Has the Robert H. Schuller Family Been Running a Crystal Ponzi Scheme Cathedral?

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We posted an item earlier this morning about two Orange County men who stole nearly $10 million from investors in separate Ponzi schemes. Now, we must ask, what is it if not a Ponzi scheme the Robert H. Schuller family has been running, at least based on the lawsuit brought by unpaid creditors of their bankrupt megachurch?

In a Ponzi scam, the crook takes money from investors promised huge returns, sometimes even trickling back payments to the initial marks that are labeled returns but are actually small portions of investments from new stooges (ala a pyramid scheme). But none, or hardly any, of the funds are actually invested, being spent by the thief on his or her lavish lifestyle.

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Illustration by Thomas Pitilli
According to Friday's court filing and as previously reported by the Weekly, the Schullers reaped generous salaries and perks for nine years while their Crystal Cathedral Ministries have nosedived financially. Similar to a Ponzi schemer using some funds to hide his tracks, the ministries also borrowed $10 million from endowment funds to make payroll and maintain the 40-acre Crystal Cathedral campus in Garden Grove, the suit alleges.

The Schullers are accused of having exerted their influence on the church to better themselves financially with huge salaries, housing allowances and other benies to the detriment of creditors, reports the Orange County Register. As the bankruptcy proceedings continue, the Schullers want to keep getting paid along with Crystal Cathedral's creditors. The lawsuit seeks to stop this, or at least hold off paying family members until the creditors are fully paid off. Unsecured creditors are owed more than $7.5 million.

Schuller family members claim through their attorneys that the lawsuit contains many inaccuracies and that there is no reason they should not keep getting paid what they have been getting paid.

Here's the Register's rundown of specifics found in the creditors' complaint:

  • Robert H. Schuller was given a discretionary fund of $300,000 after he handed over the ministry to his son Robert A. Schuller in 2006. He continued to receive compensation and housing allowances and received as much as $257,000 in 2009. He was also granted access to a 12th floor office suite. Schuller's agreement also guarantees both him and his wife, Arvella, health insurance, staff and travel staff for the rest of their lives. Schuller's claim: $55,226.27. Robert H. Schuller International, Schuller's company, also demands contractual payments totaling $223,078.09.
  • Robert A. Schuller who resigned as senior pastor in 2008 was given a $235,000 reserve fund to help found a new church. Both he and his wife, Donna, were to be paid salaries and benefits for a year after they left. Under the agreement, Crystal Cathedral Ministries also agreed to give Robert A. Schuller's new church a Mercedes Benz vehicle and $1 million in seed money for the new church. If a new church was not established, the younger Schuller and his wife would receive full salary and benefits for one additional year. The couple also occupied a condominium in Laguna Beach that was owned by the church. Robert A. Schuller's claim: $1.4 million.
  • Paul and Jeanne Dunn: Both Paul and his wife Jeanne Dunn were compensated until the filing of bankruptcy for producing the Glories although the pageants were not produced in 2009 and 2010. Dunn's agreement in 1992 gave him retirement benefits, life insurance, medical and disability insurance, paid staff, business, housing and car allowances. He was also allowed eight round trips per year from Hawaii, where he lives, to California. Paul Dunn's claim: $52,037.57; Jeanne Dunn's claim: $25,908.
  • Tim and Carol Milner: The suit alleges that Tim Milner received $10,000 per month in salary since 2006 to provide services at the discretion of his father-in-law and that he had no defined role or duties. Carol Milner was given a salary and housing allowance as well, but she provided "little or no benefit" to Crystal Cathedral Ministries. Tim Milner's claim: $ 98,313. Carol Milner's claim: $10,615.
  • Fred Southard: The only insider who was not a Schuller family member, Southard was the CFO of Crystal Cathedral ministries who retired early this year. He received a tax-free housing allowance of $132,019.33 per year. The complaint alleges that he loaned $100,000 to Crystal Cathedral Ministries and in return received a deed of trust on a specific property. However, the deed of trust was not recorded. Southard has filed two claims for $49,785-97 and $100,000 respectively.



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