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Church in financial bind over member loans
More articles on this topic: Living Enrichment CenterSome members say the Living Enrichment Center, which is $20 million in debt, consistently minimized its money problems.
The Living Enrichment Center, a popular church in Wilsonville that has attracted more than 4,100 members, is struggling to repay $20 million in debts run up by years of operating losses and a failed broadcasting venture.
The church told congregants on Sunday that it owes much of the money — about $8 million — to members who lent their personal funds to the organization in hopes of helping it through its financial difficulties. Some of those members now say church leaders consistently understated the extent of its financial problems.
Church officials acknowledge the debts have put the organization in a significant financial hole. Marty McCall, Living Enrichment Center’s vice president of operations, said the church has launched a restructuring plan and intends to pay off most of its congregant loans within five years.
A key part of the restructuring, however, is the church’s goal to persuade 25 percent of its congregant lenders to forgive their debt, said McCall, who was named to the post last month.
“I’m sad, and I’m also very troubled,” said Tom Holce, a prominent Portland executive and former member of the church who lent it more than $600,000. “I’ve never been a strong believer in organized religion. This Living Enrichment Center just fit me to a T. And now I just feel real deceived.”
Holce said church leaders consistently failed to provide full information to a committee organized to look into the financial problems.
Some member loans went to the church. Others went directly to Mary Manin Morrissey, the church’s dynamic founder and lead pastor. McCall said Morrissey routed the money she was loaned back to the church.
Morrissey was unavailable for comment Monday.
“There’s such a disconnect between what (Morrissey) says on Sunday and the way she runs the church,” said Karen Garst, a former congregant who says she has not been repaid the $20,000 she lent to the church.
That the Living Enrichment Center was suffering financial trouble became evident last month after the city of Wilsonville sued the church seeking $76,029 in unpaid lodging taxes and utility fees. But the magnitude of the church’s travails are only now coming to light.
McCall said the church may have defused much of its members’ anxiety and unhappiness on Sunday, when officials publicly disclosed the details of the church’s financial troubles and its turnaround plan.
“The meeting . . . was very positive,” McCall said. “I think a lot of the people who were confused and angry, it really made a difference for them.”
Attorney retained
The church has retained Charles Markley, a Portland attorney, to guide it through the restructuring. Though Markley is perhaps best known as a bankruptcy lawyer, the church has no intention of filing for bankruptcy, McCall said.
The church has cut back to four days a week of operations and has taken other steps to pare expenses. It also will step up fund-raising efforts.
The Living Enrichment Center no longer will borrow from church members, McCall said.
Morrissey, a Beaverton native and former teacher, often speaks and writes of her personal transformation from young single mother with few prospects to prominent church leader. She has written a number of books, has addressed the United Nations, and has met with the Dalai Lama and other religious figures. She appears weekly on television in Portland and Seattle as well as on a number of cable channels.
The nondenominational church she founded is aligned with the New Thought movement, a set of ideas stemming from mid-19th-century U.S. philosophers who emphasized the power of thought. The teachings and example of Jesus Christ are central touchstones. But the church commonly uses teachings from religions other than Christianity as well.
Move to campus
The congregation moved from Beaverton to Wilsonville about 11 years ago, moving into the sprawling Callahan Center, a former state-owned facility that has a 936-seat auditorium.
The move to Wilsonville allowed the congregation to grow. But for an operation that formerly met in a Beaverton movie theater and in tents in parking lots, the costs associated with running a 45-acre campus posed an immediate financial challenge.
According to internal financial reports obtained by The Oregonian, the nonprofit Living Enrichment Center typically takes in about $5 million a year, largely in donations as well as book, video and merchandise sales. It has lost money, $600,000 to $700,000 annually in most years, McCall said.
The church’s single largest debt is the $10.2 million it owes on its real estate, McCall said. Watamull Properties, a Hawaiian investment company, holds the mortgage.
To cover the shortfall, the church, among other things, borrowed money from church members. Church officials told members the church would take responsibility for repayment of the loans to Morrissey, McCall said.
Heather Westing was one of those lenders. The Portland woman said she lent $75,000 to Mary Morrissey personally about four years ago. It was to be a six-month loan.
“Mixed feelings”
Like other former church members, Westing feels conflict between her admiration for Morrissey and her frustration with the organization’s lack of accountability.
“I have very mixed feelings about this,” Westing said. “I can afford to lose the $75,000. I just don’t want others to get misled.”
As the years went by, Living Enrichment Center’s financial trouble worsened. Holce served on an executive committee with other experienced businesspeople who tried to alleviate the problems. He said he spoke with a number of banks about lending money to the church.
But Holce grew frustrated with the effort, in part because he thought he couldn’t get reliable financial information from the church. “We could never get who the loans were from and what the money was being used for,” said Holce, who finally left the church in January 2003.
Holce said the Living Enrichment Center has yet to repay the more than $600,000 he lent it.
The church defaulted on its debt to Watamull in December, McCall said.
Some of the church members’ money went into an ill-fated startup called New Thought Broadcasting, led by Morrissey’s husband, Edward Morrissey. McCall confirmed that the church in turn invested some of the funds borrowed from members in New Thought Broadcasting. McCall, reached Monday, said she didn’t have access to records showing the size of that investment.
New Thought Broadcasting was soliciting potential investors on a Web site as recently as Monday afternoon.
For-profit company
State records show that New Thought Broadcasting, a stand-alone, for-profit company, was founded in May 2003. New Thought Broadcasting offered video-on-demand segments of various inspirational speakers, including Mary Morrissey.
The church owned 10 percent of the stock of New Thought Broadcasting, which it valued on its September 2003 balance sheet at more than $800,000.
McCall could offer no financial information on New Thought Broadcasting. She did confirm that company officials told church members at Sunday’s meeting that the company had been disbanded.
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