A four year long investigation by the Ohio Attorney General has uncovered millions of dollars of inappropriate expenditures of charitable funds by executives and board members of Kettering Health. According to the Dayton Daily News article, the investigation is still ongoing.
Dayton Daily News—A number of former Kettering Health executives and board members, along with their family members, received more than $3.2 million in improper “excess benefits” from the hospital from 2016 through 2022, according to hospital tax records recently obtained by the Dayton Daily News.
The updated tax filings say a forensic audit completed in 2023 found 46 people received “excess benefits” from the nonprofit hospital network. Recipients include former hospital executives, current and former senior leaders in the Seventh-day Adventist Church, prominent local business leaders and their families.
Former Kettering Health CEO Fred Manchur and his wife, Mary Kaye Manchur, topped the list, receiving nearly $1.5 million in benefits, according to tax filings.
Examples of such benefits include a $12,124 whale watching trip in Maui, a $21,250 spa retreat, thousands of dollars of decorations for the Manchurs’ private home, travel and lodging in Europe and Hawaii, and thousands of dollars in personal gifts, according to additional records obtained by the Dayton Daily News.
Manchur retired at the end of 2022, and months later, Kettering Health announced it hired a firm to look into “allegations of inappropriate fiscal and operational management at Kettering Health.” This firm conducted an audit for Kettering Health in 2023.
The Manchurs could not be reached for comment.
In response to questions about these records, Kettering Health issued a statement to the Dayton Daily News reiterating that the Ohio Attorney General’s Office opened an investigation into “alleged inappropriate expenditures of charitable funds by executives and board members of Kettering Health” in 2021 that is ongoing.
“Kettering Health launched its own internal investigation at the same time. At the end of 2023, Kettering Health shared that its internal investigation of the matter had been completed, resulting in changes to key personnel, policy, and governance structure,” the hospital’s statement said.
Kettering Health’s 2023 announcement of the conclusion of its investigation didn’t identify any individuals or dollar amount. It said: “Individuals implicated in the investigation are no longer with the organization.”
But tax records show some of the individuals found to have received improper benefits are still on the hospital’s governing board or in senior leadership positions with the SDA church.
Expenditures
Records obtained by the Dayton Daily News illustrate some of the excess benefits identified in the hospital system audit.
Ron Halvorsen Jr., former SDA Ohio Conference president, and his wife, Buffy Halvorsen, together received a total of $391,609 in economic benefits from the hospital, according to tax records.
Records obtained by the Dayton Daily News show Kettering Health spent thousands of dollars in domestic travel for Ron Halvorsen to “be with family” or “see his kids” in 2019, and a car rental and meals in Maui.
Current president of the SDA Ohio Conference Bob Cundiff received $62,654 and his wife, Tanique Cundiff, received $21,415 in economic benefits.
The Cundiffs attended a “Board Chair Retreat” in 2021 in Hawaii, which cost more than $6,000 in travel expenses and $1,300 in lodging for the couple, according to records obtained by this news outlet.
Current treasurer of the Columbia Union Conference, Emmanuel Asiedu, received $23,584 in economic benefits from Kettering Health. Asiedu declined to comment.
Kettering Health spent more than $5,000 in domestic travel in 2022 for Asiedu to attend a retreat, records show.
Andrea Jakobsons — current senior pastor of the SDA church in Kettering and listed as a “director” in tax filings — and several of her family members were listed as receiving benefits totaling tens of thousands of dollars.
Examples of transactions involving Andrea Jakobsons’ family include trips to Europe for a “growth retreat” and Hawaii for a “spiritual retreat,” according to documents obtained by the Dayton Daily News.
Jakobsons declined to comment.
Many of the flagged transactions involving Manchur were gifts or “personal messages” often worth more than $100 each — as much as $1,412 in one instance — from Unique Designs and Furst Florist.
On the other end of the spectrum were transactions worth tens of thousands of dollars each for travel to Hawaii and Rome, Italy.
Kettering Health responds
Kettering Health administrators say they sought repayment of improper benefits discovered in their audit.
“These funds represent, among other things, the value of trips, meals, gifts, and/or other items that in the course of the investigation, were deemed to be excessive or not have a legitimate business purpose,” the organization’s statement says.
The hospital network reported to the IRS that most people paid the money back. Those who did not pay the money back were:
• Fred and Mary Kaye Manchur.
• Jarrod McNaughton, former president of Kettering Medical Center (now Kettering Health Main Campus) and executive vice president of Kettering Health, and his wife, Heidi McNaughton. They reportedly received $36,064 in excess benefits.
• Petra Moskalova, sister of Kettering Seventh-day Adventist Church pastor Andrea Jakobsons. She reportedly received $6,306 in benefits.
• Thomas Peebles, owner of Peebles Homes and listed as a community volunteer on previous tax forms. He reportedly received $3,172 in benefits.
In three of the cases considered to be “corrected,” the person made a partial payment, according to IRS filings.
When asked by the Dayton Daily News last week, Kettering Health officials would not say if any additional funds have been paid back to the hospital network since the excess benefits were reported to the IRS in 2024.
“It is important to note that multiple individuals listed in the tax filings did not realize they received funds inappropriately until they were notified at the conclusion of Kettering Health’s internal investigation,” Kettering Health’s statement reads.
In several instances, people were led to believe these were legitimate business activities or acceptable gifts, according to Kettering Health, which added those people “had no reason to believe they were not appropriate.”
“However, the internal investigation determined that some funds were misused, clearly falling outside of the stewardship principles of a not-for-profit organization. We are thankful that the vast majority of individuals chose to repay the funds back to Kettering Health,” Kettering Health’s statement reads.
Seventh-day Adventist Church
Leaders in the Seventh-day Adventist Church named in the 2023 probe include local pastors, state and regional administrators and at least one person linked to the North American Division of the church, which is the division that oversees the territories of the church in Bermuda, Canada, Guam/Micronesia and the U.S.
David Weigley, former president of the SDA Columbia Union Conference, which oversees conferences in Ohio and seven other states, and his wife, Becky Weigley, reportedly received $293,000 in benefits from the hospital. The Weigleys did not respond to requests for comment.
The Columbia Union Conference, which also has a longstanding relationship with Kettering Health and appoints members to the Kettering Health Board of Directors, has cooperated with the Ohio Attorney General’s office since the start of the 2021 investigation, according to the organization.
“As part of the broader process and in line with findings from Kettering Health’s internal review, individuals affiliated with the Columbia Union Conference who were reported as having received associated benefits repaid those amounts in full,” a statement from the Columbia Union Conference reads.
“These repayments were not made as an admission of wrongdoing or liability, but rather to bring clarity, peace and finality to the situation, and to help maintain trust in faith-based and nonprofit institutions.”
Each of these individuals is devoted to the mission of Kettering Health and the Seventh-day Adventist Church, according to the Columbia Union Conference.
“Likewise, the Columbia Union Conference supports the mission and integrity of Kettering Health and the Seventh-day Adventist Church. We remain dedicated to transparency, accountability and responsible stewardship in all areas of our work,” the Columbia Union Conference’s statement reads.
Marvin Brown, current president of the Allegheny West Conference of the SDA church, and his wife, Grace Brown, reportedly received a total of $16,792 in economic benefits from Kettering Health. Brown was unable to be reached for comment.
Tax records say Austin Roberts, pastor at Stillwater SDA church and former chaplain at Kettering Health, received $20,682, and his father, Randy Roberts, received $2,025. Austin Roberts declined to comment.
Tax reporting
The breakdown of who received $3.2 million in excess benefits from Kettering Health was reported in the organization’s recently amended 2022 tax filing.
Amanda Adams, chair of the Exempt Organizations Taxation Committee for the American Institute of CPAs, could not comment on any specific organization’s filings, but spoke to the Dayton Daily News about nonprofit tax law in general.
Adams said an organization having to file such a report is unusual.
“In my over-20-year career, I’ve never had a client file a return that reported an excess benefit transaction,” she said.
She said an excess benefit means “that there was a payment to an interested person that was in excess of the value received by the organization.” This can include benefits given to a “disqualified person” such as a board member or his or her family member.
IRS rules require someone who received such a benefit to pay it back to the organization — plus a 25% tax paid to the IRS, with interest. So if someone received a $100,000 excess benefit, they could end up owing the IRS well over $25,000 in taxes in addition to having to pay it back.
If someone doesn’t correct the overpayment, the tax rate could grow to 200%.
Anyone with the organization who knowingly approves an excess benefit could also be on the hook for penalties, Adams said.
Kettering Health’s tax records list nine former hospital and church officials who they say approved the transactions.
AG investigation ‘ongoing’
The Ohio Attorney General’s Office has continued to decline to comment on these allegations and on Kettering Health.
“Any potential for or existence of charitable investigations is confidential under (Ohio law),” AG’s office spokesman Dominic Binkley said when contacted by the Dayton Daily News.
IRS officials likewise would not comment. “Because your inquiry deals with a specific organization, the IRS cannot comment due to disclosure provisions of (IRS code), which makes it against the law for the IRS to discuss any taxpayer’s or organization’s information, status, or relationship to the IRS,” said agency spokesman John Fuld.
“The Ohio Attorney General’s Office has conveyed its satisfaction with and appreciation of Kettering Health’s cooperation, internal investigation and follow up actions inclusive of the changes to leadership, policy, and governance,” Kettering Health’s statement reads.
“Today, Kettering Health operates with new leadership under strong governance, rigorous financial safeguards, and a commitment to principled stewardship of our not-for-profit assets. We remain fully committed to the promotion and restoration of health in every community we serve.”
Kettering Health added it is not in a position to comment further on the “Attorney General’s ongoing investigation,” adding it is separate and independent from Kettering Health’s completed investigation.
Kettering Health improper benefits
From 2016 through 2022, Kettering Health provided $3.2 million in improper benefits to 46 individuals, according to the hospital network’s tax filings. The tax filings list the following people as receiving improper benefits, as discovered through a forensic audit completed in 2023. If a benefit is labeled “corrected,” that means Kettering Health reported to the IRS that the person reimbursed the money.
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“The LORD will destroy the house of the proud, But He will establish the boundary of the widow” (Proverbs 15:25).