News conference on investigation into ethics violations proffers updates, unanswered questions

After spending roughly 12 hours meeting in closed session over two days, the Presbyterian Mission Agency Board emerged with a public statement April 16 about how it plans to address an investigation involving four employees of the Presbyterian Church (U.S.A.)’s national staff who were involved in an unauthorized plan in which funds were channeled from the denomination to an outside entity.

Shortly after 7 p.m. on April 16, Marilyn Gamm, a minister from Wisconsin who is the board’s chair, announced in a brief statement the decisions the board had made in its closed sessions. Gamm said that:

• The board voted to authorize one of the lawyers it recently hired, John O. Sheller, to work with the board’s executive committee and with Linda Valentine, executive director of the Presbyterian Mission Agency, “to undertake appropriate steps to resolve employment issues” with the four staff members named in the ethics investigation. Sheller is a labor and employment lawyer from the Louisville firm of Stoll Keenon Ogden.
• The board voted to communicate its intent to the PC(USA) “to be as transparent as possible as soon as sensitive personnel and legal matters are resolved.”
• The board will instruct that action be taken to make sure that incorporation criteria are communicated to the PC(USA)’s national staff and to make those policies “readily available.”

The controversy exploded last fall, after an internal investigation revealed that four employees connected to the denomination’s 1001 New Worshipping Communities program were involved with an unauthorized plan in which funds were channeled from the PC(USA) to an outside corporation set up in California. The four were involved with the PC(USA)’s evangelistic efforts to start 1,001 new worshipping communities over 10 years, starting in 2012.

On Nov. 15, 2014, the four employees were put on paid administrative leave, at the executive committee’s request, while the Presbyterian Mission Agency Board hired a lawyer from Charlotte, North Carolina, Mark Calloway of the firm Alston & Bird, to conduct an external investigation of the matter. Those employees are:

• Roger Dermody, the PC(USA)’s deputy executive director for mission (one of two deputy directors who serve directly under Valentine;
• Eric Hoey, director of Evangelism and Church Growth;
• Philip Lotspeich, then-coordinator for church growth, with responsibility for overseeing the 1001 initiative; and
• Craig S. Williams, based in California and staffs the western regional office of the Presbyterian Centers for New Church Development.

During a news conference April 16 following the board’s announcement of its actions, Gamm and Sheller declined to give more details on what an external investigation by Calloway’s firm revealed about the efforts to set up the outside corporation or to say what will happen next with the four employees involved. Repeatedly, in declining to give details, Gamm cited attorney-client privilege involving potential litigation and personnel matters.

She said the four employees remain on paid administrative leave, with full salary and benefits, but would not say for how long or what it might mean to take “appropriate steps to resolve employment issues with the four named staff.” While Gamm wouldn’t elaborate, it appears likely those steps could potentially involve a range of possible actions – from having the employees come back to work, to seeking to terminate their employment, or attempting to have them resign with some sort of negotiated settlement. It’s also possible the same outcome might not be reached for all four of the employees.

Sheller did say “no lawsuits have been filed” in connection with the matter. Asked how long it likely will take for the employment issues to be resolved, Sheller replied that he expected it would be “something on the order of a month, give or take. A couple of weeks.”

Gamm also declined to say whether the board will make any future comment about what has happened to the employees or what the investigation revealed. “I wouldn’t rule anything out,” she said – including that there may be no future statement. Asked if the results of Calloway’s investigation into what happened with the 1001 program would be made public, she said: “I cannot guarantee that. It is currently privileged . . . I cannot guarantee any release of the report.”

Asked what reaction she expects from the church to the board’s decisions in this matter, Gamm said the decision to put the four men on paid administrative leave and to undertake an external investigation drew everything from praise to criticism, and “I would anticipate there would be a range of responses again.”

Information also has been made available about costs associated with the investigation:

Legal fees: The board originally hired a lawyer from Nashville, from the firm Butler Snow, but switched to Calloway’s firm of Alston & Bird in December when concerns were raised about a possible conflict of interest involving a board member and the first legal firm. So far, $80,526 has been spent from Nov. 14, 2014 through April 4, 2015, as follows:

• $4,424 to Butler Snow, LLP;
• $34,505 to Alston & Bird LLP; and
• $41,597 to Document Technologies Inc.

Gamm said Calloway’s firm – Alston & Bird – was asked to provide an estimate of their legal fees, in preparation for a revised 2015 budget for the board to consider at this meeting. The firm estimated their legal fees would be in the $500,000 to $750,000 range, she said.

Also, “Mr. Sheller has just begun” his representation in this matter, Gamm said – so more fees will be incurred there. Asked why Sheller rather than Calloway is providing legal counsel in attempting to resolve the employment issues, Gamm said Calloway’s firm was hired as an independent investigative counsel, and “in order to remain independent” that firm needs to refrain from giving the board advice as it attempts to resolve the employment issues.

Administrative leave: The costs for salary and benefits for the four employees to be on paid administrative leave for the time period from November 14, 2014 to April 4, 2015, came to $205,452.

Calloway reported his findings to the board’s executive committee in closed-door conference calls April 8 and 10, and to the full board April 15. That report remains confidential.

An investigation by the board’s audit committee – announced in the minutes of an August 2014 meeting – found that:

• On Dec. 3, 2013, PC(USA) employees set up an independent corporation in California, without authorization from the Presbyterian Mission Agency and using the name Presbyterian Centers for New Church Development Inc. That name is almost identical to the name the PC(USA) uses for its regional centers for evangelistic work.
• A $100,000 grant was made to the California corporation, outside of the normal review process of the Mission Development Resources Committee.
• A second grant was initiated but not completed. Valentine has said all the money was repaid.

The board’s audit committee determined that the four employees had violated the PC(USA)’s ethics policy.

Valentine said in a Nov. 12 statement that all the funds were returned and that while “mistakes were made,” the employees’ actions “were not for personal gain.” The employee who formed the corporation applied to the Internal Revenue Service for nonprofit status for the corporation, she has said. Valentine also said in the statement that while some had called for the four employees to be terminated, she had decided not to do that, although “strong new measures have been put in place to ensure this does not happen again.”

During its closed-door conference call meeting on April 10, the executive committee voted to instruct Barry Creech, director for policy, administration and board support, to “identify and remove from the public domain” documents related to the investigation, with the action to be taken by April 15, and “to create a list of those documents for inclusion in these minutes” of the April 10 meeting. The documents to be removed from the PC(USA) website include minutes of board and committee meetings, and Presbyterian News Service articles related to the controversy.

Gamm said during the news conference the documents were removed on the advice of legal counsel.