In the wake of Master’s University being informed that they had been placed on academic probation, a number of allegations and issues have become known to the public, including a large financial contract between family members and the president of the University.

Master’s Probation Timeline

In August of this year, the student and faculty of The Master’s University were informed that due to a number of issues found by their accreditation organization, the Western Senior College and University Commission (WSCUC), they had been placed on academic probation.

The punitive measure comes after a WSCUC team, known as the Accreditation Visiting Team (AVT) visited the school’s campus in previous months, and reported that among a number of issues found on the campus, the team was concerned that the school was: in violation of the Clery Act, distributing financial aid to friends and family of the school’s president, a lack of independence on the school board of directors, and had cultivated “a climate of fear, intimidation, bullying and uncertainty” among staff and faculty members.

In addition to these findings, the school board reported their concern over John MacArthur’s son-in-law, Kory Welch, the former-Chief Operating Officer of the school and current Special Assistant to the President, “overseeing a contract from which he benefited from.

“An Inside Perspective”

In an article published on the school’s website Thursday, some of The Master’s school faculty and staff, and Mr. Welch himself, defended the contract his private company, WeKreative, has with his father-in-law’s non-profit university.

In an article, entitled “An Inside Perspective on Kory Welch,” the history behind Mr. Welch’s involvement with the school is presented from the perspective of Master’s University.

The article states that Welch’s involvement with the school began with him being given a “consultant role” in 2016 in order to help the University and its declining enrollment numbers.

It goes on to state that Mr. Welch’s role was to “rebrand” the University. Being instructed to “recast and lead the marketing department of the University, his consultancy was eventually expanded to overseeing “plant operations, admissions and athletics.”

According to the article released by the school, Welch was an independent contractor with the university until March of 2018, when the School Board of Directors asked him to become the Chief Operating Officer (COO) at The Master’s University, making him the second highest officer after the school president.

In an email sent to students on April 13 of this year, Senior Vice President and Provost John Stead told students that Welch’s new position was responsible for “marketing, human resources, physical plant, admissions, student services, institutional technology and athletics.”

However, between April and September of this year, Welch was told he no longer holds that position. Instead, his title has been changed to “Special Assistant to the President.”

The letter also acknowledges, for the first time by Master’s officials in a public statement, that Welch’s private graphic design and advertising company, WeKreative, held a contract with the school.

While Welch was in charge of the Marketing Department, and eventually functioned as COO of the university, the Master’s University explains that the school was on contract “before Welch’s arrival on campus to do any consulting work.”

The article states that the contract amount for “one year is $180,000” and that Welch does not “pocket that money, but has overhead and employees that need to be paid.”

Also, the article states that $180,000 was actually a low ball projection of what his company should have been paid, stating that his company had worked 3,000 billable hours, but only charged the school for 1,200.

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An Outside Perspective

However, discrepancies continue to exist between official statements made by university officials and what can be found in official federal and school documents from previous years.

In regards to the Master’s University specifically, the 2016 990-form — the university’s tax return filed with the IRS — WeKreative reportedly received $252,000 from the school during that fiscal year. This is likely due to the fact that the university has a fiscal year that begins July 1, 2016 and ends June 30, 2017.

What this payment likely indicates is that WeKreative billed the university on a standard quarterly system, meaning that the additional $72,000 — the difference between the totals on the 2016 990-form and the $180,000 that Welch said the contract was worth in the article from Thursday — came from the 2017 calendar year. Which would account for the $72,000 difference.

It is an important distinguishment because proof that payments were made to WeKreative during the Master’s 2016 fiscal year indicates that WeKreative was paid $180,000 for one year of work in 2016, and it would appear that the contract was continued into 2017.

WeKreative was a brand, that according to its trademark filing, was created in February of 2016, the same year that they received the contract from Master’s University, and the same year that Welch was made the head of marketing for the university.

Therefore, while the school had a marketing contract with WeKreative, Welch, a vendor with the institution, was then hired to oversee a department that his company had a contract with.

And according to the article posted on Thursday, it was not until six months ago that the university decided to reconsider the marketing contract with WeKreative, right around the same time that the AVT was investigating the school.

Furthermore, it is important to point out that WeKreative is not a company, but is rather a brand owned by Welch’s company — The Welch Group.

This is one of many companies that Welch has owned over the years, and appears to be one of the few that has not been either dissolved or suspended by the California Franchise Tax Board (FTB).

The California Franchise Tax Board is tasked with suspending LLC’s if there is a pattern of nonpayment of taxes and/or reporting of income.

Companies owned or overseen by Mr. Welch or his wife have either been dissolved or suspended since the early 2000’s include:

– Flexible Media, LLC – FTB Suspended

– Welch Group Films, LLC – Cancelled

– JMMK, LLC – FTB Suspended

– W Properties, LLC – FTB Suspended

– Maclette, Inc – Dissolved

Furthermore, in regards to Welch’s start date at the university as Chief Operating Officer (COO) and Chief Marketing Officer (CMO) in March of 2018, the Master’s University Academic Catalog for the 2017-2018 school year, which was copyrighted in 2017, states that Welch held both titles.

He currently holds the title of Special Assistant to the President, which switched sometime this year after the WASC report was released, indicating their concern over his conflict of interest.

The WSCUC returns to Master’s on Nov. 1 and Nov. 2 to assess the school’s response to the initial report.

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