IN THE MATTER OF THE TITLE IV PROCEEDINGS AGAINST THE RIGHT REVEREND J. JON BRUNO REPORTER'S TRANSCRIPT OF PROCEEDINGS DISCIPLINARY HEARING

Transcription

1 IN THE MATTER OF THE TITLE IV PROCEEDINGS AGAINST THE RIGHT REVEREND J. JON BRUNO REPORTER'S TRANSCRIPT OF PROCEEDINGS DISCIPLINARY HEARING Date and Time: Tuesday, March 28, :05 a.m. - 6:10 p.m. Location: 180 North Fair Oaks Avenue Pasadena, California Reported By: Jay M. Bullard, CSR Certificate No Job No

2 1 APPEARANCES OF COUNSEL: 2 3 For the Episcopal Church: 4 COUGHLAN MEDIATION BY: JERRY COUGHLAN, MEDIATOR West Broadway, Suite 500 San Diego, California (619) rcoughlan@csllaw.com 7 8 For Respondent Right Reverend J. Jon Bruno: 9 EPISCOPAL DIOCESE OF LOS ANGELES BY: RICHARD ZEVNIK, CHANCELLOR 10 The Cathedral Center of St. Paul 840 Echo Park Avenue 11 Los Angeles, California (949) rzevnik@ladiocese.org and 13 JD2 COUNSEL BY: JULIE DEAN LARSEN, ESQ Golden Lantern, Suite 376 Dana Point, California (949) larsen@jd2counsel.com HEARING OFFICERS: RIGHT REVEREND HERMAN HOLLERITH IV RIGHT REVEREND NICHOLAS KNISELY 18 RIGHT REVEREND MICHAEL SMITH REVEREND ERIK LARSEN 19 MS. DEBORAH STOKES 20 LEGAL ADVISOR: BRADFUTE W. DAVENPORT, JR Haxall Point, PO Box Richmond, Virginia (804) brad.davenport@troutmansanders.com 23 ALSO PRESENT: RON SAUNER 24 WALTER STAHR 25 2

3 1 2 I N D E X 3 4 EPISCOPAL CHURCH WITNESSES DIRECT CROSS REDIRECT RECROSS 5 Bruce Bennett Evangeline Andersen Patrick Di Giacomo Warren Wimer Cindy Evans Voorhees

4 1 E X H I B I T S 2 3 FOR IN 4 EPISCOPAL CHURCH EXHIBITS IDENTIFICATION EVIDENCE Summary of expected testimony Parochial Report Parochial Report Pastoral letter dated Letter from Reverend Voorhees dated Letter from bishop's office dated Letter from Bishop Bruno dated Letter from Bishop Bruno dated chain dated chain dated Standing Committee meeting minutes dated Vicar's Vision PowerPoint chain dated from Ted Forbath to David 282 Tumilty dated chain with Appraisal report chain dated Church service program dated chain dated Easter church service program Letter from Reverend Voorhees dated chain dated

5 1 E X H I B I T S 2 3 FOR IN EPISCOPAL CHURCH EXHIBITS IDENTIFICATION EVIDENCE Evangeline Andersen's CV chain dated Letter from Reverend Voorhees dated PowerPoint presentation Finance team goals chain dated Finance Team Meeting Agenda Profit and Loss Statement Budget Worksheet

6 1 Pasadena, California - Tuesday, March 28, Morning Session 3 4 RT. REV. HERMAN HOLLERITH IV: Good morning. This 5 hearing panel for the Episcopal Church is now assembled to 6 continue its work. I want to remind all here that at the 7 heart of these proceedings is the church's desire to seek to 8 resolve conflicts by promoting healing, repentance, 9 forgiveness, restitution, justice, amendment of life, and 10 reconciliation among all involved who are affected. 11 First, I would like to invite each member of 12 the panel to introduce yourselves, to say where you are from 13 and your position. 14 REV. ERIK LARSEN: My name is Erik Larsen. I'm the 15 rector of St. Columba's Chapel in Middletown, Rhode Island. 16 I've been on this panel since general convention of MS. STOKES: My name is Deborah Stokes. I'm from the 18 Diocese of Southern Ohio. I am a lay elected person on this 19 board and began my term at the last general convention. 20 RT. REV. HERMAN HOLLERITH IV: I'm Herman Hollerith, 21 the Bishop of Southern Virginia and the president of the 22 hearing panel. 23 RT. REV. NICHOLAS KNISELY: Nicholas Knisely, Bishop 24 of Rhode Island. 25 RT. REV. MICHAEL SMITH: Michael Smith, Bishop of 6

7 1 North Dakota. 2 RT. REV. HERMAN HOLLERITH IV: I'd also like to 3 introduce Mr. Brad Davenport, the legal advisor to the panel. 4 Mr. Davenport is an attorney with Troutman Sanders in 5 Richmond, Virginia. 6 To my right in the back corner here is Ms. Leah 7 Sicignano, the clerk of the hearing. In her regular life, 8 she is a spouse and secretary of the Diocese of Southern 9 Virginia. 10 Finally, I would like to introduce our court 11 reporter who I do not know. 12 THE REPORTER: Jay Bullard. 13 RT. REV. HERMAN HOLLERITH IV: Thank you, Jay. 14 Before we begin, it is necessary I think to do 15 a few housekeeping items. For those of you with the media, 16 please know that the members of the hearing panel will not be 17 doing interviews or addressing the press at any point while 18 we are here for the next three days. If you have questions, 19 please direct them to Ms. Neva Rae Fox, who is the 20 communication -- a communication officer for the Episcopal 21 Church. She will try and accommodate you. She is being 22 assisted by Reverend Canon Mary Sulerud as well. 23 Allow me to state something that should be 24 obvious. Most, not all, but most of us in this room are 25 baptized Christians, with most also being I would assume 7

8 1 Episcopalians. To that end, I hope we will remember who we 2 are and behave accordingly and allow the Holy Spirit to 3 invoke our better angels, if you will, and that we will at 4 all times respect the decorum and the sanctity of these 5 proceedings. 6 There will be no speaking out in public by 7 anyone in the gallery when the hearing is in session. This 8 is not a democracy, in other words. And, please, I ask 9 everyone at this moment if you would please silence your cell 10 phones. 11 At this time I would like to invite the 12 Reverend Canon Erik Larsen to lead us in prayer. 13 (Prayer given) 14 RT. REV. HERMAN HOLLERITH IV: We will begin with 15 introductory remarks. I would invite Mr. Jerry Coughlan, the 16 attorney for the Episcopal parish. 17 MR. COUGHLAN: Good morning, bishop. Thank you for 18 taking your time to do this work for us. 19 For the panel members, this is what's known as 20 an opening statement. It's meant to be just an outline or a 21 preview. Some trial educators would call it a chance to 22 tease you a little bit, get your appetites wet to see what is 23 coming. 24 What I want to do is start with the canons. I 25 know you're more familiar with them than I am, but I think we 8

9 1 ought to look at the one with respect to the Standing 2 Committee issue quickly. We have marked that as Exhibit 20 3 and put it up on the screen. We can blow it up at the very 4 bottom of the page. There you go. 5 Two things. As I understand Respondent's 6 position, there was no need to go to the Standing Committee 7 in advance of executing the sale, and they admit that did not 8 happen. The argument is that because this consecrated church 9 was held in Corp Sole, it didn't need to do that. But Corp 10 Sole is not mentioned here, nor could it be. The issue is 11 whether it's a consecrated church or not. 12 In Section 3, "No dedicated or consecrated 13 church or chapel shall be removed, taken down or otherwise 14 disposed of for any worldly or common use, without the 15 previous consent of the Standing Committee of the Diocese." 16 We know the previous consent was not granted. 17 The other sentence that appears in the 18 Respondent's trial brief is that an executed contract of 19 sale -- the only contingencies out there were that the buyer 20 wanted to check it out. They had until June 24th to check it 21 out. "Was not otherwise disposed of." That language clearly 22 covers an executed sale. 23 If Legacy had come in with money and they were 24 satisfied and handed it to them, this was done. That 25 property was otherwise disposed of April 10th, well before 9

10 1 the Standing Committee met. 2 This case is, although -- can we put that back 3 up for a second just for a quick thought. The charges, for 4 whatever reason, don't explicitly include 6.2, but it can be 5 used, as far as I'm concerned and I think in this sort of 6 setting -- can we just get the top of 6.2 to help interpret 7 if this comes up. But in you'll see it at the top. 8 No. No. No. Sorry. All the way back down. Right there. 9 That's 3, and 2 is above it. Perfect. Thank you. 10 "It shall not be lawful for any vestry, trustee 11 or other body authorized by laws of any state." That, in and 12 of itself, disposes of the Corp Sole issue, at least I 13 believe and I think that has to be the case. 14 This is an important point that -- imagine a 15 pastor in a church is selling a property, saying, "well, this 16 is our property." There's no exclusion here for Corp Sole. 17 There's no exclusion here for bishops. Consecrated churches 18 are important. We all know that and you all know that. 19 I think at the end of this case you should find 20 without any question that that canon was not complied with, and The Respondent's brief talks about this is a 23 question of or a case about questioning Bishop Bruno's 24 judgment. It is not. Nobody questions whether he could, if 25 he followed the proper procedures and was truthful about why 10

11 1 he was doing it, public, could have done this. It's not 2 about that. It's not about attacking bishops across the 3 country or anything like that. It is about whether that was 4 followed and whether the rules with respect to 5 misrepresentations were followed. 6 Let's look at -- sorry. I think it's 28. I 7 was going to do this at the end and I changed my order. Look 8 at Exhibit 28, please. Might as well do it now. 9 If we go down to Canon 4, the Respondent's 10 brief and defense appears not quite clear, but this canon 11 sets up for clergy a higher standard than just making a 12 misrepresentation. And Respondent talks about intentional 13 and standard of care -- I'm sorry, and burden of proof and 14 that sort of thing. If you read it carefully, it is designed 15 to set a higher standard for clergy. 16 "In exercising his or her ministry, a member of 17 the clergy shall," important word, mandatory. Now, if we can 18 go to the next page, subsection (h). The phrasing is 19 interesting. "Refrain from." Puts an affirmative duty on a 20 member of the clergy to not just rely on other people, but to 21 understand and to refrain from, and then it will go to Again, right there -- no. Subpart 6. Right there. There it 23 is. 24 "To refrain from conduct involving dishonesty, 25 fraud, deceit or misrepresentation." So it's a very broad 11

12 1 standard imposed properly on the clergy because we all rely 2 on our clergy being honest. So conduct would include making 3 sure you check if somebody else has given you information 4 before you make a statement. 5 The other thing is the choice of the word 6 involving dishonesty, fraud, deceit or misrepresentation. 7 Those in the law are all different standards. 8 Fraud clearly requires intentional intent and 9 so on. Misrepresentation under the law can even be 10 negligent. I'm not even arguing this is negligent. What I 11 am going to say to you is misrepresentation is a lower level 12 of conduct, less intent than fraud or deceit. 13 Conduct involving misrepresentation is broader 14 still, and the affirmative duty, based on the notion you must 15 refrain from it and shall refrain from it, is the heart of 16 where we're coming from. I think you're going to see, and 17 we're going to show you some of the evidence soon, that in 18 this case Bishop Bruno was on notice that some of the things 19 that he put in writing and stated were not accurate. I think 20 you'll find that in conclusion of the case that they were 21 misrepresentations. 22 I tend to divide the evidence into sort of 23 three areas. There is the long period of time that the St. 24 James Church was in the possession of the Anglicans, roughly 25 from 2004 until During that period of time, pleadings 12

13 1 were filed. Bishop Bruno litigated that case. You will see 2 that the position taken was: We need to get the church back 3 into the Episcopal Church as a church. 4 When it came back, he sent out a letter. He 5 also appeared at St. James and spoke. And you will hear from 6 several witnesses who were there, and you've read that 7 letter. They were led to believe that this was an ongoing, 8 future -- this was something that, if they threw themselves 9 into, would be a wonderful place to worship, and they did it. 10 So, if we could look at Exhibit 22 for a 11 minute. This is an example of the sort of thing they 12 received. If you can just blow it up so that we can see it 13 from "Dear friends" on. 14 So, if you look at it, he's basically inviting 15 folks to come on October 6 where he was going to speak and 16 meet with people. If you go down to the second paragraph actually, why don't I use mine. 18 Okay. So, if you look. "We will reaffirm the 19 congregation's name under the patronage of St. James the 20 Great, one of the three apostles who witnessed the 21 transfiguration of Jesus and also our Lord's agony in the 22 Garden of Gesthsemane." This is important. "We will also 23 look ahead to engage God's mission locally for the days and 24 years to come." 25 You will hear from several members of this 13

14 1 congregation that nothing was ever said, oh, well, we're 2 going to sell it in a year or two. They joined, relying on 3 the notion that this was something they could build on and 4 love and be together and worship. 5 If we could go to -- let me just do it this 6 way. At that time he talked about, in the letter, Reverend 7 Voorhees. He also talked about her when he met with the 8 folks on October 6. "I have appointed the Reverend Candy -- 9 Reverend Canon Cindy Evans Voorhees, an experienced pastor, 10 who is also a former president of the Diocesan Standing 11 Committee, to serve as vicar of the congregation, a mission 12 that the Bishop of Los Angeles serves as rector." There was 13 never a word at that time that she lacked qualifications or 14 anything we have sort of seen in the papers. You will hear 15 from person after person as a witness who worked with her. 16 To be a hundred percent clear why this 17 Parish -- parish, I know that is not the right word. This 18 mission was so successful. But she certainly played an 19 incredible part in it. And you will hear from folks talking 20 about how she has the ability to get people working on 21 things, to give, to participate, and you'll hear about some 22 of the things that were done. You've heard about Holy 23 Coding. You've heard about the kitchen. You are going to 24 talk to people who were involved in that. 25 Okay. You will hear first from Bruce Bennett, 14

15 1 who was the bishop's warden, along with his wife. They put 2 in thousands of hours over the first year. This was a place 3 with nothing. There was all sorts of capital improvements 4 that had to be made. All sorts of cleaning up had to be 5 done, and they threw themselves into that doing -- relying on 6 the notion that, if they did this, this was a place they 7 could go to church for years. 8 So, while that was happening, what they didn't 9 know, Reverend Voorhees didn't know, is that the bishop and 10 his staff were, in fact, talking to other people about 11 possibly selling this church. They had an appraisal done in which was kept secret from these folks. They actually 13 received -- let's do it this way. Let's go to Exhibit first. 15 Reverend Voorhees had no indication that this 16 was going on. Prior to opening it over the years, the bishop 17 had said many times, "I don't know what I'm going to do with 18 it." But, once she started it and this reliance occurred, 19 she didn't hear one word. Then this out of the blue came. 20 She got a call from a guy named John McMonigle, who she knew. 21 She knew that this was kind of a cold call. She didn't 22 really have any reason to believe, given his reputation, that 23 this was real, but she was concerned. 24 So she ed Mr. Forbath and Mr. Tumilty and 25 Bishop Bruno himself and said she had received this call and 15

16 1 this fellow wanted this Ted Forbath's phone number. Said he 2 had talked to Ted about the sale of the church property and 3 had the information for him but lost his number. She then 4 said, "I know John McMonigle. Is there something I need to 5 know because I am devoting my life to this parish and I want 6 to know if I am wasting my time?" 7 She got no answer to the . She talked 8 with Mr. Forbath, and he said, "I won't get between you and 9 my bishop," which she said is the kind of thing he would say 10 a lot if you ask questions. "Go and talk to the bishop." 11 She talked to Mr. Tumilty, who essentially 12 said, "I don't know anything about it. That's not real." 13 And she took that at face value. She believed it. 14 What she didn't know is that in that 15 timeframe -- I'm going to go ahead a little bit to February. 16 There was actually a consideration being given by the diocese 17 staff to consolidating two churches, St. James and St. 18 Michael's and selling one of them and/or using one of them to 19 get a big loan. And we know what the loan was now. It was 20 to finance what later turned out to be the Anaheim commercial 21 properties. 22 So if we could turn to Exhibit 55. And if you 23 were to go down to the lines right where -- sort of midway. 24 I'll point it to you. Right in there. That's good. 25 Okay. This is from Mr. Forbath to Mr. Tumilty 16

17 1 in February. "David, here is the draft note to Wes Mason 2 (Lane Foundation). My sense is that it would be best to 3 simply state that the NPB church" -- that's how they refer to 4 St. James, Newport property church -- "will be sold and not 5 be fuzzy about which church will be sold. You'll see what I 6 mean. Ted." 7 This was not disclosed. At that very time 8 Reverend Voorhees, whose parish is out with a stewardship 9 campaign. They have people volunteering to do all sorts of 10 work. They are putting in capital improvements to improve 11 the building. This was not revealed to them. These things 12 were under consideration. And one would think if you're 13 going to refrain from conduct involving misrepresentation, 14 you should be saying to your vicar: Wait a minute. This is 15 a consideration. This may happen. It never happened in this 16 timeframe. They were relying on the fact that they were 17 building this church. 18 Let's take a quick look at two issues that 19 you'll see are at the focus of the misrepresentation case. 20 So some of this is general reliance on an omission to tell 21 them, but now we come to a turning point. 22 On April 10 of 2015 the bishop sold this 23 building. You will see the purchase and sale agreement. The 24 buyer had a couple of months to do due diligence to see if 25 there were problems, but the bishop was on the hook to turn 17

18 1 that building over. In fact, there's a clause in the 2 agreement that says if he doesn't, they can sue him for 3 specific -- specific performance, which means you force him 4 to sell. 5 Two days later he told Reverend Voorhees that 6 he had sold the building. About a month later he meets with 7 the parish. But, before we get there, let's look at 8 Exhibit -- I think we marked it as 10. Which one did we go 9 with, Ron? 10 MR. SAUNER: Ten. 11 MR. COUGHLAN: Ten. Because in the previous year so one of the things you're going to see is a question of 13 whether it was a sustainable parish. I don't think anybody 14 would dispute if they had ten members a year or two in and 15 you get $50 in plate pledges, it's not viable and it's not 16 going forward, but that is not the case. 17 On July 31st of 2014 Reverend Voorhees 18 ed -- so you need to go forward one page to the to 19 Clare. 20 MR. SAUNER: Six. 21 MR. COUGHLAN: Six, maybe. We have two different 22 exhibits that were marked that have slightly different 23 paginations. There you go. Thank you. 24 So this is an on July 31st that is a 25 result of the hard work and stewardship. In the meantime, a 18

19 1 finance team has come on board. You will hear from the CPA 2 who was the head of it. Tremendous people working on it. 3 And so sending in the financials, and they're saying, "Our 4 grant, which in our first year was $60,000, we're doing so 5 well we can reduce it to $48,000." 6 I think they will testify that, in fact, if the 7 diocese didn't give them the 48,000, they would have been 8 fine, but it's there. That's a signal right there that 9 they're doing well, to say the least. 10 If you go forward three pages. In mine it's 11 the St. James the Great narrative budget. No. It's like 12 this. Sorry. Yeah, that's it. 13 Okay. So let's go to the second paragraph. 14 And this is the same point. Now, this is ed not only to 15 Mr. Forbath and to Mr. Tumilty, but to Bishop Bruno himself. 16 "On revenue we are tracking on budget for For 2015, we 17 have reduced the annual amount requested from the diocese 18 from 5,000 per month, or 60,000, to 4,000, or 48,000." 19 Let's go down a couple of paragraphs. 20 Actually, let's skip ahead and go to the next page. The 21 paragraph that says -- the next paragraph on the expense 22 side. We can stick with that for a minute. 23 They did much better. You'll hear the 24 testimony. "We have forecasted some revenue growth based on 25 anticipated increased giving as well as congregational 19

20 1 growth." And you will see that they far exceeded their 2 proposed budget in 2014, and in 2015 were on a roll to do 3 much better. 4 Ms. Andersen, the CPA, will testify that they 5 had a goal and their goal was to meet the requirements to 6 become a parish financially as quickly as possible, and they 7 were on a road to do that. One of those is you need to pay 8 your staff, including the vicar. 9 "On the expense side, members feel strongly 10 that we should develop staff and pay them a fair wage." 11 Remember, when it starts, there is no pay for anybody. The 12 vicar is non-stipendiary. "While we will not be able to get 13 there completely in 2015, we want to continue to take steps 14 to do so. Included in this budget is an initial housing 15 allowance for vicar of $3,000 per month, $36,000 a year, on 16 the documented priority to pay clergy right after the mission 17 share pledge, as well as the congregation feeling a sense of 18 moral responsibility to pay some form of compensation while 19 building toward reasonable compensation." 20 And at the end of that year they gave her a 21 $20,000 payment towards it. And the next year she was being 22 paid at that rate, and they were able to do that, and they 23 had a hundred thousand dollars in the bank when they were 24 closed. They had a hundred thousand dollars in the bank at 25 the end of They were working essentially on a profit. 20

21 1 They were not, in any sense, nonsustainable. 2 There is another issue. I want to put up 3 Exhibit 53 real quickly and go to the page that has the 4 letter to Bishop Bruno. While he is doing that, I'll tell 5 you what the issue is. 6 The issue is parking. Reverend Voorhees was 7 faced, when she came in, with a problem with respect to 8 parking. There had been a long-term contract that allowed 9 the church to use city parking. The city hall got torn down. 10 The city said you've got to find some other parking as a 11 matter of principle. The city put her in touch with a new 12 developer who was building the building there, and over a 13 period of months she came to an agreement with them. 14 All the way along -- and I have a read well 15 this thick of s to Mr. Forbath to Mr. Tumilty -- she is 16 sending proposals to them. They're getting comments back. 17 The chancellor, Mr. Prendergast, was involved in it. And 18 eventually she had worked out an arrangement where the 19 developer would pay $6,800 a month, over $80,000, to allow 20 the church to use the parking -- the developer to use the 21 parking during the week, and then she -- or the parish, 22 congregation, could use it, their spaces, on Sunday. It was 23 the sort of thing the city wanted them to try to do. They 24 got there. And the documents -- fair enough, there were 25 issues along the way, but they got resolved. And it was 21

22 1 sitting on the bishop's desk for months in early essentially ready to go. And that is evidenced by this 3 letter which was attached to what you'll see during the 4 course of the testimony, an on February 3rd, 2015 to 5 Mr. Forbath and Mr. Tumilty in which after all these months 6 of working on this, Reverend Voorhees says, "Please find a 7 proposed cover letter to the bishop." 8 She had hired an independent lawyer to look 9 into the issues related to it. One was: Is this going to 10 cause it to be taxed? Because there was profit coming in. 11 She had heard from Mr. Prendergast, the chancellor, "No, as 12 long as the money is going to be used for church purposes, 13 that is not an issue." 14 The nonprofit independent lawyer she had talked 15 to said the same thing. But, nonetheless, Mr. Forbath came 16 up with a pretty good idea. 17 If you go to the last paragraph of this letter, 18 she writes in this letter to Bishop Bruno, "Despite our 19 consensus that practically the nonexclusive license was 20 unlikely to present any issues, Ted suggested, as a 21 precaution, and I agree, that we save the equivalent of six 22 months of apportioned property taxes which would be $30 out 23 of every $85 per space in case there becomes an issue." I 24 won't go into all the rest of it. 25 But she explains to Bishop Bruno the history of 22

23 1 what she's been through, why this works. And it is another 2 $80,000 coming in on a thing that the city has recommended. 3 So, by the time -- and that's in February. In 4 April, April 10, and according to the testimony of the 5 bishop's people and bishop, this came up pretty quickly, this 6 15 million dollar offer in early April. Without consulting 7 anybody at the congregation, without consulting Reverend 8 Voorhees -- who, by the way, you will hear is a business 9 person of her own. Ran her own business, liturgical 10 consulting. She worked with over 200 churches over many, 11 many years as a designer. And part -- I think part of the 12 success you'll hear about is because she had worked with so 13 many churches, she had some insights into what works and what 14 doesn't work, and she'll talk a little bit about that. 15 April 10th, the sale goes forward without any 16 input from any of these people working there, without any 17 input from Reverend Voorhees, nothing. And then she's told 18 about it a few days later. She's told not to tell people 19 about it. And on May 17 the bishop comes, he participates in 20 the service. He indicated to people, "We would like to talk 21 in the parish hall." 22 I don't know if you've seen any photographs, 23 pictures of this church. It's quite an amazing place. It's 24 a beautiful design of a church, but it's a campus. There is 25 a parish hall that holds 200 people or more. There is eight 23

24 1 or nine classrooms. There is a beautiful area in the middle. 2 I can't get in. It's locked. But I've seen it from the 3 outside. I've seen the pictures. 4 During the course of his discussion -- we are 5 going to put up Exhibit 26 in a second -- the bishop talks 6 about why he has sold the church, and he talks about a number 7 of things. There are a lot of questions. One of the issues 8 that comes up is that parking was not a solvable problem. 9 You'll hear one of the parishioners stood up 10 and said, "I worked in that. That is not a real issue." 11 Then he talked about it wasn't sustainable and how it was 12 costing the diocese $25,000 a month. You will have heard 13 from Evangeline Andersen, the CPA. She is sitting there, and 14 she just knew that wasn't true because she knew how well they 15 were really doing. 16 So let's put it up real quickly. Let's go to 17 the second paragraph. "However, two major considerations." 18 Let's see. So this is a letter that two days later, after 19 Bishop Bruno has made the presentation to the congregation. 20 I think a couple hundred people there. And he has been 21 confronted, for example, by Bruce Bennett, who had been 22 working there, on the notion that parking is not a real issue 23 and with others with other questions. But, nonetheless, two 24 days later, he writes, "Two major considerations have changed 25 the outlook for the future of the Newport Beach property. 24

25 1 First, the church plan is out of compliance with city code 2 due to lack of 40 parking places to serve the property. 3 While the church has been operating" -- and I won't read all 4 of that. We'll go into it. But, essentially, it's the 5 parking issue, which is a nonissue, and he's been told it's a 6 nonissue both in writing and his staff knew. They had worked 7 on this for months. And by Mr. Bennett the day before. 8 Then, if you go down to the bottom, he again 9 talks about "The operating expenses of $25,000 monthly, in 10 addition to hundreds of thousands of dollars already spent to 11 restart the congregation, are not sustainable given the 12 present congregational income." Congregational income was 13 way above what they had predicted. They knew it. You'll see 14 the financial statements. And the expenses were at a level 15 that they had saved a hundred thousand dollars. Had they had 16 parking, they would have had another $80,000 coming in. 17 So, again, Ms. Andersen will testify, Reverend 18 Voorhees will, too, that they were very sustainable at that 19 point in time. He knew it or should have known it because he 20 had been given that information. 21 Let's do one more -- let's do something real 22 quick. Let's go to Exhibit 44 quickly. What was never 23 mentioned by Bishop Bruno in any of these things is that some 24 of that money was likely to go to finance and complete a 25 purchase of commercial property in Anaheim, California which 25

26 1 is near Angels Stadium. If you have a chance -- baseball is 2 not quite open yet, but maybe by the end of this. There is a 3 gas station there. There is an RV storage area. There's 4 other commercial stuff there. Never mentioned. And it 5 brings in money for Corp Sole. We're told now that it brings 6 in about $300,000 a year to Corp Sole. Never mentioned that 7 this is how some of the money is going to be used. 8 We know from that -- I showed you that Lane 9 Foundation. We know that one of the alternatives was to get 10 a loan on St. James and do it that way. 11 When the sale proposal came along, it's pretty 12 clear this is a way we get free and clear 15 million dollars. 13 We'll take some of it and we'll put it into this commercial 14 transaction, which is exactly why standing committees are 15 supposed to be involved so you don't just do a commercial 16 transaction and sell a church. 17 Anyway, these notes which we received in the 18 last month or so are among several pieces of evidence that 19 later showed up that revealed that, in fact, money was going 20 to this commercial transaction. So these are Mr. Timilty's 21 handwritten notes on May 13, This is the 15 million 22 dollars coming in right there. How are the funds going to be 23 used? It says "preliminary." He and Mr. Forbath are 24 talking. Right here -- so he takes his costs, the broker never been able to figure out why brokers make quite so much 26

27 1 money, but the deal -- the broker got $550,000 on this sale. 2 Here it is listed as a million with costs, taking it down to 3 about 14. And right here, 6.3 million of this sale is going 4 to be used to fund Anaheim. 5 What Anaheim is, it's these parcels of property 6 that the bishop has received partial ownership over many, 7 many years, and he had been advised that if you can get a 8 full ownership, it will be a much more valuable property. 9 You could develop it and all sorts of things. This would 10 allow them to get a full ownership of the property. 11 This is an omission and it was a serious 12 omission. You know, if Bishop Bruno made a judgment call 13 that, in the best interest of the diocese, we need to make 14 this decision, and he had involved people in it and had been 15 up front about it, we wouldn't be here. And the Standing 16 Committee had been properly informed, we wouldn't be here. 17 But this is misrepresentation by omission. For a long, long 18 time they refused to admit that it had anything to do with 19 it. The disclosures in this case, pure coincidence. 20 Okay. So that's Anaheim. And then, finally and this goes to not only misrepresentations but the conduct 22 unbecoming a member of the clergy. I think the 23 misrepresentations do, too. In your canons, the conduct 24 unbecoming talks about conduct that prejudiced the reputation 25 and good order of the church and so on. It's pretty broad. 27

28 1 I don't think it is just a catch-all. I think it has real 2 meaning. At least as I see it, by involving the public in 3 this, this really opens up this one. So Exhibit What happened is there turned out to be a 5 community -- not just the people in the parish, but the whole 6 community got upset about this. This church is right on the 7 entrance to this peninsula or isle called Lido Isle. I think 8 it's got 800 homes or something. It's also right in the part 9 of Newport Beach. 10 The mayor had called a town hall meeting to see 11 what people thought. It was overwhelming that they didn't 12 want this to turn into condos there. And she later had a 13 city hall meeting. You're going to see the video of that or 14 parts of it, and she is going to testify. 15 This is a letter that the evidence will show 16 that the buyer, Legacy, realizing there was some controversy, 17 suggested that Bishop Bruno write. So let's go down here. 18 Let's go to the third paragraph. This is a letter to a 19 public official, the mayor pro tem of the City of Newport, 20 who is dealing with this controversial issue. And here is 21 what he says: 22 "It has been a complex decision to enter into a 23 sale agreement for the property owned by the bishop as 24 Corporation Sole. I have done so knowing that the time is 25 right to liquidate this asset." It's a church. It's a 28

29 1 consecrated church, not just an asset. "For the benefit of 2 the ongoing mission within the church and our diocese. 3 Operating expenses were no longer sustainable by as much as 4 $300,000 annually." Well, operating expenses were $300,000, 5 but revenues were more than $300,000. So the second part of 6 it, that it is not sustainable, is just not true. 7 The mayor will indicate that she read that to 8 say, oh, boy, they're in the hole 300,000, not just operating 9 expenses. And especially after nine million in legal costs 10 related to securing the four parish properties. That's an 11 interesting representation. 12 You will hear from the bishop that they spent, 13 from his people, witnesses, nine million dollars on legal 14 costs. And they have a spreadsheet that shows that. I'm 15 going to suggest to you now that it's about five million 16 dollars in legal fees and costs and then other -- they apply 17 a cost of I think a million eight to the use of their staff. 18 As far as I know, there was no designated staff. There was 19 no time kept. They just apply another one point eight 20 million. Out of the nine million, about four million are 21 these what I'm going to call -- I don't want to call them 22 fake, but they are not real legal costs. They couldn't be 23 supported as true legal fees or costs. 24 So these sorts of representations after the 25 sale are at the heart of the misrepresentation. Going public 29

30 1 goes to the heart of conduct unbecoming. 2 I'm going to skip over the resignation issues. 3 You'll hear all about that. I think it is no longer an 4 issue. Respondent's brief says she was terminated, 5 literally. The bishop and Mr. Tumilty have both agreed that 6 essentially she was terminated. The misrepresentation is in 7 telling people like Bishop Matthews that she resigned and 8 other people that she resigned. 9 So let's just talk about the burden of proof 10 very quickly because it plays such a central role in 11 Respondent's trial brief. 12 I don't know why they cited a California case 13 that sets a clear and convincing standard that's higher than 14 reasonable doubt, but we don't need to go there because the 15 canons define clear and convincing. And without reading it, 16 I can tell you basically. You will read it. I've tried a 17 lot of cases beyond a reasonable doubt as a prosecutor and as 18 a defense lawyer, and beyond a reasonable doubt is something 19 like it's not beyond all doubt. It's not to a scientific 20 certainty. It's the kind of doubt about which you have an 21 abiding conviction, something like that. It's a doubt as to 22 which you can ascribe a reason. That's reasonable doubt. 23 Preponderance is more than more likely 24 than not. Most judges will say to a jury something like percent or percent. Anything above the 50 percent 30

31 1 line. 2 Clear and convincing is an unusual one. There 3 aren't many cases involving it. It is someplace in between. 4 It is probably closer to reasonable doubt, in fairness. It 5 usually is involved in fraud cases, but that's the standard 6 you have to follow. So let's just read it. 7 If you want to put up Exhibit 20 again on clear 8 and convincing. 9 It's up near the top of the -- that's Exhibit 10 20, but it's probably on page 132. No. I'll just read it. 11 You know it anyway. Don't worry about it. Ron, don't worry 12 about it. 13 "Clear and convincing shall mean proof 14 sufficient to convince ordinarily prudent people that there 15 is a high probability that what is claimed actually happened. 16 It's more than a preponderance of the evidence is required, 17 but not proof beyond a reasonable doubt." 18 So, that's the standard that you'll be 19 applying. We think that's a fair standard. We welcome it. 20 I think you are going to see evidence that is well beyond it. 21 I think it's actually beyond a reasonable doubt these 22 statements about parking and sustainability were not true. 23 Why he made them we'll have to hear about. But I think the 24 evidence at the end of this will be clear that there should 25 be findings against Bishop Bruno on these charges and the 31

32 1 Standing Committee issue should be admitted. These 2 representations are clear. We certainly welcome and 3 appreciate your patience so far with me. 4 RT. REV. HERMAN HOLLERITH IV: Mr. Richard Zevnik, 5 counsel for Bishop Bruno, I would invite you to give your 6 introductory remarks. 7 MR. ZEVNIK: Vice-Chancellor Larsen will be giving the 8 opening. 9 RT. REV. HERMAN HOLLERITH IV: That's fine. 10 MS. LARSEN: Good morning, Right Reverend Hollerith 11 and the hearing panel. My name is Julie Larsen. I am a 12 vice-chancellor and co-counsel in this matter. I represent 13 Bishop Bruno, Respondent. 14 I'm going to make my opening statement very 15 brief. I'm going to just focus on the relevant facts as in 16 an opening statement, and there are eight that are relevant 17 and important in this case. 18 As you know, there are three charges against 19 the bishop. That he disposed of consecrated property without 20 first getting permission from the Standing Committee; that he 21 made misrepresentations regarding the sale of Newport Beach; 22 and that he engaged in conduct unbecoming a bishop as a 23 result of the misrepresentations and in closing the Newport 24 Beach property. 25 They, the Complainants and the church, has 32

33 1 adopted six factual allegations regarding those three 2 charges. And what you'll notice throughout this hearing is 3 that 90 percent of the relevant facts are really not in 4 dispute, which is probably why co-counsel argued law and not 5 the facts so much in this opening statement. 6 For example, if you look at the first issue, 7 charge one, disposal of consecrated property. There's no 8 dispute that Bishop Bruno did sign a purchase and sale 9 agreement. There's no dispute that after he signed it, but 10 before escrow closed, that the Standing Committee concurred 11 in the sale. And the relevant fact, there's no dispute that 12 the escrow never closed. The property was never disposed of 13 and never sold. 14 This proceeding arises from Bishop Bruno's 15 decision to accept an unsolicited 15 million dollar all cash 16 offer for a piece of property that had been appraised at million dollars five years earlier. The facts will show that 18 he carefully and prayerfully considered that decision as 19 quickly as possible. That he looked at the information that 20 he had at the time regarding the finances and sustainability 21 of the congregation that was there. That he thought about 22 the problems with the Newport Beach property that had been 23 there, the 40 missing, basically, parking spaces, and a 24 permanent solution to that and what that would mean. He 25 thought about the use of the 15 million dollars in the 33

34 1 diocese and where it was needed, and he thought about the 2 fact that we have ideal congregations very close to that 3 property. 4 The third relevant fact in this is that if 5 Bishop Bruno made only one promise with regard to that 6 property when it came back after ten years of litigation, and 7 he made that promise to the presiding bishop, as those 8 properties -- there were four of them -- were coming back 9 after that ten years of litigation, he talked with the 10 presiding bishop and asked about restrictions and desires of 11 the national church in terms of handling those properties 12 when they came back. And presiding bishop told him, and he 13 promised, not to sell the properties to any one of the 14 congregations that had left after the consecration of Gene 15 Robinson as Bishop. 16 He made no promise to Reverend Voorhees or to 17 the congregation or to the public that he would not sell the 18 property. What happened is that Reverend Voorhees and the 19 congregation implied from his support of the congregation 20 itself, from the startup of the congregation and helping the 21 congregation, that that meant that they were entitled to use 22 and stay at a very large campus, a 15 million dollar property 23 on a very small island that formerly had a congregation of at it. 25 The evidence will also show that after he 34

35 1 signed the contract to sell the property and told the 2 congregation and talked to them about it on May 17, he worked 3 and made plans and promises with the congregation about the 4 sale proceeds, how the million dollars would be used to 5 continue their mission, if they wanted, on Lido Island. He 6 talked with Reverend Voorhees. And they talked with the 7 congregation about her continuing role with the congregation. 8 He worked with the congregation's transition 9 team to make plans for paying employees beyond the sale of 10 the property, to close out leases, and in general to plan the 11 congregation's future. 12 The fifth relevant fact is that, while this was 13 going on, the congregation and Reverend Voorhees were 14 actually working to stop the sale. On the day that Bishop 15 Bruno flew to General Convention, June 22nd, Save St. James 16 the Great, the 501(c)(3) congregation entity, filed a request 17 for a temporary restraining order to stop the sale. A few 18 days later, while the bishop was at General Convention, 19 Reverend Voorhees sent out a final pastoral letter to the 20 congregation saying that she would not follow them as the 21 final service was July -- June 28th. And she published a 22 final farewell in Anglican, Inc. 23 She did not give Bishop Bruno a copy of the 24 letter or inform him of the resignation, but others did. And 25 when he received it at General Convention, he issued and sent 35

36 1 a letter to her accepting the resignation and informing her 2 to come to see him at his office when he got back. She never 3 did that. 4 The sixth fact relevant to the charges is that 5 while still at Convention, after the last church service on 6 June 28th, the church needed to be secured, and Bishop Bruno 7 asked the COO, David Tumilty, who was also at General 8 Convention, to arrange to have that done. 9 David Tumilty called Ted Forbath, the CFO, who 10 was back in Los Angeles, and asked him to do that. And he 11 and Clare Zabala went on Monday, June 29th, to the property, 12 changed the locks, secured all the doors and closed it. They 13 later made arrangements for people to come in and get stuff 14 and handle all of that. 15 The seventh relevant fact -- and you'll note 16 that opposing counsel put up Exhibit 10 with regard to the 17 presentation and packet that Reverend Voorhees had made the 18 Corporation of the Diocese for a $48,000 grant. 19 It's important to know, if you look and drill 20 down in that document, that that is the information that was 21 submitted on July 31st in 2014 that was in the diocese in 22 April of That is only eight months of financial data 23 from St. James the Great which had been in existence for months. 25 When the bishop made his decision to accept the 36

37 1 15 million dollar offer, he had only that financial data in 2 at the diocese. And if you look at that financial data, not 3 at projections for 2014 and 2015, but the actual data that 4 came in from 2013 and 2014, you'll see that there was a 5 43,000 and change deficit. 6 If you back out the 75,000 and change cash that 7 the diocese had given them, and the $30,000 worth of rental 8 of the campus, basically the classrooms, the kitchen, some 9 money from parking. And, as her notes recognize, they 10 weren't paying anything for vicar. She was non-stipendiary. 11 The congregation at that time had not submitted any monthly 12 financial reports. They had no bishop's committee, no annual 13 meetings or elections. Their ASA had been reduced from from 92 to 85 by There was nothing at the diocese in April of which suggested St. James the Great was the best use of 17 that very large property. 18 The final relevant fact is that the Anaheim 19 interest purchase -- this was a piece of property. Yes, it 20 had gas stations and everything that was given to the bishop 21 as Corp Sole in stages and percentages like lots of 22 bequeaths. And there was a long-term plan to purchase the 23 remaining interest in the property so there was a hundred 24 percent interest in eventually that that property can be sold 25 or something can be done with it to make it useful. 37

38 1 That Anaheim interest purchase and the Newport 2 Beach property sale were not dependent, but completely 3 independent business transactions. Anaheim, and the money, 4 six something to buy that 15 percent interest, was going to 5 be done whether or not the Newport Beach property would be 6 sold. The timing of the two transactions made it easy and 7 relevant to make that one piece of the 15 million dollar 8 proceeds that came from the Newport Beach property. 9 But Anaheim and the purchase was not prompted 10 by the sale of the Newport Beach property. And the Newport 11 Beach property sale was not instituted because of the Anaheim 12 purchase. 13 If you look at the relevant facts and you apply 14 the burden of law, you will see that Bishop Bruno truly made 15 a decision prayerfully in April when a 15 million dollar 16 unsolicited all cash offer came for that property. And he 17 did not misrepresent his intentions with regard to the 18 property to anyone. These charges should be dismissed. 19 RT. REV. HERMAN HOLLERITH IV: Let's take five 20 minutes, a five minute recess. Thank you. 21 (Recess) 22 RT. REV. HERMAN HOLLERITH IV: Mr. Coughlan, would you 23 like to call your first witness. 24 MR. COUGHLAN: Yes. I almost said Your Honor. 25 R. REV. HERMAN HOLLERITH IV: Please don't. 38

39 1 MR. COUGHLAN: Bruce Bennett. 2 THE CLERK: Please raise your right hand. 3 ^Bruce Bennett, 4 called as a witness by the Episcopal Church, having been duly 5 sworn, was examined and testified as follows: 6 ^DIRECT EXAMINATION 7 BY MR. COUGHLAN: 8 Q Good morning, Mr. Bennett. 9 A Good morning. 10 Q Did you already spell your name for the court 11 reporter? 12 A No. 13 Q Why don't you spell your name for the court 14 reporter. 15 A Bruce Bennett, B-e-n-n-e-t-t. 16 Q Mr. Bennett, would you tell the panel a little 17 bit about your educational and work background to start. I'm 18 going to ask you questions along the way, but just to start. 19 A Yes. I'm currently retired. I spent 38 years 20 operating my own business, a skilled nursing facility, before 21 I sold that seven years ago and retired. I'm a graduate of 22 the University of Maryland, and I spent four years in the Air 23 Force prior to coming back to California to run my business. 24 Q If I remember correctly, you have an 25 interesting military and educational career kind of mixed 39

40 1 together way back when. Is that right? 2 A Well, yes. I was a Russian interpreter in the 3 Air Force Security Service, and we flew combat missions up 4 and down the Communist block countries back in the early 70's 5 during the Cold War and tried to gather as much as we could 6 about their military operations and transmit that to our 7 military to defend it. 8 Q Does that mean you spoke Russian or could 9 understand Russian? 10 A Yes. 11 Q If I can visualize it, you were up in an 12 airplane kind of listening in on them? 13 A Yes, that's correct. 14 Q Is that -- did they send you to the University 15 of Maryland? Were they tied together in some way? 16 A They sent me to Syracuse University for a year, 17 the Russian language school. At that point I completed three 18 years of college, so I finished my undergraduate degree at 19 the University of Maryland in Heidelberg, Germany. 20 Q And then at some point you went -- you left the 21 military and went into business? 22 A Yes. 23 Q Can you tell us a little bit about the nature 24 of that business? 25 A Well, we had two skilled nursing facilities, 40