Lax financial oversight riles some church followers

At First Family Church, money mysteries leave some of the faithful wondering: Is the church serving God's glory or the pastor's?

The Kansas City Star/March 11, 2007
By Judy L. Thomas

Jerry Johnston, the dynamic Johnson County pastor who leads one of the fastest-growing megachurches in America, has an unusual problem.

As hundreds of new worshipers flock into his First Family Church, hundreds of others have bailed out, complaining that the pastor they once held in high esteem appears more intent on building his own kingdom than God's.

"What he preaches from the pulpit, he doesn't put into action," said Bruce Shalberg, who was co-chairman of a fundraiser that he said raised millions of dollars several years ago to pay off the new church building. "You would have to call someone like that a hypocrite."

What's more, an examination by The Kansas City Star found that the church is structured in a way that provides little financial oversight.

Johnston dismisses such complaints, maintaining that they are merely attempts by his enemies to discredit him because of his church's success and his uncompromising stances on social issues. In a Feb. 18 sermon, he told followers that strong leaders should expect opposition.

"Whenever God's work is being built, Satan sends opponents, and he energizes opponents," Johnston said. "Beware of Satan as he speaks through different people."

The newspaper did not examine Johnston's religious doctrine or his positions on social issues, only the church's finances. Among the findings:

Broken promise. Johnston raised millions of dollars in late 2005 for a new children's building that was to include a Christian academy. But last August, despite completion of the building, he told church members that the launch of the academy was being postponed and that First Family instead would build a bigger, 5,000- to 7,000-seat sanctuary. Financial experts said that raised ethical and possible legal questions.
Delayed spending. In October 2000 the church launched the "Cornerstone Campaign" for its sanctuary, promising donors their names would be engraved on a large monument near the church entrance. Though $750,000 was raised, the monument wasn't erected until six years later, after The Star began examining church finances. And it was scaled down considerably from what was proposed in 2000.
Unexplained land deal. In 2005, Johnston told followers that God had answered their prayers — someone had donated more than 200 acres for a new youth camp. But real estate records show that Johnston's 25-year-old son, Jeremy, actually signed a $400,000 mortgage on the property in the church's name.

Johnston insists that the church, a Southern Baptist Convention affiliate, is accountable and run by a board of trustees that oversees all of its finances.

"They're respected Christian leaders," he said. "And they're everything from the former United States district attorney to very accomplished Christian businessmen."

But Tim Dollar, a lawyer listed in church corporation papers as a board member until January, acknowledged he hadn't been to a meeting in years. Dollar said he didn't even know who was on the board and hadn't ever attended the church.

The board's chairman, former U.S. Attorney Robert Ulrich, said no one had ever voiced concerns about church finances. But four former members of the church's building committee said they raised such issues repeatedly with Ulrich several years ago before leaving the church in frustration.

Even critics acknowledge that Johnston is a gifted orator with a strong grasp of Scripture. And supporters say that's what keeps them coming back. The church now boasts more than 4,200 members, a $17 million annual budget and a TV ministry that has gone global.

"I've never seen such a visionary," said Gary Krings, a financial adviser who joined First Family three years ago. "The guy is incredible. There are very few people I see that are making such an impact for Christ worldwide and locally."

But among Johnston's biggest critics are people who either worked for him or were in his inner circle — including former members of his board. Many were major donors, and several said they gave hundreds of thousands of dollars.

Although their backgrounds are diverse, they all shared similar concerns. They believe the church is in dire need of financial oversight.

"Jerry Johnston controls everything," said Jerry Simmons, a Johnson County developer who served on the church's building committee and helped acquire land for for its campus west of 143rd Street and Metcalf Avenue.

David Pinson, who is on the faculty at the University of Kansas Medical Center, said he left the church two years ago because Johnston refused to provide any financial information.

"There's zero accountability," said Pinson, who taught Sunday school and sang in the choir. "I did put money in the church, but I regret every penny of it."

Under federal law, churches — like many other charitable organizations — are exempt from federal income taxes. The law also prohibits pastors and their families from excessively benefiting from the tax-free money they raise and states that their compensation must be "reasonable."

Johnston and the board decline to reveal his compensation for his church duties or money he makes from a for-profit corporation he owns that handles his book and video sales and his speaking engagements.

But board member Jeff Anderson told The Star Johnston and his relatives could earn far more in the corporate world, although he also wouldn't reveal any salaries.

Critics, however, complain about the Johnstons' extravagant lifestyle and spending.

"There's big money being spent by and for the Johnstons, and no accountability for it," said Anne Balmer, who taught a Sunday school class with her husband, Glenn, before leaving last year over financial concerns. "His whole life is an endorsement of materialism."

She cited expensive family photographs and pricey vehicles. Others complained about costly clothing and homes, and an exclusive American Express card.

Johnston said only the church's board members were entitled to his salary information, and Ulrich agreed.

"Most industry and most churches do not publish that because of the privacy of the employee, among other reasons," Ulrich said. "But I can say that the board has approved everything, and the board represents the congregation."

Officials at several other large churches in the metropolitan area, however, said they provided their pastors' salaries to members who asked for it.

Former First Family members say hundreds of followers have left the church over the past decade because of accountability concerns. They describe Johnston as a Pied Piper, luring people in with impassioned sermons and celebrity speakers, then reeling in the members' money.

"If you've ever been to the church, you wouldn't believe that a man who could preach from the Bible as he does could lead a life that is just the opposite," said Shalberg, who left the church in 2004 after giving donations that he said totaled six figures.

Johnston granted a 35-minute interview in January to address the numerous financial questions. He brought in a public relations specialist from Dallas, who answered additional questions only by e-mail before declining to respond further.

"In an organization as large as First Family Church and with a high profile pastor who is somewhat controversial because of his conservative social stances, pastor Johnston knows that many people will support the church and choose to connect to the spiritual life, the community service and ministry actively going on at FFC," said Lawrence Swicegood, who described himself as the church's director of communications.

"However, he also realizes that a few will leave over the years and may become dissatisfied with the ministry, the conservative positions he takes, or some decisions he or the Board of Directors may make."

Johnston, 47, has come a long way since he was a disillusioned teenager partying and, by his own admission, doing drugs. But at 14 he accepted Jesus at a youth camp in central Missouri. At 19 he founded Jerry Johnston Ministries. Seventeen years later, in 1996, he started First Family Church.

Today, Johnston has gained national prominence through his tough talk on homosexuality, abortion and what he views as wimpy pastors who won't take strong stands on social issues. His positions have earned him appearances on "The Today Show" and "The O'Reilly Factor."

Those positions have prompted Johnston to use volunteer bodyguards for personal protection, as well as for church security.

Indeed, Johnston envisions himself becoming one of America's foremost religious leaders.

"Guess what?" he asked his congregation after rattling off the names of evangelists such as Jerry Falwell and Pat Robertson in a 2005 sermon. "Those men are getting old. Really old.

"See, God's calling us to step up to the plate. And there are national Christian leaders all over this nation that are looking to First Family Church to do the job."

Accountability issues

Perhaps the biggest criticism of Johnston's church is that members aren't allowed to see detailed financial information.

"We became very concerned financially about the fact that there was never a vote on anything," Balmer said. "You never get an accounting for how your money is being spent."

Simmons said he and his colleagues on the building committee went around and around with Johnston about the issue. The four, he said, had given six-figure donations to help buy the land to build a church.

"He would not open his books or give us the financial statements so I could take it to the banks to get the loan," Simmons said. "I told him, 'If we're going to build this, you've got to be totally transparent.' He kept giving all these excuses."

Simmons said he continued to request the financial documents. Then one day, he said, Johnston told him he'd gotten the loan for the land himself.

"And I said: 'Jerry, you can't do this. I have stood up on your stage and asked people to give money. I've got to have the books.' And he finally said, 'I'm not going to give you the books.' I said: 'Jerry, you've got to. This church does not belong to you.' And he said, 'There's the door.' "

Vicki Murray, another building committee member, said the group repeatedly asked Johnston for financial records. Murray said Johnston called her after Simmons quit, telling her he was broken-hearted and asking her to stay.

"I just said: 'Well, can I pick up where he left off? Am I ever going to get to see your actual books?' And he said that just wasn't important to him. The ministry and the fundraising and everything else was. And if that was the way I felt, then perhaps I should go, too."

Within weeks, the entire committee quit.

Speaking generally, Johnston denied that members had been turned down when they asked to see financial information.

"Respectfully," he said, "I disagree."

The best way for any church to ensure accountability is to be open, said Dan Busby, vice president of the Evangelical Council for Financial Accountability, which sets standards for charities and religious organizations.

"If there isn't that basic appropriate transparency, then people in and out of the congregation will tend to believe that something is being hidden, whether or not it is," Busby said.

But First Family Church is not a member of the accountability council, and Johnston said church audits were only for the board members to see. He said that tithing church members had online access to some financial information, but former members said it consisted only of weekly offering and general budget figures.

Johnston declined The Star's request for copies of First Family's annual audits, conducted by a Texas firm. But copies obtained from a former employee showed that in 1999 the church's assets totaled $3.8 million. By 2002 they'd soared to $13 million. Offerings have risen as well. In 2004, they totaled $4.9 million. But in the first three quarters of 2006 alone, they were $9 million.

The audits, however, are not very detailed and categorize spending under such headings as "church activities" and "general and administrative."

But First Family's current $17 million budget is hefty considering its 4,200 membership. By comparison, the United Methodist Church of the Resurrection in Leawood has nearly 12,000 members and a budget of $12 million. College Church of the Nazarene in Olathe, with 3,200 members, has a $7 million budget.

The Evangelical Council for Financial Accountability also stresses the importance of an informed board. Johnston at first said First Family's board consisted of 10 or 11 members, including himself and his wife, but later provided The Star seven names.

Still, it remains unclear how board members are selected. Johnston said members appointed other members. Ulrich, the chairman, said he was elected by the congregation. When asked whether church members still elected board members, he said, "Well, the bylaws have changed."

The church denied The Star's request for a copy of the bylaws.

Ulrich, a Missouri Court of Appeals judge who has been chairman of the church board for nine years, also insisted that no one had questioned church finances.

But all four members of the church's former building committee said they met with Ulrich at his office and with him and other board members later to voice their concerns.

"I said: 'We want to see the financials, Judge. We are stakeholders in this church,' " Simmons said. "He said, 'I assure you, you will all have copies of the financials by Friday.' I called him a couple of times, and he said they were working on them. But we never got them."

Asked later about the meetings, Ulrich said he recalled them. But he said he didn't remember discussing money or "any question about financial responsibility or misuse of funds or anything like that at all."

Broken promise

The exciting announcement came in mid-2005: First Family was going to build a Christian academy that would rival the metropolitan area's finest schools.

Johnston hired John Carver away from a Christian school in Indiana to become headmaster of First Family Christian Academy. Johnston introduced him at the Oct. 23, 2005, service in a rousing speech in which he talked of the church's staggering growth.

"We have prayed for nine years for this," he said.

An October 2005 church booklet said the school would open in conjunction with a new children's building.

"We are very prayerfully planning to launch our academy grades K-5 in August of 2006 with the addition of the middle school and high school in August of 2007. We will begin taking applications for our opening classes in the spring of 2006," it promised.

On Nov. 6, 2005, Johnston reminded worshipers that some families had offered a $2.5 million "challenge gift" to build two buildings — one for small children and another for older youths. The gift had to be matched by the end of the year, he said.

Johnston later told followers they needed to give beyond tithing to match the $2.5 million donation for the new buildings. The faithful opened their pocketbooks. And on Jan. 8, 2006, Johnston proclaimed, "We have matched our goal, and we have received the $5 million that we need. And that is huge."

He said the Christian Academy would open in August. By March, however, things had changed.

Johnston said a construction delay had postponed the church's ability to obtain an occupancy permit in time for the school to open.

By August, Johnston was the bearer of more bad news: "In the ensuing months we have realized, due to the rapid growth of First Family Church, that our next building must be a 5,000-seat auditorium (sanctuary). … So we are having to postpone our plans to launch a Christian Academy."

In less than a year after arriving, Carver was out of the school headmaster job with a family of seven to support. Carver, who remains in Johnson County, declined to discuss what happened and is no longer attending church services at First Family.

Several church members interviewed by The Star said church staff told them that the reason the school didn't open was because it didn't meet building code requirements. Carver, however, said the building code explanation was "not true."

Johnston maintains he hasn't given up on the school.

"We are very hopeful to have a Christian Academy operating through First Family church in the days ahead," he said.

Even though the children's building opened in September, some critics remain upset that Johnston raised millions of dollars on the promise that the building would include the Christian school.

Busby, of the Evangelical Council for Financial Accountability, said the switch raised ethical and possibly legal issues.

"Donor-restricted fundraising is as simple as saying what you mean and meaning what you say," Busby said. "If they coupled the building and school together, then they were duty-bound to build the building and develop the school with the money. … That's an ethical and integrity issue if it is not a legal issue."

Ulrich, however, disagreed.

"As I understood, the promises were made that the buildings would be constructed, first one building for youth … the second one for children of essentially preschool through sixth grade. So our belief is that we have complied with any promise we've made or that might be implied," he said.

Critics also complain about another church project that didn't materialize for six years.

The Cornerstone Campaign was launched in 2000 to pay for contents to furnish and equip the new church, which opened in April 2001.

According to church literature and a promotional videotape, donors' names would be engraved in large type on a 1½-ton stone shaped like the Star of Bethlehem. The stone was to be placed in a landscaped plaza outside the church entrance. Church literature indicated that $750,000 was raised, but donors wondered for years what happened to the monument.

"I'd made a donation in each of my girls' names for the Cornerstone Campaign, and it never got done," said Shalberg, who said he contributed $5,000. "That was one of the main reasons we left."

But in December, after The Star began examining church spending, Johnston wrote contributors that "although this campaign fell short of our goal, preventing us from completing the monument," the church was now able to erect it.

A scaled-down version of the monument was recently placed outside the church. Instead of being engraved on large blocks, the donors' names are listed in tiny print on a plaque on top. Some who donated said their names were omitted.

Church board member Fred Riley said last week that "it probably could have been done sooner."

Unusual land deal

In October 2005, Johnston had another big announcement: Someone had donated a large parcel of land for a youth camp.

"Forty minutes south from the front door of this church is 211 acres that, thanks to two different donors, First Family Church has acquired for us to have our own youth camp, retreat center. We've got the ground, and it's going to be an awesome future for us," he said.

Two months later, David Vanlerberg sold the Linn County, Kan., property to First Family Church. That same day, real estate records show that Johnston's son, Jeremy, signed a $400,000 mortgage on the property. Some church members said they were not told about the mortgage.

The holder of the mortgage — Vanlerberg Farms — was formed just 17 days earlier.

Vanlerberg, an Olathe businessman, acknowledged in an interview that the land wasn't donated but instead was purchased by the church. He said he talked to both Jerry and Jeremy Johnston about the transaction.

"They got a wonderful deal on it," he said. "I don't charge them but 5 percent (interest)."

Neither of the Johnstons, however, would discuss the transaction.

"Our board of directors handles all those details," Jerry Johnston said. "I don't know all those details."

Ulrich, the board's chairman, said: "I hesitate to talk about the arrangement with the individual who donated the land. But I would simply say some of it was donated. A significant amount was donated."

Last week, board member Jeff Anderson added to the confusion by telling The Star that although the church signed a mortgage on the land, someone else was helping pay for it.

Now, 17 months after Johnston's initial announcement, the property sits idle.

Johnston did, however, bring up the property during a Jan. 7 church service, telling followers that he had visited it on Christmas Day.

"I was reminded on Christmas Day how our entire church should be praying for that camp," he said. "Let's keep the vision alive."

About the stories

The Kansas City Star began researching First Family Church last summer after a group of former members contacted a reporter to express concerns about financial accountability.

Reporter Judy L. Thomas interviewed dozens of former church members, current and former board members, tax experts and the Rev. Jerry Johnston for these stories.

Johnston granted a 35-minute interview in January, but deferred further questions to Lawrence Swicegood, a Dallas public relations specialist.

After answering questions via e-mail, Swicegood said he thought that Johnston had been cooperative and that "I have instructed him that we are now moving on and will no longer engage in more and more questioning."

The Star also researched dozens of Johnston's sermons archived on the First Family Church Web site for verification of complaints about accountability. But after the newspaper interviewed Johnston and sent follow-up questions to the church spokesman, the sermons were removed from the site.

Thomas is a longtime member of the United Methodist Church of the Resurrection in Leawood.