The powerful Catholic fraternal organization and multibillion-dollar life insurance company Knights of Columbus appears to be grossly inflating its membership numbers by more than a quarter, according to data filed in federal court Wednesday by a company alleging the organization is involved in a massive insurance scheme.
The data, obtained by BuzzFeed News, supports the allegation made by UKnight — a Colorado-based IT firm hired by members of the Knights of Columbus to update communications software — that the Knights of Columbus are inflating their numbers in order to get a better rating from insurance rating agencies, allegations previously reported by BuzzFeed News. The data is based on membership information from more than half of the Knights of Columbus’ local councils, or chapters, given to UKnight’s legal team via court order, submitted as evidence in court, and analyzed by an expert witness chosen by UKnight.
Based on this data, UKnight’s expert witness who analyzed the survey, Martin Shapiro, found that the national rolls had 28% more members than the local councils had reported.
"No matter how you count it, there is a huge disparity," Shapiro said in court Wednesday.
UKnight alleges that the Knights have kept thousands of “phantom members” on their books — members who haven’t paid their dues in years and are often unreachable — in order to inflate the potential pool of customers for the organization’s multibillion-dollar life insurance company. Those inflated figures, the company alleges, have allowed the Knights to maintain a top insurance rating, thereby making their insurance policies more attractive to potential policyholders. According to UKnight’s lawyer Steve Long, who addressed the issue in court Wednesday, as well as the witnesses called up by UKnight, the data and accompanying analysis demonstrate that the Knights of Columbus are falsely presenting to insurance rating organizations that they are growing and expanding their membership and insurance customer base, when in fact their membership in the US is shrinking.
BuzzFeed News also spoke to seven men who served in leadership positions in their local Knights of Columbus councils who said that they found large numbers of inactive members on their local rolls and that the Knights of Columbus leadership made removing them “close to impossible.”
John Hernandez, a former Knights insurance agent who testified on Wednesday, also told the court that some of the rolls are so out of date that they include members well into their hundreds, so old they couldn’t possibly still be alive.
In response to a request for comment on the membership findings, Knights of Columbus spokesperson Kathleen Blomquist referred BuzzFeed News to a transcript of Wednesday’s hearing, which will not be publicly available until 90 days after the hearing.
“We look forward to continuing to present our case in court and want to avoid appearing that we are litigating through the media instead,” Blomquist added.
On Tuesday evening Blomquist told the Associated Press that the wording on the survey used to gather the membership data confused many local councils and did “not accurately reflect” Knights of Columbus’s membership.
In an annual report announced publicly, the Knights say they have 1.9 million members, 1.5 million of whom are insured by the Knights. These members belong to more than 10,000 local councils, or chapters. The local councils are primarily devoted to charity work, but also serve as a customer base for the Knights' insurance company. They keep track of their own members, and send membership fees to their higher-ups in the state and national councils.
Members of the Knights of Columbus can only be Catholic men over the age of 18, and in order to stay a member, they must pay annual dues, which can vary anywhere from $30 to $100. Only members can buy insurance policies from Knights of Columbus, but not all members have those policies.
Ann Frohman, an insurance regulatory attorney who also testified as an expert witness Wednesday, told the court that the Knights of Columbus is one of the strongest conservative insurance organizations in the country. However, she said, if the customer base for an insurance company is aging and shrinking rather than “thriving and growing,” this could cause the insurance company’s A+ rating to downgrade and cause a “world of hurt” for the organization, she said.
In materials on the Knights of Columbus insurance website, the Knights present its insurance business as growing and expanding, despite a “rough economic climate.”
“I firmly believe that our moral compass has helped guide us through a turbulent decade and an uncertain economy,” the head of the Knights of Columbus, Supreme Knight Carl Anderson, is quoted as saying on the website. “While other companies were making ethically questionable and unnecessarily risky decisions, we were not. While others were looking for novel ways to do business and to increase profits, we were not. ... We stayed true to our principles and knew that if we did the right thing for the right reasons, we would get the results that we wanted — and we have.”
In a deposition for the trial, Tom Smith, who was the head of the Knights’ insurance wing until a few months ago, described the growth of Knights of Columbus’s insurance wing as “grim” and was concerned about its rating from insurance companies being downgraded.
The data presented in court Wednesday was collected and analyzed as part of UKnight’s $100 million lawsuit against Knights of Columbus over an alleged breach of contract. UKnight alleges that Knights of Columbus unlawfully terminated a verbal contract for their services after the IT company discovered the alleged insurance fraud scheme.
UKnight’s lawsuit was originally filed in 2017, but finally went to trial at the end of last month. The suit accused the Knights of Columbus of violating a spoken contract making UKnight the primary organization to provide communication software to the organization’s more than 10,000 local councils, or chapters, as well as stealing their “trade secrets” and attempting to use those secrets to create their own software without having to pay UKnight for its work.
Knights of Columbus argued in court last week that they had issues with the personal conduct of the head of UKnight, Leonard Labriola, who they claim offended the head of the insurance division, Tom Smith, with an overeager email attempting to formalize the contract, among other unpleasant interactions. They also claimed that UKnight’s software was not good enough to be applied to all of their 10,000 councils, and that they did not have a comprehensive business plan in place for the expansion of the software, so they chose not to employ UKnight after all.
The court first ordered Knights of Columbus to provide UKnight’s legal team with membership data in a phone hearing on Sept. 19, 2017.
“If what [UKnight’s lawyer] says is true, and 20 to 40 percent of the members actually aren't even paying dues and are just phony names that are being kept on this system to shore up ratings, if somehow he can connect that — and he hasn't yet — to the breach of this contract, then he's got something,” Judge Brooke Jackson said.
UKnight set up a survey for councils to indicate how many of their members were active or inactive and, on Sept. 22, 2017, sent out an email to the local Knights of Columbus councils from a Knights of Columbus email address, along with details of the lawsuit and instructions about why the email was being sent.
Hours later, the Knights of Columbus sent out an email to their members, obtained by BuzzFeed News, instructing the councils not to take the membership survey.
“The email ... misstates what the court ordered and implies that it gave UKnight a ‘job’ to collect membership information from you and that your council is under a ‘requirement’ to provide information to Uknight. This is false. Do not comply with this request. It was not made or authorized by the Knights of Columbus and it is not an order of the court.”
In response, Jackson issued an order to both parties calling their emails “misleading and inappropriate.” UKnight’s email was inappropriate, Jackson wrote, “because it might give the impression that the request was coming from someone within the Knights of Columbus organization.”
The Knights of Columbus’s email was misleading because it implied that membership information is confidential, which it is not, Jackson wrote, and “it attempts to prevent the disclosure of information that might be relevant to the issues in the case.”
By May 13, 2019, only 96 of the Knights of Columbus’s more than 10,000 councils had responded. In the hearing that day, Jackson suggested this lack of response amounted to noncompliance on the part of Knights of Columbus, and ordered the Knights to provide more data to UKnight for analysis. This time more than 6,000 councils responded with their membership information, which was finally presented in court Wednesday.
BuzzFeed News previously spoke to seven current and former members with leadership roles in the Knights who had discovered “phantom members” on their membership roles, many of whom had moved long ago, were dead, had left the Catholic Church, or weren't interested in being members of the Knights. According to these men, as well as emails, membership rosters, and other documents provided to BuzzFeed News, when they presented this to their state or national councils, it was close to impossible to remove the members, but their higher-ups still demanded that they pay for the dues of the phantom members. Knights of Columbus is best known for its community philanthropy, and the men ended up paying out of pocket or dipping into funds they intended to use for charity in order to pay for the phantom members, they said.
Since the publication of that article, six more current and former members of the Knights of Columbus reached out independently to BuzzFeed News saying that they faced these same problems in their own councils. Two of the members provided BuzzFeed News with emails demonstrating the difficulty they had had removing members from their rosters.
Knights of Columbus also connected BuzzFeed News with several other members after the publication of the previous article who suggested that the inflated membership numbers were due to Knights in leadership positions in the local chapters dropping the ball and not keeping track of their members, then not following the proper protocols to have them removed.
Andrew Airriess, 63, said that during his one year as a “grand knight” (a leader of a local council), he had “no problem” removing members from the rolls, though he admitted it was a lengthy process.
“We were a fairly small council, and we suspended twelve percent of the membership for no-payment of dues,” Airriess said, adding that despite this, when his council followed protocol and reached out to the inactive members to try to get them back in the fold, more often than not they chose to return rather than cancel their memberships.
Ken Latham, 62, the former state deputy of the New York Knights of Columbus chapter, said that over the past two years they’ve suspended around 2,500 members in his state alone.
Nearly all of the local council leadership positions are unpaid volunteer jobs, and the standard protocol to remove someone from the books involves a lot of legwork. The official protocol is a six-month-long process, Latham told BuzzFeed News.
“Down here in Queens, in Rockaway after Superstorm Sandy, a lot of people just moved away and we couldn’t notify them, they had no phones and we couldn’t get in touch,” Latham told BuzzFeed News, referring to the 2012 hurricane that ravaged many parts of Brooklyn and New Jersey. “So we just wrote [on the forms] ‘Unable To Contact,’ and they eventually were suspended. It gets to be a little more tedious, but it can be done.”
Latham and several of the other dozen members who spoke to BuzzFeed News also noted that the Knights offer an incentive for councils that successfully grow and retain their members — the “star council” awards, which waive membership fees.
“Most of the time these membership problems are local councils wanting to cut corners … but it might sometimes be on the state,” Latham said. “The state deputy might be wanting to win an award on someone else’s back, but I would never do that.”
Five of the men who spoke to BuzzFeed News said that even when they followed all the proper protocols, they were often told that they hadn’t and that they had to keep paying for the members.
Emails provided to BuzzFeed News by a grand knight of a local council in Virginia show that the council attempted to follow the protocols, even going to nonresponsive members’ houses to try to get an answer about whether or not they wanted to continue to be members. But despite this, the state said that they could not remove many of the members, alleging that the council had done several parts of the process wrong. The local council members insisted, in tense and colorful language, that they had.
“It’s like they’re just figuring out why you haven’t dotted all the ‘i’s and crossed all the ‘t’s so [they] can deny the request,” the grand knight, who asked not to be named out of fear that the Knights of Columbus would punish his council, told BuzzFeed News. “It’s ridiculous, some of the things they require. Had I read these bylaws when I first entered the [Knights of Columbus], I never would have entered it.” ●