Police report provides more information

Day care center owes $40,000 in unpaid federal, state taxes
Feb. 13, 2013 @ 05:38 PM

The initial police report concerning alleged misuse of funds by a former pastor indicates he acknowledged using the church's day care center credit card to pay personal expenses, but said he was also using his own money to pay expenses for the facility.

The report also indicates the Gatlinburg Presbyterian Child Care Center owes $40,000 in unpaid federal taxes and additional state unemployment taxes.

The accused church leader, the Rev. Ronald Lukat, talked to Gatlinburg police Detective Tim Williams in December, according to the report. At that time, the church had reported $3,600 in charges on the child care center’s credit card that it believed had actually been for Lukat's personal use. The matter was brought to the attention of police by Bill Ball, vice president of the church and child care center’s board of directors.

“(Lukat) confessed to using the business credit card for personal expenses but felt the amount was less than that reported by Mr. Ball. He said he sometimes used personal money for child care expenses that he believed offset some of the unauthorized charges,” Williams reported.

Ball reported the unpaid taxes to Williams, who says in the police report that he contacted the IRS and the Tennessee Department of Workforce Development about the matter.

Williams indicates Lukat had also admitted he wasn’t paying the taxes to the proper authorities, but denied he had been misusing money intended to pay those taxes.

“He said although he indicated the taxes were being paid they were not because the center was not making enough money to meet payroll, other expenses and pay the taxes. He said the taxes were being reported to the government but not being paid,” Williams wrote in his report.

Lukat also told Williams the center had been using reserve funds to pay its bills in recent months, and that he had raised concerns about that with the board of directors and they weren’t addressed.

“He insisted all money received by the child care center went for payroll and business expenses and that investigation would find no evidence of theft by him regarding the unpaid taxes. He said that money never existed, "Williams reported. "Investigation continues."

Ball said Wednesday the issues were never brought to the board of directors’ attention. “We were led to believe the state and federal taxes were being paid and we knew nothing of the credit card (fraud),” he said.

The church learned of additional personal expenses Lukat had charged to the credit card after that report was filed, Ball said, and it appears Lukat was using tuition funds paid by parents to repay charges before he was caught. He said he didn't want to go into further detail yet because the investigation is ongoing.

Lukat has not been charged with a crime. He became pastor of the church in early 2011, and volunteered to take over as treasurer for the day care soon after. Church officials learned about the possible misused funds in December, and removed him as treasurer as soon as the investigation started. He resigned as pastor about a week later.

He did not return phone calls from The Mountain Press.

The church has retained an attorney to help it deal with the state and federal tax issues. Ball told The Mountain Press the unpaid taxes and misused funds forced the church to terminate the day care center; it will close today, and the building is already for sale.

That makes it a heartbreaking day for Director Melody Huddleston, who has worked at the center for 14 years.

“When I first found out I was angry and shocked that someone you look up to as being honest and forthcoming and straightforward was doing something like that, and I guess I was waiting to see if it was actually true," she said. “I’ve gone through the  grieving process, basically...

“I really thought the day care could pull through it because we initially found the credit card stuff and then they've found a Pandora's Box of just different stuff that was going on."

She said she has purchased most of the furniture and supplies from the center, and hopes to open a day care facility along with some of the staff.

“It's kind of hard to believe I won't be coming here every day and seeing these kids every day," she said.