Burdens Grow : FBI Probing Church Founded by McBirnie

The FBI said this week that it is investigating the Glendale-based United Community Church and affiliated organizations founded by the Rev. William Steuart McBirnie, which has filed for protection from its creditors.

A spokesman for McBirnie said the minister is unaware of the investigation and declined to comment until McBirnie is notified by the agency. However, he said McBirnie no longer controls any of the organizations.

An FBI spokesman said the investigation is in a preliminary stage and refused further comment.

The United Community Church filed for protection last week under Chapter 11 of the U.S. Bankruptcy Code just two weeks after McBirnie, citing poor health, asked church officials to replace him as senior minister. In the past year, three other organizations founded by McBirnie have also filed for reorganization under the Bankruptcy Code.

McBirnie founded numerous church organizations that grew to become a multimillion-dollar empire, thanks to his charismatic presence and a nationally syndicated radio show on which he preached anti-Communist sermons.

Flurry of Lawsuits

But the church ran into trouble several years ago when former parishioners sued McBirnie and his affiliated organizations for repayment of loans the parishioners claimed were never repaid. McBirnie said he was unable to repay the loans because of bad investments, rising interest rates and poor financial advice.

At least 17 such lawsuits are pending throughout California.

In another case, a Glendale court commissioner last year ordered McBirnie and his affiliated churches to repay 24 parishioners a total of $200,000 in outstanding loans and more than $1 million in punitive damages. That ruling is being appealed.

In ordering restitution, the commissioner found that the various church enterprises operated under McBirnie’s control and were treated “as if they were one.” McBirnie, in his defense, said he does not control the organizations and is not responsible for their finances.

Last month, the federal Department of Housing and Urban Development asked the inspector general’s office to undertake an audit of the Concord Senior Housing Foundation, one of four McBirnie-founded organizations to file for reorganization within the past year, according to HUD attorney Joseph Gelletich.

HUD did not request the FBI investigation, Gelletich said.

The foundation owes HUD $2.5 million for financing construction of the Concord Senior Housing Facility, a 150-unit apartment building in Pasadena, which the foundation owns.

Gelletich said Concord officials refused to let auditors inspect their books, saying the project was under the jurisdiction of the federal bankruptcy court. Gelletich said HUD has asked the bankruptcy court for authority to audit the Concord.

Four years ago, the senior-citizen housing project paid off $1.7 million it owed on a 50-year, 3% mortgage held by HUD, put the building up for sale and notified tenants that their rent would be doubled.

At that time, McBirnie was chairman of the board of the Concord Foundation.

Because it had not obtained approval from HUD and the prospective buyer did not meet department qualifications, HUD filed suit and blocked the sale, Gelletich said.

Church attorneys say they still hope to sell the Concord so that creditors can be paid off, but the housing complex is still owned by the foundation and remains under the authority of HUD’s subsidy program.

Two other McBirnie affiliates that have filed for Chapter 11 are the California Graduate School of Theology and Community Churches of America, the umbrella organization for McBirnie’s religious enterprises.

United Community Church is housed in a a Spanish-style, octagonal building that sits on a large lot in downtown Glendale on East Colorado Street. In its 1985 annual report, United Community Church claimed $3.8 million in assets and $907,000 in liabilities. About 300 parishioners still attend Sunday services each week, and the church recently started an Arabic Community Church with about 100 members, said Joel MacCollam, a church spokesman. “They’re not doing badly at all,” but bankruptcy protection was sought to protect its assets from creditors, he said.

Christ Troupis, an attorney representing former parishioners who claim they were defrauded by McBirnie and his organizations, said the church is not bankrupt, and he will ask the bankruptcy court to overturn the filing.

Meanwhile, the church last week filed a $10-million malpractice suit against its former attorney, Robert Garcin, and his firm, Glendale-based Irsfeld, Irsfeld & Younger. Garcin is a former Glendale mayor and president of the Burbank-Glendale-Pasadena Airport Authority.

Harry F. Scolinos, a church attorney, said the suit was filed because Garcin “did nothing to protect the interests of the church.”