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.

No Manna From Heaven

The cathedral owes about $7.5 million to unsecured creditors and it has a $36 million mortgage on its sprawling 40-acre grounds in Garden Grove. According to court papers, the church has assets of between $50 million and $100 million.

"For these reasons, the ministry now finds it necessary to seek the protection of a Chapter 11," she told reporters.

The church's money troubles have forced it to lay off 140 people in the past year, halve its "Hour of Power" air time and even dismiss its orchestra and professional choir singers, church officials have said. The church choir is now made entirely up of volunteers. In May, the church sold land donated by a San Juan Capistrano couple for $22.5 million.

The cathedral decided to file for Chapter 11 only after some of its creditors sued for payment, according to church officials. Hundreds of creditors could be owed between $50 million and $100 million, according to documents filed in U.S. Bankruptcy Court. Its largest creditors include several television stations.

Leadership Challenges

The iconic church was founded by the Rev. Robert H. Schuller in a rented drive-in movie theater in 1955 and came to prominence through the "Hour of Power" television show, which reaches millions of viewers.

Shuller's son, Robert A. Shuller had been groomed for years to succeed his father.

But his tenure as senior pastor lasted barely two years until he said his sisters and brothers-in-law forced him out.

"They said my sermons weren't adequate for the 'Hour of Power.' Then by October they said that I couldn't preach any time on Sunday mornings, and with that I resigned. So you tell me whether I was kicked out or whether I resigned," he said.

Robert A. Schuller's daughter, Angie Schuller-Wyatt is even more blunt.

"When you mix faith, family and fame it's a toxic combination. And people start vying for positions of power. And I think that's what led to the Crystal Cathedral crumbling," she said.

Robert A. Schuller now runs a successful Christian media network with his son-in-law called AmericanLifeTV, that they recently purchased from the Unification Church.

His daughter Angie has a website called SpiritualWellness.com, that helps victims of spiritual abuse.

The Shuller's who are still holding on at Crystal Cathedral include Angie's aunt, Sheila Shuller Coleman, Robert H's daughter, now senior pastor.

It fell to her to break the news of the bankruptcy on the steps of the chapel.

In January, faced with a $55 million budget deficit and a 27 percent drop in revenue over the last two years, the church began slashing costs.

At a news conference last month, Schuller Coleman echoed her father's popular proverb, "Tough times never last, but tough people do." She stressed that the church's "message of hope will continue."

Schuller did not return phone calls seeking comment.

The Associated Press contributed to this report.