Shortly before cutting ties with Gospel for Asia last October, the Evangelical Council for Financial Accountability warned the organization's leader, K.P. Yohannan, about a list of concerns it has with its financial accounting, including the withholding of hundreds of millions of donor dollars earmarked for "urgent" work overseas.
The warning is presented in a nine-page letter submitted as evidence in a class action lawsuit filed Monday against GFA, one of the largest missions agencies based in the U.S., alleging that the organization and several affiliates fraudulently solicited hundreds of millions of dollars in charitable donations, and misdirected the money into Yohannan's personal empire.
In the letter dated Sept. 2, 2015, exactly one month before the ECFA cut ties with GFA, 16 key concerns about the way GFA conducts its financial affairs are highlighted.
Among the concerns are the presence of excessive cash balances held in partner field accounts in India and the use of trip participants to move hundreds of thousands of dollars out of the country that were not reported to U.S. authorities.
Concern was also raised about the use of nearly $20 million in donations earmarked for foreign missions for the construction of GFA's new multimillion dollar headquarters in Texas.
"Allegations were made that GFA had upwards of $150 million in partner field accounts, far more than necessary to provide appropriate operating reserves. During our visit on June 3, ECFA was informed that GFA field partner cash reserves were approximately $7 million," said the letter signed by John C. Van Drunen, executive vice president of the ECFA.
"After ECFA requested detailed documentation of cash balances held by foreign field offices, on June 29, we discovered that GFA's field partners had $259,437,098 on hand at March 31, 2014 and approximately $186 million in June 2015," the letter noted.
When ECFA officials asked about the high cash balance in partner field accounts held in India, they were told "it was important to maintain the high balances in case the Indian government decided to block funds being transferred into the country."
"The source of the balances was primarily from donor-restricted gifts to GFA, often raised in response to gift solicitations that communicated urgent field needs. ECFA staff expressed concern that the high reserves may not comply with ECFA Standards 4 and 7.1," the letter continued.
It was only after the ECFA raised this concern that the organization put forward a plan to reduce the reserve cash balances to $72 million in late July and then to $11 million in late August. GFA staff told the ECFA that they had no control over field partners.
In a meeting with Yohannan in July as well, the ECFA said he told them he had no idea the field offices held such high cash balances.
"In our meeting on July 1, ECFA staff asked you what the GFA board would think if they knew of the high balances in partner field accounts. You indicated that neither the board nor you were aware of the magnitude of the balances. You responded, 'They would be as surprised as I am,'" the letter noted.
The board was informed on July 13.
In further observations of the financial practices of GFA, the ECFA appeared dissatisfied with the reason the organization gave for using trip participants to hand-carry nearly $290,000 overseas.
"ECFA received concerns regarding GFA's lack of disclosure with the U.S. Department of Homeland Security regarding a total of $287,500 of cash sent with trip participants that exceeded federal mandatory reporting during the years 2013, 2014, and 2015," the organization noted.
"On June 3, ECFA reviewed this issue regarding compliance with ECFA Standard 4. When ECFA staff queried GFA concerning the reason that excessive cash was carried out of the U.S., GFA staff said the practice was used to avoid reporting the incoming cash in India," it added.
ECFA officials didn't buy it.
"ECFA observes that GFA has been transferring approximately $50 million from the U.S. to India per year. Thus, carrying in a few hundreds of thousands of dollars in cash to avoid reporting in India does not seem to be a sound basis for the practice," it said. "While ECFA cannot conclusively determine if there was a sound basis to carry cash into India, we are clear that there is no justification to disobey U.S. law with respect to reporting cash carried out of the U.S."
According to the letter, on July 20, GFA staff reported the failure to properly disclose cash carried into India during the years 2013, 2014, and 2015 to the Department of Homeland Security.
"On July 27 and in subsequent meetings, GFA staff indicated that GFA has not received and does not anticipate any further follow-up from the Department of Homeland Security on this matter," the ECFA noted.
During its assessment of the accounting practices of GFA, the ECFA was also informed that GFA India made a gift to GFA of $19,778,613 in 2013 to complete GFA's new office in Texas.
"On August 27, GFA's staff confirmed that the funds relating to this donation were originally received by GFA as gifts restricted for the field and GFA transferred to field partners to fulfill donor restrictions," noted the ECFA.
The ECFA said this was a violation of their standards but noted that GFA staff had informed them that it was Yohannan who suggested the idea to the organization's partners in India.
"Reallocating gifts donated for field purposes and using them to pay for headquarters construction appears to be a violation of ECFA's Standards 7.2. GFA staff stated in a recorded GFA staff meeting that you approached the field partner and explained that GFA could borrow the funds in the U.S., at less than desirable terms, for the headquarters construction," said the ECFA in the letter to Yohannan.
"However, a gift from the field partner, in lieu of GFA borrowing the funds, would allow GFA to complete the new headquarters and thereby save interest. Therefore, GFA would be able to send more money to the field in future years," it continued.
The ECFA charged, however, that the potential savings resulting from the GFA India gift is an inadequate basis to reallocate gifts donated for field purposes.
"Reallocating gifts donated for field purposes contradicts GFA's claim that 100 percent of funds are sent to the field. In fact, a significant amount of donations restricted for the field made a circuitous trip back to GFA and were used for the headquarters construction, as though they had never gone to the field. This appears to be a violation of Standard 7.1," the ECFA charged.
Throughout the entire assessment process, the GFA claimed to have had no knowledge of what was happening whenever financial irregularities were pointed out or would state that the organization had no control over what their foreign partners did, but the ECFA has challenged this defense.
"At several points in our review, GFA staff has disclaimed any control over field partners, including Believer's Church in India, which oversees all other field partners. Whether GFA has control or does not have control over its field partners has a significant relationship to a number of issues, including disclosures of related-party transactions in the audited financial statements, oversight of the use of resources of field partners, board approval of related-party transactions, and truthfulness in communications," said the ECFA.
The accountability organization pointed out that GFA's staff stated Yohannan's responsibilities and powers as the Metropolitan Bishop of Believer's Church, as included in the Believer's Church Constitution is significant.
Among other things, Yohannan "functions as the president of the Synod, the Conference of Bishops, General Assembly, institutions, and every other official body of the Church as may be established or constituted from time to time…."
It further noted that: "it appears that GFA staff has significant influence on the operations and decisions of GFA field partners. This influence has been evidenced in the announcement of vast revisions in maintaining or spending down cash balances held by field partners, the change in tracking expenditures for consistency with how funds were solicited, and ceasing the use of local funds to partially cover donor restrictions."
"Based on this level of oversight and control as well observed during our review, ECFA staff questions whether GFA has a sound basis to disclaim any control over the activities of field partners," said the ECFA.
Matthew and Jennifer Dickson, who are listed as plaintiffs in the lawsuit, charge defendants in the case with violations of RICO and the Arkansas Deceptive Trade Practices Act, as well as fraud and unjust enrichment.
Listed as defendants along with Yohannan are: his wife, Gisela, a member of the Board of Directors of GFA; his son Daniel Punnose, also a member of the Board of Directors of GFA and a vice president; David Carroll, who serves GFA in multiple capacities, including Chief Financial Officer; and Pat Emerick. Emerick, according to the suit, is a United States citizen who resides in Ontario, Canada. He serves as the director of the Canadian affiliate of GFA.
The Christian Post is still awaiting a response from the GFA on the lawsuit.