As ministry cuts jobs, CEO builds $4 million home

The Charlotte ObserverJune 29, 2009 

At a time when Inspiration Networks has been cutting jobs, freezing wages and even adjusting the office thermostat to save money, the chief executive of the Charlotte-area broadcaster has invested about $4 million in a lakefront home under construction in South Carolina.

CEO David Cerullo's new house includes more than 9,000 heated square feet, along with a 2,000-square-foot screened porch, records show. It sits on the edge of the Blue Ridge Mountains west of Greenville in a gated community that overlooks Lake Keowee.

And it's shaping up to be one of the priciest houses in western South Carolina. On Realtor.com, just two homes in the greater Greenville area are on the market for more than $4 million.

Cerullo's fast-growing religious network, meanwhile, is drawing scrutiny for the money it collects from donors and the incentives it won from the state of South Carolina to move from Charlotte.

The broadcaster has raised tens of millions, largely by telling viewers that God brings financial favor to those who donate.

As the nonprofit network has grown – with revenues expected to approach $100 million this year – so has Cerullo's salary.

With compensation exceeding $1.5 million a year, Cerullo is the best-paid leader of any religious charity tracked by watchdog groups, the Observer reported last month.

A network spokesman did not respond last week to repeated calls and e-mails requesting comment about the new house. In a March interview, Cerullo defended his salary and said he's turned down recommendations that he be paid more. He said that appeals to donors are based on the Bible, and 80 cents of every dollar donated is spent to spread the Gospel.

Much of the network's money has been invested in a multimillion-dollar campus in Indian Land, S.C., just south of the Charlotte outerbelt in Lancaster County. That's where Inspiration is fighting for an exemption from property taxes on the 92-acre site, despite an S.C. revenue department ruling that it must pay them.

S.C. taxpayers are already helping to subsidize the project. In recent years, South Carolina offered the broadcaster incentives worth up to $26 million to land its City of Light campus.

Taxpayer advocates question the deal, particularly in light of Cerullo's salary and real estate holdings. “If they've got these kinds of assets, does the state really need to offer… tax breaks?” asked Don Weaver, president of the S.C. Association of Taxpayers.

In 2006, Cerullo and his wife, Barbara, paid $950,000 for the one-acre lot along Lake Keowee, real estate records show. Two years later, they took out a $3.15 million construction loan for the custom-built house.

The couple now lives in a 12,000-square foot home in south Charlotte valued at $1.7 million.

Gregg Hill, a Pennsylvania resident who donated about $5,000 to the network before growing disenchanted with its fundraising pitches last year, questions why the Cerullos can't live more modestly.

“He doesn't need to be living in a $4 million house,” said Hill. “There are people who could be helped with that money.”

U.S. Sen. Charles Grassley, R-Iowa, who is investigating the finances of six other televangelists, told the Observer that leaders of religious nonprofits should be careful not to use viewers' donations to adopt extravagant lifestyles.

IRS rules prohibit nonprofits from paying “unreasonable compensation” to officials. Grassley wants reforms to ensure those rules are better enforced.

“Some nonprofit organizations provide compensation usually available only to the top rung of the employee ladder in corporate America,” Grassley said in a written statement. “This suggests major flaws in the test for ensuring that executive compensation paid to officers and directors is fair and reasonable.…”

Inspiration has grown rapidly. Since 2004, its budget has more than doubled, approaching $80 million last year.

But starting in late 2008, the broadcaster began to trim its payroll.

A number of employees were laid off, current and former workers said. Many of them worked for MediaComm, a for-profit video production subsidiary. They lost their jobs after the company's contract with the Speed Channel ended late last year.

The organization also froze wages and stopped contributing to employees' 401(k) retirement accounts early this year, employees said.

Over the winter, several workers said, the network tried to save money by turning the thermostat on its new headquarters building down to about 65 degrees. The Observer talked to more than 10 current and former employees, all of whom declined to be named for this story for fear of reprisals.

“Couldn't he (Cerullo) give a little of his excess so we wouldn't have to freeze in his building?” said one employee.

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