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AR7 January 21, 1979

Dear Friends:

As most of you have undoubtedly heard, the Worldwide Church of God (WCG) is in the midst of its greatest crisis ever. Because of the complexity of the situation, we decided to delay our November-December issue until now. We have been following the momentous events of the last few weeks very closely. Here is what has transpired:

The Lawsuit

Since Garner Ted Armstrong's expulsion from the WCG, many members of the church have become increasingly concerned over the rapid liquidation of church and college properties at a time when the WCG has claimed record-high income. Many deeply committed members of the church have been heartbroken to see college properties and church festival sites put up for sale while millions of tithe dollars are diverted to the costly world tours of Herbert Armstrong, the secular Everest House Publishing Company, Quest magazine, and other Ambassador International Cultural Foundation projects.

In late 1978 a handful of concerned WCG members obtained legal counsel about the matter and were put in contact with Hillel Chodos, a distinguished Beverly Hills attorney noted for his expertise in litigating major corporate fraud cases. A legal brief was prepared and presented to the attorney general of California. (Coincidentally, Ambassador Report, completely unaware that any of this was occurring, also contacted the attorney general's office expressing concern over the same matters.)

The attorney general, working in close cooperation with Mr. Chodos, took immediate action. A civil suit was prepared listing the following plaintiffs: Earl and Shirley Timmons of Altadena, California, John and Paula Tuit of New Jersey, Ronald Quinlan of Staten Island, New York, and David Morgan of Pasadena, California. Also listed as a plaintiff are the People of California because monies contributed to nonprofit corporations are, by statute, deemed monies held in public trust and therefore subject to monitoring by the attorney general on behalf of the people.

Listed as defendants are: the Worldwide Church of God Inc., Ambassador College Inc., the Ambassador International Cultural Foundation Inc., Herbert W. Armstrong, Stanley Rader, Ralph Helge, Henry Cornwall, Robert Kuhn, Ray Wright, Osamu Gotoh, plus five firms with ties to certain of these individuals: Worldwide Advertising Inc., Wilshire Travel Inc., Gateway Publishing Inc., Environmental Plastics Inc., of Dallas, Texas, and the accounting firm of Rader, Cornwall, and Kessler.

Among the charges of the suit are the following: (1) that Herbert Armstrong and Stanley Rader have siphoned off ("pilfered") millions of dollars of church funds annually for their personal use, (2) that there has been a failure to provide an adequate accounting of the church's financial position as required by state laws governing charitable institutions, (3) that there has been a refusal to hold regular meetings of the corporations or to allow voting on matters affecting the governance of the organizations, (4) that there has been improper co-mingling of funds among the church, college, and foundation, (5) that there has been a liquidation of church-owned properties "on a massive scale," including about 50 parcels in Southern California, (6) that written records of financial dealings have been removed from the church's Pasadena office, shredded, and destroyed.

The suit does not ask for any monetary damages for the plaintiffs but calls for an accounting of all funds and financial transactions, especially of Herbert Armstrong and Stanley Rader. The suit also calls for the replacement of the trustees of the nonprofit corporations.

The "Raid"

On Tuesday, January 2, Judge Jerry Pacht of the Superior Court of Los Angeles issued a temporary restraining order placing the assets and financial records of the church and related corporations under the control of a receiver, retired Judge Steven Weisman. This was done (on an ex parte motion) because it was feared that church financial records might be destroyed or church assets liquidated before a full hearing could be held. The fears of the attorney general's staff were to later prove well-founded.

The following morning (January 3), armed with the court order, Judge Weisman, deputies of the attorney general, various state law enforcement officers, and a contingent from the Pasadena Police Department swooped down upon the Worldwide Church of God's Pasadena headquarters. Administrative offices and vaults containing property records and bank accounts were cordoned off. State security officers were posted at key points to prevent records from being removed. Also seized were financial records from the Rader accounting firm in Century City.

The swift action by the attorney general put the Armstrong organization in total confusion. Some workers even locked themselves in their offices. Stan Rader was called away from a game of tennis to be informed of the raid by a phone call from Ellis LaRavia. Rader then called Mr. Gary Gittler, one of his lawyers. Gittler went to the college and, while refusing to identify exactly who he was working for, attempted to convince Judge Weisman that the court order was somehow legally deficient. Weisman disagreed, and the operation continued.

Realizing the magnitude of the crisis, C. Wayne Cole, director of the church's ministry, flew to Tucson with church leaders David Antion, Herman Hoeh and Ray Wright to confer with Herbert Armstrong. For once Herbert acquiesced to good judgment and appointed Cole his Acting Executive Director for the duration of the crisis and pledged total cooperation with the investigation. Herbert then issued a signed press release announcing Cole's appointment. Judge Weisman concurred with Cole's appointment and was hopeful that order was about to be restored to the chaotic situation.

Unfortunately, less than 24 hours later Armstrong removed Cole from his new position and declared, "I will not submit to the state." This dramatic change of attitude came after Stan Rader made a phone call to Herbert on Thursday saying Weisman had fired him as head of the church. (Weisman has denied ever saying any such thing. Indeed, he is not authorized to interfere in ecclesiastical matters.) The charge put Rader-who was to have been displaced by Cole-back in control and along with him Ralph Helge, Ellis LaRavia, Raymond McNair, and Roderick Meredith.

Rhubarb in "God's House"

The following morning, the new regime asserted its authority by calling a meeting of church and college employees in the "House for God." Speakers included Rod Meredith and Raymond McNair, who said, "We have the opportunity to shake and move this nation more than has ever been done." Raved McNair, "When the government of God comes to this earth, it will not be a democracy." As the meeting of about 1,500 persons neared conclusion, Wayne Cole attempted to take the podium to tell his side of the story, but a phalanx of Meredith supporters blocked his path. The lights went up, loud music began playing, and the microphone was quickly dismantled as Meredith grabbed Cole's arm and threatened to call the police. Cole backed away only after supporters of Meredith and himself engaged in a shoving match during which two of Cole's men were punched. The Cole group retreated, flinging charges of "outrage" and "travesty" as they left.

Judge Weisman who was present was appalled at the spectacle and vainly tried to convince those present that they were violating their own scriptural belief that chaos should be avoided. Weisman, an elderly, mild-mannered man who walks haltingly because of the after-effects of polio, wanted to reason with them. He tried to explain that although he would have liked Cole as the executive officer in the receivership proceedings, Herbert Armstrong was still the spiritual head of the church. He told a group of elders: "We are not adversaries. I am here as a neutral party to supervise an investigation of expenditures of charitable funds. We're all working toward a common goal. I don't know if there has been a siphoning off of funds; I hope there is nothing wrong, but you are entitled to know."

To all of us at Ambassador Report it is obvious that Judge Weisman is doing his very best to protect the church's assets in a very difficult situation. Earlier in the week after repeated noncooperation from Rader's staff, Weisman confronted Virginia Kineston, Rader's secretary, with the question, "Are you personally loyal to the church or to Mr. Rader?" When she answered "Mr. Rader," Weisman fired her. Other employees who were also asked that question but were unable to decide where their loyalties lay were suspended from their jobs for one week (with pay) and told to make up their minds. Said Weisman: "I wanted people loyal to the church here."

When Wayne Cole fled the raucous meeting at the college auditorium, he was followed out of the building by 25 ministers from across the country who had come to Pasadena for a regional directors meeting. Cole's demotion (and later disfellowship) was a major disappointment to the moderate wing of the ministry. Said one perceptive elder: "Cole was the church's last hope."

Sabbath Court Battle

Late afternoon on Friday the battle shifted to the downtown Los Angeles County courthouse where the head of Rader's legal defense team, Allan Browne, attempted to show that the receivership was causing the church irreparable harm and should be lifted. The stifling courtroom was packed to overflowing with bus loads of Ambassador College students, employees, and church members who had been encouraged to attend to demonstrate their "support for Mr. Armstrong." The only witness in the four-hour hearing was Judge Weisman who testified that since the moment he arrived on campus Wednesday, he had met with obstruction and had been thwarted in his efforts to obtain church documents for protection during the investigation. He also testified he closed off access to the church's Swiss bank account.

Hillel Chodos pleaded with presiding Judge Vernon Foster not to lift the receivership, saying it would take Rader only 20 minutes and a pack of matches to do away with crucial evidence. The most dramatic moment came when Chodos presented some of the evidence discovered in only two days of investigation: a shredding machine from Rader's office and the executive payroll checkbook for the church (found at the Worldwide Advertising Agency's offices in Century City). Checks drawn in just the last few days before "the raid" included one to Herbert Armstrong for $40,000; one to Natalie Rader for $1,144; one to Rader's secretary, Virginia Kineston, for $2,500 (marked "bonus"); and checks to Rader for $2,400, $4,940, and one for $35,000 marked "bonus."

Although Judge Foster modified the receivership somewhat by ordering Weisman, for the next week, not to interfere in the normal day-to-day operation of the church, he absolutely refused to remove the receiver. The proceedings ended at 8:30-well past Friday sunset.

The Propaganda Barrage

The following day, the Pasadena congregation of the WCG was treated (subjected) to a three-and-a-half-hour Sabbath service consisting of a Dean Wilson sermonette, a legal report from Ellis LaRavia, and a sermon from Roderick Meredith who said: "We are in a war. Let's see if we are faithful warriors." Meredith then proceeded to announce the disfellowship of Wayne Cole, David Antion, Robert Kuhn, and Ben Chapman. (We understand these four "cooperated" with the court-ordered receiver.)

All of this was then followed by sermons from, of all people, the church's lawyers, Stanley Rader and Ralph Helge, who castigated the judges and courts as being agents of Satan. Rader accused Wayne Cole of being the equivalent of a Nazi collaborator and also had this to say about the future of the church: "We are going to have a ministry that's not divided. We are going to have church government as it was here up until about ten years ago. And we are all going to know what the doctrines are, and we are all going to agree."

Just hours later campus hostilities escalated to a direct face-to-face confrontation between state security officers assigned to guard church financial records and Ambassador College security officers who, under orders from Meredith, attempted to enter the college administration building and change locks. The Pasadena Police Department was notified, and the following morning the State Department of Justice assigned 20 additional armed security officers to protect the church's records.

The next day Rader tried to whitewash the episode by claiming to the press that Meredith's raiders were simply trying to go about their normal business (on Saturday night?). Said Rader, "my people were turned away. They were denied access to their offices.... We don't work a 40-hour week. How do you think this organization could be so successful if we only worked 40 hours? It's successful because we have gifted, inspired, indefatigable workers for God." When asked if he classified himself in that category, he replied "yes."

Monday morning brought no letup to the campus hostilities and confusion. Rader arrived at Ambassador College, along with his chauffeur John Kineston and Ralph Helge, to find a full contingent of news reporters and cameramen awaiting him. Rader appeared shocked to discover his office suite locked to prevent the removal of records. A four-hour meeting between the Rader gang and the receiver ended in a stalemate, whereupon Rader's attorney Allan Browne petitioned Judge Foster once more. Foster ordered that Rader be allowed access to his office and to church records but only in the presence of Judge Weisman, the receiver. Foster made every effort to see that the church's operations continue as usual. However, he also saw the importance of maintaining the receivership.

The "Media Event'' Begins

On Wednesday, January 10, hearings began as scheduled in Los Angeles Superior Court to determine if the temporary receivership would continue. For days previous to this the entire Ambassador Report staff had mobilized to alert the press and media to what was transpiring. Among those who covered the hearings were representatives from Time magazine, the Los Angeles Times, ABC-TV, NBC-TV, CBS-TV, KTTV, KFWB News Radio, National Public Radio, City News Service, and Associated Press. Newsweek asked John Trechak of Ambassador Report to cover the hearings for them.

The same morning the hearings began, the Los Angeles Times carried a story by Bert Mann and Michael Seiler that was a major scoop. The Times was able to obtain a church financial document for the 1975-1976 fiscal year that was later to be submitted as evidence. Here is an excerpt from the Times article:

"The 1975-1976 fiscal document shows the church spent $1.7 million on travel, lodging and public relations, including expensive meals and gifts for what church officials claim was the courting of foreign dignitaries.

"The lion's share of the money expended was spent by Osamu Gotoh, said to be a former Tokyo cab driver who at that time was the coordinator of church activities in many countries. Gotoh's services were dispensed with after Armstrong had the heart attack in 1977 that curtailed his travel. But other substantial portions were spent by Armstrong and Rader.

"Among the items listed were:

"-$564.15 for June 25 and June 28, 1975, meals at Perino's. Only Gotoh's name is listed under the heading 'Purpose of Payment' on the document.

"-$38,494.81 owed Trans World Airlines by Gotoh for a globe-girdling trip in August that took him to many of the world's major capitals, including Paris, London, Rome, Geneva, Tel Aviv and Tokyo, with side trips to Addis Ababa and Nairobi.

"-$2,902.03 to cover costs at the Beverly Wilshire for guests described only as 'Senator Bunsei Sato' and 'Japanese senators.' These same visitors also rung up a $2,588.60 bill at a West Los Angeles limousine service, which the church covered.

"-A bill for $5,739.27 described only as an American Express card bill for Gotoh at the Imperial Hotel in Tokyo.

"-A bill to cover Gotoh's Diner's Club card bill of $1,519.75 for Gotoh in a Japanese night club.

"-Another American Express bill to Gotoh for $6,325.40 to cover expenditure described only as 'hotel bill-Switzerland.'

"-Three bills from Perino's covering an unknown number of meals totaling $2,304.40.

"-Bills from the Hilton Hotel-Jerusalem, paid by Rader on his Diner's Club card, totaling $10,131.11. The bills are all dated Feb. 25, 1976, but no details are given.

"-A Steuben Glass bill of $12,402 described as '1 Moses, 1 Pyramidon, 1 Excaliber, 3 Pillal of the Griffin.' No other description is given nor are the recipients of the gifts stated.

"-$26.12 for 'Golf balls for King Leopold.'

"-A July 9, 1975, bill from Gucci in Paris for $1,162.10. No explanation given on document.

"-Three Aug. 27, 1975, bills, from Gucci, Beverly Hills, paid by Gotoh's credit cards, totalling $1,215.82. No further details.

"-A December 23, 1975, bill on Gotoh's Diner's Club for purchases from Christian Dior, Paris, of $645.46.

"-Another Gotoh bill, charged to his Diner's Club card, for $2,124.24 on Dec. 18, 1975, for a purchase, details unknown, from Siberian Fur Store, Kowloon, Hong Kong."

The article went on to quote Rader's excuses for the expenditures. Also reported was Allan Browne's confirmation that the church did indeed have a Swiss bank account and gold bullion. But said Browne: "Is there anything wrong with that? Is this the beginning of the state telling the Pope what kinds of robes he can wear or that he should not live in such splendor in the Vatican?"

$150 per Hour

Wednesday's hearing opened with Hillel Chodos voicing a strong objection to church funds being used to pay Rader's lawyers. Sixty thousand dollars had been paid out the previous night to Allan Browne's firm and another law firm as advance payment for legal fees. Judge Julius Title expressed utter amazement at the large number of lawyers Rader had representing him in the case. Besides Ralph Helge and his associates, there were two other law firms with large staffs for each. Title ordered the defense attorneys to return a good portion of the amount they had received. Money for services already rendered (at a rate of $150 per hour per lawyer) was allowed, but advance retainer fees are improper in cases involving money in a trust, said Title. Further, he ordered that half of the fees already earned be paid by Rader and the other defendants and not by the church. He also ordered that no further legal fees for individuals be paid for by the church.

Early in the proceedings Judge Title denied defense attorney Allan Browne's motion to end the receivership based on constitutional law. Browne has claimed repeatedly that the receivership and related investigations interfere with his clients' freedom of religion. Judge Title (as had Judges Pacht and Foster earlier) did not see a First Amendment violation. Nor was Title moved by Browne's assertion that the United California Bank had called in $1.3 million in demand notes owed by the church and that "a million dollars worth of [WCG] checks have been bouncing....

Rader Takes the Stand

Thursday's court session was the most revealing to date. Stanley Rader was put on the witness stand to answer questions about his financial dealings with the church. Rader testified that under the terms of the employment contract he has with the church, he gets $200,000 per year plus expenses. He also admitted that under the agreement he would receive $100,000 per year plus expenses to the year 2003 even if he stepped down as adviser to Herbert Armstrong. Here is an excerpt from the Los Angeles Herald Examiner of January 12, 1979, which gives details of the financial benefits Rader has received from his associations with the church as obtained from his testimony:

"-The church financed his purchase of a $300,000 Beverly Hills home in 1972 which Rader sold last year for $1.8 million. He said he pocketed the profits.

"-The church paid most of the taxes on Rader's home. Asked why, he said, 'that would take a long theological explanation.'

"-The church recently bought Rader a $150,000 house in Tucson, Arizona, so he could be near the 86-year-old Armstrong, who now lives there following a major heart attack last year. It also paid for all the furnishings.

"-Rader's law firm has been the only legal counsel used by the church for many years. The amount of its reimbursement was not brought out.

"-An accounting firm in which Rader has been an associate does all of the church's books.

"-Rader set up a corporation to buy airplanes and lease them to the church in an arrangement through which the church paid the full price of the airplanes and Rader's firm made a profit.

"-Rader organized an advertising firm known as Worldwide Advertising, which handled all advertising, radio and television shows put on by the church. Rader recently stepped out of that firm.

"Rader's answers at first were hesitant and convoluted. Superior Court Judge Julius M. Title at one point instructed him: 'Mr. Rader, I think it would be helpful if you would listen to the questions-you are a lawyer-and respond to the questions.'

"Hillel Chodos, the attorney for the plaintiffs, sought to show that Rader has exercised complete legal control over matters which involve his self interest. He suggested that Rader has given misinformation to Armstrong to keep him from hiring independent counsel, and from knowing the true nature of the current investigation."

It was while Rader was on the witness stand that his counsel Allan Browne introduced into evidence and showed a ten-minute promotional film prepared by the church. It was entitled "Herbert W. Armstrong-Ambassador of Peace." Unlike Stanley Rader who sat transfixed at the edge of his chair in the witness box as he watched his leader prancing about on the screen to symphonic strains, the press was duly unimpressed, perhaps even embarrassed. Ironically, the film has "God's Ambassador" declaring: "People are concerned about self-what they can accumulate. That is the cause of all the world's problems!" (This is one Armstrong teaching Ambassador Report agrees with. In fact, we're convinced that Herbert Armstrong himself is living proof of the statement's veracity.)

Conflicting Testimony

Rader was only the first witness. Jack Kessler of the accounting firm of Rader, Cornwall, and Kessler was next. We now quote from the Los Angeles Times of January 12. (We do so because some may believe we are prejudiced and are perhaps fabricating these quotes. For those who have doubts, please write to the newspapers quoted and purchase a copy of the issues from which the excerpts are taken.)

"William Kessler, a certified public accountant and lawyer active in the accounting company, was asked by the attorney representing both Rader and the church if Rader benefited in any way from the firm.

"'No...he's not a partner or an employee,' Kessler said.

"Kessler said he and the other partners merely 'bought' the company from Rader, not for money but for 'an exchange of promises.'

"'We promised him to service his clients (primarily the church, Ambassador College and Ambassador International Cultural Foundation) to the best of our abilities... and he promised us not to compete with us and that we could use his name.'

"What, if any, profits Rader has made from the four companies remained unclear as the hearing adjourned late Thursday afternoon."

The next witness to take the stand was Virginia Kineston, Rader's secretary. Here is how Anne Sutherland of the Pasadena Star-News (January 12) described her testimony:

"...Virginia Kineston, Rader's personal secretary, testified about the events of the first day of the receivership, when retired Judge Steven Weisman arrived on the campus.

"She described the receiver's arrival as 'A swarm of people came in. Our office was under siege.'

"Mrs. Kineston's clipped, tersely worded testimony was in direct opposition to that given in court last week by Weisman, who testified about the difficulties he had faced in attempting to take control of the church documents.

"Mrs. Kineston, attired in a shimmering emerald green dress, said that Weisman fired her without ever asking her about her loyalties, and also said that Armstrong and Rader 'were out.'

"Judge Weisman had earlier testified that after encountering difficulty in securing control of documents, he asked Mrs. Kineston if her loyalties lay with the church or with Rader. When she replied 'with Mr. Rader,' he terminated her. (She was reinstated two days later, after Weisman, attorneys and church officials worked out some of the logistics of the limited receivership.)

"Mrs. Kineston also denied shredding any material the day that Weisman arrived, adding that she did not know if anyone else had used the shredder. She said the office shredding machine was regularly used to dispose of other materials, such as the time that someone sent some pornographic mail to the offices. 'Of course I've used the shredder,' she snapped when questioned by Chodos."

John Kineston, her husband, was the next witness. We again quote Ms. Sutherland's account:

"One of the more dramatic conflicts in testimony presented in court concerned John Kineston, Rader's aide and chauffeur, who allegedly removed documents from Rader's office after the receivership was imposed Jan. 3, which Kineston referred to as 'the day of the raid.'

"Kineston vehemently denied the allegations. He said that he took no church records and did not drive in a Cadillac limousine to Burbank airport, where the church's jets are kept. He also denied being near the campus transportation building or the data processing building, where financial records are kept.

"'During the period in question I most assuredly, definitely never went near the building,' Kineston testified....

"But the next witness to take the stand told a different story, causing a flurry of note-passing and conferring among the defense attorneys and defendants Rader and church counsel Ralph Helge, who sat a few feet behind their four attorneys.

"Chester Roberson, a church member who has worked for the church as a gardener and mechanic for the past 25 years, said that he saw Kineston come to the transportation building the afternoon of Jan. 3, carrying something in his hands.

"Chodos showed Roberson some accounting ledgers, and asked the mechanic if the objects in Kineston's hands resembled such items. 'Yes,' replied Roberson in a direct manner that contrasted the articulate manner of Rader's colleagues.

"Roberson testified that he then heard Kineston decline to have gasoline pumped into the car, saying that he was afraid that he would be seen leaving for Burbank.

"Roberson also said that he saw Kineston enter the data processing building late Saturday night. After witnessing this, he added, he and David Morgan, one of the plaintiffs in the lawsuit, reported the incident to a nearby policeman.

"After scoring a point that caused obvious consternation in the defense camp, Chodos also appeared stunned when one of his witnesses, secretary April Cowan, testified that although Kineston did appear in the transportation building, he was not driving a Cadillac.

"Chodos asked the young woman if she had conferred with Helge, and when she replied that she had, he ended his questioning....

"Willis John Bicket, accounting manager, was called to the stand by defense attorney Allan Browne to describe the effect the receivership has had on the daily operations of the corporations.
"Bicket, who, like other church supporters maintained eye contact with Rader while testifying, said: 'We are in a crippled condition.'"

The 99.9% Victory

Friday, January 12, was the third day of the hearing. No further testimony was heard as each side was allowed only 30 minutes to present their closing arguments. Allan Browne, the lawyer for the defense, spoke first. He reiterated previous arguments he had made stating the only action acceptable to his side would be the termination of the receivership.

Hillel Chodos then very eloquently summed up the arguments for the Attorney General's side. (Space does not permit us to run the entirety of his comments in this letter. Perhaps we can in the future.) Chodos argued that in the church's literature the tithes are said to be God's money, but that in court the church's leaders claimed it was theirs to do with as they wished. Chodos said the members contributed the money for a specific purpose, namely God's work, not for the personal pleasure and profit of the trustees of the funds. He castigated Rader for his conduct as the church's general counsel, saying: "He has millions of dollars that must be disgorged [and returned to the church]." Said Chodos of Rader's conduct: "It's the most extraordinary thing I've encountered in all my years of litigation!"

Receiver Weisman spoke briefly to the court, telling how his duties as receiver had been continually obstructed and asking that he be given greater control to carry out his responsibilities. Said Weisman, "I am the lone voice in the foxhole at the front lines."

Judge Title's detailed ruling on the matter brought shock to many of Rader's followers who were sitting in the courtroom. Title ordered the receivership to continue pending trial on the civil charges leveled by the state. Until then (probably four to six months or more) the receiver should "possess," "supervise" and "moniter" all church assets and records. The receiver was instructed not to interfere in ecclesiastical matters but does have extensive powers to hire and fire. The only exceptions to the latter being Herbert Armstrong and Rader, who cannot be removed without Title's permission. Of course in that case they could still function ecclesiastically (presumably, however, without pay).

In making his decision Judge Title said that the evidence of misappropriation of funds was a "cause for concern." He commented that "astonishing amounts of money have been expended by Armstrong, Rader and others" and that the matter would have to be open for examination at the time of trial. Title also expressed concern that the church's administration was a "one-man operation" in spite of the fact that it is filed with the state as a charitable, nonprofit corporation supposedly having a board of trustees. He said evidence suggested that in recent years Herbert Armstrong's "one-man operation" had become, with Rader, a "two-man operation" and that with Herbert Armstrong's advancing age and poor health "perhaps it is a one-man operation again." Title also expressed concern over Rader's involvement in several financial transactions, including his aircraft-leasing firm that leases jets to the church, the purchase and sale of his Beverly Hills' home, and his employment contract with the church that gives him $200,000 per year plus an apparently unlimited expense account. Said Title, "I question the legality of his present employment with the church."

 

 

 Note: At this point in the article appeared two photographs of Hillel Chodos and Stanley Rader. Unfortunately, we had only a photocopy of this issue of AR to work with. The photographs in the photocopy were of such poor quality that they were unusable. If you have an original of this issue and can loan it to us, or if you can scan the photographs and send them to us in digitized form, please contact us at youngambassador @ altavista.com -The Archivist

Hillel Chodos answering questions for the press (left) and Stanley Rader outside of courtroom (right).

After the hearing Allan Browne, Rader's lawyer, said he would appeal the decision immediately. Rader, however, was silent for the first time since the receivership began and when questioned by the press as to whether he would now cooperate simply said "no comment." Ambassador Report asked Hillel Chodos to assess the results of the hearing. Said Chodos: "We won. We got 99.9% of what we wanted."

Herbert Fights Back

Of course, throughout all of this, Herbert remains out of state in Tucson where he cannot be subpoenaed by the attorney general of California. But Herbert hasn't just been sitting on his hands! Oh no. He's been up to his old tricks.

On January 7, three days before the January 10 hearing even began, Herbert wrote a letter to the church. Here is one excerpt:

"Our Great God is still on His throne! God has given his Work a TREMENDOUS VICTORY against the most MONSTROUS conspiracy and attack Satan ever launched against God's Work!

"I want here to give you the true inside story. You've probably read of the outrageous false charges against myself and Mr. Stanley R. Rader in 8-column front-page banner headlines, or heard it on TV news. But we were vindicated in the court, the conspiracy actually triggered by Satan broken. And God's Work SURGES ON!" (Emphasis his throughout.)

Herbert then went on to equate the attorney general's actions with a Satanic attack upon the church when in fact the legal action was brought to protect the church from having its assets liquidated. Herbert continues:

"But when this suit came for a hearing in court, Friday afternoon, January 5th, GOD GAVE US THE VICTORY. Although our records were seized, NO EVIDENCE of any wrongdoing had appeared."

Nonsense! There was much evidence of wrongdoing, and as a result the judge refused to lift the receivership. Here is another quote from Herbert's letter:

"Last Wednesday we had the astonishing situation of Christ's Apostle having been put out of God's Church under color of authority of the State government, and Wayne Cole made the HEAD OF THE CHURCH by the state civil government!"

Ridiculous! Herbert was never removed by anyone. The state has no authority to remove him from his ecclesiastical position as spiritual head of the church and never attempted to do so. That was very clearly stated by Judge Foster on Friday, January 5, and reiterated later by Judge Title on January 13. In fact, it was Herbert himself who put Cole in charge of the church (under himself, of course) on January 3. And Herbert wrote and signed a press release announcing that appointment. We even have a copy of it in our files.

Herbert's January 7 letter is absolutely outrageous, but for sheer insanity one would have to look far and wide to find the equal of his letter to the church dated January 14, 1979. Comparing the attorney general's action of protecting church assets to Herod's attempt at murdering the infant Jesus, Armstrong wrote that charges of "lavish spending" etc. were a "monstrous lie." He then continued:

"Now the State of California has appointed a Receiver, whose pay and expenses for his supporting staff are to run much higher than either mine or Mr. Rader's ever did, and who is using GOD'S TITHE MONEY TO PAY PROSECUTION EXPENSES AND TO DESTROY GOD'S CHURCH!

"MONEY SENT TO THE USUAL ADDRESS will be used by a Receiver appointed by the State.

"The State has seized and tied up all our Church funds. So send a special offering to me, personally, for our legal defense and to save the Work-to Herbert W. Armstrong, c/o General Delivery, Tucson, Arizona, 85731."

The fact is the receiver's budget is quite limited and is being used to perform many business functions that Armstrong and Rader should have themselves been performing all along. For instance the receiver's staff is now doing an audit of the church's finances to ascertain exactly what is the true financial state of the church. Another expense which Judge Weisman has incurred is in the area of security. He has found it necessary to hire extra security people to protect church records because of the continuous obstruction he has encountered from the Rader-Meredith gang. These expenses would have been far lower had there been cooperation. As for Herbert's charge that tithe money is being used to pay for someone's prosecution, the fact is there have been no indictments yet, but maybe Herbert has had a vision. The attorney general's people are, of course, on government payroll, not on church salary.

At the end of the letter Herbert had this to say:

"I have to ask you to SACRIFICE AS NEVER BEFORE. Send the most generous offerings it is possible for you to send to defend God's Work.

"And please state in your letter, in your own words, that this money is YOUR ENDORSEMENT OF MY APOSTLESHIP, AND THE MONEY IS TO BE USED FOR DEFENDING GOD'S WORK AS I, Christ's Apostle, deem best.

"CONTINUE TO SEND, for the defense of God's Work as generously as possible, even at sacrifice, to the address below until I notify you otherwise-and make it payable to ME, PERSONALLY .... SACRIFICE AS NEVER BEFORE!"

The above letter was secretly run off the press in the early morning hours of Monday, January 15. However, a conscientious insider passed on word of the letter and Judge Weisman was able to stop the mailing of about 60,000 of the 85,000 letters. As the embargoed letters sat waiting at the Pasadena Post Office, Judge Title backed up Weisman s action, saying Herbert's letter was a direct violation of his court order.

It's not hard to see why. Herbert's letter is a perfect example of the very type of conduct he is charged with in the lawsuit (i.e., using church resources to obtain money for personal use). Judge Title had even specifically ruled that church funds were not to be used to pay for the legal defense of any individuals. If church members do as the letter suggests, Herbert will collect vast sum of money while the Worldwide Church of God, already financially drained, will go into bankruptcy. This is exactly what the receiver's installation was aimed at preventing. Judge Weisman's action was a wise and necessary one. But again his orders were circumvented. Some letters were secretly distributed and many church members around the country received calls from ministers and deacons who read them the letter on the phone. In the last few days we've heard stories of members selling personal property and sending what amounts they could obtain to Herbert in Tucson.

Hillel Chodos called Herbert's letter "inflammatory" and said it was "unfortunate" that he had taken this course. Said Chodos: "It certainly isn't cooperation. It has always been our belief that the members of the church are fine people and law abiding... and that they would be eager to see the affairs of the church brought into proper order and that all rumors that aren't true are finally quashed. We would hope that all members will be eager to cooperate, but we can't protect people from their own foolishness."

And foolishness it certainly is when professing Christians so quickly throw out all reason, even ignoring the very scriptures they have for years professed to believe. For instance, look at I Peter 2:13-15:

"Submit yourselves to every ordinance of man for the Lord's sake: whether it be to the king, as supreme; or unto governors, as unto them that are sent by him for the punishment of evildoers, and for the praise of them that do well. For so is the will of God..." (KJV).

Now let's look at another passage often quoted in past years by Herbert Armstrong, Romans 13:1-4:

"Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God. Therefore he who resists the authorities resists what God has appointed, and those who resist will incur judgment. For rulers are not a terror to good conduct, but to bad. Would you have no fear of him who is in authority? Then do what is good, and you will receive his approval, for he is God's servant for your good. But if you do wrong, be afraid, for he does not bear the sword in vain; he is the servant of God to execute his wrath on the wrongdoer" (RSV).

In addition to these scriptures, also look at Isaiah 59, Matthew 5:25-26, 39-40, John 3:19-21, Isaiah 5:20, and Proverbs 18:13, 17. Obviously, neither obedience to constituted authority nor reason, tolerance, or compliance with scriptural admonition prevail in the Armstrong organization today.

Federal Court Hearing

Tuesday morning (January 16), as two dozen church members picketed and prayed outside the federal courthouse, attorneys for Rader asked U.S. District Court Judge Robert Firth to declare unconstitutional the Los Angeles Superior Court decision which had put the church's earthly affairs into Judge Weisman's hands. They also asked Firth to award the church $700 million in damages for the court's action. But in the first hearing on this matter Judge Firth refused to remove the receiver, saying that the state court judges had sufficient reason to impose a receivership. Said Firth: "It is obvious at this stage that it would be foolish to intrude the federal court into the proceedings taking place in state courts." He also said that "Judge Title and others over there have arrived at a conclusion-Judge Title apparently after a three-day hearing. I just don't have quite the degree of ego to interfere." His later comments also revealed skepticism as to the merits of Rader's $700 million lawsuit against the state. (The argument will continue in federal court on January 29.)

The hearing was not without its colorful moments. Allan Browne attempted to defend Herbert Armstrong, saying: "The press is crucifying him! He's cut off. He can't communicate!" (Perhaps Mr. Browne could solve the problem by asking Herbert to come back to California.) Browne also raved: "The beaches of Normandy look pale to what's going on here." But Browne's histrionics were no match for the clear logic of Chodos who said that the attorney general never intended to interfere with communications between the spiritual leader and his followers. But the money involved in the letter was under the protection of the state. Chodos' words brought a chorus of groans from the courthouse audience packed with Rader supporters. But Judge Firth, irritated by the vocal demonstration, said: "One more outburst and this courtroom is going to be cleared."

On Tuesday the WCG also filed a written appeal of Judge Title's decision with the state Court of Appeal, but that court may take many days or weeks to decide if it will even consider the matter. Knowledgeable observers say it is unlikely that the state Court of Appeal will overturn the rulings of the Superior Court.

Church Records, Assets Missing?

With each new defeat in the courts it appears that the pro-Rader forces at Ambassador are becoming more desperate to hold together the rapidly disintegrating Armstrong empire. Rumors of break-ins and theft at church headquarters are rampant and apparently not unfounded. On Friday, January 19, a spokesman for Judge Weisman told the Los Angeles Times that security at the church's headquarters had broken down and vital assets, including gold bullion and coins, expensive paintings, and computer tapes containing financial information may be missing.

A. Sheridan Atkinson, chief operating officer for Weisman, said he was "getting no cooperation" from church leaders in his attempts to locate church assets. Weisman has also found it necessary to fire one outside private security firm and replace it with another in what were described as "some weird circumstances." "All I can tell you for sure is that we've had our armed guard security system violated two or three times this week," said Atkinson. He said that in one instance his auditors entered a headquarters vault Tuesday night to check the computer tapes stored there against an inventory list. The vault, however, was left unguarded for several hours early Wednesday morning when a guard left his post. A check later in the morning indicated two missing tapes that apparently contained a summary of the church's financial interests and a membership list. He said that church personnel later gave him two tapes, but he had no way of knowing if they were the same two tapes taken out. Atkinson told the Times that he fears-but cannot prove-that the gold, paintings, and computer tapes were removed from church headquarters and spirited away to church-owned property in Arizona. Atkinson said the reason he had doubts as to what occurred is because church employees are slowing down his work. He implied that those with information valuable to his investigation were being close-mouthed about what they know.

Ambassador Report has learned that not only are employees who cooperate with the receiver being ostracized but some have also been suspended or fired for refusing to obey superiors who've instructed them to disobey the court's orders. Apparently some have even been threatened with violence. Rader has also beefed up security forces at the church's headquarters with numerous burly but untrained church members to "guard the property." The only real purpose of this "goon squad" is to intimidate those who wish to cooperate with Judge Weisman. Indeed, it's a madhouse on campus. Wild accusations are flying all over, and employees are running to the right-wing leaders urging them to fire fellow employees who are not as fanatical as they are. The mood seems somewhat reminiscent of the purges in communist China. The only difference is that this is taking place at the headquarters of the "true" church of God. Said one minister concerning the campus pandemonium: "I'm staying away from the Armstrong campus. Those men have killing in their eyes."

Time to Flee?

Herbert Armstrong has called a ministerial conference for Monday, January 22. It will be held in Tucson, Arizona, where he is out of reach of the California attorney general. What will transpire is anybody's guess. Rumors are rampant, however, that the WCG will abandon its California operation and move its headquarters elsewhere-probably to Arizona. Some church officials are even talking of moving everything to another country-perhaps Israel.

Tonight (January 21), as we go to press, we have learned that Stanley Rader has announced at a press conference earlier today that the church's entire operations will indeed be moved out of state immediately. He also predicted that within one week no money would be flowing into the coffers of the Worldwide Church of God. Whether or not Herbert Armstrong has authorized this incredible decision, or is even aware of it, remains to be seen. One thing is certain however. Unless the WCG's employees and members begin cooperating with Judge Weisman and his staff, the Worldwide Church of God's operations will not be revived and its income will virtually cease. Bankruptcy will be right around the corner.

Church members, as usual, are not being told the whole story. The Wordwide News, most members' only source of information on the lawsuit, is slanted, incomplete, and inaccurate on many of the key details of the suit and the court hearings. The Worldwide News (January 15, 1979) published different news clippings, trying to appear as objective as possible, but what the members aren't aware of is that a number of the most incriminating articles on the church were not reprinted. The articles that were reprinted omitted numerous statements that put Rader and the church in a bad light, and the editors didn't even have the honesty to indicate these omissions with ellipsis points. But evidently the church's top officials don't wish the truth to come to light. Notice Rader's self-professed method of dealing with accusations against the church: "I, too, cannot understand why, upon hearing any of the flagrant rumors, which have been recently brought to my attention, you [ministers] cannot simply respond to others, 'That is not true!'" (The Worldwide News, Jan. 15, 1979, p. 2.) (The answer to this is simple, Stan. Maybe some still believe lying is a sin, and when they hear rumors that are true, they have great difficulty saying, "That is not true.")

To add to the confusion, members are being told by their ministers and by Herbert that the church is being unfairly "persecuted" and that "Satan is attacking." Members don't have access to all the facts, and consequently many are going to send their hard-earned dollars not to the WCG but to Herbert personally. These sincere and dedicated people will not realize that by doing so they will not only be throwing away their money but will be destroying the very church they love. If any of our readers have friends in the WCG that they wish to help, we offer this suggestion. Send them a copy of this newsletter along with a note encouraging them to read it and get all the facts. (Reproductions of this newsletter can be made very easily by simply taking the issue to any photocopy service. Most charge about 5 per page for copies.)

Meanwhile, Garner Ted Armstrong, Herbert's son, isn't rejoicing over the recent chain of events, but he isn't keeping silent either. Ted finds it incredibly ironic that the Attorney general is having to step in and do the very thing he recommended to his father last year-put the church finances in order. Ted told the Pasadena Star-News on January 6: "1 tried to tell my dad. I was overruled." Ted also stated that he complained to his dad of the involvements of Rader in outside corporations that were doing business with the college and church and warned his dad that such should not be permitted. "When I found out there were five or seven or eleven corporations Rader was involved with, to my mind, it was a simple matter of conflict of interest," Ted explained. "That is why I went beating a steady path to Tucson [where his dad lives]. I pleaded with dad, 'Please, 'we've just got to get rid of this sort of thing.'"

Ambassador Report will continue to monitor the events in Pasadena, and we'll report to you as soon as we are able. We have been absolutely swamped with work-corresponding with and providing information to various government agencies, providing backgroud information and leads to the press and media, talking to disenchanted and confused WCG members, ministers, etc. We hope you'll forgive us for not being as regular with our newsletters as we should. Thanks again to all of you who are making our publication possible.

Sincerely,
The Publishers

 


Ambassador Report is published bimonthly as finances allow.

Publisher-Editors are:

Robert Gerringer, Bill Hughes, Mary E. Jones, John Trechak, Leonard Zola, and Margaret Zola.


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