Houses of the Holy

A Star investigation into Toronto's Prayer Palace congregation finds that despite the members' dutiful tithing, the church spends little on charitable projects

Toronto Star/March 4, 2007
By Jessica Leeder, Andrew Chung and Dale Brazao

After worshipping at the Prayer Palace this morning, Hyacinthe Houghron will, as she does every second Sunday, stuff her tired green minivan with a small feast: six coolers of homemade soup, a mountain of sandwiches, cakes and sweets.

Loaded down with second-hand clothes pulled from the ceiling-high piles in her hair salon, she'll give out the goods to homeless people on downtown Toronto's grittiest streets.

Missions like this aren't cheap for people like her and other volunteers at the church. "We're poor folks," says Houghron, describing the majority of the 3,000-strong congregation who attend the spaceship-shaped church at Hwy. 400 and Finch Ave.

The hairdresser scrapes together $600 of her own money each month to keep up the program because the Prayer Palace – one of Canada's largest evangelical churches – stopped running it five years ago. Other charitable works, like a promised orphanage in Brazil, either dried up or never materialized.

Meanwhile, the three white pastors – Paul Melnichuk and his 40-year-old twin sons, Tim and Tom – lead lavish lives in contrast to the mainly working-class black families that make up the bulk of the church.

Between them, the pastors have amassed a real estate fortune worth about $12 million. Each owns a multi-million-dollar country estate north of Toronto (Tim's is worth as much as $5.5 million), they share a Florida vacation villa, and the pastors and their wives drive luxurious cars – among them a Porsche Cayenne SUV, a Lexus RX 330 SUV and a Mercedes-Benz CLK 320 convertible.

Congregants are largely unaware of the pastors' extravagant lifestyles.

"Wow," says Leslie Stewart, 63, who works in a paint factory six days a week and gives 10 per cent of his income to the church. "I never heard of anything like that. But if I release my tithe and they misuse it, they have to face God."

The Prayer Palace has a devoted congregation. Most worshippers believe in tithing, the practice of donating 10 per cent of one's income to the church, and each year they give a reported $3 million. "The people love (the Melnichuks)," Houghron says. "Pastor Paul ... loves the Lord. He does God's work."

In addition to personally funding the homeless program, Houghron – a staunch supporter of Pastor Paul – tithes and also gives him $100 to $200 cash for his birthday. "He's never given me gifts like that but he's given me spiritual gifts," says Houghron. "He encourages the work I do for the homeless."

The Prayer Palace offers several exuberant religious services each week. Conducting them, combined with the pastor's church-building efforts, qualifies the Prayer Palace as a charity under federal law, making the church exempt from taxes.

However, a continuing Star investigation into Canadian charities has found the church devotes little money to charitable work. In fact, the church's most recent financial statements show that only $9,443 was spent on "benevolent and charity" activities in 2005. The church's annual "missions" fluctuate between $500 and $36,704 in the past few years.

The Star was unable to get access to the Prayer Palace's internal documents, and so could not determine if money donated by congregants went into the pastors' houses.

The church and the pastors refused requests for an interview. In response to a series of written questions, the Star was told that the church exists "to point people to a better life through Jesus Christ." The church provided a long list of charitable works, including Houghron's homeless work, which were counted as its own.

During sermons the pastors exhort worshippers to give generously if they want the Lord's blessing. "What's half a million dollars to a congregation like this? Peanuts," 72-year-old Pastor Paul thundered one recent Sunday morning, asking members to help fund an "evangelical explosion" in Toronto. In another sermon, he said: "Abraham received wealth, blessing and prosperity – not because he worked, but because he believed in a God that was bigger than the economy."

The Canada Revenue Agency, which regulates charities, has a policy that forbids it from discussing specific charities. In response to a general question, a CRA official said strict rules govern the use of charitable donations and assets. People involved in a charity cannot financially benefit from their efforts.

Asked how the pastors could afford their lifestyle, Prayer Palace officials responded that the question "is not related to charities."

In his sermons, Pastor Paul works hard to convey to his flock the notion that he and his family are simple people who shop at discount stores. However, the Star found that the three pastors' houses are extravagantly appointed. Tim's King City house boasts nine-metre ceilings, a state-of-the-art, nine-seat home cinema, Italian onyx floors and a five-car garage, and was recently put on the market for $5.5 million.

What's more, Pastor Paul and his twins fly to family reunions in a helicopter, and they frequently travel to their Florida vacation villa, which was built last year.

Church financial documents show a number of items related to the family's recent flurry of activity in the U.S. Those include a $1-million transfer of Prayer Palace funds to a "Florida mission" during the same time the pastors built a Spanish-style waterfront home there and bought a small church.

In researching this story, the Star interviewed more than three dozen current and former church members, contractors who worked on the Prayer Palace and other Melnichuk building projects, and other family associates.

The church's most devout followers say that if wealth ends up in the pastors' hands, it's because God sees fit. Still, in looking at the church construction and several of Melnichuk's personal house-building projects that overlapped it, the Star found the lines between the two often blurred.

For example, as the church prepared to turn sod on the $27-million Prayer Palace, Melnichuk had a construction company pave his own driveway instead of paying the full cost of renting space on church property for storing equipment. Also, a valuable strip of Prayer Palace land was sold to a company connected to the Melnichuks.

The church's financial documents raise numerous questions. Total salaries for the pastors and other staff (it's unclear how many are paid) was listed on Prayer Palace documents as more than $1 million in 2005, the last year reported, up from about $750,000 two years earlier. The most recent documents show one salary of more than $119,000 – likely that of Pastor Paul – and three salaries between $80,000 and $119,000.

In addition, Prayer Palace financial statements show "housing allowances" of more than $125,000, but the documents don't specify the recipients.

The documents also show annual vehicle and travel expenses have doubled in the past two years, jumping to more than $175,000. The original cost of the vehicles in the Prayer Palace fleet is over $500,000. Documents obtained by the Star show the red Mercedes convertible is registered to the Canadian church but kept at the pastor's Florida villa.

The Star found the pastors and their wives also drive, besides the Lexus and Porsche SUVs, an Audi A6S sedan, BMW 7 Series and 3 Series sedans, a Lincoln LS and Towncar, and a red, oversized Dodge pickup. The Lexus is also kept in Florida.

With pastor Tom contemplating construction of a helipad at his Caledon home, the family's opulence is on an upswing at a time when the Canada Revenue Agency has recently removed the charitable status of several religious charities. Audits obtained by the Star show they got in trouble by using vehicles for non-charity business, sending money out of country for work deemed not charitable, and paying high salaries to leaders.

John Pellowe, head of the Canadian Council of Christian Charities, said laws don't compel churches to be open about their finances. Speaking in general terms about accountability, he said church members must themselves press their boards for transparency: "Are they doing what they said they would do with your money?" Pellowe's group conducts audits of council members who voluntarily provide their financial information. The Prayer Palace is not a certified member of the group.

One morning each week, as thousands file into the Prayer Palace's soaring sanctuary, they enter into a spectacle. At centre stage is Pastor Paul's transparent altar, flanked by fake palm trees and backed by huge fibreglass rocks. Hordes of children, suit-clad men and women in their glittering Sunday best pack the pews. They hold hands, swaying and singing along to music from a live band and dozens of singers that is amplified so much, the ears ring. On their feet with hands held high, eyes clenched, the congregants speak to the Lord, sometimes in tongues.

The music usually dies down after an hour, when Pastor Paul leaves his front-row seat. His tan gleaming against his white shirt and dark suit, he nimbly jogs up the red-carpeted stairs to his pulpit on the stage.

His presence so moves some members that they leave their seats and, arms flailing, sprint around the centre aisles while the pastor begins to speak. At a recent service his opening words caused one woman to stand up, tilt her head skyward and scream out an unintelligible rant to the Lord, then collapse.

"Let her go," the pastor said. He's been watching members connect similarly with God for 50 years, he told congregants, and has no plans to stop.

"You'll never get rid of me. The only way you're getting rid of me is in a casket." A charismatic, southern-U.S.-style preacher, Melnichuk has built the Palace from humble beginnings at a small Etobicoke church. With the help of his sons, Melnichuk has also built satellite churches in south Florida and Barrie, Ont., and maintains a devout television following on Canada's Miracle Network.

Many of his current followers have been with the pastor for decades, including Houghron, who attended her first Pastor Paul sermon in 1981. "The moment I walked in, it was like someone just put their arms around me and hugged me," she recalls. "He has a great anointing on him."

Born in 1934 in Alberta, Paul David Melnichuk was the fifth child in a large family of working-class Ukrainian immigrants. As a teenager in Brantford, Ont., he received a calling to follow in his lay minister father's footsteps, recalls Paul's youngest sister, Anne Kloetstra. "He said if he was meant to devote his life to God, his hair would be curly. His hair went curly."

Paul eventually went to Eastern Pentecostal Bible College in Peterborough, where he met his wife, and took his first posting with the Pentecostal Assemblies of Canada at a small church in Nova Scotia's highlands.

The pay there was meagre, and Paul and his young wife, Kathleen, had difficulty. "His wife had to go through (donation) bins ... to find nylons," Kloetstra recalls. "He said she'd never do that again."

By 1979, the pastor had moved his family back to Toronto. Two years later he split from the Pentecostal Assemblies to start his own charismatic church in Etobicoke, Faith Cathedral. There, his efforts were dogged by controversy.

In 1981 the Pastor came under fire for publicly insulting Jews in a taped sermon. "I would never pray for a Jew; I think they're the most miserable people in the whole world," Melnichuk said. "You (Jews) cheat us on everything you do."

He also referred to the Roman Catholic Church as "that big whore." Melnichuk publicly apologized for both comments months later.

In spite of the hate incidents, Melnichuk's church continued to prosper, buoyed by a rising tide of West Indian immigrants, who fed off his trademark, southern-style preaching. People who'd never seen him heard his audiotapes.

"The word got around about this man who preaches like a black man," says Houghron. "Jesse Jackson is peanuts compared to the way this man preaches."

By the late 1980s, the pastor's flock had outgrown the church. He built a larger building in the Jane St. and Finch Ave. W. area, and began using the name the Prayer Palace. By 2001, the church expanded again, opening its current colossus.

"Nobody has left a religious mark on the city the size of that man's," says Al Bowen, the long-time head of north Toronto's Abundant Life Assembly. "I see him as a religious Mel Lastman or Ed Mirvish. I see him as a movie star."

Prayer Palace pamphlets boast that with members from 52 nationalities, the congregation runs 30 ministries, including the homeless program that Houghron organizes. But in examining some of the church's most highly touted programs, the Star found that most require little or no effort or actual investment on the part of the church.

For example, the church advertises that it runs a weekly food bank. While churches often use donated money to stock the shelves, the food at the Prayer Palace, which helped about 1,150 families last year, is actually supplied by the North York Harvest Food Bank.

In 2001 the Prayer Palace also stopped busing homeless people to the church to allow them to eat, shower and sleep. Houghron says she recently asked to use one of the two buses the Prayer Palace owns to restart that program, but was told no. "I'm on the verge of trying to get my own bus," she says.

In its response to the Star, the Prayer Palace said it also provides hospital visitation, and a mission in Nicaragua, and helps abused mothers in the Congo. Prayer Palace members do visit people in the hospital, but they say it costs nothing. As to the overseas missions the Prayer Palace mentioned, the Star could find no evidence to confirm this claim.

At each Prayer Palace service, sometimes twice, yellow-jacketed ushers carrying buckets collect donations – in both loose cash and envelopes bearing donors' names. The money is taken to a counting room and stored in a vault.

Some former church members interviewed by the Star listed the way the church handles money as a key issue in their decision to cut ties with the Prayer Palace. A former office worker questions why the Prayer Palace keeps a binder of blank cheques in its office, pre-signed by the president of the board. "It struck me as very unusual," the person says. "They can be given to anybody."

A woman who attended the church for nearly a decade and quit last year complains that, "If they knew where you lived and the type of house you had, you were expected to give more.

"It's not a church, it's a business. It's not a place we could call home."

In front of his congregation, Pastor Paul takes pains to hide his wealth. During a recent Sunday service, the pastor fiddled with his reading glasses and bragged that they came from the dollar store.

"The $300 ones break easily," he told church members. "The dollar glasses at the bargain store don't. I believe that God has invented the dollar store for people like you and me."

Yet Paul Melnichuk enjoys a level of domestic luxury most of his congregants couldn't even imagine. Without its hulking iron gates, anchored by towering stone pillars and accented with gold leaf detailing, his mansion would be easy to miss.

The three-winged stone house at 3510 Sixteenth Sideroad in King City is set so far back from the street – linked to it by a 300-metre driveway – and nestled inside such a thick, forested landscape, it's nearly invisible to passersby. Apart from the gates, the 15-acre property's only visible markers to onlookers are a few life-sized stone statues and the man-made pond made picturesque by a nearby weeping willow.

The home, which area real estate agents say would sell for at least $3 million, is the latest in a long line of properties the Melnichuks have bought north of the city since putting down roots in Toronto.

Supporters of the Melnichuks say a series of good real estate decisions helped Pastor Paul and his wife, known at the church as "Mrs. M," get to their current affluence.

"Mrs. M is smart with money," says Diane Risser, a mother of seven and the wife of long-time church board member Tal Risser. "She'd hide money under the rug in the early days so her husband wouldn't give it all away." Kathleen also taught her boys to invest early in real estate, Risser says.

Tim Melnichuk's five-acre King City château, on Dearbourne Ave., is being advertised as "country living at the highest level" in the real estate listing, with a home cinema, five-car garage, seven bathrooms and seven bedrooms.

The other twin, Tom, recently bought a $1.35-million retreat in Caledon. The two-storey stone structure set atop a heavily treed hill has undergone significant renovations since Tom moved in, including landscaping so extensive he sheared off the top of a hill and adorned it with a small mountain of rocks.

Tom, also a helicopter pilot with the Toronto-based company Four Seasons Aviation, owns shares in the latest in a series of south Florida properties his parents have bought over the past 20 years.

They include a Spanish-style villa in Bradenton on the Manatee River that Paul, Kathleen and Tom have visited several times since Christmas. The home was built in 2005, the same year the Prayer Palace's Canadian office transferred $1 million to its "Florida mission."

The home, worth well over $1 million U.S. and in an exclusive neighbourhood called Pleasant Point, has an outdoor pool and spa, a covered sunroom and a lengthy dock with a Sea-Doo.

Neighbours there say the Melnichuks have approached them to buy their properties too.

Sources who were involved in the church construction allege Pastor Paul got deals on personal building projects, including the home he currently owns in King City, at the church's expense.

One of those deals has its roots in a 1999 agreement he struck with Armbro Construction, which has since been purchased by Aecon, the country's largest public construction company. At the time, the company was under contract to resurface a section of Hwy. 400, and wanted to rent space to store equipment at the Prayer Palace.

Instead of making full rent payments to the church, Melnichuk senior asked Armbro to build his 300-metre King City driveway, a company source confirms. Documents obtained by the Star show the driveway, built in December 1999, cost $45,000. The curbs alone cost $23,000. "It was better than the 401," a former Melnichuk insider says of the driveway's quality.

The company source, who asked not to be named for fear of losing his job, says the deal "is not the way our company normally does business," and was about "keeping the peace or something ... it's partly the cost of doing business." Aecon's top public relations official would not comment.

A source who worked on the project says there were other deals as well – "It wasn't run like a normal job where you'd have checks and balances."

That lack of accountability, the source says, enabled the family to capitalize on the church's construction to obtain discounts from trades people for renovations at their homes.

Stonemason Valerio Vuaran says he experienced the deal-making first hand. Vuaran was brought in to bid on brickwork for the new church, but says Paul Melnichuk asked him to first raise the chimney at the home of his son Tom. After Vuaran completed the job and presented a bill for just over $6,000 to the pastor, he says, he had "to fight" to get Tom Melnichuk to agree to pay just $4,000.

The Star also uncovered an unusual land deal involving the most commercially viable part of the Prayer Palace's undeveloped property. The land fronts onto Finch Ave. west of Hwy. 400. If developed, it could have been worth millions for the Prayer Palace.

Charities are required by law to use property for the benefit of the organization's mission.

However, during construction, the Prayer Palace sold that land to a company called Katpa Holdings Inc., which appears to be named after Kathleen and Paul Melnichuk. The company's sole director was their son-in-law, husband of daughter Miriam Patey. The Prayer Palace says the sale was done to raise money for the construction of the church. Documents obtained by the Star show that Paul and Kathleen funded Katpa with more than $1 million to make the purchase.

Today, Katpa still owns the property, which is slated for development. Frank DeLuca, the Melnichuks' friend and the church's real estate agent, says he now owns the company and its land, and the Melnichuks are no longer involved. However, he won't say what he paid for it.

The Melnichuks' evangelical empire continues to expand even as their charitable capacity dwindles. Two years ago, they purchased a small church in Bradenton, Fla., for $750,000, and called it the Zion Worship Center. This, in spite of the fact that their first foray into Florida church building ended a decade ago in failure.

Canadian Prayer Palace members interviewed by the Star say they have little knowledge of the Florida church, for which the Palace set aside more than $1 million, according to financial statements. The Star recently attended a Sunday evening service at the aging stucco church. It's unclear how it supports itself, since there were only 10 congregants. Pastor Archilles Decarolis referred questions to the Prayer Palace.

Melnichuk has no plans to stop expanding. He recently announced to his Toronto congregation a new vision for growth: another church, bigger than all the others. "The devil wants to keep us right here!" he roared. "We've got to remove the devil!"

He described a church to accommodate up to 20,000 people anchored on a 20- to 50-acre lot somewhere north of the city.

"We're going to keep on going," he vowed, "until we reach every part of the city of Toronto."