Monday, February 17, 2070


This blog recounts my experiences with abusive conduct on the part of my former rector, the Rev. Robert H. Malm aka Bob Malm. Bob is the rector of Grace Episcopal Church in Alexandria VA—an ostensibly inclusive Anglo-Catholic parish located in the city’s Del Ray neighborhood.

Bob’s misconduct began in July 2015, after I complained to the Episcopal Diocese of Virginia about bullying on Bob’s part, as well as questionable HR, cash management, and financial reporting practices in the parish. I also complained that parish employees were routinely experiencing workplace harassment.

Four weeks later, the diocese wrote back, saying that these issues were, “not of weighty and material importance to the ministry of the church,” and declining to get involved. That’s right—the Episcopal Diocese of Virginia has no issue with bullying, workplace harassment, or church funds going AWOL.

Shortly afterwards, I received an email from Bob Malm telling me to find a new church. Days later, I learned that Bob had instructed church staff, clergy and volunteers to shun us by excluding us from the life of the church. Subsequently, Bob acknowledged that he did this in retaliation for my complaint.

I promptly informed the diocese, which refused to do anything.

But Bob’s harassment and retaliation were far from over. Bob deliberately misused memorial donations given by my family; these were not used per the terms under which they were solicited, which is illegal. Yet again, Bishop Shannon Johnston had firsthand knowledge of this matter, and was sent written documentation that the misuse of funds was illegal, but he still refused to get involved.

In spring 2017, following adverse media coverage, the bishop negotiated a ceasefire. This was short-lived, however, for the following December, Bob filed a false police report with the City of Alexandria police department, arguing that a blog written by my mother had threatened him, that the blog was mine, and suggesting that I have major mental illness. All three claims are false, and I believe Bob knows that. Moreover, in his report, Bob breached confidentiality on certain pastoral issues.

As of February 2018, the matter is now in litigation. As a result, I am limited in the details I can share.

What I can say is this: Bob’s behavior is abuse, pure and simple. His conduct is highly unbecoming, and reflects badly on him, on the parish, and the entire Episcopal church.

In addition, Bob’s actions have been harmful to my entire family, but particularly my mother, who is in the final stages of emphysema. Her distress is palpable, and no one should have to deal with behavior like Bob’s in the final weeks of their life.

Lastly, I’d point out that shunning usually is the bailiwick of cults, Scientologists, and the Jehovah’s Witnesses. Bob’s campaign of shunning me and my family will soon have gone on for two years. Such behavior has no place in any church, and suggests that Bob Malm and Grace Church are morally and ethically bankrupt.

Saturday, February 5, 2022

Letter from Dee Parsons, Editor of the Wartburg Watch

My friend Dee Parsons, editor of The Wartburg Watch, recently sent this letter for possible use in upcoming litigation involving Bob Malm.

Check it out.

Monday, February 24, 2020

Bob Malm’s E-mail Announcing His Campaign of Shunning

I’ve posted this before, but here is a screen cap of Bob Malm’s email announcing his campaign of shunning. In conjunction with that email, Bob instructed church staff, clergy and lay leaders to exclude us from the life of the parish.

A copy of this email was promptly sent to the Episcopal Diocese of Virginia, which took no meaningful action to address the matter.

Note that this email came shortly after the diocese declined to mediate the dispute between family members and Bob Malm. Thus, it was done in retaliation for contacting the diocese, and Bob’s actions would be illegal if he worked for a publicly traded company.

And people wonder why millenials have little use for organized religion.

Sunday, February 23, 2020

Email Confirming Bob Malm’s Instructions to Parish Staff to Shun Us

As Bob Malm and Grace Episcopal Church continue to falsely claim that I left the parish on my own, there is ample documentation to prove otherwise. Among these are the following email, in which I established that Bob had, in fact, instructed church staff to exclude us. Needless to say, no one on staff, from Bob Malm on down, has ever disputed the accuracy of this communication.

So, if you are told that Mike and I left the parish on our own, ask these questions:
  • If I did indeed leave the parish on my own, why did Bob feel the need to issue such instructions to church staff?
  • Why would Bob feel the need to include Mike, who had been received into The Episcopal Church just 16 months earlier?
  • Why would Bob reference Mike in this email when, to this day, Mike remains a member of the parish?
  • Do you know of other situations in which Bob Malm has taken a personal interest in church membership at this level?
  • Why would Bob issue such an email when I had not requested a letter of transfer at the time the email was sent? (I am delighted to report that I did send such a request in July of 2017.)
The fact that neither Bob Malm, nor the church vestry, have been honest in their comments about this situation illustrates how dysfunctional the parish is.

Saturday, February 22, 2020

Email from Mike Jones Confirming Bob Malm’s Instructions to Exclude Us

Just in case anyone is confused by claims by Bob Malm or the Grace Church vestry about the circumstances of our departure from the church, here is a screen cap of an email from Mike Jones, the person then in charge of the lay eucharistic ministers, confirming that Bob had contacted him to make sure we did not remain involved in the life of the parish.

Do you really want to give your time, talent and treasure to a church where the vestry and rector lie to you? As far as I know, both the vestry and Bob Malm continue to misrepresent these issues.

Friday, February 21, 2020

Bob Malm: Witness Tampering?

The issue of witness tampering is, of course, in the news these days following Mueller’s announcement that Paul Manafort may be attempting to improperly influence witnesses. How did Mueller did this? By allegedly sending encrypted texts via Whatsapp trying to get in touch with witnesses in an apparent effort to influence their testimony.

That raises the question, “Have Bob Malm and his wife Leslie engaged in witness tampering?”

Only a court can decide that question, but I have multiple pieces of evidence that suggest that they have contacted my friend Dee Parsons, editor of The Wartburg Watch, in an effort to suppress publication of materials documenting Bob’s misconduct. Further, Bob has directly criticized Dee’s written statement on my behalf regarding the quirky dynamics within my family, even though he knows that she likely will be a witness at the hearing on October 5. Moreover, well-placed sources tell me that Dee has expressed concern that Bob is trying to pressure her to change her testimony.

Additionally, Bob’s repeated intimations about mental illness on my part suggest he may be trying to “wire the discussion” within Grace Church and other fora.

Regardless of whether one concludes that Bob has engaged in witness tasmpering, at a minimum his conduct would seem questionable at best for a member of the clergy.

Thursday, February 20, 2020

Disgraceful Waste: Bob Malm Flushes $2 Million of Church Funds Down the Toilet on His Personal Residence

Speaking of dysfunction, in 2014 the Grace vestry decided to write off half of the value of a loan it had made 10 years earlier to Bob Malm. The loan had been provided so that Bob could purchase a private residence. But writing off half the loan, especially at a time when the church was in relatively dismal financial condition, was a bad and irresponsible decision, as we’ll see below. And before you ask, as a vestry member, I was the sole person to vote no on the forgiveness, which amounted to $100,000 of a $200,000 loan.

But there’s more to it than just the loan. As we’ll see below, the loan is just the tip of the iceberg in a series of spectacularly ill-advised business decisions made by the vestry at Bob Malm’s urging. In this matter, Bob placed his perceived personal interests ahead of those of the parish he claims to serve, while the vestry lost sight of its fiduciary obligations.

First, an important disclaimer, which is that a loan for a personal residence is the one exception to the canonical prohibition on churches lending money to their clergy. Thus, there is nothing inherently wrong about a church lending its rector money for the down payment for a personal residence.

That said, it is important to note that, at the time Bob decided to buy a personal residence, he resided in a perfectly livable rectory, much larger than his current home. Yes, it needed work, perhaps as much as $200,000 worth, but it was comfortable, convenient, and owned free and clear by the church.

But Bob appears to have had it in his head that if he had his own place it would be a nest egg for retirement. That of course, presupposes adequate maintenance and upkeep—neither of which has happened in practice. Thus, Bob traded a large but poorly maintained home for a small but poorly maintained home, all while spending a small mountain of donated cash. Nice move, Bob.

So, despite considerable misgivings and resistance on the part of the vestry, Bob bludgeoned a proposal through the vestry to help him buy a private residence. This he did by dint of much noisy argument, and by remaining present during the vestry vote on the matter, with the result that more than one vestry member feared that, if they voted no, they would face retaliation. Yes, imagine that.

But the proposal went further. At Bob’s urging, the church tore down the rectory, an asset with a value of roughly $700,000, at an all-in demolition cost of about $200,000. (Such projects are surprisingly costly.) Thus, the parish was down about $900,000, of which roughly $200,000 was a wash versus the cost of updating the rectory.

To get Bob into his new residence, the parish extended what was then a $100,000 loan for the down payment, and boosted Bob’s total compensation via a housing allowance and other perks from a little more than $70,000 a year, plus the use of the rectory, to a total well more than double the original figure.

To make matters worse, the original loan amortized accrued interest. In other words, the loan just sat there, getting bigger and bigger over time, with no payments or interest due. Thus, Bob’s personal residence needed to increase in value by 7% every year if the loan was not to erode any potential profit that Bob would make at the time he resold the house. Hardly a done deal in the best of times, and a very tall order indeed for a small, older home with few updates and much deferred maintenance.

When the note first matured in 2009, Bob already had signaled that he would likely seek another position, one in a different church. But it appears that Bob did not find another church willing to match his generous compensation package, nor provide a laissez-faire governance regime in which, to closely paraphrase one of Bob’s former assistant rectors, “Bob could get away with murder.” So, the vestry decided to add insult to injury for all parties and kick the can down the road. The maturation date on the loan was set back another five years, conveniently ignoring the deferred maintenance and interest that was piling up on Bob’s personal residence and thus eroding the parties’ equity in the property.

By this time, Bob still had made not a single payment of interest or principal. Making monthly payments, regardless of the imprudent terms of the loan, would of course have been sensible, but Bob has never been one to let such niceties intrude. As a result, when the loan matured in 2014, the value of the loan had ballooned to $200,000, double its original size.

So, in 2014, the vestry decided to “solve” things by writing off $100,000 of the loan, in recognition of Bob’s years of “service,” and requiring repayment of the original loan over a five-year period. That’s right—the church walked away from the original deal and gave Bob a $100,000 bonus. Keep in mind, too, Bob is far from stupid. He knew full well what he was getting into. So, why should he not have been held to the terms and conditions to which he agreed?

There are, of course, circumstances under which this may have been appropriate. For example, if the parish were awash in a sea of cash. Or if Bob’s job performance were exemplary. As in, if he adhered to the terms of his letter of agreement. Or grew the parish. Or had regular mutual ministry reviews. But the reality is that, while Bob can be engaging on an interpersonal level, he views being a priest as, in the words of someone close to him, “Just a job.” So no need to get too caught up in notions of Christian charity—that’s not part of Bob’s worldview, and I can tell you firsthand he doesn’t extend that approach to others.

Bob Malm’s Mediocre Job Performance

Moreover, Bob’s attitude towards being a priest is reflected in his work performance. Consider:
  1. For years, parish business records were a hot mess. 
  2. One of the parish registers has gone missing. 
  3. For more than a decade, church financial records were facially disorganized, while canonical requirements for an audit were ignored. (The parish does an agreed-upon procedures review, which has no external attestation value. In other words, it doesn’t prove anything, but instead recites information provided by the client.) 
  4. Staff has often behaved badly, and one staff member was a hoarder. 
  5. There still is no strategic plan.
  6. Bob comes and goes pretty much as he pleases; there have been times when he has taken leave far in excess of that permitted under his letter of agreement, and without vestry approval.
  7. Basic canonical requirements, such as a written finance manual, are still not in place, more than 25 years after Bob started his job. (See the Manual of Methods in Church Business Affairs for this and other requirements that Bob has conveniently ignored.)
  8. Even his sermons have become pointedly short, and more than one parishioner has said that Bob seems thoroughly burned out. Bob has become both increasingly lackadaisical and autocratic, while appearing convinced that he is somehow special.
Where does that leave things? As things stand, Bob is paid better than a great many Episcopal bishops. For example, below are 2017 salaries for bishops on the staff of the presiding bishop, including Todd Ousley, the bishop in charge of pastoral development:

Nor does locality account for Bob’s overly generous compensation. See, for example, data below for priests in the Episcopal Diocese of Washington, which has some of the highest salaries in the country:

Bob has about another year of payments left on the original $100,000 loan; meanwhile, the church (including its component entity, the school) is preparing to spend $1.2 million on HVAC improvements that will primarily benefit the school, with half the money coming from the church. The faux slate roof needs to be replaced, the stained glass windows need costly restoration, the parking lot needs repaved, and the original elevator needs to be overhauled.

The Debacle by the Numbers

Total Loss to Grace Episcopal Church, 2004-2018
Loss of equity, rectory$700,000.00
Write-off, accrued interest$100,000.00
Total compensation increase, 14 years$1,200,000.00
Avoided costs, rectory repairs$200,000.00
Rectory tear-down costs$200,000.00

These numbers become particularly compelling when we look at the capital expenses and extraordinary costs the church will face in the next few years:

Anticipated Capital and Extraordinary Expenses, 2018-2021
Miscellaneous HVAC repairs$45,000.00
HVAC replacement, church share$600,000.00
Elevator refurbishment, church share$30,000.00
Stained glass restoration$60,000.00
Parking lot repaving, church share$25,000.00
HVAC blueprints, church share$22,500.00
Faux slate roof replacement$60,000.00
Replace failed double-pane windows$40,000.00
Replace exterior rotted wood trim and rake boards$40,000.00
Replace obsolete fire alarm control panel$15,000.00
Contingency funds (needed for HVAC replacement and other major projects in light of facility age)$200,000.00


Keep in mind that, when all this work is done, there still will be major challenges with the building. For instance:
  • The nave still will not be able to maintain temperature during hot summer days or major events. 
  • Plumbing will still be obsolete, with piping in original parts of the building at actuarial end of life. 
  • Neither elevator will meet modern Americans with Disabilities Act (ADA) standards. 
  • There still will be no ADA-acessible entrance.
  • Interior directional signage will remain crude and non-ADA compliant.
  • Interior finish, notably much of the 1994 renovations, will still be at end of life. 
  • The commercial kitchen will still be obsolete.
  • Several local HVAC units will remain out, including the one in the rear fire tower.
  • The lower hallway under the original narthex will still lack adequate HVAC.
  • Humidity and temperature control in the undercroft will remain spotty at best due to poor air flow control and the oversized, 20-ton unit that services the space. As a result, summer humidity levels routinely exceed 70 percent, which is not healthy.
Nor is the HVAC work likely to come in under budget. Builders are doing well right now, and with the third floor of the building out of service, it will be clear to bidders that the church has little leverage. Further, older buildings such as Grace’s physical plant have one consistent characteristic, and that is their ability to throw curve balls into the path of anyone doing capital improvements. In short, procurement under duress rarely is the most cost-effective procurement, and even more so in a building that is now more than 60 years old.

Nor do things look much better for Bob Malm. Although comparable homes in the area have appreciated by about $200,000 since the date of this purchase, the extent of deferred maintenance on Bob’s private residence, the antiquated layout, the very small size, the perilous exterior steps, the lack of landscaping, and the obsolete bathrooms leave Bob in a position where he will be lucky to break even. Moreover, despite the influx of donated cash, Bob’s penchant for lengthy vacations, expensive private schools for his children, cosmetic procedures, and other indicia of keeping up with the Hillers left the family in precarious financial condition for many years. See, for example, the judgment recorded in 2010 by Suntrust Bank,  now a matter of public record, six years after the church’s original loan, against Bob’s wife Leslie, for what appears to be an unpaid personal loan. (Source: Alexandria General District Court public records)

Similarly, public records reveal what appears to be unpaid dental bills for two of Bob’s children at about the same time; the cases were scheduled for hearing on 12/15/10, but the cases dismissed. My opinion: Getting your kids sued for medical bills is not cool. Actually, it’s pretty damned dysfunctional.  (Source: Fairfax County General District Court public records)

At the end of the day, Bob engaged in a highly speculative real estate transaction, and now has been bailed out by the church for his remarkably bad business decision. It also is troubling that the loan to Bob was recorded off the books, not showing in the financial reports, for the first ten years. This raises some disturbing issues concerning financial transparency, candor, and accuracy of financial reports. If nothing else, why did the church’s “auditors” not insist that the underlying receivable be reflected in the financials? It is a basic premise of good governance that insider deals such as this be reported publicly. Again, why was this allowed to happen?


In summary, the church’s current financial posture is best described as a hot mess. Over time, Bob has increased the church’s carrying costs, while reducing its assets and eroding both giving and attendance. Yet the decline in the church’s financial position would be more than adequate to pay cash and carry for upcoming expenses, and even more so had the cash involved in underwriting Bob’s desired lifestyle been appropriately invested.

Meanwhile, the church is placing itself in existential peril, for its continuing declines in giving and attendance could well result in its being unable to meet its financial obligations as this wave of capital expenses hits in the coming years. And regardless of the ultimate outcome, the parish is out more than $2 million dollars as a result of Bob’s self-serving lack of business acumen. At the same time, it is shocking, appalling, and outrageous that Bob Malm should get both a 2014 bonus of $100,000, and annual compensation that exceeds that of many Episcopal bishops, given his feckless job performance. Even his decision to pursue a personal residence, at a time when he couldn’t even come up with a down payment, shows a remarkable lack of concern for the wellbeing of the parish and a dearth of common sense.

Friday, June 22, 2018

Navy Investigates Top Enlisted Sailor for Verbal Abuse; Episcopal Church Says Such Conduct is Unimportant to its Ministry

In a move that shows how out of step with the times The Episcopal Church really is, the US Navy has launched a misconduct investigation into Master Chief Petty Officer Steven Giordano‘s conduct, amidst acccusations that he has been verbally abusive. As a result of the investigation, Giordano has tendered his resignation, according to CNN.

The navy’s actions are in marked contrast to those of the Episcopal Diocese of Virginia, which under Bishop Shannon Johnston, has repeatedly stated in writing that Bob Malm’s repeated documented instances of verbal abuse and bullying are not, “Of weighty and material importance to the ministry of the church.” Thus, the diocese has declined to address these issues.

Per the navy’s Inspector General, Giordano is being investigated for fostering a “hostile work environment,” in which members of his staff complained of “verbal abuse” and a “bullying leadership style.”

It is telling when the US military displays greater moral integrity in the workplace than does The Episcopal Church in one of its houses of worship.

Wednesday, June 20, 2018

Here’s What a Church Budget Should Look Like

Earlier, we discussed the hot, dysfunctional mess that has been Grace Church’s financial reporting for most of Bob Malm’s tenure as rector. While some Planet Malm flunkies like to claim that there is “complete financial transparency” at the church, one only has to look at the opaque presentation of budget information, particularly salaries, to know that it is anything but. Nor is it posted on the parish website, which itself speaks volumes to the state of governance at Grace Church.

This post shows an excellent example of a church budget, as found on the St. Alban’s Annandale website. (BTW, kudos to my buddy Paul for being there. The church is richer for having you.)

First, as stated earlier, the budget is available via the church’s website. No need to ask for it, to look for it on the bulletin board in the downstairs hallway, etc. Instead, it’s available for all the world to see, under the vestry section of the church’s website. That sends a very public message about transparency and accountability in the church, and allows prospective members and donors to see, without making a big deal of it, how the church spends its money, even before visiting the church. In this post-Enron day and age, that’s huge.

Even more important it the breaking out of budget items by line item.That includes the rector’s compensation, the compensation of other staff, and more.

Check it out...everything is there. Yes, I get that this may not be comfortable for clergy or church staff, but it’s much the same regime as ethics disclosure forms for government employees. And the funds are donated, so why shouldn’t donors have this information?

Digging a little deeper, are there issues at St. Alban’s that are revealed in the financials? Yes, there are. These include the fact that the parish is drawing funds from its management reserve to balance the budget, which may or may not be a problem, depending on the root cause. Also, the limited amount of money allocated for the audit makes clear that the church does an Agreed-Upon Procedures (AUP) of the financials, which probably is not adequate for a church of this size.

But these issues are out in the open. 

Further rummaging around the church website makes clear that the parish does, in fact, do an AUP. The good news, though, is that the entire vestry sees the report and has the chance to answer questions. And with full disclosure of budget line items, including salaries, there is much less possibility of wrongdoing or hidden surprises.

Church minutes further reveal that there is a meaningful finance committee, which takes an active interest in the financial health of the parish and understanding the nuts and bolts of the budget. No having to ask the parish administrator for the audit report and being told no, as happened to me at Grace. (Why would that even be an issue? The fact that it was is profoundly troubling and speaks volumes to the state of affairs in the parish.)

Even better, the church provides budget-to-actual figures, which allow people to ask the hard questions and promotes accountability.

Looking at the church’s vestry minutes, there are some other really positive signs. These include a formal strategic planning process, using data derived from a parishioner survey; as well as proactively planning and budgeting for HVAC replacement. 

That compares favorably with Grace Church, which has ignored the fact that much of its HVAC has beyond beyond actuarial life for between four and nine years now. As a result, Grace will not only be dealing with a lack of HVAC on the third floor until well into 2019, but it has to borrow money for replacement—the most expensive way possible to fund the work. Meanwhile, the church is only vetting prospective vendors and getting quotes after failure of major system components.  This represents an appalling debacle that should never have been allowed to happen in the first place—and I can assure you, decision makers at Grace, including Bob Malm, have been given multiple heads-up about this sad state of affairs.

Is St. Alban’s a paradise in which problems and conflicts, including governance issues, don’t exist? Of course not. Are there things the church could do better? For sure. Even just a quick read of church governance materials shows, for example, that there is some conflation of strategic and tactical planning. That said, governance at St. Albans represents a massive improvement over the sadly dysfunctional system under Bob Malm and his appointed executive committee

Tuesday, June 19, 2018

Grace Church’s Dysfunctional Annual “Audit”: Why the Misinformation?

Speaking of dysfunction and questionable cash management/church governance practices, for many years, Grace Episcopal Church has failed to conduct an annual financial audit. Instead, the church did an Agreed-Upon Procedures (AUP), which is two steps down from an audit.

What does that mean? In the case of an audit, the accountant provides external assurances that financial reporting is accurate. That means that lenders, donors, and vestry members can feel confident that financial reports fairly represent the church’s true financial picture.

The next step down, a review, provides limited external assurances that financial reporting is accurate. That means means that lenders, donors, and vestry members can feel some assurance that financial reports fairly represent the church’s true financial picture. In this case, more of the burden of proof, if you will, rests with management, which in this case consists of Bob Malm and other church staff.

Still another step down is the AUP, which provides no assurances as to the accuracy of financial reporting, but instead relies entirely on the representations of the client. As such, it typically is used to provide internal assurance. For example, if I own company A, and I am planning to sell it, I might ask the auditor to confirm that I really have $1 million in receivables, so that I can confirm that I am selling for the right price. But the work is done for my benefit, and it tells the buyer or the bank nothing that I can rely on as part of its due diligence.

The problem at Grace Church is that, for all that time, Bob Malm told the vestry that an audit was being performed, when it was an AUP that was being performed. That begs that question: Why the misinformation?

Before going further, let’s recognize an important fact: Bob is not stupid. Not by a long shot. Moreover, he’s not new to the rodeo. So after 40+ years as a priest, it’s a safe bet he knows the difference between an audit and an AUP. Indeed, if he doesn’t, that in itself is profoundly concerning.

When I served on the Grace vestry, the first sign of trouble was that the church had budgeted $3,000 for the audit. Say what? Having headed up several nonprofits, I know full well that an audit for a nonprofit that pulls in $1 million a year should, even with very clean books, cost about $20K. That right there tells you that something is very much amiss.

Even more disconcerting is that there is no audit committee. Nor does the vestry see the engagement letter with the auditor, as required by church canons. Nor does it see the auditor’s report. In fact, when as a member of the executive committee I asked parish administrator Jeff Aaron to see the audit report, he declined to provide it. So, in theory, the so-called audit report could say that there is $1 million missing, and no one would know.

There’s also the sticky question: Given that for years church financial records were a shambles, how could a meaningful audit even be performed? The first rule of accounting is “garbage in, garbage out.” Yet I well remember Bob Malm telling me, as a vestry member, that the auditors had had very few suggestions. That much is true, I suppose—if you don’t actually perform an audit, you don’t actual see what a mess church recordkeeping is, so you probably don’t have many recommendations.

Still more curious is Bob’s assertion, after the departure of a previous parish administrator, that there was no sign of financial malfeasance. Huh?! Your records are a shambles, going back years, there’s no audit, and yet suddenly Bob can authoritatively dismiss the possibility of wrongdoing? How does that work? All I can say is, if that’s the case, Bob has a skill set that could revolutionize corporate America’s financial reporting.

Let me also be quick to add that an AUP may be appropriate when church records are clean, there is a lot of transparency, and there are tight internal controls, including deployment of a finance manual as required by denominational policy. However, none of these things are in place at Grace Church, and per the vestry’s own April 2017 minutes, chaos in church financial records extends back at least to 2014.

But there’s more.

Grace Episcopal School is a component of Grace Episcopal Church and has no independent legal existence. Under written church policy and as a matter of law, vestry members are fiduciaries, and have both a legal obligation and a legal right to see the school’s financial reports. In fact, if fraud occurs that would have been detected via an audit, and vestry members have not fulfilled their obligations around this issue, they may be personally liable for any loss. That’s right—they may have to pay out of their own pockets. And when I asked Bob Malm about the school’s financial reports, he replied, “Well, I see them.” Small comfort, given past payroll errors that went for months without being discovered, right under Bob’s nose. And not enough to escape potential personal liability. “I trusted [fill in the blank],” does not fulfill the fiduciary obligations of vestry members.

Nor is the usual refuge of wayward board members, the church’s director and officer liability (D&O) policy, necessarily going to protect vestry members (including Bob Malm), for all such policies contain a due diligence clause. That means board members can’t sit by and idly ignore their obligations as board members, then turn to the insurer and say, “Oh, so sorry—would you pick up the tab?”. It doesn’t work that way. If vestry members don’t demonstrate reasonable care — meaning act like a reasonable person would under the circumstances — the insurance carrier doesn’t have to pay. Given that the Church Pension Group is a nonprofit owned by The Episcopal Church, it might well pay, even with nonfeasance on the part of Grace church vestry members, but would you really want to stake your personal assets on this possibility? Not me.

In cases where I have discussed the matter with Bob Malm, he conflates the notion of reasonable care with the possibility of making a mistake. Yes, it is possible to make mistakes as a responsible vestry member—that’s what your D&O coverage is for. But the possibility of making a mistake does not mean vestry members are absolved of legal responsibility to act with due diligence.

I submit that there’s also an ethical obligation to church members, and to estates and other persons/entities that give money to the church, to be transparent. That means that all parishioners should be able to access detailed information about church finances, including:
  1. Seeing past audit reports.
  2. Accessing detailed information regarding compensation for the rector and other key personnel, including any bonuses, loans, or other insider transactions.
  3. Seeing the budget.
  4. Seeing financial reports, including budget to actual and variance information for individual line items.
  5. Seeing school board and financial reports, and board minutes?
  6. Seeing executive committee minutes (there aren’t any) and vestry minutes, as well as financial reports?
All of this leads back to my original question: Why has Bob Malm falsely told vestry members and others that the church is audited, when it is not? Moreover, why:
  1. Do vestry members not see school financials, which comprise the lion’s share of church income and expenditures? 
  2. Do vestry members not see the audit engagement letter? 
  3. Do vestry members and parishioners not see the audit report? 
  4. Are the audit report and audited church financials not available via the church website?  
  5. Did even long-time church members serving on the vestry in 2014 not know that the church had lent $100,000 to Bob Malm for the down payment on his home? 
  6. Does the church not have a finance committee that is in charge of the audit?
Given Bob’s questionable veracity in other circumstances, including possibly misrepresenting the employment status of parish employees (“Don’t worry about it, they’ll be retiring this year,”), I can only say that parishioners, donors, and vestry members alike are placing themselves at risk (in some cases personally) and living in a fool’s paradise, if they blindly trust Bob Malm and church staff to adequately safeguard church financial resources. 

Caveat emptor.