Stan used donor money to reimburse himself for 75% of a new auto lease he had recently taken. Apparently, his new wife Elaine went to lease the car but did not qualify, so Stan took out the lease for her and then used donor money to pay for it.
Please scroll to bottom of this page to read comments from the treasurer and board member of Stan Telchin Ministries, regarding this issue.
"Shortly after I obtained a printout of the STM check register, I noticed a check written to Stan Telchin with the notation "75% of lease amount - Auto Expense Reimbursement." The check is # 1919, dated 11/8/00 in the amount of $421.07 (Register listing dated December 2, 2000, page 65).
When I commenced the audit, I questioned Stan about this payment. He said Elaine (his new wife) had gone to lease a car, but couldn't qualify for the lease. So he gave her his old car and took the lease out in his name. When I asked why STM was paying three-quarters of the lease, he said his accountant told him he could "reasonably" claim 75% of the car was for business use. I told him the accountant was entitled to give his opinion, but that did not constitute approval of the expense, and the board would have to consider his request.
Before this conversation took place in January 2001, Stan again paid himself the same amount for the auto lease for December 2000 (Transaction detail report, dated February 4, 2001, page 13). The check was number 2105, dated 12/19/00. Bear in mind that Stan also paid himself for business miles allegedly driven in 2000 on the same day, in fact with the preceding check, # 2104.
I was confident someone on the board would closely question the leasing activity when Stan brought it up at our special meeting on January 25, 2001. However, he never mentioned that he was already charging the ministry for leasing. Instead, he misled the board, in my opinion, by telling the board there was already a provision in the corporate documents for a monthly payment of $400.00.
The minutes of the meeting state: "Stan pointed out there is presently an authorization from the board for a $400 per month automobile expense reimbursement plan for his use" (Minutes from referenced meeting, page 4, item F).
I was dumbfounded by this statement, which I knew was not true, having recently reviewed the corporate documents. A motion was quickly made and seconded to approve such a payment from ministry funds. I chose not to discuss the motion, as to have done so would have exposed Stan to his friends. However, I could not vote for this proposal so I abstained. The motion was approved.
I believe that I could show Stan where he was mistaken, and the action of the board could be overturned by a later "paper vote" with board members signing to indicate their approval of a new motion.
Stan was furious with me (for abstaining) as we went into the office where the documents were stored. He said angrily: "Am I going to have trouble with you? Because if I am, you can leave the board right now!" I knew he could simply call for a special meeting of the Members of the corporation (Stan, his wife, and me) and vote me off the board. (He had threatened to do this at an earlier meeting with another board member who had displeased him in some way, but I talked him out of it.)
I located the auto expense plan, part of a consent drawn up by the board during its startup phase. (Consent in Lieu of Organizational Meeting, July 7, 1994, page 4) it reads:
RESOLVED: THAT THE REIMBURSEMENT OF AUTOMOBILE EXPENSES TO THE OFFICERS OF THE CORPORATION, UPON SUBSTANTIATION OF THOSE EXPENSES AS REQUIRED UNDER SECTION 274 OF THE INTERNAL REVENUE CODE, IN AN AMOUNT NOT TO EXCEED PER PERSON BE, AND HEREBY IS, AFFIRMED, RATIFIED AND APPROVED.
I asked Stan where to $400 per month appeared, and he said it was "implied," adding that it was "ridiculous" to think it meant $400 a year. He made no mention of the fact that the consent had the words "upon substantiation" and referenced Section 274 of the IRS code. Clearly, this consent was referring to reimbursement of auto expense MILEAGE and nothing more. Stan deceived the board into approving something that did not exist, and substantiating something before the fact, a contradiction in terms."
- The former treasurer and board member of Stan Telchin Ministries, September, 2002