The Presbytery of New Covenant, based in Houston, Texas, has uncovered three years of mishandling funds, effectively redirecting restricted funds (contributed to particular causes) to the presbytery’s own mission efforts. In a letter sent November 9 to all member churches, General Presbyter Mike Cole and Moderator Rupert Turner announced the dismissal of Phillips Lacy, the director of business affairs. They state that Lacy does not appear to have benefited from the inappropriate actions. However, his handling of such funds was hidden well enough to avoid discovery by either their internal checks and balances or their annual, external professional audits.
The presbytery’s leadership is studying options for paying back the funds, which will be explored at length at the stated presbytery meeting scheduled on November 18.
The text of the letter reads as follows:
November 9, 2006
“For I know the plans I have for you, says the Lord, plans for welfare and not for evil, to give you a future and a hope.” Jeremiah 29:11
Dear Colleagues in Ministry:
On Wednesday, November 1, 2006, the leadership of the presbytery discovered that an egregious misapplication of funds had occurred within the restricted accounts of the presbytery. These restricted accounts encompass funds for special offerings, new church development, youth conclaves, hunger projects and numerous miscellaneous benevolences.
Our discovery process has revealed that funds sent to the presbytery for special offerings as a “pass through” have been held within our restricted accounts and inappropriately redirected to fund other missional needs within the presbytery. The total of special offerings received for the last three years that have not been forwarded to the General Assembly is $1.024 million. Moreover, twenty out of eighty-seven restricted funds have been seriously overspent.
Phil Lacy, our Director of Business Affairs, Outreach and Stewardship, was relieved of his duties effective November 3, 2006, was placed on administrative leave and will have his employment terminated on November 15, 2006. On the basis of our review to date, it does not appear that Mr. Lacy or any other individual derived personal benefit from the misapplication of these funds.
This is a serious breach of trust between the presbytery structure and our member churches. There is no question that we owe and will pay those funds to the General Assembly for the purposes for which they were given. We sincerely apologize for not recognizing that such a grievous error was occurring. The General Council, other elected leadership and the staff are trying to determine how these errors have escaped our internal checks and balances, including even our annual external professional audits. We are enacting management safeguards to prevent the recurrence of such misapplication of funds and strengthen our system of financial reporting.
Your presbytery leadership will also be working hard to restore your confidence and trust in us as we reinstate sound financial management and offer periodic updates of information to you. The first such update will occur at the upcoming presbytery meeting on November 18 at St. Andrew’s Presbyterian Church in Houston. We are considering several options for meeting our immediate obligation of payment of special offerings to the General Assembly. We are serious about correcting this inappropriate redirection of funds.
We solicit your prayers for the restoration of trust and re-emergence of our vision for the future as we work together to meet our obligations and fulfill the Great Commission.
In Christ’s service,
Mike Cole, General Presbyter
Rupert Turner, Moderator