John WorldPeace
Attorney at Law
2620 Fountain View,
Houston,
Tel. 713-784-7618
Fax. 713-784-9063
email johnworldpeace@aol.com
Administrative
Commission of the Presbytery of New Covenant
FROM PAGE 1 OF THE INTERIM REPORT
PAGE 2
In regards to the conclusion that the Administrative
Commission has reached, that there has been no embezzlement, conversion, or
theft of the disbursements HPC received from the estate of John Fakes, this is
a flat out lie because the Administrative Commission did not even look at the
years 1997, 1998, and 1999. Why?
$659,000
is the difference between the $920,000 received from the Fakes estate plus
$150,000 interest income from that money less the $311,000 balance in the
church’s cash account. We are looking at
$600,000 of the Fakes money being spent in a period of five years. This is in addition to the contributions and
pledges. It is absolutely insane that
the Administrative Commission would try to tell people that there is no problem
when a church of sixty people is spending that kind of money.
In the third paragraph, it says that no body has received
any money from HPC. Well folks it seems
to me that the money that Delgatto received for pushing through the IHP was not
above the table and something that can be easily tracked. We will have to track that money in different
ways. There is no way that Delgatto
would have been pushing this project for nothing. He is not that type of person. He is a liar and nothing he says can be
trusted. Everything in this ordeal was cloaked
in secrecy.
Every
attempt to get at the truth of the matter was blocked. Not only by Delgatto and the other members of
the church who were involved in it, but also by the six lawyers who are
representing the defendants in this case.
Delgatto got money and I will find out where and how. There has been no explanation as to why
Delgatto pushed this project.
As
far as ministering to the people living in the IHP, Delgatto will not even walk
across the street to
Now
after sixteen months in this lawsuit and six months with the Administrative
Commission in charge, they have finally admitted that HPC cannot spend $120,000
a year, more than HPC takes in, and not go bankrupt. The thing that has not been said is that the
reason that this deficit exists is not just due to overspending, it is due to
the worthlessness of Delgatto who does nothing to increase the membership and
therefore the economic base of the church.
It is nonsense that a preacher should be paid more money than he can
bring in in contributions.
PAGE 3
Even a first grader would suspect there is something
wrong in 1997, 1998 and 1999 due to the fact that it has not been mentioned in
the Second Interim Report.
The second question is why they have only reviewed the
Heights Money Market passbook from November 1998 to the present. The question is why didn’t they go all the
way back to 1994 when the first monies were received from Fakes. The fact that the Administrative Commission is
not looking at all of the documents raises questions of its own. Are the records missing?
Regarding the part about the Administrative Commission
interviewing people who were knowledgeable about HPC’s financial matters; they
did not interview everybody. They
interviewed the people that they knew would tell them what they wanted to
hear. They did not want to interview
people who would tell them things that would take them off into a direction
that would show the embezzlement and conversion and the bad acts of Delgatto
and company.
At the bottom of page three, virtually everything that is
said by the Administrative Commission is going to be a lie. Without those particular documents and the
documents that support these numbers, you can pretty much assure yourself that the
Administrative Commission is spinning the information to their own
benefit.
In a
normal accounting process, every number has supporting documents that show how
you get to that number. The problem is
that
The
last audit that was completed at HPC was in 1996, the year before Delgatto showed
up. Consequently, the Administrative
Commission’s numbers need to be tied into the ending numbers for 1996. That has not been done. They are simply starting in the middle. The question is why start at 2000 and not
2001 or even 1998. There is a big
question here which the Administrative Commission thinks that it will not have
to answer. That is ridiculous and
delusional on their part.
PAGE 4
The dollar figures on page four that are shown for 2000, 2001,
and 2002 have been adjusted by removing the $235,000 from the Fakes
estate. It leaves a pretty big question
as to how much money is coming into the church.
Even if you do take these numbers as true, you ask yourself why spending
in 2000 was $130,000 more than came in.
In 2001, $118,000 more was spent than came in. In 2002, $118,000 more was spent than came
in.
This
is a $10,000 per month deficit for 36 months.
Plus nine months in 2003. This
comes to a monthly deficit of $10,000.
The question has to be asked as to what is causing this budget to be
$10,000 over for this period of time. Later the Administrative Commission says the
deficit is only $6,000 per month.
The
total budget was only $76,000 in 1996, one year before Delgatto showed up, where
is this money being spent?
The
1997 projected expenses were $156,000 and the pledge income was $48,000. The 1996 pledge income was $76,000. The question is what was the pledge income in
1998 and 1999. I simply do not believe
that the numbers that have been put down as the unrestricted pledge income are
in fact pledge money received.
I would point out that on Exhibit A of the Second Interim
Report the statement for activities for 2000, 2001, and 2002 show investment
income of $22,000, $19,000 and $15,000.
If you project this back then you are talking about $15,000 a year for
six years which is about $100,000 in interest income on the Fakes money. That does not seem right on over a half a
million dollars in CD’s.
There
is still a question as to the increasing value of the money market account in
the years 1997, 1998, and 1999. There is
a loss under realized and unrealized gains on Exhibit A in 2000, 2001, and 2002
showing losses of $45,000, $72,000, and $65,000. These are substantial losses and the question
is why wasn’t that money moved and shifted during these years?
There
has been a rumor that some of the Fakes money was trying to be diverted to the
Presbytery Security Fund by David Northcut when he was at HPC. I want to know exactly where these
investments were made and I want to see these investment accounts. The Administrative Commission did not want to
reveal what happened in 1997, 1998, or 1999.
Why?
In
regards to Delgatto’s salary. I would
simply point out that he is making $66,000 a year for the very little work that
he does and all the trouble that he is causing.
When the minister does not attend a S.N.A.P.S. event with 60 members,
something is wrong.
There
is a question in my mind as far as where these contributions came from. According to the records for 2000-2002, more
money is coming in contributions than Delgatto was making but not that much
more. My understanding is that these
contribution numbers are inflated.
PAGE 5
The question that you have here is how is it possible
that the Bank of America investment account could be reduced by $233,000 over a
three year period. There is a question
as to why some of these monies were not moved into a different form of
investment account so that the principal could be protected even if a lower
rate of return would result.
PAGE 6
There is no conclusion that can be drawn from Ralph
& Ralph, CPAs. They clearly state in
their cover letter that they did not complete an audit and all that they did
was to look at the numbers that came from the Administrative Commission.
Further, there are some numbers missing. Ralph & Ralph simply put together and
balanced all of the numbers that were given to them by the Administrative
Commission. You have to remember that
the Administrative Commission has had six months to determine what it was and was
not going to hand over to Ralph & Ralph.
The Ralph & Ralph, CPA statement is worthless because it reads as if
a three year old was writing this cover letter saying that everything looks ok.
That being said, it is true that HPC has been using up
its capital investments from the Fakes money to cover the monthly operating
expenses.
The question is why are the monthly operating expenses so
high? My suggestion is that some of the
money is being bled out into places it should not go.
The other
thing that bothers me is that if you look at the difference between 2000, 2001,
and 2002, the insurance has increased by $10,000. That always leaves a suspicion in my mind
that some friend of Patty’s is handling the insurance and that is why the amount
went up. Nothing has changed at HPC to
require that kind of increase in insurance expense.
I sold
insurance with my dad for five years and I am a CLU and CPCU. I know about insurance and the last thing the
Administrative Commission wants is me looking into this.
One
other thing that bothers me is that every year until 2002 the property
maintenance has been $50,000-60,000.
This comes down to $5,000 per month in property maintenance. I do not see that there has been that long
term sustained property expenses.
Another question is who is doing the work and how much were they
charging?
My
tendency is to believe that it is friends of Delgatto, Grables, Ellis’, etc.
who have been paid and over paid for the work that was done: if any true work
was done at all.
These
are the kinds of questions that have to be answered in looking at these numbers
and until those questions have been answered we are not really going to know if
any money has been bled out of the church assets or not.
I
will give you the prime example of Patty Ellis paying her friend $1,300 to
paint cherubs on the wall in the nursery and then covering up some of those
paintings with furniture.
The
property maintenance is not going to be as high if the church is not locked to
people who are willing to spend the time to take some paint and fix up the
things that need to be done. I cannot
imagine monthly repairs at HPC being $5,000.
The question is what is being done with that kind of money? Supporting John Blanco?
There
is a question about whether pledge income has increased since Delgatto has come
to HPC because we do not know what the amounts were prior to 1997. We do not have the numbers for 1997, 1998,
and 1999. We do know that in 1995 the
amounts were $77,000. Whatever increase
there has been is limited. Again, until
we see exactly were this money is coming from we are not going to know whether
or not Delgatto has increased anything or not.
The
Administrative Commission says that there is $6,000 per month being drawn out
of the capital account to cover the operating deficit. That is about $2,000 more than I thought it
was but $4,000 a month less than the first part of the report says it is.
The
Administrative Commission claims that at the end of 2000 there was $461,000 in assets. I simply do not believe that number. There has been other documents that I have
seen in the last year that indicated that there was only $195,000 so I do not
know where this $461,000 is coming from.
It would certainly be nice if this were true.
PAGE 7
The Administrative Commission admits that there has been
$550,000 of the Fakes money used up on repairs and maintenance and to cover the
budgetary shortfalls. The reason that
these numbers do not really add up is because that $550,000 plus the $233,000
that was allegedly lost in the year 2000, 2001, and 2002 comes up to $780,000
out of a $920,000 bequest which would leave substantially less than $461,000 as
is alleged to be in the accounts.
Therefore, something is not adding up here and we need to get to the
bottom of that.
There is a question as to how much money has been
actually stolen from the church or wasted.
I would again point out that the Administrative Commission, Delgatto,
Presbytery, and the rouge members of the session have gone out of their way to
hide and skew the actual numbers.
At
the bottom of page 7 of the Second Interim Report it talks about my pleadings
in the lawsuit as of January 2003. You
have to understand that these were just gross guesses that were placed into the
pleadings and we are now nine months down the road from that date and more is
known. However, if the numbers that I
have put in the pleadings are not accurate it is simply because every avenue
has been used to block me from seeing any numbers whatsoever. The numbers that have been given to the
congregation by the session to date have only been budget to budget comparisons;
no actual members.
PAGE 8
Judge Lindsay had a hearing on
The
Administrative Commission says that no monies have been paid by HPC to the IHP
project. The few documents that Delgatto
produced actually show that about $15,000 was spent for the project; mostly in
renewals of earnest money contracts. The
question is where did that $15,000 come from?
If it didn’t come from HPC, then where did it come from? There is some serious questions that have to
do with illegalities and HUD regulations when money comes from places other
than the non-profit sponsor. Tom Lord does
not have, contrary to Reagan Brown’s statement in the First Interim Report, a
non-profit corporation called the Housing Corporation of Greater Houston.
Judge Lindsay only denied appointing an auditor in
February 2003, because the Administrative Commission had only been appointed
two days earlier. It was not that she
did not believe that an auditor needed to be appointed. In fact, she indicated prior to that date,
that she would sign an order to appoint an auditor. She just deferred her decisions until the
Administrative Commission had time to work.
PAGE 9
I would show you that there have been a lot of pleadings
that have been put into the lawsuit since April 2002. I would also show you that not one Defendant
has made any effort to show that anything in the petition is incorrect. If the pleadings are incorrect then it is
only because of the refusal of the Defendant’s to produce any documents.
In
fact, all of the Defendant’s attorneys in the lawsuit have filed motions with
the court to block any kind of discovery in this matter.
It
is ludicrous for Brown to say that all of my numbers are fabricated and that
money is not missing and at the same time file pleadings in the court to stop
me from seeing any accounting documents.
As
far as I am concerned, considering the way that things are in the judicial
system, until my allegations are proven false, they stand as true. These things are not baseless and if they
were then I would assume that the numbers would have come forward and
documentation would have come forward a year and a half ago to prove me to be a
liar. The question is why all of the
secrecy?
The
pleadings are not defamatory because all of the statements made in the due
course of a lawsuit are immune from lawsuits for defamation, slander, etc.
There
is not a single thing sworn to in this Second Interim Report. Nothing that
is in there can be taken as true because no body has put their John Hancock on
the line to swear that it is true. The
reason they have not done so is because they know that the Second Interim
Report is just a bunch of lies and half truths.
What
falls on the next pages is simply Brown telling you that you need to believe
what he is saying because he is such an honorable and truthful person. The fact is that he is not truthful and
neither is Delgatto.
Consequently,
nothing that you see in the following pages, starting on page 9 is true. If it was true, then the documents would be
open for inspection to me and if what they claim is true then this lawsuit
would have been over a year and a half ago.
I again point out the fact that they
have not looked at 1997, 1998, or 1999. If they have looked at these
years, then why have they not reported them?
If they have not looked at them, is it because those documents do not
exist anymore? Because Delgatto got rid
of them.
PAGE 10
The
Administrative Commission admits that there was $919,000 received by HPC. I seriously doubt that there would be this
admission if I had not gone to the Probate Court and found the inventory of the
Fakes estate, which showed $2.7 million to which HPC was to get 1/3. Up until the time that I produced that
document there was a statement that HPC only received $500,000.
PAGE 11
PAGE 12
What
we do not have at the end of the section on 1997 is exactly how much money was
still left in the bank at the end of that year.
Since
the Administrative Commission did not do financial statements at that time, it
is very difficult to say how much of that $75,000 was still available at that
time. There were discussions on what
would had been used and may have been used to renovate and remodel the building
but there is certainly nothing stated as to what was actually done up until the
end of 1997.
The
question is why didn’t the Administrative Commission state how much of the
Fakes money was in those financial accounts at the end of 1997. We also have an amount of $48,000 in alleged
contributions in 1997 and that is a starting point, if that number is true, to
compare what Delgatto has actually brought into the church since then.
The
beginning of the 1998 statement at the bottom of page 12 indicates that there
is still about $625,000 left of the Fakes money. However, at the end of 1998 it seems to
indicate that there is only $450,000 left.
There is no number for the end of 1998, but in August 1998 there is
$489,000. This would mean that from the
end of 1997 to August 1998 there was already $150,000 of the Fakes money spent
but we do not know for what and these numbers are very difficult to track
because they are put down in a narrative form as opposed to a financial
spreadsheet.
What
the Second Interim Report does not say is that in January 1999 that the monies
went up from August 1998 at $489,000 to $538,000. What this would indicate is an increase in
the value of the money market account of almost $50,000. We do not know whether that is an increase in
the value of the stocks or whether that is in fact an increase from unspent
income. We do not know.
Again
we do not have a financial spreadsheet.
We just have narratives and these are difficult to follow; whether or
not this $5,000 monthly operating deficit is continuing to come out of these investment
accounts. The question again is if the
$5,000 was coming out in 1999 it would be about $60,000 for the year. At the beginning of 1999 the finances had
increased by $50,000 which would mean that the investment account had actually
increased by about $110,000.
The Second Interim Report was written to be confusing. If they wanted the truth to be known, they would have used an accounting format. But the truth has never been their goal.
PAGE 13
Assuming
all of the numbers are correct, then the ending balance at the end of 2001 on
page 15 is $485,000. If you add $131,000
at the bottom of page 14 plus $73,000 then you come up with a $204,000
reduction in the investment of the account.
Yet the investment was $640,000 at the end of the year. Then $204,000 would mean that there would be
$443,000 at the end of 2001. Somehow
instead of that amount there is $485,000.
The question is where did that additional $40,000 come from?
Again this is typical of the old
saying that “figures don’t lie, but liars figure”.
Well
Brown and Delgatto are two liars and the way that this information is presented
is in a way that you cannot track these monies.
Accounting is a very precise thing where every debit has a credit. Every
time you add money somewhere you have to take it out of another account. You cannot simply drop or pick up $40,000.
You
do not take $647,000 and make entries to reduce it by $204,000 coming up with
$443,000 and then all of a sudden the balance is in fact $485,000.
Therefore,
the question becomes where did Ralph & Ralph get this number? They did not look at anything before 2000 and
these numbers were given to them by the Administrative Commission. So they simply plugged in the numbers that
the Administrative Commission gave to them to work with. How typical?
On
top of all that, there is still a question as to the $60,000 of annual maintenance
on the building. The question is who got
that money? Who was the contractor? Who did these repairs? Who was it?
Those are the things that have to be looked into.
Also
the $6,000 monthly deficit which did not exist before the Fakes money; the
question is whether or not it is in the budget.
The Administrative Commission does not speak to this. What exactly in the budget increased these
monthly operating expenses from the amounts prior to the Fakes money?
There
is certainly a building expense, repairs, and so forth, but these do not have
to do with the monthly operating expenses.
These are one time remodeling fees.
The question is why is HPC operating
in the deficit and neither Ralph & Ralph nor the Administrative Commission
begins to talk about it.
One
place where money has been bled out of an asset account is where monies are
paid to people for more than it costs to do certain repairs. Insurance costs $10,000 more a year than it
really should because it is somebody’s friend who is handling the account. And so on and so forth. Not to mention Delgatto’s HPC credit card
which does not seem to be mentioned anywhere in the numbers that I saw. Is that hidden in the miscellaneous
amounts? We do not know, but we need to
find this out.
In
2001, we have some quick shady summary numbers here. We are told that we start off with $485,000
and we add $185,000 into that investment account which makes $670,000. This does not make sense when they say that
these deposits only increase the value of the investment account to
$498,000. The question is where is the
other $172,000. When you go from
$485,000 plus $100,000 plus $85,000 you are at $670,000 then you end up with
only $430,000. The question is where did
$230,000 go?
The
numbers on Exhibit A only show a loss in 2001 of investments of $172,000. The question then becomes at $5,000 a month for
repairs you have $60,000. You take
$130,000 from $240,000 then you have a $110,000 drop in the value of the
account that is not accounted for. Note
that I did not add the additional $50,000 which they say was used for the air
conditioning repair. There is obviously
in the year 2001 $110,000 missing.
There
is no statement at the bottom of page 15 as to how the number on page 2 of
Exhibit A, how the $439,000 now becomes $311,000 or $461,000. It is very difficult to understand when Brown
is talking out of both sides of his face.
There is no debits and credits, no
spreadsheets, no showing the transfer of money from one account to the other or
monthly expenses. All of this is very
simple to reconcile with a set of computerized accounting books for those
months and with the documentation that I have been trying to get for fifteen
months.
I
can assure you that this bushwah that Brown is putting out does not even come
close to explaining how money has been drained out of the HPC assets.
PAGE 16
You
might think that we have more money than we thought, but that is simply
nonsense. In accounting, debits have to
equal credits and everything has to balance.
When you start pulling numbers out of the air and saying oh well this
might be this or that, that is simply not how you do accounting. Every transaction must balance and everything
must be accounted for and it is obvious from this ridiculous Second Interim
Report that nothing balances. Not
to mention the glaring fact that there are three years that are not even
accounted for.
PAGE 17
Brown says that the Fakes’ money has not been converted,
embezzled, stolen, or used to fund the IHP.
That remains to be seen. The only
way we will know that is to look at every single check that was signed and
track the money from account to account since 1997.
It
is a very easy process and it can be done within thirty days. I have been waiting for a year and a half to
get my hands on the records so that we can move forward with this.
But,
the Administrative Commission wanted to keep all of those documents hidden and
secret. Now it has put a spin on these
numbers which has nothing to do with reality.
There is nothing proven to be false about anything that has been stated
in the lawsuit because there is not a single document that has been
produced. Not only that, this Second Interim Report is not signed by a single
person in the Administrative Commission and nothing is sworn to by anyone.
All
of the information on page 18 and 19 about monies that are being dispersed is
nonsense. Certainly, everyone knows that
money that is being stolen is not always written in a check to the thief. What you do is take the money out through
miscellaneous and you overcharge on certain things. There are all kinds of ways to get money
out. It is ridiculous that Brown would
indicate that since there are no checks written out to any thieves then there
obviously cannot be any money stolen.
No
it does not work like that.
At
the same time, Brown’s accounting numbers do not balance and were off tens of
thousands of dollars. Basically what we
have is just a bunch of nonsense from Brown and it will remain that until we
have an audited set of books for all years since Delgatto arrived at HPC and
not just the last three. Everything
needs to be accounted for and this means every check, deposit, and transfer.
PAGE 19
The interesting thing here is that there seems to be no
admission regarding monies paid on Delgatto’s HPC credit card, which several
people have said that he does in fact have.
The question is why isn’t anything like that mentioned?
PAGE 20
Brown says that the documentary evidence has been set
forth and yet there has been no documentary evidence set forth at all. Brown has entered into court what is called a
shorthand rendition. In other words, a
summary of what he says there is. There
has not been one single document photocopied and produced to anybody. The Second Interim Report is a summary of suppositions,
lies and half truths that do not balance.
As I
have already shown, the numbers do not add up.
We are talking about a $1,500,000 that we are trying to account for over
the last five to six years. It is
absolutely ridiculous that Brown is making these kinds of statements about the
condition of the finances.
It is also ridiculous for Brown to ask
where are the documents that prove all of these embezzlements when Brown and
other attorneys filed a motion with the court to stop me from seeing any of
these documents. It is quite funny how
he is saying you can’t see the documents, but you do not have any proof.
The
ridiculousness of the statements regarding the Independent Heights, Inc. at the
bottom of this page is beyond belief.
There is a potential for monthly operating deficits in the HUD project
and Brown has still not spoken to that issue.
To say that HUD is so stupid as to just hand out these contracts and
approve these contracts without any intention to try to collect the deficits on
these monies is ridiculous. For Brown to
say that now that they have funneled everything into this Independent Heights,
Inc. that HPC has no commitment is just a joke.
PAGE 21
It is interesting that Brown would try to lead us to
believe that you can set up a non-profit corporation in
The
fact that the documents have not been produced leaves a question mark as to
whether the Fakes money has been used in the IHP or not.
PAGE 22
There is no
question as to the fact that more money is being spent than is coming in. What is funny, is that the Second Interim
Report says that there needs to be a strategy to increase pledge income and yet
for the entire time that the Administrative Commission has been in charge, the
membership to HPC has been closed. This
shows the total lunacy of the entire Administrative Commission. How do you increase pledge income without
opening the membership?
SUMMARY
The Second Interim Report has more lies in it than the
First Interim Report.
Further, on Friday Brown filed another long motion to
dismiss the lawsuit. It is full of more
lies. It also has affidavits from
Charlie Windham, Lynn Johnson, Suzy Cisne, and Arlene Boeing who have also
lied.
I hope to have my response to that
to you by the end of the week.
A lot is happening in the court right now. The judge must make some decisions here
shortly. Hopefully, we will get all this
moving again so we can get rid of the Administrative Commission.
I know this is a long process. But it is a matter of who is going to run
HPC, the congregation, the Administrative Commission or Patty Ellis and
company.
No one can deny that something must change. There must be some sanity and justice
returned to HPC.
There is little question but that Joe must go and the budget
must be balanced.
We must account for the Fakes money and we must find a minister
who will minister and who will grow the church.
Very Sincerely,
How can we manifest peace on earth if we do not include everyone (all races, all nations, all religions, both sexes) in our vision of Peace?
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