Laying Hands on Religious Racketeers

In light of the Oral Roberts scandal, the following exerpt from my prior law review article entitled Laying Hands on Religious Racketeers may be of interest:


In 1951, a New York charity dedicated to fighting cerebral palsy hit on a novel idea. The charity decided to hold its annual theatrical variety benefit show on television. Broadcasting from Carnegie Hall, this first “television fund-raising marathon” raised more money in one evening than the charity had raised the entire previous year. With that inaugural show, the charity “telethon” was born. Since this first telethon, television has become a financial bonanza for charitable and religious organizations. The relatively recent marriage between television and charity fund-raising has produced what has been called “one of the last great unregulated financial frontiers in America.” It has also produced a whole new problem for constitutional and administrative law scholars — religious fraud. Almost entirely free of any governmental regulation, religious organizations can collect unlimited funds for purposes ranging from ballooning Bibles over the Iron Curtain to buying religious books for the starving children of Indonesia. No regular official accounting of these donations is required and there is no legal requirement that religious organizations spend a minimum percentage of donations on the cause advertised.

With Americans spending an estimated $ 74 billion annually on charities worldwide, finding God can make extraordinarily good financial sense. State and federal officials readily admit that religious fraud is both profitable and virtually risk (and tax) free. “If I were a con man and wanted to make a lot of money,” a California state official remarked, “I’d set up [a] scam and call it a religion. Then nobody can look at my books, and if people say I’m a crook, I’d just say, ‘Stay out of my business; you’re violating my rights under the First Amendment!”

Religious television solicitation was a natural development after the tremendous success experienced by secular groups in charity telethons and fund-raising campaigns. Through early television charity drives, little-known diseases such as cerebral palsy and muscular dystrophy became household terms. United Cerebral Palsy, the fledgling group that launched the first telethon, is now a major charitable organization with a regular two-day telethon that grosses close to $ 20 million. Telethons, in fact, have been so successful that even national governments have turned to television solicitation. In Argentina, for example, the government arranged a star-studded telethon to raise money for its war with England over possession of the Falkland Islands. Australia produced a similar government-run telethon to help finance its 1984 Olympic team.

The potential of television religious programming and solicitation was not lost on religious leaders, particularly evangelical preachers. Accustomed to traveling from revival meeting to revival meeting, evangelical preachers saw television as liberating them from the crude limitations of the revival tent. In 1951, Billy Graham was the first to broadcast a religious program on television. In 1961, Pat Robertson established the first Christian television station. With these ventures, a new term, “televangelist,” entered the language. Since then, television ministries have sprung up on both the local and national level. The largest of these television ministries are those featuring the top religious personalities: Ernest Angley, Herbert W. Armstrong, Jim Bakker, Paul Crouch, Richard and Martin De Haan, Jerry Falwell, Billy Graham, D. James Kennedy, Oral Roberts, Pat Robertson, Rev. Robert Schuller, W. Eugene Scott, and Jimmy Swaggart. The top televangelists alone account for more than $ 1 billion in annual contributions.

Top television ministries often employ many of the gimmicks and sales tactics used in regular advertising campaigns. A former director of National Charities Information Bureau, a charity watchdog group, studied the solicitation techniques used in religious advertising and objected to the use of slick commercial pitches. “It’s a hype, a pitch,” he stated, “and they are doing a selling job, just the way car manufacturers are when they put some sexy person on an automobile hood and say ‘buy this car.'” Often large television ministries will “mine” an audience for new donors by encouraging people to write in for material or free gifts. Once these viewers send in their addresses, the ministry adds them to their mailing lists. People are more likely to donate money if their first interaction with a ministry is a free gift or pamphlet. Moreover, the one person in a hundred who does give money in a television appeal will give money again sixty-five to seventy-five percent of the time. Jerry Falwell can be seen regularly offering the faithful a free stamp-sized piece of celluloid containing the entire Bible, printed in microscopic type. Robert Schuller does the same with an offer of a free bracelet. Most of the top ministries follow suit with pamphlets and gifts designed to induce people to send in their names and addresses.

Televangelists have also borrowed heavily from secular medical charity advertising. Secular charities, particularly the Muscular Dystrophy Association (MDA), have perfected the “pity approach” used extensively in religious relief commercials. For example, in 1981 Jerry Lewis’s Labor Day Telethon was criticized for its use of graphic, sometimes misleading pictures of children suffering from muscular dystrophy. Advocate groups for the handicapped objected to MDA’s depiction of people with muscular dystrophy as “childlike, helpless, hopeless, nonfunctioning and noncontributing members of society.” MDA responded by changing its 1982 telethon format to include pictures of adults with muscular dystrophy. The result was a sharp drop in donations during the telethon, and not until two years later, after MDA returned to the earlier format, did donations begin to rise again to the 1981 levels.

Like their secular counterparts, most of the top television preachers conduct massive fund-raising drives on behalf of missionary work and famine relief in the Third World. These campaigns are often characterized by graphic pictures and urgent calls for help. The commercials at times personalize aid by asking for donations to help a specific child. 56 Maurice Mosley, the head of Priority One International, a Texas-based relief organization, takes special care to dramatize scenes of suffering in his solicitation drives. After unwrapping a dead child in one scene, Mosley turned to the camera and said, “Don’t wait. . . . Last night, 40,000 people died.” World Vision, the current champion of relief solicitation with $ 237 million in donations annually, uses similar tactics. World Vision’s studio backdrop is a stage set with clocks. Viewers are asked every three minutes to donate now because “time is running out.”

These state-of-the-art commercials seem to adhere to the rule that a charity can rarely be graphic enough. Joseph Campanella, host of International Christian Aid (ICA), knows this rule well. When filming a spot featuring five children being given up by their starving mother, Campanella was careful to remind the audience that the scene was not staged. When the sick mother fell into a convulsive seizure, he filmed her suffering as he flashed a toll-free number on the screen. Spots of this sort enabled ICA, which is now under investigation for possible fraudulent practices, to gross more than $ 33 million in 1983.

A. General Solicitation Fraud

All religious fraud can be condensed into a breach of a single promise. In soliciting funds, a television ministry or religious group holds itself out as a certain kind of organization, performing a service or following a belief that the viewer should support. A religious advertisement makes an implicit promise that it is soliciting funds for the purposes mentioned or alluded to in the commercial and not for any hidden agenda. Television solicitations can be either general or specific in nature. General solicitation involves fund raising for the support of the ministry itself. This type of solicitation is analogous to the neighborhood Sunday collection plate. Some preachers stress continual monthly pledges to finance their ministry. Others use numbers from the daily scripture reading to determine that day’s desired contributions. Regardless of the tactic used, however, general solicitations make no specific promises about how the money will be spent, beyond stating that it will be used to support the ministry.

Fraudulent general solicitation can involve either the use of donations for purposes outside the proper functioning of the ministry or the simple misrepresentation of the ministry itself. The former type of fraud, involving the improper use of church funds, is often publicized in scandals disclosing extravagant spending by religious leaders or their organizations. Allegations of this type of fraud have been made against Jim and Tammy Bakker, the dethroned hosts of the popular PTL show. The Bakkers used their television ministry to assemble the $ 129-million-a-year PTL empire. 65 PTL was rocked by a series of charges involving Jim Bakker’s alleged heterosexual and homosexual trysts. In one case, PTL allegedly paid more than $ 265,000 in church funds to suppress the episode before it became public. New evidence also suggests that the Bakkers received $ 4.8 million in salary from 1984 to 1986 despite Bakker’s assurances to his viewers in 1985 that his net worth a few years earlier “came out to be 15,000.” While at PTL, the Bakkers also purchased “$ 700,000 worth of real estate and luxury cars, including a $ 404,000 home.”

Other top preachers face similar charges of misusing church funds. Oral Roberts, for example, who has a syndicated thirty-minute program that reaches 210 stations and raises an estimated $ 88 million a year, has come under attack for using church funds to buy such items as a $ 2.5-million home in Beverly Hills. 6Nevertheless, these types of transactions are different from embezzlement of church funds. Instead these cases involve uses of church funds that are known and condoned by church leaders, though often these leaders are loyal followers or even family members of the televangelist.

Another form of general solicitation fraud occurs when contributions are solicited for a ministry that is a sham or substantially different from what it purports to be in its television spots. A good example of this type of fraud is the now-defunct Church of Hakeem. Headed by Hakeem Abdul Rasheed (a.k.a. Clifford Jones), the Church of Hakeem advanced the belief that material desires could be achieved through introspection and faith in God. A central tenet of the Church of Hakeem was “the law of increase, or the law or cosmic abundance, which provided that if one gave freely one would receive returns greater than the initial gift.” The Church began a “Dare to be Rich” program that promised contributors an “increase of God” amounting to four times their donations. God, the Church promised, would give contributors four-fold their money at rates calibrated to the amount of their donation. For example, a donation of $ 249 would be increased in 70 days whereas a donation of $ 1,000,000 would take God at least three years to increase. 75 These cycles, Rasheed explained, were tied to different levels of consciousness, the lower figure representing a level of consciousness that had transcended greed and thus could be increased sooner.

The IRS had another explanation. It identified the “Dare to be Rich” program as simply a “ponzi” or pyramid scheme. Instead of investing with divine supervision as he promised, Rasheed would actually give contributors four-fold their money by shifting funds around. Early donors with smaller contributions, therefore, received part of the money Rasheed was receiving from later contributors. In the meantime, he bought a number of strictly earthly possessions, including a $ 900,000 yacht and a $ 100,000 Rolls Royce. The Church of Hakeem is an example of fraudulent general solicitation because contributors were led to believe that Rasheed was investing their money and that the increases were the result of divinely guided investment.

B. Goal-Specific Solicitation Fraud

Fraud also occurs with funds raised for a specific stated goal of the ministry. This goal can range from money for a new television antenna to, in the most extreme case, paying God’s stated price for letting a minister live. In the last decade, however, a particular kind of goal-specific solicitation has become commonplace in television ministries and solicitations. Religious organizations, particularly fundamentalist, evangelical, and Pentecostal ministries, have organized drives for missions and relief projects abroad. Most of the top televangelists raise funds specifically for work in Africa, Latin America, and parts of Asia. Other large protestant and mainline churches have similar mission and relief programs. Most of these relief programs are legitimate and send the bulk of their contributions to the programs and missions advertised. Last year, a record 67,242 American protestants took part in missions abroad, financed by an estimated $ 1.3 billion in donations.

Televangelists became deeply involved in relief drives in the early 1970s. Of the top televangelists, Jimmy Swaggart is probably the most active in missionary work. Swaggart claims to have spent more than $ 8 million in El Salvador and Costa Rica alone and makes frequent (and popular) trips to Latin America. Although the televangelists insist that they are sending relief donations to their advertised destination, there is no way of confirming these statements. Only one top televangelist, Billy Graham, regularly discloses financial records to the Evangelical Council for Financial Accountability (EFCA), the leading monitoring group for televangelists. 85 Moreover, top evangelists and religious relief organizations are increasingly being accused of diverting donations from their advertised use or sending only a small fraction of the donations received. Jimmy Swaggart Ministries, for example, has been accused of diverting funds raised to feed hungry children. Likewise, Jerry Falwell has been accused of raising $ 6 million for refugees in northern Thailand but sending only $ 150,000 to the refugees. Tens of millions of dollars raised through relief drives may have been siphoned off for use in other areas of various ministries, and in some cases, organizations may simply have failed to send any of the relief donations abroad.

Moreover, when abuse does occur it is not always committed by fringe or evangelical groups. One of the more substantial cases of deceptive relief solicitation involved the Roman Catholic Church. In 1974 and 1975, the Pallotine Fathers of Baltimore raised $ 20 million in contributions to be used to support Pallotine missions in underdeveloped countries around the world. In 1976, however, it was disclosed that the Pallotine Order had spent less than four cents of every dollar on its missionary work.

Several other top televangelists have been accused of diverting relief donations. Jim and Tammy Bakker are currently under investigation for possible diversion of church funds for personal or unadvertised uses. Robert Schuller has been accused of similar deceptive practices, including the use of blatantly false advertising. A few years ago, Schuller began a campaign for helping the spiritually and physically starved people of China. Schuller’s organization published a letter from the minister standing in front of the Great Wall of China. Schuller praised his supporters for sending him to China and encouraged them to continue to help the relief program. He stated that he had had a number of highly successful meetings with Chinese “personalities” whose names were supposedly kept confidential to protect them from persecution. However, an aide to Schuller during the drive, which raised $ 1.6 million, recently revealed that Schuller had actually composed the letter in the aide’s living room in the United States, and that the picture of Schuller at the Great Wall was taken in a studio in the United States.

Similar charges have been leveled at other leading televangelists and relief organizations such as International Christian Aid (ICA) and World Vision. World Vision, the largest Christian television fund-raising organization, repeatedly has been accused of making misleading solicitations and employing suspect accounting practices. With $ 237 million in annual donations, World Vision has started a number of subsidiary groups, such as Black American Response to the African Crisis, that reportedly are simply fronts for the main organization. World Vision has even used the programs of other relief organizations to generate contributions for its own organization. ICA has come under attack as well. In 1984, ICA ran forty-nine commercials on Cable News Network appealing for donations to help its relief efforts in Ethiopia. There is no evidence, however, of any ICA program in Ethiopia.

The State Department claims that both ICA and World Vision systematically overstate the gravity of the situation in particular countries during their programming. 98 Yet because of their quasi-religious character, these organizations, like those of the televangelists, are left largely unregulated. As the next section will show, past private and governmental court action against fraudulent religious organizations has largely been ineffectual for legal as well as political reasons.


The potential rewards for defrauding the faithful are great and the disincentives few. Because of the country’s tradition of religious freedom, religious organizations are the least regulated corporations in our society. Public and judicial opposition to governmental interference with religious organizations has remained consistently high ever since Thomas Jefferson called for “a wall of separation between church and state.”

Past attempts by states to curb fraudulent or deceptive religious practices have faced opposition in both the courts and the legislatures. Although the Supreme Court has refused to let religious organizations hide behind the first amendment to avoid “punishment of acts inimical to the peace, good order and morals of society,” it has traditionally taken a dim view of state regulation of religion. The Court has been particularly responsive to claims by religious groups that state regulation of solicitation favors one religion or type of religion over another. Such was the case in Larson v. Valente, in which the Court struck down a Minnesota statute that placed mandatory reporting requirements on religious organizations. Under the law, religious organizations were required to register with the state and report their annual collection and administration of all contributions. The purpose of the statute was to protect against fraudulent practices in the solicitation of contributions. In drafting the statute, however, the Minnesota legislature expressly exempted all religious organizations that received more than half of their total contributions from members of affiliated organizations. The Holy Spirit Association for the Unification of World Christianity (Unification Church) challenged this fifty-percent rule. Led by Reverend Sun Myung Moon, the Unification Church charged that one of its central forms of religious expression was “door-to-door and public-place proselytizing and solicitation of funds to support the Church.” The Court agreed and held that the Minnesota statute favored mainline churches and thus violated the establishment clause of the first amendment.

Although the holding in Larson does not bar future nondiscriminatory state reporting requirements, such state regulation would be highly controversial at the state and local levels. California’s attorney general’s office can attest to this fact after its unsuccessful suit against the Worldwide Church of God. In 1977, the California Attorney General brought charges against the church on behalf of six church members who alleged that large sums of church funds were being diverted by church leaders for personal benefit. After the charges were made public, a statewide petition drive was launched to enact legislation barring such suits. The California legislature bowed to public pressure and prohibited future suits of that kind. In passing the bill, one state legislator explained that “[i]f we have a choice of keeping the state out of the legitimate affairs of churches, or to let some charlatans get away with fraud, I’d rather do the latter.”

Without state mandatory reporting laws and civil remedies for religious fraud, citizens and government officials must rely on existing legal sanctions from collateral areas such as tax, federal licensing, and mail fraud statutes. Although use of these sanctions has met with some success, their limited usefulness in combating religious fraud is easily apparent.

2 thoughts on “Laying Hands on Religious Racketeers”

  1. I would like to call attention to one money grubbing outfit. Victory Bible College Thailand. It is led by “Doctor” Al Purvis through A&D (Aid and Development) mission. Some of what they do is legitimate, alot is just a bunch of fund raising by “Doctor Al”. This money pays for his lavish home in Siracha Thailand, the office building a few blocks from the beach and other real estate ventures headed up by “Doctor” Al.

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