Pastor General Staff  


   On January 3, 1979, armed with a court order of receivership obtained ex parte and without notice of any kind (not even the telephonic notice required by local court rules) given or even attempted to be given, retired Judge Steven Weisman, government attorneys, private attorneys "deputized" both by the state Attorney General's office and by Weisman, government investigators, and law enforcement officers swooped down upon the Worldwide Church of God like buzzards to their prey. Nine days later, following a hearing on confirmation of the receivership order, the State of California drove the last nail into the coffin of the First Amendment constitutional mandate of separation of Church and State, as the Los Angeles Times reported:

   "Receiver Takes Over Armstrong Church Judge's Order Intensifies Battle Between State, Religious Empire

   "A Superior Court judge Friday ordered a temporary receiver to 'take possession and control' of the Pasadena-based Worldwide Church of God in an action that seems-certain to set up a major legal confrontation between the church and the state of California.

   "Judge Julius M. Title ruled that receiver Steven Weisman is to assume all administrative powers over the $80 million religious empire of Herbert W. Armstrong — including the church, Ambassador College and Ambassador International Cultural Foundation." Los Angeles Times, Saturday, January 13, 1979, part II, p. 1 (empasis added)

   The full import of this massive, unwarranted intrusion of government into religious affairs cannot be appreciated without some factual and legal background.

   The Church was founded by Herbert W. Armstrong 46 years ago; since that time has flourished to where it now has 100,000 members worldwide. Mr. Armstrong has been the spiritual and temporal leader of the Church s inception, and in church theology is the appointed Apostle of Jesus Christ charged with the responsibility of spreading His Gospel throughout the world. The Church does not solicit funds from the public. Its members, however, voluntarily tithe and, in addition, make other voluntary contributions from time to time. In the last twenty years, contributions and tithings have gone from $800,000 to $20 million annually; the Church spends approximately the same amount in connection with its Work, which includes the following:

   (1) Worldwide travels by Mr. Armstrong, his personal advisor, Stanley Rader, and others meeting with dignitaries, speaking to millions of people, and otherwise carrying out the Work of the Church; in the last five years, for example, Mr. Armstrong and Mr. Rader have averaged approximately 200 travel days per year.

   (2) Numerous publications such as Quest magazine, The Plain Truth, The Worldwide News, The Good News, and books published by Church-owned Gateway Publishing, Inc.

   (3) A multitude of television and radio broadcasts spreading the Gospel, for which the Church spends approximately $5 million annually.

   (4) The operation of Ambassador College, an institution which primarily trains students for the ministry but which also educates them in all areas.

   (5) Concerts, opera, theater and other cultural activities funded by the Church and conducted through Ambassador International Cultural Foundation.

   (6) Numerous other charitable, educational, scientific, and religious projects.

   Mr. Armstrong's personal advisor, Stanley R. Rader, is a lawyer and accountant who has been involved with the Church for approximately 20 years. Prior to 1975, Mr. Rader was an independent contractor and outside consultant who was not even a Church member. In 1975, he became an officer, director and member of the Church. Hr. Armstrong feels that Mr. Rader has been invaluable in making the Church financially successful, thereby enabling it to more effectively carry out its Work.

   For a number of years prior to 1978, Mr. Armstrong's son, Garner Ted, also worked for the Church. A rather charismatic, well-spoken man, Garner Ted Armstrong was widely regarded as the man most likely to succeed his father as leader of the Church. However, Garner Ted Armstrong's personal misconduct, as well as theological and philosophical differences with his father and, perhaps, his desire to take over leadership of the Church immediately, led to Mr. Armstrong "disfellowshipping" (i.e., excommunicating) him in 1978. Since that time, Garner Ted Armstrong has formed his own Church of God, Universal (based in Tyler, Texas) with the support of former members of the Church, and has attempted to induce members to leave the Worldwide Church of God and join his new organization. For some reason — perhaps jealousy because his father trusted and relied upon Mr. Rader more than on his own son — Garner Ted Armstrong intensely dislikes Stanley Rader and has expressed this hatred publically, calling Mr. Rader "an evil man" and otherwise reviling and disparaging him.

   Sometime prior to January 2, 1979 (how much prior to this date is not known but, judging from subsequent events, it appears to have been at least a period of weeks), a small group of dissident former Church members apparently contacted a Beverly Hills attorney, Hillel Chodos, and sought advice regarding what could be done to disgrace, discredit Herbert W. Armstrong and Stanley Rader and remove them from their positions in the Church based on trumped-up alleged improprieties vituperatively referred to as "siphoning of funds for personal use"; these charges and their lack of merit will be discussed later in this memorandum. Among this small group of dissidents were (a) Alvin and Shirley Timmons, supporters of Garner Ted Armstrong to the point that Mrs. Timmons had at a Church convocation attempted to persuade Church members to leave the Church and join Garner Ted Armstrong's organization; (b) David Morgan, a former Church employee fired for not being able to get along with his fellow employees; and (c) Benjamin Chapman, who is married to Garner Ted Armstrong's secretary and the widow of Garner Ted Armstrong's brother. Through Mr. Chodos or upon his advice, this group met with representatives of the California State Attorney General's office presumably including Deputy Attorney General Lawrence R. Tapper, who is in charge of the case. In addition to former members, apparently a small number of dissident active members also participated in these meetings, including C. Wayne Cole, the Church's Director of Pastoral Administration who, after Garner Ted Armstrong was disfellowshipped, was viewed many, no doubt including himself, as the likely successor to Herbert W. Armstrong. In an attempt to clothe their plot with an aura of respectability, this group prevailed upon the Attorney General's office and, based upon the same trumped-up charges, obtained leave to sue on the State's behalf. For its part, the Attorney General's office did nothing by way of investigation to verify these charges before lending its name to an attempt (thus far successful) to put the Church, a religious institution of long standing and high regard, in receivership, despite the authority given to the Attorney General by the California Corporations Code to examine books and records of charitable trusts to investigate alleged improprieties. In a further attempt to gain respectability, Mr. Chodos hand-picked Steven S. Weisman, a retired Los Angeles Superior Court judge whom (and whose family) Mr. Chodos previously had represented, as the receiver to be imposed on the Church.

   On January 2, 1979, the State of California ex rel the dissidents (termed "relators") filed its complaint in Los Angeles Superior Court, seeking an accounting, the replacement of Church trustees and directors with a new set, a receivership, and an injunction. Almost every charging allegation of the complaint is on "information and belief," i.e., not personally known to the State or the relators but, rather, based upon inadmissible and untrue hearsay, conclusion, speculation, and opinion. On that day, Mr. Chodos also filed accompanying affidavits from some of the relators and others (including Mr. Chapman, who apparently chose not to be named as a relator), all of which contained the same inadmissible hearsay, speculation, etc. Mr. Chodos then appeared, with these papers, before Judge Jerry Pacht ex parte (i.e. unilaterally and with absolutely no notice whatsoever to the Church or its leaders — not even the telephone notice required by local court rules — somehow persuaded Judge Pacht to impose a receivership on the Church without ever giving the Church, Mr. Armstrong, or Mr. Rader an opportunity to be heard in their defense. This action was virtually unprecedented and constitutes the most blatant violation of the separation of Church and State which the Constitution guarantees.

   The next day (January 3), armed with an all-encompassing order saying virtually "do what you want" until a full hearing set for January 10, the receiver, as noted at the outset, descended upon the Church. In a complete state of shock, the Church employees understandably and justifiably refused to allow the receiver to enter. Late in the afternoon, the receiver and his companions gained entry and immediately began rapaciously rummaging through every Church document they could lay their hands on. The receiver terminated Mr. Rader's secretary on the spot, accusing her of being loyal to Mr. Rader rather than to the Church. The receiver also was heard by several Church employees to state that Mr. Rader and Mr. Armstrong were "out" or "terminated." Having thus ensconced himself, the receiver commenced fulfilling his role: the destruction of the Church.

   On January 10, the hearing on the confirmation of the receivership order commenced. The matter was heard by Judge Julius Title. The hearing lasted three days, at the conclusion of which Judge Title entered his order, which will be discussed shortly. At this juncture, however, it is appropriate to outline the charges made, the "evidence" introduced to support them, and the true facts as proven at the hearing. Briefly, in chart form, they are as follows:

   (1) Charge: Messrs. Armstrong, Rader and others were incurring exorbitant travel, gift, and entertainment expenses.

   "Evidence:" Church expense records and other documents from 1975-1976 disseminated to Church ministers and members or available to them. No evidence was introduced that the expenditures were not in furtherance of Church business or that they were unreasonably high.

   True Facts: In order to gain goodwill for the Church and gain access to the people in other countries whose governments are autocratic, the Church presents gifts to heads of state and other dignitaries, gives receptions for them, and incurs other ordinary entertainment and travel expenses. This has resulted in the dramatic increase in Church members and contributions which enables the Church to carry out its work.

   (2) Charge: Herbert W. Armstrong is senile.

   "Evidence:" His age — 86.

   True Facts: Mr. Armstrong still travels worldwide, writes innumerable articles, is writing five books to be published (one in fact is already in print) this year, and speaks on the media and before live audiences very frequently.

   (3) Charge: Messrs. Armstrong and Rader are engaging in self-dealing with Church funds to their personal benefit.

   "Evidence:" None offered re: Mr. Armstrong. (i) In 1967, a partnership of which Mr. Rader was a member purchased an airplane and leased it to the Church. No evidence was offered on his profit, if any, therefrom. (ii) In 1971, Mr. Rader purchased a home allegedly paid for by the Church and sold it in 1978, pocketing the proceeds. (iii) After the sale of that home, Mr. Rader bought another home from the Church. (iv) Mr. Rader does not know if Mr. Armstrong was advised by outside counsel before executing Mr. Rader's employment contract.

   True Facts: (i) In 1967, Mr. Rader was not an officer, director, or even member of the Church. The Church could not afford to purchase the airplane, and could not lease it through normal channels since lessors do not feel that they can or want to sue a Church in the event of default. Mr. Rader formed the partnership and personally executed indemnities to the other partners. (ii) In 1971, the Church purchased a home and put title in Mr. Rader's name. A few months later, in 1972, Mr. Rader deeded the home back to the Church, who used it as security for a loan. The Church then deeded the property back to Mr. Rader, who put $90,000 down, assumed that portion of loan allocable to the home, and gave the Church a second trust deed for the balance of the original purchase price. Mr. Rader made all payments on the house; occasionally the Church would make a payment on the house to the lender and treat the payment as compensation to Mr. Rader, who treated such compensation as income. Having thus made all payments, Mr. Rader of course kept the profit on his house when he sold it. (iii) The second house was independently appraised at $208,000. Mr. Rader purchased it for $225,000 cash. (iv) Mr. Rader had successful law and accounting practices prior to becoming employed by the Church. He travels 200 days per year on Church business. There is no showing that his compensation is excessive, and in fact it is not.

   (4) Charge: The Church is selling a $30 million campus at Big Sandy, Texas for $10.6 million to cover up the siphoning of funds.

   "Evidence:" None as to value except a magazine article quoting the prospective purchaser, who intends to donate or resell the property.

   True Facts: The Church produced an independent appraisal by a national appraisal firm setting Big Sandy's value at $6 million. Mr. Chodos conceded that no showing had been made by him on this issue.

   (5) Charge: The Church in 1978 sold numerous other properties below fair market value.

   "Evidence:" None except the conclusion of one relator who is not a realtor.

   True Facts: The Church produced independent appraisals on every property sold by it in 1978. The properties were sold at an aggregate of several hundred thousand dollars above appraised value.

   (6) Charge: The Church is removing and destroying financial records to cover up the massive siphoning of funds.

   "Evidence:" (i) A Church employee was seen leaving the Church with a package approximately 1' x 1' x 3", which the witness giving this testimony could not identify. The same employee was seen entering the data processing center in the company of another employee and a security guard. (iii) Two students entered the data processing center through the roof and left ten minutes later taking nothing with them. (iv) A paper shredder was found in the executive offices. (v) A hearsay statement in the declaration of a relator who would not even identify the person allegedly giving the information.

   True Facts: (i) The employee was carrying books, which were given to him by another employee and which a third employee observed. (ii) The first employee was at dinner with approximately 6 other people at the time in question, and the second employee spent the entire weekend 150 miles away in Vista, California, visiting friends. (iii) Nothing was taken; it is impossible to get in, destroy documents, and get out of the building in ten minutes. (iv) The shredder was Garner Ted Armstrong's while he worked for the Church. Only prank mail and innocuous papers are shredded. Duplicates of records generated by other departments may sometimes be shredded. All financial documents are retrievable through the computer system. (v) There is no evidentiary support for this statement, as no financial records have been destroyed.

   In spite of the evidence, Judge Title, perhaps a victim of what may be referred to as a "Jonestown mentality," nevertheless stated that there were "questions," "inferences," and "conceivable" problems raised. Incredibly, however, in light of (a) the clear evidence, (b) the legal requirement of a strong showing in receivership cases, (c) the irreparable injury already, and continuing to be, suffered by the Church as the direct result of the receivership (including loss of faith by members who will cease to contribute; calling of $1.3 million of demand notes; loss of credit lines; and shifts by suppliers from credit to C.O.D. or cash in advance), which injury was conceded by Judge Title, and (d) constitutional guarantees of religious freedom, association, privacy, and due process, Judge Title confirmed the appointment of Judge Weisman (a long-time friend and colleague) and empowered him to:

   (1) Take possession and control of all Church property.

   (2) Hire and fire Church employees.

   (3) Control all "business and financial" operations of the Church in his sole discretion.

   (4) Employ lawyers, accountants, security personnel, and staff at Church expense.

   (5) Conduct an audit of all Church activities and initiate appropriate proceedings based thereon (the Church, on theological grounds, has never been a plaintiff in a lawsuit except in a federal court action to set aside this very order).

   (6) Put all Church funds in a receiver's account in his sole discretion.

   (7) Apply to the court to fire Messrs. Armstrong and Rader.

   (8) Grant access to all documents on Church premises to the State without allowing the Church and the other defendants to object on grounds of relevancy, constitutional privilege, attorney-client privilege, or clergy-penitent privilege. A specific request by counsel for the Church to create a procedure for such objection was denied by Judge Title.

   (9) The court did admonish the receiver to stay out of ecclesiastical matters, but reserved to itself the determination of what is and is not ecclesiastical. This clearly is constitutionally impermissible. New York v. Cathedral Academy, 98 S.Ct. 345 (1977)

   Since January 12 order, Judge Title and the receiver have violated constitutional guarantees in a multitude of respects, including the following:

   (1) The receiver hired a disfellowshipped Church member as a Church employee, contrary to Church doctrine that a disfellowshipped person is barred from Church property; Judge Title upheld this act.

   (2) The receiver recalled a communication from Mr. Armstrong to Church members in which Mr. Armstrong voiced his vehement objections to the receiver on religious and legal grounds and solicited contributions for legal defense; Judge Title upheld this act and stated that Mr. Armstrong could not solicit defense funds from the Church membership.

   (3) The receiver used a Church ministry list to send a mailgram misstating a Court order. Judge Title acknowledged the incorrectness of the mailgram but stated that receiver could use Church membership lists to communicate with church members on "business and financial matters." This is clearly prohibited by NAACP vs. Alabama, 377 U.S. 288 (1964).

   (4) The receiver has filed a motion to suspend Mr. Rader from all his duties despite Mr. Armstrong's desires to the contrary.

   (5) The receiver is seending Church funds contributed for religious purposes at the rate of $25,000 per week.

   In short, virtually every constitutional guarantee of both personal and religious freedom has been violated by the state and its court-appointed receiver based upon no more than allegations by a handful of persons each of whom has an axe to grind, especially Garner Ted Armstrong. That the State should allow itself to be a part of such a conspiracy is intolerable in any context; when a Church is involved, it is heinous.

   The issue is not, as the California Attorney General attempts to frame it, one of simple "accountability." Mr. Armstrong, Mr. Rader and all others working in and for the Church are of course "accountable" to God and, with respect to Mr. Rader and other employees, to Mr. Armstrong. Moreover, they are also "accountable" to Church members in the sense that the members are free to examine their conduct for themselves and, based on that examination, continue or cease to donate funds to the Church. By virtue of the Church's extensive publishing and electronic media activities, its members for years have known of the activities of which the State now complains. That they have continued to donate in ever-increasing amounts is perhaps the most persuasive testimony and expression of their faith and trust in the Church, its Work, and its leadership.

   The State has no right to invade, seize, and desecrate the Church because of the alleged improprieties of Mr. Armstrong, Mr. Rader or anyone else. Can anyone imagine a receiver taking over General Motors ex parte, without notice, because of alleged antitrust violations? Or taking over Columbia Pictures because of alleged defalcations and other improprieties by its executives? Why, then, take over a Church, the last place government should invade? To do so is all the more contemptible when one considers that the State's action was taken on the mere accusation of six dissident former members who are attempting to use the Attorney General's office as a sword to further their own ends and gain control of the Church.

   This is not the People's Temple. Mr. Armstrong is not Jim Jones, Reverend Moon or any other "cult" leader. The Church and Mr. Armstrong have carried out their Work for over 40 years and have the highest of reputations. Neither Mr. Armstrong nor Mr. Rader has engaged in any improprieties. If the State feels to the contrary, it may proceed in the proper forum in civil or criminal actions. However, the Constitution commands that the State cannot proceed as it has done, and that the receiver cannot be permitted to continue to oversee the destruction of the Church.

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Pastor General's ReportJanuary 30, 1979Vol 3 No. 2