The U.S. trustee and creditors in the Crystal Cathedral bankruptcy proceedings have questioned spending at the Garden Grove-based megachurch, which has long kept its finances under wraps.
In documents filed in U.S. Bankruptcy Court in Santa Ana, the trustee and the creditors concluded that the church paid at least three insiders for what appeared to be redundant duties. They also question the six-figure housing allowance paid to Chief Financial Officer Fred Southard, which allowed him to largely avoid federal income taxes, according to tax documents filed in court.
The documents objecting to compensation proposed by the church give the first look into the long-questioned financial practices at the Crystal Cathedral, which employs more than a dozen family members and in-laws of founder Robert H. Schuller.
The Crystal Cathedral filed for Chapter 11 bankruptcy last month, citing the bad economy and a 24% drop in donations in 2009 for its financial problems. More than 550 creditors are owed between $50 million and $100 million, according to the initial filing.
A church spokesman did not respond to requests for comment Wednesday after a new round of documents were filed in court.
According to court documents, Southard received $132,019 out of his total $144,261 compensation in the form of a housing allowance last year. About $15 in federal income taxes were withheld in 2009, a W-2 tax form filed in court shows.
The Crystal Cathedral requested authorization from the court to pay him a total annual compensation of $156,110, including a $140,000 housing allowance, while the bankruptcy proceeds.
Southard has been the Crystal Cathedral’s chief financial officer since 1978. He owns a home in Newport Beach assessed at $2.3 million, according to property records.
The U.S. trustee questioned why Southard should be employed as director of finance when the church also employs a full-time accountant. It also suggested that Southard should not receive any housing allowance.
“There is no justification whatsoever for a housing allowance of this amount,” according to the documents. “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.”
In addition, the creditors’ committee, several of whose members have worked with the church for as many as 20 years, called Southard a “figurehead.”
True Discernment 
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