Federal Bankruptcy Filing Questions Compensation at Crystal Cathedral

Nov. 18, 2010— -- The U.S. trustee overseeing the bankruptcy proceeding of megachurch Crystal Cathedral filed objections to the salaries of three staff members, including two family members of the pastor, Robert A. Schuller.

A court document filed last Friday states that the job descriptions of Schuller's youngest sister, Gretchen Schuller Penner, and her daughter, Neva Penner Klaassen, overlapped in producing the church's "Hour of Power" TV program.

Gretchen Penner, first employed in March 1999 as executive director of programming and director of prayer ministry, had a 2009 salary of $69,525. The total 2009 compensation for her daughter, Neva Klaassen, was $55,099. Klassen began working as programming manager in July 2004 and managed the scheduling of music guests and directed the Sunday evening services, according to her job description.

"We don't agree with the objections and will be responding through the appropriate process," said Marc Winthrop, a lawyer for Crystal Cathedral. Calls to Frank Cadigan, assistant U.S. Trustee, who is overseeing the chapter 11 bankruptcy were not immediately returned. The U.S. Trustee program is under the umbrella of the Justice Department.

The U.S. Trustee also objected to the salary of Crystal Cathedral's chief financial officer, Fred Southard, who received a $132,019 housing allowance and $12,242 salary. The court document states that records "fail to set forth" why the church "needs to employ Mr. Southard as CFO and Director of Finance, when there is apparently a full time accounting staff employed" by the church in Santa Ana, Calif.

"Mr. Southard's role may be duplicative and discovery needs to be conducted in order to determine whether Mr. Southard's continued employment is necessary," according to documents filed on Friday.

Southard was employed in his current position since 1978 and worked approximately 60 hours each week, according to court records. The Orange County Register reported that pastor Robert A. Schuller had the highest salary of $196,478 followed by Southard, who had total compensation of $156,710, including his housing allowance.

The megachurch, founded by the Schullers' father and television evangelist, Robert H. Schuller in 1995, filed for Chapter 11 bankruptcy in October to restructure its staggering debt.

In a sermon just a week after filing for bankruptcy, Robert H. Schuller pleaded with his congregation for help.

"I need more help from you," Schuller said, according to the Orange County Register. "If you are a tither, become a double-tither. If you are not a tither, become a tither. This ministry has earned your trust. This ministry has earned your help."

Schuller's voice cracked with emotion as he told congregants about his family home and cornfield in Iowa getting flattened by a tornado when he was a teenager.

"I learned from my father that tough times never last," Schuller said. "Tough people do."

"Budgets could not be cut fast enough to keep up with the unprecedented rapid decline in revenue due to the recession," Senior Pastor Sheila Schuller Coleman said in a statement. Services and programs at the landmark church will continue, including the "Hour of Power" TV program, she said.

The beleaguered glass cathedral canceled its "Glory of Easter" for the first time this year and could be forced to cancel its popular Christmas spectacular. The pageants, which charged up to $45 admission, drew thousands of people.

"It was a very big production," said Juliet Noriega, the wardrobe manager for the pageants, who claims she is owed more than $11,000. "The three wise men rode in on camels. The roman centurions made their entrances on horses. Because the cathedral was such a large venue everything they did there was quite large. There were 200 people on stage and thousands of costume pieces."

Other long-time vendors for the "Glory of Christmas" pageant still waiting to get paid are Kristina Oliver, who supplied camels, horses and sheep; dry cleaner Bruce Johnson, who cleaned the actors' costumes; props manager Sharon Crabtree, and Carin Galletta, whose public relations firm handled the publicity.

"There would be mainly three big camels that the kings would ride and five horses, a donkey, and goats and sheep," said Oliver, who is owed more than $50,000, according to court papers. "It would be two months that I would be down there on the grounds."

In a statement , Schuller Coleman said the bankruptcy filing was necessary because a small number of creditors chose to file lawsuits and obtained court-ordered writs to attach the church's bank accounts and assets in an attempt to get paid immediately.