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Reflections On The Scandal

3.30.07

The Year 2002

by Wayne Tatusko, Bethesda MD

A review of the OCA’s own financial statements indicates that calendar year 2002 was a pivotal year in the financial life of the Church.

The OCA Auditing Committee consisting of V. Rev. Paul Suda, V. Rev. David Mahaffey and Mr. David Donlick presented their audit results for calendar year 2002 by letter to the Metropolitan Council dated February 9, 2004. According to these statements, as of December 31, 2001, the OCA held securities and liquid assets totaling $4,622,177. To put this in perspective, recall that this date is less than four months after the tragedy of September 11, and the resulting crash of the financial markets. Yet these statements show that the OCA had:

• stocks valued at $3,608,901,

• bonds valued at $174,757,

• mutual funds valued at $546,489 and

• money market funds of $277,024.

In addition, the statements indicated the OCA had no indebtedness for loans.


After serving for 15 months as Treasurer of the OCA

( September 1999 - January 2001) Metropolitan Herman became "Temporary Administrator" of the OCA for four months between May 2001- September 2001) and was later elevated to the primacy full time in the summer of 2002.

By the end of that 2002, though, the entire financial picture of the OCA had changed dramatically for the worse:

• Stocks were valued at $2,348,795,

• bonds were valued at $108,545,

• the mutual funds were completely gone, and

• money market funds were $177,790.

The aggregate drop in the value of church investments was $1,972,041. In addition, the balance sheet showed a loan payable of $240,000. Had the loan not been obtained, and assets had been applied to pay the loan, the total drop would have been $2,212,041.


The plunge in the OCA’s portfolio cannot be explained by increased program expenses.

• The amount expended for Mission and Stewardship in 2001 was $278,812, but in 2002 it was $158,064, a reduction of $120,748.

• The amount spent on Clergy Care was $66,320 in 2001, but was $15,572 in 2002, a reduction of $50,748.

• Seminaries faired the worst in 2002, as the $82,514 spent in 2001 was reduced to zero in 2002.

This represented an aggregate reduction in expenditures of $254,010 on just these three line items.


Were revenues down? No.

Assessment income in 2002 was actually up about $73,000 in 2002 over 2001. There was an All American Council, the cost of which was shown as $722,513. There was also, however, special assessment income received with respect to the Council, which was shown as $453,886. Therefore, the All American Council resulted in a net loss of $268,627 during 2002.

As the numbers above indicate, this loss was almost entirely covered by our Mission parishes, Clergy in need and our Seminaries. Therefore, the All American Council cannot be claimed as a reason for any substantial impairment of the OCA’s financial position.


Subsequent financial statements show the OCA making small improvements after 2002, with assets at $2,815,510 at the end of 2003, and $2,928,393 at the end of 2004. This is not to say that nothing was amiss in those years, as it has been reported by Lambrides, Lamos and Moulthrop (the OCA’s independent CPA’s) that $1,019,071 in checks to cash were withdrawn, with no supporting documentation as to where the cash went, during the years 2001 through 2005.


Not surprisingly, given these figures, the OCA needed to borrow $1,700,000 when finally, after six years of denying there was a problem, the central administration admitted to financial irregularities. The entire need for the loan arose in that one year, the same year during which then Bishop Herman was elevated to the primacy.


Metropolitan Herman was invited, as our Diocesan Bishop, to come to St. Mark Church in Bethesda, Maryland for the express purpose of discussing the financial situation with the OCA on February 3, 2007. To our Metropolitan’s credit, he accepted the invitation and came to face questioning from our parishioners. When asked about the year 2002, during which he was Treasurer and then Metropolitan, and the precipitous drop in Church assets, Metropolitan Herman had two responses:

First, he stated that he was Treasurer in name only, and never did anything with Church finances at all;

Second, he didn’t know what had happened, but he was sure there was some explanation.


The biography of Metropolitan Herman on the official OCA website states that Metropolitan Herman received a degree in business administration from Robert Morris College in Pittsburgh. Among other positions Metropolitan Herman has held, he was Chairman of the OCA’s Department of Finance. He has been awarded an Honorary Doctor of Business Administration from Robert Morris College. Someone familiar with Metropolitan Herman from St. Tikhon’s Seminary reports that he knew where every dollar was going. Unlike many of our clergy who are trained at seminaries and have no financial background, Metropolitan Herman has a better financial background than most of our parishioners.


At the meeting at St. Mark Church on February 3, 2007, Metropolitan Herman was asked directly if he would step down in order to heal the Church. His response was in the form of a question: “Why would my stepping down heal the Church?” Metropolitan Herman seemed incredulous.

One possible answer to the Metropolitan’s question could have been: "When someone assumes the position and fiduciary responsibility of the important office of Treasurer (especially after having been advised by the previous Treasurer that serious financial questions existed) and does nothing but hold the title “in name only,” and when that person thereafter becomes the head of the entire organization, and at the same time an unexplained drop in net assets of more than 40% takes place, that person must accept responsibility. That person must accept that, even if he himself did nothing affirmatively wrongful, the trust of the members of the organization is shattered. It is a difficult decision, but by removing oneself gracefully, and allowing new leadership to take the reins, the organization can regain the trust of its membership. It is the difference between being remembered as the Metropolitan who held on while the Church crumbled, or the Metropolitan who had the courage and selflessness to step aside in order that the Church might live."


Wayne G. Tatusko,

St. Mark Orthodox Church

Bethesda, Maryland

 
 

 

Other Reflections:

Fr. Michael Simerick
SS. Peter & Paul Detroit MI,
(reposted with permission)

Fr. Paul Harrilchak
Holy Trinity, Reston VA

Cyril
(reposted with permission)

Gregg Nescott, PA
(Reprinted with permission)

Fr. Jason Kappanadze
Holy Trinity, Elmira Hghts. NY
(Reprinted with permission.)

Fr. Ted Bobosh
St. Paul, Dayton OH

Otche M 
Special to OCAnews.org

Fr. Alexy Karlgut
Special to OCAnews.org

Fr. Robert Arida
Special to OCANews

Alexander Brody
Special to OCANews

Mark Warns, WA
Special to OCANews

Elena Andrusezko, NY
Special to OCANews

Fr. Robert Arida
Holy Trinity, Boston

Harry Coin
Special to OCA News

Inga Leonova, MA
Special to OCA News

Fr. Michael Plekon, NY
On Being The Church

Gregg Nescott, PA
Reprinted with Permission

Fr. Robert Arida, MA
Special to OCA News

Fr. Alexander Schmemann
On What Is Important (1949)