MotherJones MJ93: Other people's money
News: Being a tale of Jerry Flawell, Charles Keating, and the pursuit of Christian booty.
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By all rights, these should be salad days for the Reverend Jerry Falwell. The new president is a Democrat who wants gays to serve openly in the military, and the first lady doesn't think (as Jerry does) that parents own their children--the forces of evil are clearly ascendant. It's a golden opportunity to scare money out of a Religious Right thrown into disarray by the discovery that the country has a two-party system, sort of.
Unfortunately, there's a small problem. It is unseemly to revile one's creditors in public, and Jerry Falwell's organizations owe the U.S. government some $5 million.
The founder of the Moral Majority gained no small celebrity in the early eighties as he smote the liberals hip and thigh from his pulpit and on his "Old Time Gospel Hour," earning himself a place of honor in Ed Meese's Rolodex. But unlike Rush Limbaugh, Jerry didn't sell an adaptable product: with Reaganism triumphant, his contributions began to dry up. When the Evil Empire collapsed, it became even harder to extract fear capital from the southern Christian ladies-of-a-certain- age who were Falwell's most reliable source of funds.
Unfortunately, the reverend has a history of mishandling other people's money. According to Lynchburg News and Advance reporter Jan Vertefeuille, Falwell's ministries borrowed $72.3 million during the eighties, pledging his Thomas Road Baptist Church as collateral on some eleven separate occasions. By a supreme irony, the creditor who chose to place business before sentiment when Falwell couldn't repay these loans was Stephens, Inc., the Arkansas financial institution that has been such a generous patron of that minion of Satan, Bill Clinton. In 1991 Stevens, Inc. foreclosed on the North Campus of Jerry's pride and joy, Liberty University.
In the meantime, Falwell had borrowed at least $32 million from a company called AMI, which specialized in church finance. In 1988 Falwell mailed out 1.2 million letters urging the recipients to buy bonds of AMI affiliates and describing the company and its affiliates as "true friends" and the ministry's "investment banker"--although the ministry and AMI were "in no way involved in a business sense." In one of the many lawsuits that eventually descended on AMI, it was disclosed that Falwell billed AMI $600,000 for his services and received $300,000. This was after his lawyers said that he "did not expect to be compensated." Meanwhile, some 2,500 AMI bondholders lost three-quarters of their money ($13 million of which found its way to the "Old Time Gospel Hour").
But before AMI went belly up, it attracted the attention of that poisoned chalice of American finance, Charles Keating, Jr. Keating's Lincoln Savings not only bought all the preferred stock in AMI, but it used AMI as a conduit to loan $8.5 million to the Falwell organization, which, as usual, used the church as collateral. On April 13, 1989, when the government finally shut Keating down, one of the things they found in his vault was the deed of trust to Falwell's Thomas Road Baptist Church.
By 1992 Falwell's creditors were all over him like a cheap suit, as was a team of IRS agents. But the age of miracles is not past. In a complex series of transactions, Falwell not only got his church back, but also had the good fortune to have the IRS back off, and he reduced the amount he owes the American people from $11.6 million to the aforementioned $5 million. You have to hand it to Jerry: he lands on his feet, every time, even if he does it with our money. Where's the IRS when you need 'em?
