Los Angeles Times, Federal Bankruptcy Officials Question Crystal Cathedral Compensation:

Crystal Cathedral, the Orange County mega-church that filed for bankruptcy last month, allowed its chief financial officer to skirt federal income taxes by paying the bulk of his salary in the form of a housing allowance, a benefit reserved under law for ministers.

The six-figure housing allowance paid to financial officer Fred Southard -– along with compensation to members of the church founder’s family –- are among the expenses questioned by the U.S. trustee’s office and the creditors’ committee assessing the bankruptcy case. …

The Crystal Cathedral has cited the weak economy and a 24% drop in donations in 2009 for its financial problems. More than 550 creditors are owed $50 million to $100 million, according to the initial bankruptcy filing last month.

According to court documents, longtime financial director Fred Southard received $132,019 out of his total $144,261 compensation in the form of a housing allowance last year. Southard has been the Crystal Cathedral’s chief financial officer since 1978 and owns a home in Newport Beach valued at $2.3 million. …

Southard told The Times on Wednesday that he was ordained as a minister by the Crystal Cathedral about 10 years ago and has taken the bulk of his compensation in the form of a housing allowance since then. “That’s what ministers are allowed to do, and so it’s to the individual’s advantage to do that,” he said. …

[The U.S. trustee’s office] suggested that Southard should not even receive the allowance. “There is no justification whatsoever for a housing allowance of this amount,” according to the documents. “Mr. Southard has failed to explain why such a housing allowance is necessary or appropriate, given this debtor is in Chapter 11 and suffering financial difficulties.”

• Orange County Register, Bankruptcy Official Objects to Crystal Cathedral Salaries

(Hat Tip: Bob Kamman.)