In an article published on September 28, 2018, KHTS explored the various claims of a conflict of interest existing between Master’s University School President John MacArthur, the president’s son-in-law, Kory Welch, and a company owned by Welch.
According to school tax returns filed with the IRS on an annual basis, Welch’s advertising and graphic design company, WeKreative, held an annual contract with the school, with the total amount paid equaling $180,000 in 2016.
KHTS learned that while the school had the $180,000 contract with WeKreative, Welch was also paid as a “consultant” overseeing the Master’s University marketing department — the department which his company had a contract with.
Additionally, it would appear that although Master’s has stated the president’s son-in-law was brought on because of his “experience” and that the bidding for the marketing contract was “competitive,” Welch and his wife seem to have had at least five companies that have been canceled or suspended by the California Franchise Tax Board due to a failure to pay taxes since the early 2000’s.
And lastly, it would seem that board officials had publicly announced Welch as the chief operating officer — which would give him greater control of not only the marketing department, but a number of other departments as well — in March 2018, but according to the 2017-2018 academic catalogue that was published a year prior, Welch was already listed as COO and chief marketing officer under the “administration” section.
While Welch is not explicitly named, financial statements released on behalf of Master’s University and Seminary state, “During the years ended June 30, 2017 and 2016, (The Master’s University) paid $392,900 and $137,071 respectively, to the businesses owned by a family member of management for marketing, public relations and video production services.”
When questioned on this, representatives from The Master’s University would not comment on the specific totals Welch himself received in compensation, but reiterated that WeKreative had an annual contract for $180,000 at the company’s nonprofit rate that amounts to 1,200 hours of work.
“Over the past 12 months, however, WeKreative has documentation to show they provided more than 3,000 billable hours of work for TMU,” said Brian Harr, the Director of Communications at Master’s University. “The school was not billed for the extra 1,800 hours.”
The Master’s University is not the only organization related to MacArthur that Welch has financial ties with.
According to individual audits and 990 forms from the 2003 to 2016 fiscal years, Welch and his companies have received over $7 million in payments from Grace to You — the nonprofit media arm for his father-in-law’s church, Grace Community.
Beginning in 2003, Welch received $145,700, for the “production of materials.” Then, in 2006 as the Grace to You video production director, he received $130,228 in total compensation. By 2007, the last year that it would appear Welch received a formal salary from Grace to You, he received $103,677 worth of compensation as the director of television broadcasting.
After 2007, the tax returns indicate that Welch was no longer a paid employee at Grace to You, but The Welch Group — a company founded by Welch in 2006 — began receiving annual payments from Grace to You for post-production and graphic design contract services in the fiscal year starting on July 1, 2008.
Over the course of the next decade, The Welch Group or companies owned by Welch were paid by Grace to You, with the lowest amount received by a Welch-owned company being $658,950 in 2010, and the largest amount being $794,000 during the fiscal year that ended June 30, 2017.
Coupled with those payments, the ministry made a $20,000 loan to Welch for purposes of him purchasing a personal residence. The loan was given with zero percent interest and total loan forgiveness within five years, meaning that Welch was likely not required to pay a single dollar back.
In addition, The Welch Group was loaned approximately $8,500 by Grace to You for “goods and services” and “asset purchase.”
An accountant that KHTS has spoken with stated that it is highly unusual for a business to receive a loan from a client in order to complete the services that the company was hired to do.
Additionally, according to the submitted and signed 990 forms, the loans were not board-approved or put into a written contract. There was no written agreement signed by the board guaranteeing that Welch had to pay the money back.
In total, it would appear Welch and his companies have received approximately $7,610,399 from Grace to You and The Master’s University since 2003. This final figure includes the sum total of the payments listed in the 2003 through 2016 tax returns for both organizations, but does not include the most recent fiscal year for both organizations, as they are not available to the public as of the time of publication.
KHTS reached out to both Grace to You and Kory Welch, but neither had been able to comment by time of publication for this story.
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