Durham Cathedral Shop Finances and questionable Saint Stephen the Great payments

Matt Wardman writes:

First of all, let me set the context for this series of posts.

I have covered the rundown of the bookshop chain that used to be known as SPCK over several months. An earlier post covered a story of some leaked correspondence from the time when the management of the bookshop at Durham Cathedral was transferred from the Society of Saint Stephen the Great (SSGCT) to the newly created company “Durham Cathedral Shop Management Limited” (DCSML), which showed a brutal approach to the management of unpaid suppliers to the previous management company SSGCT.

This article is about a debt of almost £100,000 ($165,000+) built up over a mere three month period owed to the new company DCSHL by SSGCT after the new company took over on March 11th 2008, and before J Mark Brewer attempted to put SSGCT into Bankruptcy in Texas on 19 June 2008 (that is the date when the “Statement of Financial Affairs” was filed).

I also take a detailed look at a series of payments comprising well over half a million dollars taken out of the SSGCT organisation during a period of 12 months and paid to J Mark Brewer’s legal firm or to him personally, or to the “Orthodox Christian Mission Fund” of which he is listed as the Trustee.

I need to attach a strong note here that the SPCK mission society who used to be associated with the bookshop chain which includes the Durham Cathedral Bookshop is no longer involved in any way, and that Durham Cathedral are the landlord and not responsible for the management of the Durham Cathedral Bookshop. Nothing in this article reflects on either Durham Cathedral or SPCK.

I should also say that there are a lot of numbers in this post, and I will be pleased to correct any mistakes.

The Financial Context: Turnover of SPCK Bookshops

The turnover of the SPCK Bookshops Chain in previous years has been as follows, using figures drawn from SPCK Annual Accounts

• May 2003 to April 2004: 6.597 million UKP
• May 2003 to April 2004: 6.206 million UKP
• May 2004 to April 2005: 6.003 million UKP
• May 2005 to April 2006: 6.037 million UKP
• May 2006 to October 2006: 2.570 million UKP (6 months)

On 31 October 2006, the operation of the SPCK Bookshop Chain was transferred to the Society of Saint Stephen the Great Charitable Trust (SSGCT – Charity No. 1109008).

At this point the financial trail vanishes into a Black Hole, because SSGCT (Charity No. 1109008) filed one set of accounts covering 4 NOVEMBER 2004 TO 31 MARCH 2006, and nothing after then. On 8 August 2007, SSGCT was united by direction of the Charity Commission with the new charity SAINT STEPHEN THE GREAT (Charity No. 1119839) as a subsidiary. As at December 1st 2008 no accounts for the new charity have appeared on the Charity Commission website. Let me be very clear and say that none are required to have been presented yet.

However, that does leave us without trading accounts for the from October 2006 to August 2007 for a bookshop chain with a turnover likely to be in excess of 5 million UKP. That is not a satisfactory state of affairs.

But … as with a lot of other information in this case … we have figures in dollars in the “Bankruptcy Documents”. So, courtesy of J Mark Brewer and his “Statement of Financial Affairs“, dated June 19 2008, we have:

• Nov 2006 to March 2007: $4.733 million = 2.37 million UKP (using exchange rate of 2:1)
• April 2007 to March 2008: $7.555 million = 3.78 million UKP
• April 2008 to Jun 4 2008: $0.299 million = 0.15 million UKP

The savage drop in monthly turnover is mainly due to all of the shops being being transferred to different companies.

The Transfers out of Durham Cathedral Bookshop

The SSG Bankruptcy Schedule of Debtors Continuation 2 document shows an outstanding debt of $165,388 (82,700 ukp at 1:2 exchange rate) owed to Durham Cathedral Shop Management Ltd.

Remember, the company to which this debt was owed only came into existence 11 weeks before the debtor filed for Bankruptcy.

Durham Shop Turnover for Interim Period

Let’s compare the size of that transfer with the turnover of the Durham shop in that period.

Within these turnover figures, the turnover of the Durham shop is the largest in the chain, and accounts for around 15% of the turnover of whole chain (*), which gives us an estimated figure of £565k for the turnover for April 2007-March 2008.

The period between March 11 2008 (when the new Durham Company was set up) and May 31st is 11 weeks, and the turnover of the Durham shop would be roughly 11/52 of £565k, which is £120k. That figure assumes a flat turnover profile throughout the year.

(*) I am told by a reliable source.

SSGCT Debt is 70% of Entire Durham Cathedral Shop Turnover for interim period

So – how the hell did the Saint Stephen the Great Charitable Trust manage to build up a debt to the new company running the Durham Cathedral Shop of fully 70% of that shop’s entire estimated turnover between 11 March 2008 when that company was created, and June 4th 2008 when J Mark Brewer attempted to put the Charitable Trust itself into Bankruptcy in Texas? Or, to take a view from the other side, resources or assets equivalent to 70% of the shop’s estimated turnover during the period were transferred out to SSGCT at a time when past suppliers were simply . not . being . paid.

Payments to “Orthodox Christian Mission Fund” from SSGCT

[Note: the “Orthodox Christian Mission Fund of Houston Texas” appears to be a misprint or constituent fund of the “Orthodox Church Mission Fund of Houston Texas” referred to in the linked database below, which is listed in US charity databases as having the same home address as Brewer and Pritchard – the legal where J Mark Brewer is a Principal. The exact relationship between the two is not precisely clear. I suspect that the Orthodox Christian Mission Fund is part of the Orthodox Church Mission Fund or is a simple misprint.]

The “Orthodox Christian Mission Fund“ (Trustee J Mark Brewer) is an organisation listed in the Bankruptcy Documentation with an address the same as J Mark Brewer’s law firm in Houston, i.e., Three Riverway, 18th Floor, Houston, Texas 77056. Further, it is listed as a “Private non-operating foundation” and a “Private Grantmaking Foundation” so it cannot have been supplying servcies to the SSGCT.

This “private non-operating foundation” received from SSGCT:

If you total it up, that is just under $342,000 in 12 months (when J Mark Brewer attempted to pull off the USA Bankruptcy attempt he was required to disclose payments over the previous 12 months).

There may well be more payments which were made between November 2006, when SSGCT took over the SPCK bookshops, and June 2007 when this disclosure period began.

More than $75,000+ was transferred out of SSGCT less than two days before the attempt to make “Saint Stephen the Great LLC” bankrupt in Houston.

And they have the temerity to claim that a further debt of almost $500k was “owing” after that. Owing for what, Mr Brewer? How does a “non-operating private grant making foundation” have half a million dollars owing from a British Bookshop Chain?

Payments to “Brewer and Pritchard” Legal Firm

Here’s the disclosure in the Bankruptcy documents.

Firstly $110,000 between August and September 2007:

And $56,694 still alleged to be owing.

Secondly, just under 50k UKP for “payments related to debt counselling or bankruptcy”:

Finally, $75,000 sought (not paid of course as the bankruptcy application collapsed like a house of cards) for J Mark Brewer as lawyer on behalf on “St Stephen the Great LLC”:

Remember, this is just the 12 month disclosure period before June 2008. There may well be more payments which were made between November 2006, when SSGCT took over the SPCK bookshops, and June 2007 when this disclosure period began.

That’s around $200,000 in a 12 month period.

Comment

Is it any wonder that the whole thing was on the verge of Bankruptcy when it was being milked like this?

Why was any money transferred out of an organisation which had undertaken to run and develop a major 6 million ukp a year bookshop chain, when before taking the bookshops on its entire turnover had been about twenty thousand pounds since it was created?

Meanwhile …

Don’t forget. All this money was being shovelled out of the backdoor of SSGCT into other Brewer organisations at a time when Phil Brewer was telling his staff in the Durham Cathedral Bookshop to do this to their suppliers:

Please work with your suppliers as a new entity. Ignore whatever was and whoever was in the past. We are now a new company, with no relationship to the old going forward. So, contact your suppliers, tell them the drill, that you are a new company and that you would like to begin trading. When and if asked about billing, tell them they should process that at vendor-accounts, as you are not aware of how they are paying old invoices, etc. they will need to chase Saint Stephen the Great Trust as they have been doing.

Remember, we are a new company. No need for you to get involved with or diverted with what bills etc are being paid by whom.

What do we say if the suppliers ask about the invoices that we already owe for ?
Since we are new, we can’t owe anyone anything yet.

SSGCT Paid For Flying Club Expenses

Let me identify one further item that caught my eye. We all know that Mr Phil Brewer has an aeroplane. We had some fun with it.

Did you know that the SSG Charitable Trust paid $1637.80 to the Cornwall Flying Club in August 2007?

There must be more nuggets in the Bankruptcy Documents, but that will do for today.

Wrapping Up

To recap:

• Durham Cathedral Shop Management Company to SSGCT: $165,000 in 11 weeks in spring 2008.
• SSGCT to “Orthodox Christian Mission Fund”: $342,000 in 12 months to June 2008.
• SSGCT payments in legal feed: around $200,000 in 12 months to June 2008.

Surely it is time that someone asked the Fraud Squad to at least run a slide-rule over this little lot to make sure that it is all legal? What it amounts to is J Mark and Phil Brewer diverting hundreds of thousands of pounds from ex-SPCK bookshops to a private “Orthodox” setup, and the ex-SPCK Bookshops being charged around $200,000 for legal fees within a 12 month period. On top of that there are even larger alleged debts still owed in the purported Bankruptcy Documents submitted by J Mark Brewer to the South Texas Bankruptcy Court.

And then there is the initial 9-month period about which nothing is known whatsoever. How much money was transferred out to the Orthodox Christian Mission Fund and charged in legal fees in that period, when – presumably – the chain was stronger?

We need a hero or a group of heroes. Can I politely suggest that it is time that somebody who had a business relationship with this organisation took some action to start a legal process in the UK to resolve this? I can’t do that, because they don’t owe me any money.

What is needs to start is someone who is owed money by the Saint Stephen the Great Charitable Trust to put the Trust into liquidation in the UK under UK Law, as that will get the authorities and the regulators involved – and will at least start to take the lid off the can of worms.

I have no idea how much money you will get back – which will depend on the UK framework of company and bankruptcy law, but it will be a good deed. And it shouldn’t have an immediate impact on the members of staff in the bookshops as they are all now employed by different companies – and we will be on the way to lancing this long-running boil for good.

Or get in touch via the News Blog Contact Page and we will put a group of suppliers in touch to tackle this together.

Then eventually book enthusiasts and local communities that used to depend on SPCK bookshops and the programmes they used to run can start to pick up at least some of the pieces. And when more new well-run bookshops start to emerge, the suppliers to the trade will have a chance to recover.

Let me repeat: the SPCK mission society who used to be associated with the bookshop chain which includes the Durham Cathedral Bookshop is no longer involved in any way, and that Durham Cathedral are the landlord and not responsible for the management of the Durham Cathedral Bookshop. Nothing in this article reflects directly on either Durham Cathedral or SPCK.

Tags: durham cathedral, j mark brewer, phil brewer, saint stephen the great, spck, ssg