Audit raises ‘red flags’ about how a local church’s money is being spent
By André Coleman 08/21/2013
Members of a local congregation are wondering how tens of thousands of dollars in church funds could have been spent in 2012 for such items as salaries, high-tech computer equipment, personal cell phones, utility bills, gasoline purchases and car repairs without proper authorization.
An audit of Pasadena First African Methodist Episcopal Church finances indicates that the person responsible for most of the spending in question was the Rev. Allen Williams, who came to Pasadena from Oakland four years ago. Although the church is located in the 1700 block of North Raymond Avenue in Northwest Pasadena, and the church owns Summit House, located a about block away from the church, Williams and his wife, Marchetta, live free of charge in a $1.17 million home owned by the church in Sierra Madre.
The 12-page audit states Williams spent $4,075 on six separate telephone numbers listed in his name. Williams also used church money to make utility payments on a home in Northern California. As for other questionable expenditures — among them $16,369 for computer tablets, Kindle Readers and laptop computers; $3,527 for oil company credit cards; and $1,409 for auto services provided by Rusnak Motors in Arcadia — financial record keeping was so shoddy that the church’s audit committee “was not able to conduct an analysis or audit review of the central checking and all other bank accounts,” states the audit.
“The reason for this is that the church’s records are in very poor condition and complete monthly files needed could not be located. The numerous online bank transfer activity without oversight and approval raises many red flags and serious control concerns,” the audit states.
Members met at the church last week to discuss the audit but declined to allow a Pasadena Weekly reporter to attend. Williams did not return several phone calls seeking comment on this story.
The four-member audit committee was able to examine statements for charge cards issued to the church by Office Depot, Exxon-Mobile and Visa. According to the document, the church has been forced to pay thousands of dollars in late fees and other charges due to the maintenance of high credit card balances.
“Due to large beginning and overall account balances maintained all year, the church paid thousands of dollars in finance charges and late fees during 2012,” the audit states. “Exxon, Office Depot and Visa charge cards have beginning balances on 1/1/2012 of $1,921, $11,041 and $20,142, respectively.”
But even more disturbing are five unauthorized cell phone numbers under the name of Pastor Williams. According to a copy of an AT&T bill contained in the audit, $4,075 was billed to the church for those five phones, each with Oakland area codes.
“This is of great concern,” the audit states. “While the church is responsible for the pastor’s phone, which averages $156.96 monthly or $1,884 annually, it does not appear that the remaining five phones are the church’s responsibility. The difference of $2,191 in our view is not a church expense.” Last year, the church was billed $14,384 in AT&T phone charges.
Two months of unauthorized payments for utility bills dated March and April 2012 were also made to East Bay Municipal Utility District and Pacific Gas & Electric Co., also located in Oakland. The audit did not list how much the church was billed for those expenses.
“They have been letting him have his way since he got here,” said Joe Hopkins, owner and publisher of the Pasadena Journal. A local attorney, Hopkins is also a member of the First AME congregation.
“We need elevators, a new kitchen, and instead they are furnishing the lavish lifestyle of the pastor and his wife. To buy him a $1.17 million house for just he and his wife in Sierra Madre, when the church is right in the heart of the black community in Pasadena, is ridiculous,” Hopkins said. The church later paid an undisclosed amount to have an extra bedroom added to the home in Sierra Madre.
According to an article in Los Angeles Wave, the audit came about after the church refused to give Williams $56,000 from the Hardman Fund to pay the church’s back taxes. The Hardman Fund is a $6 million gift left to the church in the will of Vertus Hardman, a former church member who made his fortune in real estate. Hardman, who died in 2007, was born and raised in Indiana. In 1927, he and nine other school-aged African-American children were selected for experimental treatment for ringworm. The parents agreed to have their children tested, not knowing the kids were actually part of an experiment designed to test the impacts of extreme radiation on children. The government-funded experiment left Hardman with disfiguring scars on his scalp and a hole in his head, which he covered by wearing wigs and caps. A documentary on his life is narrated by actor Dennis Haysbert, a Pasadena resident.
The church’s record keeping was no better when it came to tracking employee salaries and other benefits.
In addition to his regular salary, a man identified only by his first name was paid a regular unspecified salary in 2012 and another $22,316 in overtime pay.
Another office worker, who was supposed to earn $750 a week, or $39,000 a year, was really paid $900 per week, “plus a non-taxable ‘other reimbursement”’ ranging from $250 to $475. The attached summary shows this increased payroll cost for the year totaled $19,309. “
The committee requested an explanation for the purpose of “other reimbursement” but no explanation was received.
Total salary expenses for the church staff in 2012 was $74,359. Another $76,375 was paid to musicians. Church expenses totaling $4,575 were used as part of for a Christmas gift fund. It does not list the items purchased and who the “gifts” were for. The committee recommended that the gift fund only be used for volunteer church staff.
The oldest African-American church in Pasadena, the 125-year old house of worship has been involved in other controversies surrounding the unauthorized use of its funds.
In 1997, the Rev. Lee Norris May was removed from his position after members discovered that he had taken out two separate unauthorized mortgages of $56,000 and $112,000 on a church-owned three-bedroom bungalow in the hills of Altadena.
May later acknowledged he had done something wrong in a similar members-only meeting of the congregation at which he asked for forgiveness. However, May never openly said what he had done wrong. He was later replaced by the Rev. Johnny Carlyle of Oxnard and shipped off to a church in Phoenix.
Ironically, May refused to forgive a Korean-American hat shop owner in Los Angeles a year earlier, after she asked him to leave her store. May insisted that he was asked to leave the store because he was an African-American male. The woman said her customers — primarily African-American women — expressed concern about a lone man being in the store, which catered specifically to women.
May later called upon members of Pasadena developer Danny Bakewell’s Brotherhood Crusade to protest outside the store. The woman eventually closed, and even apologized to May. But he refused to accept her apology.
After May’s transfer to Oxnard, church leaders never revealed what the money from the mortgages was spent on.
The situation involving May deeply divided the congregation. Hopkins said that is happening again, now under Williams’ leadership.
“As normal, the church is split,” Hopkins told the Weekly. “There is a certain group of people standing up for him and others who want to get to the bottom of this.”