Employee Pay Questioned During Crystal Cathedral Bankruptcy Proceedings

GARDEN GROVE (AP) — Federal authorities were questioning the compensation packages of three employees of the Crystal Cathedral as the Orange County megachurch goes through bankruptcy proceedings.

The U.S. trustee overseeing the church’s bankruptcy filed objections in court over a six-figure housing allowance for its chief financial officer and the salaries of two relatives of founding pastor Robert H. Schuller, according to media reports Wednesday.

The U.S. trustee overseeing the bankruptcy of the megachurch filed objections in court questioning the need for $132,019 as a housing allowance for CFO Fred Southard, whose salary is just $12,000, the Orange County register said.

“There is no justification whatsoever for a housing allowance of this amount,” the court documents said. “Mr. Southard has failed to explain why such a housing allowance is necessary or appropriate, given this debtor is in Chapter 11 and suffering financial difficulties.”

The housing allowance is set aside for ministers and is exempt from federal taxes.

Southard defended the compensation package Wednesday, saying the church ordained him as a minister about 10 years ago and he has sometimes acted in that capacity.

“That’s what ministers are allowed to do, and so it’s to the individual’s advantage to do that,” Southard told the Los Angeles Times. “I doubt that many would spend what I do, because most people don’t live in the area I do.”

Southard, the church’s CFO since 1978, owns a home in Newport Beach worth $2.3 million, the Times said.

The trustee also questioned the need for a $70,000 annual salary for Schuller’s youngest daughter Gretchen Schuller Penner, who produces the church’s “Hour of Power” telecast, and the $55,000 salary of her daughter Neyva Penner Klaassen, who books musical guests for the TV show.

Cathedral attorney Marc Winthrop declined comment when reached by the Register.

The church, founded in the mid-1950s by Schuller, filed for Chapter 11 bankruptcy protection Oct. 18, citing debts of more than $43 million.

The church has ordered major layoffs, sold property and canceled its annual “Glory of Easter” extravaganza.

(© Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)


More From CBS Los Angeles

KNX 1070 Newsradio

Listen Live