3.30.10 FROM THE WAYNE INDEPENDENT
Investigation of St. Tikhon finances yields report
By Kevin Zwick
Mon Mar 29, 2010, 06:01 PM EDT
Monroe County -
An internal, year-long investigation performed by the Orthodox Church of America (OCA) discovered alleged financial improprieties at St. Tikhon’s Monastery and Bookstore, dating back to 1996, when it was under the direction of Metropolitan Herman.
Interviews and research of documents by the St. Tikhon’s Investigation Committee (STIC) revealed a number of situations where Metropolitan Herman allegedly displayed negligence in his management of St. Tikhon’s Monastery and Bookstore.
Metropolitan Herman did not implement or require the use of the most basic cost accounting mechanisms, and he authorized the withdrawal of large amounts of cash with no documentation system to validate its use for legitimate purposes, the STIC report says.
Metropolitan Herman authorized the opening of a satellite bookstore in Philadelphia called Svetoch, allegedly with no system to monitor its expenses and income, or to test the health of the business venture. The report also states that “he did not exercise reasonably expected supervision of Archdeacon Klimitchev.”
The report also states that he allowed Archdeacon Klimitchev to make jewelry and watch purchases, with no process to demonstrate recovery of expenses.
STIC also investigated the “Jacewicz Agreement” between Metropolitan Herman and deceased elderly members of the Church.
Metropolitan Herman’s negligence cost the monastery and bookstore an undetermined, but large, amount of money, according to the report.
“This report is nothing but gossip, innuendoes, allegations and rumors,” said Martin Paluch, a spokesman for Metropolitan Herman, interviewee in the report. “I have some questions about other interviewees and where [the committee] came up with list of people,” he said. Herman is 78.
Interviewees said Metropolitan Herman developed favorites and gave special attention to them.
According to the report, Metropolitan Herman gave Archdeacon Klimitchev the land that his house now occupies. He appointed Archdeacon Klimitchev to occupy the managing director position in the bookstore without adequate qualifications, training, or supervision. Archdeacon Klimitchev subsequently cost St. Tikhon’s bookstore thousands of dollars through poor management, says the report. Metropolitan Herman gave Archdeacon Klimitchev free reign to develop the satellite bookstore in Philadelphia, which allegedly cost St. Tikhon’s bookstore thousands of dollars.
The favoritism didn’t just cost money, but also affected the morale at the Monastery, the report said. While the monastery quarters degraded to unacceptable conditions, Archdeacon Klimitchev drove around in an expensive vehicle, paid for with Bookstore funds.
The investigation revealed Metropolitan Herman’s alleged disregard for formality and procedure if it suited his purpose. One example is the uni-lateral mortgaging of monastery property.
According to the report, he collaborated on two occasions with the former Protopresbyter Kondratick to represent to the banks that he had authority to mortgage property. He misrepresented to banks that there were “duly called meetings” of the St. Tikhon’s Monastery Nonprofit Corporation.
In another case, he changed an estimate from contractor Ron Franks in his own handwriting and represented it to the bank as Franks’ estimate, the report stated.
Metropolitan Herman appointed Archdeacon Klimitchev to the managing director position of the St. Tikhon’s Bookstore with no training, qualifications or experience, the report stated.
Metropolitan Herman gave Archdeacon Klimitchev authority to open a satellite bookstore, Svetoch, in northeast Philadelphia, and allowed Klimitchev to share the store with his jewelry operation, Omega Design, as a way to attract people to the store.
The idea was proposed by Victor Grigoryev, a Russian living in the Philadelphia area.
High-cost jewelry items were purchased by Klimitchev with St. Tikhon’s Bookstore funds, but there was no evidence of a system to track the items and their benefit for the St. Tikhon’s Bookstore.
At some point, Grigoryev was allowed to procure stock items for the Philadelphia store. The report found no evidence of any controls regarding Grigoryev’s purchases or sales. It cannot be determined whether he purchased items from store income, or whether receipts from sales of these items were returned to store revenue, the report stated.
The report could not verify that revenue from items sold reached St. Tikhon’s Bookstore. Credit card sales from Svetoch were deposited directly, but cash and check revenue were transferred in random fashion from Philadelphia to South Canaan with no record of cash or check transfer receipts.
At the closing of the store, the report said “no cogent record was kept of inventory returned to St. Tikhon’s Bookstore.” Interviewees described the closing as a “chaotic process of items being thrown into boxes and Grigoryev withholding money he claimed he was owed from stock he purchased for the store.”
The report cannot explain and finds “highly disturbing” the approximately $29,000 discrepancy between revenue from items sold and revenue received by St. Tikhon’s Bookstore. The report estimates a loss between $175,000 and $200,000, “some of which would have been saved with proper management.”
In a long-standing practice, a person or persons would pay the cost of constructing a house on Monastery property, and live the rest of his or her life in the new home. Upon death, the home and its use is reverted to St. Tikhon’s Monastery.
However, in the case involving Julia Jacewicz Federko and Anna Jacewicz Dziamba (the Jacewicz sisters), Metropolitan Herman acted improperly, according to the report.
The Sisters, who lived in an assisted-living facility in Waymart, signed an agreement to sell their Jersey City, New Jersey home, and give the net proceeds, $338,059.16, to St. Tikhon’s Monastery, in return for a newly constructed home at St. Tikhon’s. The Sisters were always large donors to the church, the report states, but this time was different. This agreement said Metropolitan Herman may move into the new home for the rest of his life, upon the death of the Sisters.
The report said Metropolitan Herman did not act properly in accepting this donation because of the self-benefiting provision of the donation, and he being the de facto director of the nonprofit St. Tikhon’s Monastery Corporation was the only one to approve or deny the agreement.
“A major area of concern at the outset was the suggestion of criminal activity,” the report stated. “We were hindered by a system of shoddy record-keeping that we identify within the report.”
“In some instances, these explanations could neither be verified or disproved,” the report states. A foot note read, “It is possible that the information the committee has provided in this report can be used by other agencies with broader investigative powers to confirm or deny any of these suspicions of criminal activity.”
“The report speaks for itself,” said Father Eric Tosi, Chancery Secretary of the Orthodox Church of America. “No legal action is pending,” he said.