Court approval.”

Much Remains Unexplained

Much of what is stated here was previously disclosed –with a few exceptions. While it was known that funds had been diverted from both the Seminarian Scholarship fund and the Summer Seminary Intern program, the amount (some $60,000) is new information; as is the amount diverted from the OCA’s Chechen Relief Fund.

What is not explained is how monies owed to the IOCC, orphanages in Russia or firehouses in New York City are “internal debts of the Church”; but it certainly sounds better than diverted funds.

More importantly, what is not explained is the continuing discrepancy between the amount the OCA claims to have raised for the 9/11 appeals ( $285,000), the amount publicly distributed ($25,000) and the amount the OCA now says it owes to repay the diverted funds - some $90,000. This leaves some $175,000 of the 9/11 Funds still unaccounted for. Secondly, the OCA has never explained why and for what purposes Metropolitan Herman took out a $500,000 loan from Commerce Bank in 2003.

Appraisals Revealed

The court filed documents confirm that the Honesdale Bank loan will be secured by mortgages on the Syosset mansion as well as the Chancellor’s residence on Martin Drive. The document states:

“11. The Church proposes to borrow $1,700,000.00 from the Honesdale National Bank (“HNB”) an institutional lender with offices located at 733 Main Street, Honesdale, Pennsylvania 18431, for the purpose of consolidating certain internal and external debts of the central administrative offices of the Church and for the purpose of paying off certain creditors of the Church.

12. HNB proposes to secure the repayment of such loan by having the Church grant HNB a mortgage of the following two (2) parcels of real property owned by the Church and situated in the Town of Oyster Bay, Country of Nassau, State of New York: (i) the real property and improvements located at 6850 Northern Boulevard, Oyster Bay Cove, New York, which property is known and identified on the Nassau County Land and Tax Map as Section 25; Block 57; Lot 27 and more particularly described as Exhibit “C” annexed hereto (the “Northern Boulevard Property”); and (2) the real property and improvements located at 216 Martin Drive, Syosset, New York, which property is known and identified on the Nassau County Land and Tax Map as Section 15; Block 155; Lot 25 and more particularly described at Exhibit “D” annexed hereto (the “Martin Drive Property”).”

What the document reveals for the first time is the appraised value of the two properties:

“16. Based upon the appraisal report prepared by Robert Marks, MAI, a duly certified real estate appraiser in New York, dated July 7, 2006, a copy of which is annexed hereto as Exhibit “H”, the fair value of the Northern Boulevard Property is estimated to be between $7,850,000.00 and $9,500,000.00.

17. Additionally, based upon another appraisal report prepared by Mr. Marks, dated June 22, 2006, a copy of which report is annexed hereto as Exhibit “I”, the fair value of the Martin Drive Property is estimated to be $595,000.00.”

Two Misrepresentations & Stonewalling

The documents also reveal two troubling misrepresentations of fact. In his signed affidavit, Fr. Paul Kucynda swore under oath:

“3. The Church is currently comprised of approximately two (2) million faithful and has approximately 700 parishes, missions, monasteries, and institutions located throughout the United States, Canada, and Mexico.”

Why Fr. Kucynda felt he had to mislead the court so dramatically - inflating the membership of the OCA by roughly 100x its paying membership of 20,000; or by 50x the 40,000 members it claims in its 1st quarter 2006  budget report; or by 5x the stated membership of 400,000 recently given to the press by Syosset; or even 2x the already-exaggerated number of 1 million that was commonly used by Syosset until the scandal broke, is troubling. Some have suggested that the Court would have little problem with a church of two million members taking out a $2 million loan; a loan of $2 million for a Church of 20,000 contributing members might have raised many more questions. On the other hand, the appraisals indicate the Church clearly has the assets to back up the loan, so there was no real need to inflate for this purpose. No matter what the reason, such a blatant (and ultimately silly) prevarication under oath does not contribute to the rebuilding of trust in anything coming out of Syosset.

More serious, however, is Fr. Kucynda’s sworn statement that the Metropolitan, Chancellor, Treasurer and Secretary of the OCA are now only “ex-officio” members of the Metropolitan Council; despite the fact that the OCA Statute states that they are indeed “members”. Such a demotion was clearly needed to reduce the number of “members” of the Metropolitan Council in order to be able to claim that clear “majority” of members had voted to approve the loan. The document states:

“6. The Metropolitan Council consists of the following persons: (i) the Metropolitan, as Chairman; (ii) a Chancellor; (iii) a Secretary; (iv) a Treasurer; (v) two (2) representatives (a priest and layperson) from each diocese of the Church (there are ten (10) dioceses); and (vi) three (3) priests and three (3) laymen elected by the All-American Council. Id. Thus, when all membership positions are filled, there are 30 members of the Metropolitan Council and two (2) alternates to fill vacancies occurring among the members elected by the All-American Council.

7. Historically, the Chairman, Chancellor, Secretary and Treasurer of the Metropolitan Council have been considered ex officio members of the Metropolitan Council and do not vote on actions of the Council. In the event of a tie vote, however, the deciding vote is cast by the Metropolitan. See Verified Petition at Exhibit “B” at Article V, Section 2.”

The actual OCA Statute reads otherwise:

“The Metropolitan Council is the permanent executive body of the Church Administration Which exists for the purpose of implementing the decisions of the All-American Council and continuing its work between sessions. It shall consist of the Metropolitan as Chairman, the Chancellor, the Secretary, the Treasurer, two representatives from each diocese, one priest and one layman to be elected by the Diocesan Assemblies, three priests and three laymen elected by the All-American Council. Vacancies occurring among diocesan representatives are filled by the respective dioceses. Two alternates are to be elected by the All-American Council, one priest and one layman, to fill vacancies occurring among members elected by the All-American Council. All elected members, whether representing the several dioceses or those elected by the All-American Council, may succeed themselves in office for one term only. The Metropolitan Council may, between meetings, delegate a committee consisting of the Chancellor, Secretary, Treasurer, and two other members to meet in conjunction with the Lesser Synod of Bishops upon their invitation, to discuss normal church administrative procedures. This committee shall report back to the Metropolitan Council concerning all actions and decisions.”

There is no mention here that the Metropolitan, Chancellor, Treasurer and Secretary are only “ex-officio” members of the Metropolitan Council. Many former Council members remember the Chancellor, Treasurer and Secretary all taking part in votes. One need only point out that if it was truly as Fr. Kucynda has sworn, the OCA is that rare organization whose governing board has more than half of its steering committee (The Administrative Committee) composed of ex officio members; one of which, indeed, even appoints the two elected members to that same committee! Such a notion is simply absurd.

Worse, these documents were requested by members of the Metropolitan Council from both OCA attorney Jon Ward and acting Treasurer Fr. Paul Kucynda, yet both refused to release them. The Attorney General of New York who reviewed the application also requested Jon Ward to provide a copy of the filed application to the Council members who requested it. Yet this was not done either. It light of the misrepresentations contained in it, it is perhaps understandable why the OCA was not interested in sharing this document with its own governing body.

The Sad Fact

In short: what the new court documents reveal is that it seems little has changed in the governance of the OCA in the past eight months despite loud trumpetings of renewal. As in the recent past (the scandalous details of which are only now slowly emerging) the current administration in Syosset continues to operate with little regard to the facts or the truth; making up its own rules for its own purposes; and expecting the rest of us, from the Holy Synod to the Metropolitan Council, from Dioceses, Deaneries, Parishes down to the lay person standing or sitting in the pew, to quietly acquiese.

Whatever one believes about the way forward, the sad fact is that misrepresenting the size and governance of the Church to the Court under oath is hardly a “Best Practice”; and denying those with responsibility access, is hardly a way to engender trust.

-Mark Stokoe

 
     
 

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