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7.14.06
Metropolitan Council Minutes

Detail Loan Re-Vote

Minutes from the recent Metropolitan Council meeting, held June 13-14 in Syosset, reveal further details of the $1.7 million loan sought by Syosset to repay diverted charity funds, appeal funds, endowments, as well as outstanding bills from vendors. Regarding the loan the Minutes read:

“Father Kucynda distributed and reviewed the minutes of the May 18, 2006, teleconference call meeting. He noted that the Statute of The Orthodox Church in America does not provide for absentee ballots in the Metropolitan Council’s balloting process and that the minutes must therefore be amended to indicate that 17 participants cast votes, not the 24 indicated in the minutes. This provides a result of 10 yes votes, 6 no votes, and 1 abstention. 

Father Kucynda also reported that the legal representative of Honesdale Bank had requested that the vote be recast so that this decision cannot be called into question when reviewed by the competent civil authority. The matter was further complicated by the fact that the address of record is in New York City at the Cathedral of the Holy Virgin Protection, not in Syosset.

Father Kucynda informed the Council that in order to assure compliance with the Church’s Statute, the vote concerning the acquisition of the $1.7 million loan from Honesdale Bank would be recast at Wednesday’s session.”

Necessary Background

The concern of the Honesdale bank to have a re-vote stems from New York State law. The New York Religious Corporations Law requires court approval of “the sale, mortgage or lease for a term exceeding five years of any real property of a religious corporation.”  (Religious Corporations Law (“RCL”) Section 12(1)).  Court approval is required even if the religious corporation’s real property does not constitute all or substantially all of its assets.

New York’s Not-For-Profit Corporations Law requires that upon filing the petition with the court the Attorney General be given a minimum of 15 days notice before a hearing on the application.  The procedure preferred by the Attorney General and most courts, however, is to submit the petition and proposed order to the Attorney General for review before filing with the court. If after reviewing the proposed filing, the Attorney General has no objections, a written endorsement on the proposed order is given that waives statutory notice.  The petition is then usually submitted to the court without the 15-day waiting period and without the need for a return date or hearing.

There is a two pronged test that the court must find to grant the petition:

– That the consideration and the terms of the transaction are fair and reasonable to the corporation; and
– That the purposes of the corporation or the interests of its members will be promoted.

To determine whether or not the consideration is fair and reasonable, there must be an appraisal of the assets.  The appraisal must be “full and completely independent.”  If the asset is real estate, three comparables will be required. 

In an explanatory memo posted on the OCA website on July 7th, Fr. Kucynda referred to the above, explaining:

“Since The Orthodox Church in America is an institution located in the State of New York, while the Honesdale National Bank is a banking association in the State of Pennsylvania, all relevant Pennsylvania, New York, and federal banking and civil-law requirements were researched and will be met.

“Since the loan will be secured by the two properties owned by The Orthodox Church in America in the State of New York, County of Nassau, it was necessary to affirm that The Orthodox Church in America complies with a checklist of 14 items. The following are a few of the primary requirements: Have the existing land surveys verified for accuracy; clear titles to both properties searched and affirmed as belonging to The Orthodox Church in America without mortgages or taxes due; and appraise the properties in regard to current real estate values in Syosset, NY. “

Thus, the necessity to re-vote by the Metropolitan Council to fully conform to New York State regulations.


In his Report to the Metropolitan Council, Fr. Kucynda confirmed that the two properties being mortgaged are the Martin Street property in Syosset and the Syosset estate itself.

The current process is therefore, a welcome step in the right direction towards adhering to the rule of law as set aid forth by the Statute. Three years ago the OCA was indebted largely in secret, with no vote, at the discretion of the Metropolitan, for $600,000. This time there has been disclosure, a vote and the attempt to fulfill legal requirements. Now all we have to do is find out where the money we donated for the last five years (whose repayment requires the loan) really went...

The Vote

The Minutes continue:


“Wednesday, June 14, 2006

Loan Acquisition
Father Paul Kucynda reviewed the process by which the Metropolitan Council approved the acquisition of the $1.7 million loan from the Honesdale Bank. The bank’s legal representative requested that the vote be recast, as noted in the minutes for yesterday, June 13. The resolution previously voted upon and approved was distributed (attached).

A question was raised concerning the validity of voting in Syosset if the Church’s legal address had not yet been changed. It was noted that people who took part in the first vote were not present today and that some members of the Council left without knowing that a second vote would be cast.

Dr. Faith Skordinski voiced concerns about approving a loan without knowing the Church’s assets and how the loan payments would be met.  Father Westerberg also raised concerns concerning the payment of the loan and the fulfillment of all obligations, including the need for updating the Church’s technology systems as well as other improvements.

Father Gregory Safchuk pointed out that there is no penalty for pre-payment, thus some assets could be sold and the loan could be retired sooner. Gary Popovich noted that the restoration of trust is crucial, and normalization of Chancery office operations is an essential component for the restoration of trust. Richard Schneider reminded the Council that they were speaking about the Church, not a business, and that they depended upon the faithful to exist and carry out the Church’s work.  He stated that what is at stake is doing the right thing, not just fiscal soundness. Father Tate re-emphasized that it is imperative to pay back the outstanding loans. 

Robert Kornafel stressed that the loan was approved in the May 18 conference call meeting of the Metropolitan Council and that the Council was now simply addressing technicalities pertaining to the loan of which its members were previously unaware.

Metropolitan Herman commented that “we need to move forward” for the sake of the Church and that this loan will not be a difficulty. The Church, he said, would be able to retire the loan in a timely manner.

Dr. Faith Skordinski called for a vote by written ballot. Ballots were distributed. The roll call was taken so that the minutes might reflect those who participated in the voting process. Father Vansuch and Father Dresko were invited to count the ballots. His Beatitude announced the result of the ballot: 13 yes, 3 no, and 2 abstentions. The loan was approved.

The record will reflect that the 13 yes votes were cast by Father Gregory Safchuk, Eleana Silk, Richard Schneider, Father John Onofrey, John Zoranski, Father Vladimir Berzonsky, Richard West, Father Philip Reese, Gary Popovich, Father George Hasenecz, Robert Kornafel, Father Matthew Tate, and John Schulz. The 3 no votes were cast by Dr. Faith Skordinski, Father Isidore (Brittain), and Father Michael Westerberg. The 2 abstentions were cast by Father Sergei Bouteneff and Father Theodore Boback. .....”
 

One Potential Problem

Although the loan was approved again, one potential problem may be looming. According to New York State law the transaction must be approved by the corporation’s board by a majority vote of the entire board. According to the minutes, the vote was 13 for, 3 against with 2 abstentions. Is this a majority of the entire Metropolitan Council?

On the face of it, no. By statute there are 33 members on the Metropolitan Council . There are currently 6 vacancies - 2 each from the Bulgarian and Romanian Dioceses, one from the Diocese of the West, and the Chancellor. Thus, there are 27 members at present - and 13 does not make a majority.

So while the Statute of the OCA says that: “All matters of the Metropolitan Council are decided by a majority of votes of those present”, New York State law takes precedence. As a result, some may argue that the decision still lacks validity. And the point is not merely academic, since New York regulations allow for a court hearing on the issue. The court, at its discretion, may direct that notice of the application be given to any interested person, such as a member, officer or creditor of the corporation, specifying the time and place of a court hearing.  Any person, whether notified or not, may appear at the hearing and show cause why the application for loan approval should not be granted.

Ms. Valley Singleton of the Attorney Generals’ office in Nassau Court would not confirm or deny whether an application had been submitted or when a hearing might be held.

The Bank Extends

On July 7th, Fr. Kucynda confirmed that the Bank had extended the deadline to close on the loan in view of the time it would take to fulfill New York’s conditions. The OCA press release stated:

“As you are aware, the Honesdale National Bank, located in Honesdale, PA, offered a Commitment Letter to The Orthodox Church in America in the amount of $1,700,000.00 on May 3, 2006, with a termination/closing date of July 3, 2006. The Board of Directors of the Honesdale National Bank offered an Extension of Commitment Letter dated June 28, 2006, with a termination/closing date of August 3, 2006.....”

In short, the closing on the loan is still in process, and may be in process for some time.

Question Five Explained

In a story last week OCANews cited an email from Fr. Kucynda to Dr. Woog. Fr. Kucynda wrote:

“I believe that it appropriate for you to share with all of us just how you obtained information from the chancery office concerning your “Question #5.” As a member of the Metropolitan Council and as a member of the Administrative Committee, I believe that my requests of you--on behalf of others--as well should be answered? Isn’t this fair?”

Fr. Kucynda is referring to a point he made in his Report of the Acting Treasurer to the Metropolitan Council last month. In that report, Fr. Kucynda cited another email he received from Dr. Woog:

“This, however, was not the only breach of confidentiality that appears to be motivated by an effort to injure the Church and cast doubt on the credibility of those who seek to serve her. During this past week, you received an e-mail which included a number of questions posed to me in preparation for this meeting. One of the questions for the purpose of my report, I will identify as question #5. Question #5 concerns a loan of $50,000 that was offered and received at this time by my office so that current obligations of the Church could be paid. The text of Question #5 supports the conclusion that the author of the question was only able to pose their question on the basis of confidential information available to a very limited number of staff working within this building.

In Matthew 6:3 and 4, our Lord and Savior, Jesus Christ is quoted as saying, “But when you give alms, do not let your left hand know what your right hand is doing that your alms may be in secret; and your Father who sees in secret will repay you.”

The member of our Metropolitan Council who revealed the identity of a faithful member of our Orthodox Church in America, a member of the Church who wished to confer a benefit on the Church and—in keeping with Christ’s mandate—requested to remain anonymous, gave their personal agenda priority over Christ’s commandment. What could possibly justify the violation of one of the basic tenets of the Holy Scriptures and in this case, a mandate from Christ Himself?

The loan in question was from Matushka Mary Buletza Breton. Dr. Woog has not answered Fr. Kucynda publicly.

- Mark Stokoe

 

 

 

 

 

 

 

 

 

 

 

 
     
 

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