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Accusations swirl around leaders of Orthodox Church in America

Did church mismanage funds?

Sunday, March 12, 2006
By Ann Rodgers, Pittsburgh Post-Gazette

For 400,000 members of the Orthodox Church in America, this first Sunday of Lent is troubled by staggering claims of financial mismanagement against two of their most respected leaders.

The accusations, squelched for six years as church financial officials and even a bishop sought an investigation, now are shouted to the world on the Internet.

Former insiders from church headquarters in Syosset, N.Y., say that, from 1996 to 2002, millions of dollars in grants and charitable gifts were siphoned into two unaudited accounts. One was controlled by former Metropolitan Theodosius, the now-retired primate; and the other by the Rev. Robert Kondratick, the church's chancellor.

A past treasurer says some of the money was used to pay personal credit card bills and even blackmail. He says that no full, certified, independent audit has been done on church accounts since 1996.

Father Kondratick said Metropolitan Herman, the current primate, has told him not to address the accusations for now.

"I hope, at some point in the future, to be permitted to express my own point of view," he said. "However, what I can say is that the church administration is working closely with our Holy Synod [of bishops] and with our CPA firm, which is currently conducting audits and reviews. ... Obviously, we look forward to their recommendations."

The acting treasurer, the Rev. Paul Kucynda, a Charleroi native who became treasurer in July, said every cent given for charity or special projects "is all sequestered and used only for that purpose. There will not be any invasion, for any reason, of any designated funds from here forward.''

But questions linger. Metropolitan Theodosius retired in 2002 to his native Canonsburg, where efforts to reach him were unsuccessful. Metropolitan Herman has promised an outside audit for 2004-05. Critics say that evades the key years, 1996 to 2002.

"What happened to the intervening years, and will the audits they have promised be audits of all the accounts?" asked Greg Nescott, a member of St. Alexander Nevsky Cathedral in McCandless. He resigned from the OCA's Metropolitan Council, an executive body, citing a six-year failure to investigate.

Mr. Nescott, a federal prosecutor, said Archbishop Kyrill, of Western Pennsylvania, and his own priest, the Rev. Paul Suda, who heads the audit committee, barred him from becoming parish council president because of his call for an investigation. Father Suda did not return calls from the Pittsburgh Post-Gazette, and Archbishop Kyrill was reported to be out of town.

Those raising the alarm have not called for legal action but for certified public accountants.

"My only call has been to bring in an independent auditor," said Deacon Eric Wheeler, the former treasurer whose account of irregularities in Syosset caused long-simmering questions to boil over publicly last year. A Web site devoted to the issue went online Jan. 7 at

Nearly 60 clergy from the Diocese of the Midwest and 70 of the most senior priests nationwide have petitioned for a thorough investigation.

A few priests who called for audits, including the 86-year-old former dean of the national cathedral, reported that Metropolitan Herman had silenced them.

"Good people who have raised honest questions have been vilified or silenced," said the petition from the senior priests.

The OCA is a daughter of the Russian Orthodox Church. About 40 of its 600 parishes are in Western Pennsylvania.

For 10 years, beginning in 1990, both inside and outside auditors warned of poorly kept expense records and chided church leaders for allowing the same person to handle deposits, disbursements and record-keeping, according to documents now on the Web.

Deacon Wheeler, 51, finance manager for a Long Island museum, had an accounting background before becoming secretary to Metropolitan Theodosius in 1988. He soon noticed that money constantly moved outside normal channels, he wrote in his 2005 "Call to Accountability," distributed to members of the church's governing council and now posted on the Internet.

The attitude was that "funds were needed to safeguard the church from scandal, cover embarrassing credit cards debts ... provide family members who leached off their relatives with a steady stream of assistance, pay blackmail requests," he wrote.

Father Kondratick's monthly American Express bills ran between $5,000 and $12,000, explained only by notations such as "Help for Russia," Deacon Wheeler wrote. He estimated that half of unrestricted bequests in the early 1990s went into unaudited accounts, as did some gifts for missions special appeals.

The treasurer then, as now, was Father Kucynda, who, Deacon Wheeler said, made a valiant but futile effort to enforce financial discipline.

"The weekly tirades and outbursts when he would discover the American Express bills being paid with little or no back-up ... fed a great deal of internal tension," he wrote.

From 1995 to 1999, he said, the church received $3 million to $5 million from the Archer Daniel Midlands Foundation and the Dwayne Andreas Foundation. It was to renovate St. Catherine's Orthodox Church in Moscow and build a religious conference center there, named for Mr. Andreas, the CEO of Archer Daniels Midland.

A spokesman for the Archer Daniels Midland Foundation didn't respond to an interview request. IRS records the Post-Gazette obtained from 1998 show that $400,000 from Archer Daniels Midland went to the church that year alone.

When the first $250,000 ADM grant arrived in 1995, Father Kucynda tried to put it into a segregated, audited account, Deacon Wheeler said. A month later, Father Kucynda and Deacon Wheeler were told to switch jobs.

"I had Father Kondratick affirm and reaffirm and reaffirm that the current financial practices would stop," Deacon Wheeler wrote.

Two years later, after he found that a $250,000 grant check was not in any audited account, he stopped signing financial reports.

Deacon Wheeler does not say that all the money was misused. Substantial work was done on the Moscow church, though there was once a plan to disguise a law office as the proposed Andreas Conference Center should Mr. Andreas attempt to visit, he wrote.

"As a ballpark, one-third of the money went for good purposes, one-third went into gray areas [that claimed to be charitable] and one-third was used for who knows what because there was no record-keeping," he said last week.

In June 1999, Deacon Wheeler confided in John Kozey, head of the church audit committee, and Robert Taylor, an outside auditor. Mr. Kozey, a financial analyst living in Syosset, said he was nominated for his elected position because of a friendship with Father Kondratick. He hoped a meeting with Father Kondratick, the church's attorney and other key officials would put things right.

"Father Bob acted very surprised, as if he had never heard of the irregularities before. He said, 'We have to address this. We have to fix this,' " Mr. Kozey said.

Minutes from that July 8, 1999, meeting describe a plan to hire a special outside accountant to determine whether the metropolitan's discretionary account was "used for purposes consistent with state and federal law."

But three weeks later, the Holy Synod of bishops suddenly declared that the metropolitan had a right to an unaudited, discretionary fund.

"We unanimously exhort the primate to deny any form of audit," the bishops said. Archbishop Job, of Chicago, later wrote that no one had told him that a large sum of money was involved.

According to lawyer Richard Hammar, of Springfield, Mo., an authority on church financial law, discretionary funds are common but can lead to tax problems.

"Any discretionary funds that could be accessed by a pastor and used for personal purposes can amount to taxable income, even if the funds are not ever used for personal purposes," he said. To avoid that, the church must limit the amount in the fund, prohibit the pastor from using it for personal benefit and have some church official review it.

Whether a church faces trouble for diverting designated gifts toward other ministry depends on the circumstances, he said.

In September 1999, Deacon Wheeler was removed as treasurer. About the same time, the outside auditor wrote that he could not complete the 1998 audit because of incomplete data and poor records.

Mr. Kozey promptly wrote to every member of the Metropolitan Council, asking to address its November meeting. Its administrative committee refused, but his letter moved the issue into some parishes.

After reading the letter, Mr. Nescott, the Pittsburgh prosecutor and an alternate to the meeting, decided to sit in on the council, as alternates had done before. He was shocked when the metropolitan's secretary called to tell him he couldn't attend.

That refusal "gave enormous credence to the concerns being raised by John Kozey," Mr. Nescott later wrote.

"Surely they didn't fear a few honest questions. Did they not have enough chairs at Syosset to seat me at the meeting? Or could the fact that I was a federal prosecutor have anything to do with it?" He later became a delegate.

At that November 1999 council meeting, the dormant plan for a special outside auditor to perform a "summary review" of the discretionary fund was resurrected. Mr. Kozey and a few others protested that a "summary review" was not an audit.

On Jan. 14, 2000, an attorney for Metropolitan Theodosius wrote that an outside firm had found the discretionary account statements of 1996-1998 "in conformity with generally accepted accounting procedures."

That satisfied most members of the Metropolitan Council. That April, Mr. Kozey said, chancery officials maneuvered him out of his role as head of the audit committee by scheduling meetings he couldn't attend. Father Suda replaced him.

Metropolitan Theodosius retired in July 2002. Archbishop Job, who had met with Deacon Wheeler, hoped Metropolitan Herman would bring reform. But, according to minutes of a talk the archbishop gave to Ohio priests, he was disappointed.

In June, Archbishop Job wrote to Metropolitan Herman, asking for a complete report on finances at the All-American Council in July. Father Kondratick replied that the metropolitan considered such a report "inappropriate."

Learning of that, Mr. Nescott resigned from the council.

"The Metropolitan Council that just a few decades ago was a reliable and respected body that offered professional and intelligent advice to the church in financial and related matters is no more," he wrote on an Orthodox Web forum.

Deacon Wheeler sent his summary of concerns to all council members. At their November meeting, Metropolitan Herman promised "to order independent audits by an outside CPA firm."

But, as echoed at two succeeding meetings of bishops, the audit would cover only 2004 and 2005.

On Nov. 28, Archbishop Job wrote to Metropolitan Herman, saying that "an independent audit of the finances of the church for only the last two years will not provide the necessary answers." He complained that church leaders had attacked Deacon Wheeler's character "while the issues were essentially ignored."

"What continues to perplex me is that the simple and most appropriate question was not asked. ... Are any of the allegations true, or are they false?" he wrote.

"Obviously there must be investigation."

But Father Kucynda, the acting treasurer, believes that the 2004-05 audit can lead to further audits.

"The accountants are going backward, wherever that takes them," he said. "Audits are expensive. We are a modest church. We are trying to do what we can to clarify all the accusations and, at the same time, limit the amount of auditing in the older records to whatever is really necessary to get to the heart of the matter."




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