As the Boy Scouts of America hurtled toward its historic bankruptcy over the past several years, signs of financial distress abounded:

The national organization operated in the red — spending more than it took in — for five of the past six years. Membership fell 21 percent. Fundraising expenses doubled. The cost of outside legal consultants nearly tripled. And more than 5 percent of its net assets disappeared.

All the while, pay for Boy Scouts’ top brass jumped more than 14 percent, with then-top Scout Michael B. Surbaugh paid $873,927 in total compensation in 2017, according to the national council’s most recent tax returns.

Boy Scout Director Mark Logemann received total compensation of $625,016, while Bradley Farmer got $602,874. Eight other executives earned more than $400,000, and another four made more than $335,000.

First-class travel — necessary so employees can discuss business during flights, according to its filings — cost $382,490 over the six years examined by the Southern California News Group. Travel for spouses — “critical” to furthering the family-oriented organization’s mission and business purpose — cost $187,696 over those years, while membership in airline clubs cost $20,667.

The iconic, national Boy Scouts of America filed for bankruptcy this month as hundreds of lawsuits piled up from men who said they were sexually abused as Scouts. The national organization wants to use bankruptcy to carve out a victim compensation fund, while also ensuring that programs will continue, officials said.

It also hopes to protect local Boy Scout councils — such as the ones in Los Angeles and Orange counties and the Inland Empire — from liability for sexual abuse, allowing them to retain a vast real estate empire worth hundreds of millions of dollars for future generations of Scouts. That land is owned by the local councils, not the national organization.

Local Boy Scout councils in L.A., Orange and the Inland Empire stress that they are not bankrupt, and that everything will proceed as usual.

But are they truly distinct from the national organization? Are they insulated?

“The local councils are not independent,” said Los Angeles attorney Paul Mones, whose suit against the Boy Scouts of America a decade ago resulted in the release of the “Perversion Files” — details of alleged sexual abuse secretly kept by the Boy Scouts for decades — as well as a $19.9 million verdict for a former Scout who was abused by his Scout leader in the 1980s.

“Even though the local councils have their own corporations, they’re inextricably linked to the national,” Mones said. “The Boy Scouts of America has to approve the troop leaders. The Boy Scouts of America carries the retirement plans. Every year, the local councils have to apply for an annual charter, which is approved by the Boy Scouts of America.

“There’s a real overlap, a significant overlap,” Mones said. “To the extent they allege that they’re separate entities, that remains to be seen.”

‘Legally separate’

Several local councils posted a nearly-identical message for concerned patrons on their websites.

“The CA Inland Empire Council has not filed for bankruptcy,” said Matt Myers, Scout Executive for the Riverside-San Bernardino area council, in the message. “Our Council is legally separate, distinct and financially independent from the national organization.

“Scouting programs will continue. This means that unit meetings and activities, district and council events, other Scouting adventures and countless service projects will take place as usual. In short, we expect no changes to the local Scouting experience.”

Scouting is safer now than ever before, said the Greater Los Angeles Area Council’s version of the message, and restricted donations — “past, present or future” — can only be used for their designated purpose.

In court documents, the BSA likened the relationship between it and the local councils as akin to that between franchiser and franchisees.

“The BSA is responsible for developing and disseminating the structure and content of the Scouting program, owns and licenses intellectual property, and provides training and support services, including corporate services such as human resources, marketing and legal functions, and information technology,” the national council said.

Local councils, on the other hand, “play a key role in delivering the Scouting program,” the BSA said.

While each of the local councils is crucial to the BSA’s ability to carry out its mission, they’re not “agents of the BSA” and they’re not part of the bankruptcy filings, it said.

Still, each will have an “opportunity” to contribute to the Victims Compensation Trust fund, it said — though precisely which councils, and how much, remains to be seen.

Many of the “perversion files” were destroyed over the years. But the files released in Mones’ case — for the 20 years ending in 1985 — include 140 from California. They detail reports of abuse in Anaheim, Berkeley, El Toro, Garden Grove, Long Beach, Los Angeles, Oakland, Orange, Riverside, San Francisco, San Jose, Santa Ana, Santa Monica, Westminster and Yorba Linda, among many others.

Local councils

When it comes to money that might be tapped for those victims, the local councils have varying degrees of fiscal health.

The Greater Los Angeles Area Council appeared to be in the best shape. It operated in the black for the past two years, with net assets climbing from $45.2 million to $46.4 million. Its then-top Scout, Jeffrey Hunt, had total compensation of $576,061.

The Orange County Council spent more than it brought in for two consecutive years, while net assets shrank from $49.5 million to $47.9 million, its tax returns show. Then-top Scout Jeff Herrmann had total compensation of $428,119 in 2018.

The Inland Empire Council had a mixed financial bag, spending more than it brought in in 2016, but breaking into the black the next year. Total assets grew from $1.8 million to $2 million. Its top Scout, Joseph Daniszewski, earned total compensation of $217,858.

The Southern California councils didn’t pay for first-class travel or companions’ travel.

Jeff Sulzbach, Scout Executive/CEO of the Greater Los Angeles Area Council since November, said the local councils will get a seat at the table as the national organization navigates the bankruptcy, though details on exactly how that will work are unclear this early in the process.

Scouting has put many safeguards in place, he said, including criminal background checks for adults and prohibitions against adults meeting privately with children. “We want the Scouting mission to continue,” he said. “Forever.”

‘Boondoggle for decades’

The Boy Scouts of America’s bankruptcy petition lists assets of at least $1 billion, and liabilities of up to that amount.

The Scout executives who received large compensation packages are among the creditors standing in line for money.

“This has been a boondoggle for decades, where insiders pay themselves million-dollar salaries with fabulous pension plans,” said Tim Kosnoff, an attorney also representing abuse victims. “It’s sickening to see. They’re paid more than any other not-for-profit in the country. This is an abusive organization in more ways than one.”

Sylvia Acevedo, chief executive of the Girl Scouts of America, had total compensation of $598,527, according to its latest tax filing. The Girl Scouts is a smaller operation, with about 2.6 million child and adult members compared to Boy Scouts 3 million, but the Girl Scouts’ budget is about half as large. The Girl Scouts have operated in the black for five of the past seven years.

Dean Baker, senior economist at the Center for Economic and Policy Research in Washington, D.C., has urged the IRS to cap nonprofit CEO pay at $400,000 — the annual salary of the U.S. president.

In an emailed statement from the Boy Scouts of America to SCNG defending compensation, a spokesperson said that BSA executives have decades of experience delivering “the nation’s foremost youth program of character development and values-based leadership training.” Given the great responsibility of that mission, it said, “it is our duty to attract and retain the smartest and most effective leaders to ensure Scouting’s success and doing so requires that we provide competitive compensation.”

The national council has prudently managed its financial resources throughout its 110-year history and will continue to do so, the statement said. Business-class travel is no longer authorized for national executives unless the employee personally pays the difference in fees, or there’s a “business-critical need” for upgraded travel.

The BSA also reduced how much employees can spend on food and tightened policies on payment authorization, reimbursement and personal travel, and will maintain fiscal responsibility through the bankruptcy, it said.

New law triggered abuse lawsuits

The flood of abuse lawsuits in California comes in the wake of AB 218, signed into law in October and allowing victims of childhood sexual assault more time to file lawsuits.

The new law provides a three-year window for victims to bring claims that would otherwise be barred due to existing statutes. The Boy Scouts of America seeks to significantly shorten that window in bankruptcy court so victims can be compensated and it can exit bankruptcy renewed.

“The Boy Scouts of America believes our organization has a social and moral responsibility to equitably compensate all victims who were abused during their time in Scouting,” the organization says on a new web site devoted to bankruptcy proceedings. “We also have a duty to carry out our mission for years to come.”