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WASHINGTON, DC: The Divided and Conquered Soper Trust
Diocese of Washington Removes Millions from Permanent Restriction
By Sarah Frances Ives
Special to Virtueonline
www.virtueonline.org
August 23, 2014
According to a recently released audit, in 2013 the Diocese of Washington divided up the former Soper Trust and decided much of the money was at their disposal. While under the direction of PNC Bank, the Soper Trust grew to over $27 million. Now under the Diocese of Washington, the Episcopal leaders re-named the Soper Trust as the Soper Fund. They have designated about $11 million dollars as temporarily restricted and ready for their use.
The recently released 2013 audit, done by Johnson Lambert LLP for the Diocese of Washington, reveals many complicated details about the division of the former Soper Trust. In short, the Ruth Gregory Soper Trust no longer exists and has been declared the Soper Fund. The former trust has been divided into many categories of permanent and temporary restriction, as well as legal fees funding the dissolution of $550,000. About $18 million of the trust has been categorized as permanently restricted, but that seems liable to change according to the wishes of the diocese. The diocese declared $11 million as temporarily restricted but available for the use of the diocese. Hence, the diocese now has access to about $11 million of the trust for whatever it wants. Previously, PNC Bank only allowed the Diocese the use of interest from the Soper Trust. Now the body of the former trust seems destined for use by the Diocese of Washington.
The dissolution of the Soper Trust contradicts the wishes of the Episcopal benefactor, Ruth Gregory Soper. She wrote in her 1967 will her desire for a trust to exist in perpetuity. At her death on October 25, 1973, she designated several beneficiaries, including the Diocese of Washington. The last other beneficiary died in about 1995. Mrs. Soper designated Riggs National Bank as her agent to supervise the trust. This was later assumed by PNC bank after the demise of Riggs. Under PNC's direction, the Soper Trust began with $7 million and has grown to over $27 million.
In October 2010, the Diocese of Washington began a legal battle to take control of the Soper Trust away from PNC Bank. The Episcopal leaders declared that the trust would be safe under its direction.
In March 2010, PNC Bank said that the Diocese of Washington "wants to break the trust and raid its assets so it may control the principal as it wishes." PNC bank's attorney Sean F. Murphy said that allowing the diocese to take control of the money opened these assets to the creditors of the diocese. PNC also said that these diocesan actions violate Mrs. Soper's intent. PNC bank referred to the diocese of Washington's legal arguments as a "fiction." (October 8, 2012)
In filed court documents, the Diocese stated that "the Diocesan Investment Committee will oversee the investment of the fund" and that the money would "be accorded more protection, and certainly no less protection that they now have."
In response to the diocesan claim that Mrs. Soper's trust would be safe under diocesan management, PNC argued that under the DC law called the Uniform Prudent Management of Institutional Funds ("UPMIFA") these funds would no longer be endowment funds, but only "board-restricted" funds and that the funds would lose their legal protection from creditors.
PNC wrote, "Since UPMIFA would not restrict the Diocese's spending of the Trust corpus, the only restrictions on spending would be those the Diocese imposes on itself through its governing policies. The Diocese has, however, previously fallen short in complying with its policies governing Mrs. Soper's funds." (9)
PNC attorneys stated that the "Diocese would be allowed to spend the fund at whatever spending rate the Diocese may determine is appropriate at any given time." (8) They conclude, "The absence of any legal restriction jeopardizes the perpetual life of the funds and is totally inconsistent with Mrs. Soper's directive that the funds be held "in trust . . . in perpetuity." (9) (January 20, 2012)
PNC bank waged a valiant battle until December 2012 when it signed a secret agreement with the Diocese of Washington to release the Soper Trust to diocesan care. In April 2013, the Diocese of Washington dissolved the Soper Trust. Legal expenses of $550,000 were taken out of the trust, although it is unclear to which lawyers this money was given.
The June 2013 Diocese of Washington audit statements read as a fulfillment of the warnings of PNC Bank. The audit from the Diocese of Washington states about the former Soper Trust, "The Diocese has interpreted the District of Columbia's UPMIFA as requiring the preservation of the fair value of the original gift as of the date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. The Diocese classifies investment income as temporarily restricted until such time that it is appropriated for use."
Now that the Diocese of Washington has divided the Soper Trust into many different categories, the diocese is ready to spend over $11 million of the former Soper Trust. As PNC had warned, there is no Soper Trust left. There appears to be only diocesan control on the remaining $18 million from the Soper Trust.
So as soon as the court action dissolving the Soper Trust was finished, the diocese, contrary to its public statements, took money from the body of the Soper Trust and placed it in a category available for its own use.
PNC bank statements were prophetic. That the legal court system allowed the demise of the Soper Trust raises questions about what decisions were made behind closed doors. Ruth Gregory Soper died believing her money would be in perpetuity. Her money now appears to be destined for annihilation at the hands of the Diocese of Washington leaders.
Many questions present themselves. Do any of the judges from the courts overseeing this case care that the Diocese of Washington chose a different route than the one apparently listed in court documents? What is the Diocese going to use these Soper millions for? Some speculate that this will go to the debt on the Cathedral parking lot or to fund the 2011 earthquake repairs at the Cathedral. PNC's characterization of the Diocesan plan for protection of the Soper Trust as fictional seems to have been fulfilled.
The full audit is posted here. file:///C:/Users/David/Downloads/Warner%20Lambert%20(2).pdf
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