05 September 2019, The Tablet

The Knights of Columbus: brothers in alms?

by Christopher Lamb

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Members of the Knights of Columbus in their new uniform, which replaced ceremonial regalia on 1 July
Photo: CNS

A US-based fraternity and charity that is one of the wealthiest and most powerful lay organisations in the Catholic Church has been accused of fraud, deception and theft
Eric Wilson was 23 years old when he joined the Knights of Columbus, a Catholic fraternity that, thanks to a multibillion-dollar insurance arm, is the wealthiest and most active lay group in the English-speaking Church.

Two years earlier, he had been received into the Church and like many other male Catholics looked for a group that would support him in his faith. Across parishes in the United States, the Knights are pillars of the community, raising money for charity through fried-fish gatherings on Fridays. Just before Wilson’s “first-degree ceremony” to join the Knights, he was approached by an insurance representative who laid out the life insurance policy options.


“I thought I was joining a Catholic men’s fraternal organisation. I didn’t realise I was joining an insurance company,” he told me. “I was a young guy. I wasn’t married and didn’t have a mortgage. I wasn’t exactly in need of a life insurance policy at that point.” Wilson claims it was made clear to him that if he wanted to be a good Knight, he needed to take out the policy.
Wilson had signed up to the same local association in Washington, D.C. as Supreme Knight, Carl Anderson, who has led the organisation since 2000. But Wilson left after a staffer working for pro-choice Governor Bill Richardson was admitted as a member. The staffer, he explained, had donated to Governor Richardson’s 2008 presidential campaign. Wilson, a digital strategist who remains a practising Catholic, felt the decision to allow the staffer to join the Knights ran counter to the Church’s teachings, and against the group’s values. His complaints, he says, fell on deaf ears.

Wilson says he realised that getting new members, and prospective insurance policyholders, was the driving priority for the Knights. In 2008, he wrote an email to a senior Knight warning that the “rigorous recruitment metrics should be given a second look as I fear this breeds a mentality of ‘quantity, not quality’”.

Eleven years later, Wilson’s concerns appear prescient. The Knights are now battling a lawsuit in a Colorado district court in which allegations of inflated membership are at the heart of the dispute. The claim has been brought by the Knights’ former IT firm, UKnight, which is claiming breach of contract and accusing the Catholic association’s leadership of “fraud, deception, theft, and broken promises”. Experts say the suit could cost the Knights between $50 million and $130 ­million (£41 million and £107 million).

UKnight, led by Leonard Labriola, himself a former Knight of Columbus, alleges it was dropped by the Knights after uncovering inflated membership numbers. Why do allegations of inflated membership matter? The health of insurance companies rests on whether the number of policyholders is growing and can pay out claims. Knights of Columbus life insurance is only available for members, or those who become a member within 90 days of applying for insurance, who live in the US, Puerto Rico, Guam or Canada. They must be “practical Catholics”, an awkward nineteenth-century phrasing which essentially means that they practise their faith and uphold the Church’s teachings. The Knights currently have an A+ rating from the leading insurance rating agency.

But the lawsuit, first filed in 2017, asserts that the Knights’ membership is ageing and in decline, meaning the market for their insurance business is contracting. It claims the true numbers are masked by the fact it is very difficult to remove members from their rolls – making it look to the outside world as if the membership pool is growing. Five Knights told the American website BuzzFeed News that when local chapters couldn’t get non-existent members off the books, they had to pay the fees out of charity funds, or Knights had to dip into their own pockets.

The Knights insist there has been no fraud, no deception and no theft. They deny there has been any inflation of the membership numbers. A spokeswoman for the order says there are “clear procedures” for removing Knights who have left from the rolls, but added local councils “have a great deal of discretion to carry out most of their administrative matters, including assessing dues for members, which often results in highly localised practices and philosophies”. This, she says, can lead to “judgement calls that are very individualised”.

The Knights of Columbus is a charity, and is tax-exempt, with the vast majority of its money coming from its insurance company, which holds $25 billion (£20.5 billion) in assets and, according to Supreme Knight Anderson, has $111 billion (£91 billion) in liabilities. Critics argue the lack of clarity over the membership numbers is problematic. UKnight, which had been hired to update communication software for the more than 10,000 local Knights’ branches, claims 30 per cent of insured members are aged 70 and above, and just 8 per cent aged 30-39.
A spokeswoman for the Knights said claims they have inflated their numbers are “false”, and said that membership of the order is not contingent on taking out an insurance policy. She stressed that life insurers are not expected to “maintain $1 for every $1 of life insurance”, and that the Knights’ balance sheet is “no different than the rest of the life insurance industry and is stronger than that of most companies”. She added that with 30 million men in the US identifying as Catholic, and “approximately 1.5 million insurance-eligible members”, the Knights “have yet to come close to saturating our market”.

But can the Knights continue to attract practising Catholics, willing to join the association and also willing to take out life insurance with them? The 1.5 million potential members in the US appears to be a shrinking market: Pew Research data in 2014 found the number of Catholics in America was in decline, and millennials – the target market for the Knights – are not joining organisations or taking out life insurance.

Founded in 1882 by Irish-American priest Fr Michael J. McGivney, the Knights were set up to provide life insurance to working-class, immigrant Catholics, along with a male fraternity association. Over the years it has morphed into a global empire with immense wealth, and 1.9 million members worldwide. Notable Knights include the late John F. Kennedy and Samuel Alito, a Supreme Court justice. In 2018, the Knights of Columbus gave $186 million (£153 million) to charity, helping a range of causes including disaster relief and support to persecuted Christians in the Middle East.

Away from their legal dispute, questions are being raised about its highly paid leadership. Does it adequately serve the hard- working labourers on the ground, and reflect the values of a Catholic charity? The spotlight being shone on the Knights will not have escaped the attention of senior officials in Rome. Some church observers argue that after the clerical sexual abuse crisis, the next scandal to contend with will be money. Anderson’s compensation package was $1,277,232 (£1 million) in 2015, down from $2,289,806 (£1.8 million) in 2014. In 2017, it totalled $1,510,594 (£1.2 million). By contrast, Charlotte Haberaecker, chief executive of Lutheran Services, which has around $22 billion (£18 billion) in revenues each year, was paid $202,422 (£166,471) in 2015.

The board of directors is effectively chosen by Anderson. A number of board members and executives receive six-figure pay packages. According to the 2014 accounts, Dennis Savoie, former Deputy Supreme Knight, was paid $630,361 (£518,481) for zero-hours work. He left the Knights in December 2013 and became Canada’s Ambassador to the Holy See in 2014. Meanwhile, the Archbishop of Baltimore, William Lori, Supreme Chaplain of the Knights and board member, was in 2017 paid $125,000 for approximately five hours’ work a week. A spokeswoman for the Knights said the archbishop’s compensation is in line with guidelines developed by Willis Tower Watson, a compensation firm hired by the board. She added that he worked much more than just five hours a week for the Knights. As for Savoie, the sum reflects “a pre-determined compensation package, which is a common practice when senior executives leave a high-level corporate position”.

In Rome, the Knights have earned a seat at the table of influence, largely thanks to their donations. They have donated millions to the Vatican over the years, including hefty contributions towards the refurbishment of St Peter’s Basilica and the costs of broadcast papal masses.

How does all this sit with Pope Francis’ hopes for a “poor Church for the poor”? He has warned those who want to follow “both Jesus and the world, both poverty and wealth” that this leads to a “halfway Christianity, which seeks material gain: it is the spirit of worldliness”. Francis says that when a “Christian is attached to possessions, he gives the bad impression of a Christian who wants to have two things: Heaven and Earth”.

In Washington, D.C. the Knights are extraordinarily well connected, and their donations show their sympathies with Republican Party causes, many of them out of sync with the direction of this pontificate. Anderson’s CV includes working as a legal adviser to Senator Jesse Helms, an outspoken conservative, accused of using the race card during elections.

According to their spokeswoman, the Knights have employed Washington lobbyists to ensure “tax reform efforts do not harm non-profit fraternal benefits societies”, and to influence this administration’s policies on judicial nominations, health-care reform, religious liberty and the issue of persecuted religious minorities in the Middle East. Awkwardly, a review of their lobbying records shows they paid $100,000 to Van Scoyoc Associates, who employed Carl Anderson’s son – he then became chief lobbyist for the Knights. The Knights paid far more to this firm than to another lobbying outfit they had used previously. Public Citizen, a consumer advocacy organisation, said the imbalance of payments “reeks of nepotism and is ethically problematic”.
Anderson has boasted that the Knights appear on the Ethisphere Institute’s list of the world’s most ethical companies. For five years from 2014, he was right. In 2019, the Knights no longer appear on the list.

The lawsuit in Colorado also threatens to lift a lid on the internal culture in the Knights when it comes to selling insurance. Whistleblowers have come forward to talk about “absolute obedience to superiors”, and a culture of intimidation against anyone trying to speak out. An email in 2017 from Tom Smith, the Knights’ former chief insurance officer, seen by The Tablet, urged Knights selling insurance to improve their performance. He admitted that life insurance applications were down by 4 per cent. “No excuses,” he said. “Excuses are for losers. We know why we are here and what we need to do. As always, if there is help you need, just ask.” Eric Wilson told me the “pressure is on leaders” to make their dues and “sell the policies”.

The Knights’ spokeswoman says that UKnight is “a disappointed prospective vendor”, which “offered the order inferior and outdated web services”. She added that Labriola has raised “preposterous legal claims”, including that UKnight was given an “oral contract” worth $100 million and that the suit boils down to a “garden variety dispute”. She says their insurance business is rigorously regulated. Time will tell whether the Knights can retain their unrivalled position of wealth and influence in the United States an