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What Can You Do?
 

1.19.07

 
 

WHAT WAS PROSKAUER ROSE

HIRED TO DO?
 
Among the most asked questions concerning the OCA scandal are:


• “Are the allegations true or false?”
• “What happened to all the money?”
• “Why won’t Proskauer Rose submit a written report to the Holy Synod or the Metropolitan Council on its findings?”; and
• “Why is Metropolitan Herman guiding the Proskauer Rose investigation when he, himself, is directly involved in the allegations?”
 
While a partial, affirmative answer has been given to the first question concerning the truth of the allegations, the other questions cannot be resolved until an additional prior question is answered; that is,

”What, precisely, was Proskauer Rose hired to do?”

Various answers have been proffered in the past eight months; by Proskauer Rose, Syosset, the Metropolitan Council and by various internet commentators.

In the minutes of the Administrative Committee of March 16, 2006, Sarah Gold, an attorney for Proskauer Rose, explained her role as follows:

“Ms. Gold explained that the investigation was being conducted to prepare for anticipated possible regulatory investigations or litigations arising out of the allegations.  Since the Church is a not-for-profit legal organization with a 501.C3 tax exempt status, the Church must act responsibly within the United States of America and conform to the required legal expectations that come with this status.

When allegations are made, the Church must be in a position to show that the allegations have been responsibly investigated.  The Church would be vulnerable to a number of governmental agencies if it does not conduct this investigation in a timely manner. For these reasons, there is no other option than to do an internal investigation with the guidance of appropriate legal counsel.”
 
Two months later, on June 13, 2006, in his address to the Metropolitan Council, Metropolitan Herman explained Proskauer Rose’s role this way:
 
“After careful consideration and wise counsel, I chose to engage the law firm of Proskauer Rose, on behalf of the Church, to initiate a full investigation of various matters related to our central administration, particularly as they relate to all financial allegations that could be identified from various sources.”
 
It is interesting to compare this wording with the earlier report of the Administrative Committee. Clearly, the Metropolitan is suggesting a more extensive investigation (“various matters”, “all financial allegations”) than did Proskauer Rose.
 
Three months after this, in September 2006, Protodeacon Peter Danilchick, in his role of answering questions regarding the allegations of financial mismangement on the OCA website, seemed to be suggesting an even more expansive writ for Prosakuer Rose:
 
“The reason for the investigation is to determine whether financial improprieties occurred and, if so, what remedies might be available, what legal steps might be taken, and what changes might be made to protect the Church (including the faithful) in the future”. 
  
Then, in October 2006, in an article containing a preliminary account of the Metropolitan Council meeting entitled ”The Council Finds Its Voice” OCANews.org reported:

“Proskauer Rose has confirmed to those from whom testimony has been sought that they indeed represent the OCA, not any individual, and that their role is one of investigating what actually took place in the context of the allegations raised. They were not retained to provide recommendations for possible legal action.”

Finally, there is this from Monk James Silver in his post on the Yahoo Orthodox Forum dated January 4, 2007:
 
“And we also have P-R’s (Proskauer Rose) faithful adherence to Fr. PK’s (Fr. Paul Kucynda’s) directive to ‘build a firewall around the Metropolitan”.
 
Silver, who is widely seen as a spokesman for former chancellor Fr. Robert Kondratick, has made similar accusations on numerous occasions over the past months.

So, the question: What was Proskauer Rose hired to do?

Re-examining the Written Agreement

The written agreement in the present Proskauer Rose investigation is the March 11, 2006 “Retainer Agreement”, signed by Kathleen M. McKenna on behalf of PR and by Fr. Paul Kucynda on behalf of the OCA.  In the absence of any other documents or evidence of oral agreements, we must assume that the March 11th letter constitutes the entire agreement between the parties.Without belaboring the point---which has been frequently repeated on various internet sites these past months----Fr. Kucynda’s signing of this agreement was not in accordance with the OCA Statute, since neither he nor the Metropolitan is competent to sign this type of agreement on behalf of the OCA. That prerogative, by Statute, belongs only to the Metropolitan Council.

The March 11, 2006 Retainer Agreement begins:
 
“Thank you very much for asking us to represent the Orthodox Church in America (the Church) in connection with an internal investigation of allegations relating to the finances of the Church. (emphasis added)

The emphasized portion is the only mention in the agreement related to the services to be provided by Proskauer Rose. Essentially, it says nothing. They (Proskauer Rose) are to conduct an internal investigation of certain unspecified“allegations relating to the finances of the Church”. Period. Which financial allegations? The Wheeler allegations? Additional financial allegations reported by OCANews.org? Others made subsequent to the Wheeler allegations in the national press? Some, none or all of the above? 

If the topic of the investigation is unclear, nothing in the agreement identifies the time period the investigation is to cover, the financial accounts to be reviewed, or whether the investigation is limited to any geographical area, etc. In other words, are the ongoing Alaska land controversies to be included in the investigation? Are the allegations related to the ADM monies and the so-called "discretionary" funds to be investigated? How about the so-called Kondratick "promissory note"?

The Report to the Joint Meeting

In a press release dated December 12, 2006, issued after the first day of the joint meeting of the Synod of Bishops and the Metropolitan Council, a statement issued by the participants in the joint meeting recounted: “Presentations by the accounting firm Lambrides, Lamos Moulthrop LLP and the law firm Proskauer Rose LLP confirmed the following allegations:....” 

The nine confirmations were expressed in very broad language so that each of the confirmations could include a spectrum of transgressions. Considering just the Wheeler allegations, there are no specific references

• to the ADM money,
• or the “so-called” discretionary funds,
• to the bequests or the charitable remainder trusts,
• no mention of the St. Sergius Chapel account,
• no discussion about off-book funds from the sale of merchandise brought back from Russia,
• no discussion of the Alaska Lands controversy,
• nothing about the alleged Kondratick promissory note,
• nothing about funds needed to safeguard the church from scandal,
• nothing about funds needed to provide assistance to family members,
• and nothing related to blackmail requests. 
 
In addition, there are also 24 questions asked by Protodeacon Wheeler in his November 1, 2005 letter to the Metropolitan, the findings of which, if any, are not answered or addressed in the confirmations provided by Proskauer Rose.
 
In short, the “findings” by Proskauer Rose do not address all the financial allegations made, let alone all of Wheeler’s allegations. The question, of course, is who decided what allegations should be addressed; and which should not? The fact that only eight people were interviewed for the investigation does indeed suggest that the investigation was a limited one and that it was never intended to be a full investigation of all---or even most---of the allegations.  If so, who limited it? 

This absence could be the result of a number of things including:

• the deficiency in the Retainer Agreement in failing to spell out what allegations were to be investigated,


• that Proskauer Rose knew exactly what they were asked to investigate, and it did not include the above,


• the press release of December 12th did not accurately reflect Proskauer Rose’s oral report to the joint meeting,


• or the joint meeting’s statement did indeed accurately reflect the Proskauer Rose oral report – but Proskauer Rose did not present all of its findings to the meeting....

Despite protestations to the contrary, the way Syosset negotiated and wrote the contract, as well as the way Proskauer Rose has performed raises doubts as to whether the OCA is indeed the client of Proskauer Rose.  Nor are such questions idle. They take on significance with the recent appointment of the independent Special Commission. Common sense, conflict of interest policies and simple ethical standards all dictate that former OCA Treasurers – for example Metropolitan Herman and Fr. Paul Kucynda – should have had no role in hiring Proskauer Rose, and certainly no part in directing their investigative efforts. But what is done is done. The Commission however, cannot permit any involvement or interference in its work by any who may have been officers or employees of the central church administration during the times being investigated, lest its own credibility, and its report, be called into question as well.

After 10 months it is not clear what Proskauer Rose was contracted to do. The only thing that appears to be well defined is how they are to be paid.

- Nick Skovran and Mark Stokoe

 

 
 

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