Receivership an Appealing Issue

It seemed like a repeat performance. In less than an hour, about 1,400 members of the Worldwide Church of God (WCG) flocked to the Pasadena, California, headquarters of the 70,000-member sect to block a court-appointed receiver from entering the ornate buildings and taking over its financial affairs.

The sense of deja vu stemmed from the fact that it was the second time in two months that Los Angeles Superior Court Judge Julius M. Title had imposed a receiver on the beleaguered church, and it was the second time church loyalists had rallied behind patriarch Herbert W. Armstrong, 86 (who remained secluded in Tucson, Arizona), and Armstrong’s chief aide, church treasurer Stanley Rader, to stave off a state probe of church records.

This time, Rader and a battery of four law firms representing the church (running up six-figure fees) insisted they would take the case all the way to the U. S. Supreme Court, if necessary, on grounds that First Amendment protections guaranteed them sanctity of records, both ecclesiastical and financial. There seemed to be reasonable grounds to think the appeal-studded case just might get to the high court, while becoming a classic church-state confrontation on the way.

The first receiver, Stephen Weisman, was appointed in early January and got into Ambassador College and Worldwide Church offices to begin the audit (Feb. 2, 1979, issue, p. 43, and Feb. 16, 1979, p. 43). But he soon quit, claiming that non-cooperation by church officials made his job impossible. And Judge Title lifted the receivership, substituting an injunction, saying the audit could be accomplished just as easily by auditors working directly with church employees and the state attorney general’s office. (The attorney general had filed the original suit against the church on behalf of six disgruntled former members, claiming that Armstrong and Rader had diverted millions of dollars in church assets for their personal use.)

After seeming to promise cooperation with the audit, Rader did a 180-degree turn and announced that the church would fight any probe of its financial affairs because there had been “a conspiracy to violate our civil rights.” Church attorneys then promptly appealed the injunction, automatically stopping it from being implemented.

The change in tactics piqued Title. He, in turn, slapped on a second receivership, saying that “incredible resistance to the audit” made the extraordinary action necessary. So church members swarmed into the administration offices again, defying David Ray, a Beverly Hills attorney and certified public accountant, to take over as receiver number two. But by the third week of March, at least, the vigil seemed unnecessary. Title had left a small loophole, which WCG leaders squeezed through: the judge had said that the church could post a $1 million bond to stay the receiver order.

Members, contacted through a nationwide phone network, pledged $2,374,308 in property, jewelry, and cars at the last moment. Title accepted the collateral against the possibility that the church would lose money for lack of a receiver. The bond was only a stop gap, however, pending church appeal of the whole receivership issue.

A thicket of other related court actions also were pending as costs both to the church and to the people of California, who were footing the bill for the attorney general and the audit, mounted daily. Meanwhile, church officials admitted that expenses were eclipsing revenue—sagging badly under the glare of publicity—by about $700,000 a week. (The Worldwide Church normally receives $70 million a year, mostly from members who double and triple tithe.)

Why the mulish resistance to the audit? Disillusioned members and state attorneys claimed that Rader, Armstrong, and other WCG leaders feared that fraud would be discovered, and were pulling a Watergate-style coverup.

Church attorney Allan Browne, who would not even agree to Judge Title’s compromise suggestion that both sides agree on a nationally known accounting firm to conduct the audit, declared: “We have nothing to hide, but everything to protect.”

Marshaling some support from other church groups, Worldwide Church spokesmen asserted repeatedly that the state has no right to stick its nose into church business as long as no criminal charges have been filed. And they saw the move by the state as a Jim Jones aftershock—ripping away First Amendment protections from the Worldwide Church today and from all religious groups tomorrow. Aside from the merits of the suit—which, of course, haven’t been tried in court—stands the inviolable right of a religious leader to choose how and at what expense he will spread the gospel (as he sees it), state the church’s attorneys.

At least one Armstrong family member disagrees. In a letter published in the Pasadena Star-News, Dorothy Armstrong Mattson, daughter of the sect founder, challenged Rader to open the books: “Why so scared? If there are things in the records that show misappropriation of monies sent in, then it should be known and dealt with accordingly. Instead, the lifetime work of my father, that beautiful campus, even my father’s credibility, is fast disappearing …

“Stan Rader owns three houses and a stable of horses … Most of the people he is asking to sacrifice either rent or live from paycheck to paycheck, meanwhile trying to pay three tithes and eke out an existence to be able to own one house! How many drive a Maserati plus a Mercedes-Benz sport model and a limo? I think it’s high time the sacrifice came from the top.… I was brought up to believe that God is Love. For the past nine months every publication I have seen has been a searing, scathing denouncement of either my brother [Garner Ted Armstrong, who was excommunicated from the church last June] or of the courts. What has this to do with preaching the Gospel?”

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