Chapter 11 Preparing for Action
(pg 135) During the time of the Feast, reports began circulating about an embezzlement that had been reported in the Worldwide Church “Pastor’s Report.” It was revealed that Raymond Wright, Vice –President for financial affairs, and Robert Kuhn, had been responsible for the illegal diversion of $219,000 of Church funds. According to the “Pastor’s Report,” this money had been transferred to Environmental Plastics Inc. of Dallas, Texas. This was a small company owned by Wright and Kuhn which dealt in the application of chemical-resistant coatings for chemical processing equipment. Church officials claimed that it was an embezzlement authorized by Garner Ted, and they inferred that he was a pivotal figure in the embezzlement. While it was later found that most, if not all, of the transfers of this money took place in 1977, for some reason no announcement of the discovery was made until the fall of 1978. The “Pastor’s Report” stated boastfully that the uncovering of this scheme was a fine example of the talent of the CPA firm employed by the Church. The report stated that the embezzlement was discovered as a result of “God’s auditing procedures.” Yet if the books had been audited earlier in the year for calendar 1977, one would think that the embezzlement would have been discovered at that time. This is most likely the case, which of course leads to the question, “Why did they wait until autumn to disclose the discovery?” “God’s auditing procedures’ must be something (pg 136) unique only to the Worldwide Church of God. The revelation of these unique procedures has never been disclosed even to the “big eight” accounting firms and one can only assume that they were given by divine revelation to Stanley Rader. I make that assumption since not even the Scriptures appear to contain any such procedures, not even the Book of Numbers.
Following the announcement of the embezzlement it was interesting to note that the Church never brought criminal charges against the alleged embezzlers in spite of the fiduciary responsibilities of Church officials to do so. The reaction on the past of Robert Kuhn was swift. He threatened to bring suit, as he had not know of any transfers of money until the matter had been published by the Church. He reported that he had been a silent partner, merely an investor in the company with Ray Wright, and knew nothing of the daily operations or financial activity of the business. Wright then confirmed that Kuhn had known nothing of the transfers, and it was necessary for the Church to retract any allegations regarding Kuhn. Strangely enough, while Wright was relieved of his vice-presidential duties, he was retained in the employ of the Church. It was announced that he would be sent to Europe. There was speculation at the time, later confirmed, that Rader appeared to know of the embezzlement for some time. Holding that knowledge, he was then able to use it at a time most appropriate to putting Wright in a position of enforced loyalty. The time to use it against Wright was when it appeared that Wright may reveal to authorities his knowledge of Rader’s financial dealings with the Church. The involvement of Garner Ted, if any, in the embezzlement was still to remain a mystery for a couple of months.
Back in September, Garner Ted, knowing that I was exploring the possibility of a lawsuit gave me information that Jim Lookingbill, the general manager of Environmental Plastic, had given him over the phone. Garner Ted said, “This guy Lookingbill told me that he works for Environmental Plastics, which is owned by Ray Wright and Bob Kuhn. I never even heard of the place. I never knew that they were involved in another business like that.” He then went on to tell me that it seemed like their business was being used as some sort of a laundry for Church money. He told me that money had been coming into the company from the Church and (pg 137) that it appeared that some really strange things were going on. He said that Lookingbill was frightened about possibly being implicated in something illegal.
I then obtained a Dun & Bradstreet report on the company, and in this way was able to confirm Wright and Kuhn were the owners. Yet I was not able to find anything further until the disclosure of the embezzlement by the Worldwide Church of God.
While these various events were unfolding, and Herbert Armstrong was focusing his attack constantly on is son, another wedge was about to be driven in the still-widening crack in the façade that was covering the secret truths of the Worldwide Church of God. Hillel Chodos had been pursuing the matter of a possible legal action with the California Attorney General’s office, and was infrequent contact with my attorney Peter Pearlman at Cohn and Lifland. In early November, Pearlman wrote me a letter advising that Chodos was interested in pursing the matter. It was their suggestion to initiate an action similar to what is known as shareholders derivative action in corporate litigation, in which Rader and others could be sued on behalf of he Church, seeking to obtain reimbursement to the Church of funds which we alleged had been misappropriated. In this type of lawsuit, the recovery would be for the Church itself. In other words, we were to pursue an action against individuals on behalf of the entire Church. Of coursed, the legal fees would be very high in a case such as thins, and I was thrilled to be informed that both Chodos and the Cohn and Lifland firm were willing to take the entire case on a contingency fee basis, as we had hoped they would. They just required assurance that disbursements would be covered. As I already had preliminary discussions with Ron Quinlan about the possibility of bringing a suit, and the hope that it could be handled in this fashion, he had been making arrangements to cover any disbursements on the part of the attorney’s.
At this point, we were faced with the financial decision of whether or not to proceed. Paula and I reevaluated the entire situation and it appeared to us that there just was no other way to solve this problem. But we wanted to be sure we were doing the right thing. IN discussing it with Ron, he said, “I’m willing to put up the money to cover lawyer’s disbursements. It appears that would be a better use of my tithe money, compared to what it was spent for in the past when I was ending it out to WCG. I just want to make (pg 137) sure though that we are doing all this in accordance with Scriptures. It’s a serious matter to take your brother before the courts.” This was something we had to be very certain of. Even though Church leadership had gone wrong, they were still our brothers. Christ’s instructions regarding handling of disputes with fellow Christians are quite clear.
Obviously we had not tried to confront Rader or any of the others with our allegations. How, then, could we now make this a court matter? After considerable discussion and prayer, it became quite clear to us that although we personally had not confronted the people, we were just a few of many people having the same complaints. It was known that others had confronted the Church leaders with allegations of self-dealing and misappropriation of funds. Garner Ted Armstrong had confronted them on many occasions in the last days of his power struggle. Others, as reported in the Ambassador Report, had done the same thing back into the early 1970’s and even the late 1960’s; and of course the Ambassador Report itself and the ensuing news coverage had served to bring the entire matter before the Church. IN view of this the Church leaders had been made well aware that there was concern regarding their conduct. There was no doubt that the scriptural requirements of handling such a situation had been met. We were merely in a sense bringing to conclusion a corrective campaign that had been started many years earlier by many other brothers and sisters in the Church.
I told Pearlman to proceed. From there on, events moved very rapidly with Chodos and Deputy Attorney Tapper doing all of the work necessary to prepare the case. There was little more that we could do here, three thousand miles away, other than feed them any additional information that we might be able to uncover. It was then finally determined that we as individuals would not be Plaintiffs, but relators with the Attorney General’s office actually bringing suit. This was in accordance with the required procedure for (pg 139) bringing a civil suit against officers of a non-profit, charitable corporation alleging their misuse of funds. We were immediately faced with a problem as the Attorney General and Chodos thought that it would be good to have a California resident as a relator. Their reasoning was that it would probably be necessary to sign affidavits or assist in some other way and only with a California resident could such things be done expeditiously.
Up to this point we had one of the best kept secrets in the Church. The only ones not directly involved with the lawsuit who had any knowledge at all were Gordon Muir, with whom I had discussed the possibility and Garner Ted Armstrong. Garner Ted, while helpful in answering any direct question I put to him, seemed to act as though he wished things were not heading in that direction. But he also realized that it was inevitable sooner or later. He said, “Well, I’d sure like to see them get Rader. It’s about time they get that guy out of there. No one should become a millionaire off of a church. But I know my father’s lived pretty good too, but it’s nothing compared to what Rader has done. I just hope it doesn’t all back up on my father, too. I hope he won’t have to be involved in this.”
Of course, what I didn’t realize at the time was that Garner Ted was quit concerned for himself. How will this affect him? What about the publicity? Would it enhance or destroy his efforts in building the Church of God International? He was saying all the right things now; he was speaking out against ostentations edifices, massive spending of worldwide trips and entertaining and autocratic rule. He was even saying that he could never be an autocratic ruler, as the constitution of the CGI was being set up to provide for his removal if necessary. But the fact remained that, while at the Worldwide Church, he had a home in Pasadena, Big Sandy, Texas and Lake Tahoe, as well as the use of facilities at Orr, Minnesota. And, of course the airplane. The Church had its own private air force; the Gulfstream II jet that was used for Herbert Armstrong was just the flagship of the fleet. There are a few prop-driven planes of various sizes, a Cessna Citation jet and a Flacon jet. Garner Ted could fly them all, which he did frequently. He had gotten his pilot’s license after having attended flight school with Church money. But of course, these were necessary tools for doing the work of Christ, he claimed. In addition to the various Church (140) areas, and the shuttling back and forth between Pasadena and Big Sandy, there were the frequent rest and rehabilitation trips for fishing and hunting in places like Canada and Alaska. Yes, it could back up on him, too. I was concerned about it, and I hoped that it wouldn’t. For it appeared as though Garner Ted had repented of whatever wrongdoing was in his past and was not making an effort at being a diligent servant in preaching the Gospel. But if he did get caught up in it, one can only say that he should have thought of it when he, too, was living the good life.
Gordon had promised to keep the whole thing a secret. So had Garner Ted. Considering his nervous attitude regarding the entire situation, he was certainly not about to talk about the suit. Now we were faced with letting the cat out of the bag. I thought, “Who could I contact in California? I don’t really know anyone there who could ride this thing out, in case it turns into a long drawn-out battle. And even worse, suppose the person I tell says no, then it would no longer be a secret and we’ll lose our element of surprise.”
The only possibility that I could think of was Earl Timmons. I had heard of Earl and his wife Shirley from Mark Armstrong. They had been early supporters of his father after his ouster from the Worldwide Church of God, and it was they who contributed substantial amounts of money to him and encouraged him to start a new Church. He seemed to be not only the ideal choice but the only choice. At the moment Earl did not have any job or any business responsibilities, as he had previously sold a plumbing contracting business and had not yet gotten involved with any thing else. I felt fairly confident that if he rejected the idea of getting involved, we could at least trust him to maintain the confidence. What we were about to do with this lawsuit was later to be attacked by Herbert Armstrong as a massive conspiracy orchestrated by his son. Stanley Rader was to claim that the entire scheme was hatched and organized in Jekyll Island. Contrary to the wild claims that were later to be made by these men, no such conspiracy existed and in fact I had never met Earl Timmons or his wife Shirley at that time.
Early in November, I phoned Earl Timmons and told him of the plan. As I began to ask him if he would be a relator, he interrupted and said, “Wait a minute, you don’t; have to go further. It’s about time something like this was done. Yeah, I’ll do it, of course I will. Maybe finally we could get the evil influence out of the (pg 141) Church. But what about Mr. Armstrong? You’re not going to have to name him in a suit, are you? I know he’s not been perfect, none of us have been. I just think he’s been under a very bad influence.” I then saints, “Aim glad that you agreed to this! I was afraid that in our attempt to get someone in California to cooperate with us that we just might blow the lid of secrecy off the whole idea.
Earl then proceeded to tell me that he and his wife had just recently gone to the Attorney General’s office on their own with some information they obtained and thought that the Attorney General should look into the Church. Earl said, “They told me down there that they were already looking into it and that something was being developed. They said that an attorney had been retained by some Church members back east and asked us not to say anything. The it must have been you people that he was talking about.”
“That’s right, we’re the ones. I don’t know of anyone else actively engaged in bringing any action at this time., I know there have been various rumors from time to time but I think it was all talk. This is for real”, I said.
There had been two other developments in recent days that graphically illustrated the excesses existing in some religious organizations. The one was the tragic murders and suicides resulting in the loss of over nine hundred lives in Guyana. If there had been any question in our minds before as to how far individuals may go into following dictates of a religious leader, it was not quite clear that there were no limits. No matter how sincere a religious leader might be or how correct his doctrine, he must always be viewed in light of Scriptures and should be considered a heretic should he stop preaching the truth of the Bible. More than enough has been written about he Guyana tragedy that it is not necessary to belabor the point. It did impress upon us, however, that the Worldwide Church of God was in the early stages (pg 142) of apostasy and the leaders had been engaging in lies and deception. It was quite plain where this could lead to if allowed to run its potential course, under the leadership of an all powerful apostle and his crown prince.
The other development was the situation that prompted Earl and Shirley Timmons to approach the Attorney General regarding the Worldwide Church of God. Shirley Timmons had been driving in her car when she heard a news announcement stating that the Attorney General’s office had launched a probe into the Faith Center Church of Los Angeles. There were allegations of misuse of funds by the church leader W. Eugene Scott. Faith Center owned their own FM radio and UHF TV stations and conducted an almost marathon broadcasting schedule mainly featuring Scott and his brand of evangelism. It had been alleged that Faith Center, a non-profit charitable corporation had been using money solicited for one purpose for other proposes. Records have been subpoenaed and an attempt to quash the subpoena on November 3, 1978 met with failure. Judge Phillips made it quite clear that while government agencies are not allowed to interfere with the ecclesiastical activities of a church, they do have the responsibility to see that the church uses its funds for the purpose for which they are collected. To deviate from that would be a violation of the State Corporate Laws. Judge Phillips said, “The nature of a religious organization is such that any funds it has are subject to public trust.”
This appeared to be a situation quite similar to what we were dealing with, and it gave us encouragement to proceed. It appears to be more than a coincidence that at the same time we were preparing a lawsuit, Timmons also approached the Attorney General. Also we were later to find out that Robert Gerringer and his associates at the Ambassador Report also approached the Attorney General’s office at about the same time. It seems that one way or the other something would have happened. While we had been accused of being agents of the Devil, it appears that something quite different was the case. The ministers had often said that God would take care of the situation. I would say that God had decided to deal forcefully, and was doing so in such a way that if one of us fell down on the job, there were others coming forward at about the same time with the same ideas. This was much more than coincidence, I am sure.
(pg 143) Earl and Shirley then visited Chodos, as it was decided that they would both sign affidavits as relators.
Shortly thereafter, a sixth relator David Morgan, was added to the list of relators by Earl, for as he said, “Just in case something happens to me, you know these guys can get pretty mean out here. I really don’t trust them. I’m not paranoid, because I really don’t care for myself. This is a very important thing we have to do, and I won’t be intimidated, but in case something does happen we’ll have Dave here to carry on. It’ll be a lot harder for them to stop two of us.” I don’t think we are dealing with quite the type of a situation, but it still made sense if for no other reason than the fact that Earl just may be hit by a truck; one just never knows.
Over the next few weeks Earl and Shirley began gathering as much information as they could to have a good foundation on which to base a complaint. They were able to make it known, without revealing our plans, that they had a desire to gather as much information about the Church as possible in an attempt to correct problems. That was when we began to realize that the entire organization was built on a very shaky foundation. Few of the employees were actually loyal to Rader. Information began to literally pour out of the sky. Many anonymous informants, employees in very sensitive areas of the organization, began to funnel data to the Timmons. Many apparently felt that the Timmons were fronting for Bert Mann, a reporter for the Los Angeles Times.
There had been rumors for the past several months that Mann was going to do a major expose of the Church. I called Mann to determine the accuracy of the rumor and he did admit that he was planning such a story. He said, “This thing just has to be exposed. It’s a colossal rip-off. I’ve never seen such fraud in the name of religion in my life. It’s going to take quite some time, however, to get all my facts together before I can run the story. .” Many had been hoping that the rumors about Mann’s forthcoming story were true, and were basing their hopes on such an expose. I kept in touch with Mann from time to time and sent him some of the more devastating documents such as the “Pastor General’s Report” and “Executive Expense Analysis.” I confided in him that we were planning a lawsuit and asked him not use certain of this information until I gave him the go-ahead. With Mann’s high degree of interest in the Church, we were counting on the Los Angeles Times to give our lawsuit the type of publicity that we hoped would make (pg 144) it a national issue. We did not realize at the time that this matter was going to become a national issue without any special cooperation from any one reporter.
From the extreme position of fearing Rader may find out about the lawsuit ahead of time and stop it, the conversation would wing to the other extreme. We would discuss lists of potential defendants. I told Gordon that according to our attorneys, it definitely would name Rader, the Board Members and, unfortunately, Herbert Armstrong. Gordon was concerned that if Armstrong were named it would be viewed by the Church members as an attack on the apostle, giving them a rallying point to fight the suit. I agreed that such a possibility existed and felt that I would prefer to see that Herbert Armstrong would not be named. Maybe there was another way. We discussed the possibility of confronting Rader in advance in the hope that just a mere threat of a lawsuit would cause him to see the wisdom in resigning from his position. If that could be accomplished, then any other problems could easily be dealt with.
I discussed this concept with Ron Quinlan and he said, “Look. I know that Herbert Armstrong is not an apostle. Still, we have to acknowledge that he was used by God to raise up this Church and we can’t deny the fact that we learned a lot of truths as a result. I almost feel that he is trapped by Rader and would like to be released, but doesn’t know how to handle it.”
(pg 145) We agreed that if there were some way to use the threat of a suit without actually proceeding with a filing, then perhaps the Church could be cleaned up without any scandal and adverse publicity. We knew that if we had to follow through with it all the way, not only would there be a lot of publicity, but that we would actually seek it since it would be a necessary instrument in preventing the public from being deceived by the organization..
One visit to the offices of Cohn and Lifland, I decided to discuss our idea with Pearlman and Hermann. I said, “If we actually file this lawsuit it would hurt and perhaps even destroy the Church when our real desire is to save the Church from the corrupt leadership. Why don’t; we just get everything prepared, then Ron and I could go to California and along with Chodos and the other realtors call on Rader. We could just tell Rader, “Look, this is it. It’s all over. We’re going to file this lawsuit before the courts close this afternoon, unless you agree to resign from all positions in the Church.” I really thought that could work. Ron and I were both convinced that if Rader’s main objective was one of gathering riches for himself, that he would have to realize that sooner or later the game would be over.
I continued, “Look at some of these men like Robert Vesco, they know sooner or later the game is going to be over and they make preparation to skip the country. When it’s over they run, that’s all. We won’t even have to be concerned with whether or not we gain restitution. It would be worth it just to be rid of this cancer. We could say to Rader, “Look, the game is over, pack your tent and leave. We just don’t want to see you any more. Here’s a one way ticket to Costa Rica.”
Pearlman nearly had a fit. He said, “Do you really believe that this man has spent the last twenty years at the Church, methodically gaining control over every aspect of the organization, just to have some of what he considers dumb sheep jackass members to come and scare him off? I can’t tell you right now that we are not dealing with an armature. We’re dealing with a man who knows what he is doing, and this man will fight, there is no doubt about it. In fact, when we file this lawsuit he’s going to fight. I told you before, this is not going to be over one. Two, three, just like that. It’s going to take a longtime. And while I think that money is a very important thing to Rader, I think that he may just hold on due to another even more powerful motivation. There’s power there, a (pg 146) a lot of power. Don’t you think he likes it and wants to keep it?” I argued my point presenting the same case, in several different ways, but Pearlman kept shooting me down. He said, “It’s important that we have the element of surprise here. If they have any advance notice at all, there’s no telling what they will do to destroy evidence or hide it. You know there have been a lot of pretty well-founded rumors regarding double books, false entries, and things of that sort. To do what you want to do would only serve to give him advance notice, and then when he tells you what to do with the lawsuit and where to stick it, it will be over. We’ll have lost before we even got started.”
I knew Pearlman was right, but there was such a desire on the part of us to be involved in this to still give benefit of the doubt that we felt that it was worth discussing this approach. Then Pearlman further summoned it up very clearly, saying “How easy do you think it’s going to be to just convince a man to walk away from $65 million a year?” Reluctantly, all of us had to agree that Pearlman was right. There was no choice but to allow Chodos and Tapper to proceed in a way that they considered most appropriate. It seems that ever couple of days I was on the phone to Earl Timmons. In the beginning, it appeared as though my investment in this lawsuit would be mainly one of time, as Ron Quinlain had agreed to handle the payment for our attorney’s disbursements. As the frequency of phone calls increased, I was later to develop a feeling that I was directly resizable for a substantial increase in the earnings of New Jersey Bell Telephone Company. In the next couple of months, my bills were to climb as high as $750 per month.
A similar situation, but on a lesser scale, developed with Ron. He is single and lives with his parents. It was no longer possible for him to share the family telephone. He had to have his own private line installed, as he found it necessary to make frequent phone calls to the West Coast. He had made many friends in California during his year at Ambassador College and was now able to take advantage of those contacts. It was important to obtain every bit of information, no matter how seemingly insignificant, in order to be properly armed for this legal action. He could only say, in very general terms, that they had lots of good information, but he could not be specific. Ad there (pg 147) had been reports of phone bugging within the Church headquarters, he was fearful that his own phone many not have been clear.
Toward the end of November, in a conversation with Gordon Muir, I felt he had really breached a trust. He said, “I know that I agreed not to tell anyone about the lawsuit, but I felt it necessary to discuss it with Jack Martin. I thought he should know about it. He’s a minister you know, and very concerned about the condition the Church had fallen into.” I couldn’t understand Gordon’s having done this, and was quite angry. I had met Jack on a few occasions, and also heard him preach a couple of times. I was always impressed by him and knew that he was not fooled by the ridiculous claims of Herbert Armstrong or by Armstrong’s and Rader’s constant justification of there own excesses. But I didn’t feel it was Gordon’s place to decide that Jack should be aware of the lawsuit.
I angrily responded, “Gordon, what did you do that for? There’s no purpose or reason for it. Just to let Jack in on it so he would know, is ridiculous. He knows a lot of people in top positions. So now how do we know that he won’t in turn let some of those people in on the secret? By the time it’s all over, the cat will be out of the bag and Rader will have advance knowledge and it will be too late. You could have blown it right here, Gordon!”
Gordon said, “Hey, I can assure you that he won’t tell anyone, but I thought he should know that you are planning to name Ray Wright and Robert Kuhn as defendants. I know those men, John, and I am quite sure neither of them was implicated in any way in squandering the Church’s money. I know Ray had his problem with embezzlement, but he’s owned up to that and I understand that he has fully repented and is making restitution to the Church. These men, I’m sure had no par with any of Rader’s doing.”
I just thought it was ridiculous to begin getting selective in the list of defendants. Ray Wright had publicly admitted to embezzling and Kuhn had been a member of the Board of Directors of the Church. According to the attorney’s, there was no way that they could avoid being named. Finally, I settled down and at least accepted the fact that Gordon meant well, and only hoped that Jack would not discuss the situation with anyone else. Gordon said that he would suggest that Jack call me in order to put my mind at ease. Soon Jack Martin called and he said, “John, as a minister I must (pg 148) advise you that you are dealing with a very serious matter when you are preparing to bring a lawsuit against officials of the Church. I’ve thought a lot about it and perhaps there is no other way to straighten out this whole mess that the Church has gotten itself into. There’s no doubt that we are in the end-times and one can expect almost any kind of trouble in the Church. I’m concerned, however, that you are going to name Ray Wright and Robert Kuhn. John, I know these people, and as Gordon told you there is really no justification in naming them. If you do, you are only going to bring a lot of trouble on two men who don't deserve it.”
Again, I made the same points to Jack as I had made to Gordon. I felt that he grudgingly was accepting the fact that there was nothing more that he could do about it and further there was nothing that I was going to do about it, considering that the attorney’s advice should be followed regarding the naming of defendants. Jack then said, “Are you also going to name Mr. Armstrong? I really hope that won’t be necessary. If there’s any way to avoid it, I wish that you could. If the lawsuit is successful in removing Rader and freeing Mr. Armstrong from his influence, I think things would be fine, John, I don’t believe that Mr. Armstrong is an apostle, but I do believe that God has used him all these many years, and we have to consider that. With all his many faults, he has done a lot. We shouldn’t be quick to judge, as no one can know what we might be like were we to be in his position.”
We discussed that further, and I felt that I couldn’t really object too much to Jack’s position regarding Herbert Armstrong. I promised to discuss it with the attorneys. I conveyed Jack’s opinion regarding the naming of Mr. Armstrong to Peter Pearlman, indicating that I was in agreement with Jack. Pearlman said, “Look, I can understand that we are dealing with more than just physical considerations here. This is a very unusual case. I know that you have a spiritual consideration in mind also. However, Herbert Armstrong is the chairman and president of the organization and there’s no way that he could not have know some of the things that were going on. I don’t want to disillusion you, but the results of the investigation out there seem to indicate that Herbert Armstrong is in this up to his ears, according to what I have been told.”
There was no way that it was going to be changed, and it was something that we finally had to face up to. Altogether there was a list of approximately fifty defendants, consisting of current (pg 149) and former employees in various positions of responsibility in the Church. How many of the total list would be named was not yet determined. But we had to accept the fact that the key figures, including Herbert Armstrong were going to be defendants. From that point on, both Jack Martin and Gordon Muir became part of the daily phone network as the lawsuit was drawing closer to reality.
It was early December, and the daily phone calls from Jack Martin and Gordon Muir increased to several each day. Every time one of them could obtain a bit of information or grapevine scuttlebutt, they would call, and then also inquire about the progress in preparation of the lawsuit. They had nothing to do but sit around home, collecting their paychecks from the Church, as they had received no new job assignments. At least they were now putting their time to good use, although Rader may have had a different opinion, had he known of the interest at t the time.
The phone rang early one morning, and when I answered, I heard a familiar “Hello, John, Jack here again.” He then stunned me by announcing that it was about time he told me that he had been discussing the lawsuit with Robert Kuhn. I responded, not hiding my annoyance at what I considered to be a breach of rust: “Jack, why did you do that? He’s a crook like the rest of them, and will be named as a codefendant. Kuhn was one of the guys who double-crossed Ted when he could have stood by him last May against Rader. And don’t; forget that he was involved with Environmental Plastics. You know very well that he is implicated with Wright on the embezzlement.”
Jack then assured me that Kuhn had nothing to do with Ted’s ouster, but along with Director of Ministry, Wayne Cole and Wright, was set up and used by Rader in that situation. He continued, “Look, John, Rader is now out to destroy his opposition one by one. He caught Ray in the embezzlement, but Ray is taking the rap for something that appears worse than it is. He didn’t use all the money for himself. Most of it went through the plastics company as a conduit to lawyers in Texas who were investigating Rader’s dealings. The man was under a lot of pressure, and kept some money for use by his company. He is totally repentant, and has given Rader a letter stating that Robert was only an investor in the company, and had no knowledge of any financial dealings. Robert is totally innocent of any wrong doings, but Rader, (pg 150) is using this situation as a means to destroy him before the Church. He must get rid of Robert, as he is afraid that sooner or later Robert may expose him.”
“That’s all very nice Jack, “ I said sarcastically, “but what is to be gained by telling him what we’re doing? Now we have a leak. It’ll get back to Rader and we’ll lose our element of surprise. By the time we get the suite filed, Rader will have picked the Church clean to the bones, and be on his was to Costa Rica in the G-II.”
Begging me to be patient with him, Jack explained that Kuhn wanted to help, and that he could possible convince Ray Wright to meet our lawyers. He also claimed that Kuhn could speak to Cole and other leading ministers in order to gradually prepare them for the impact of the lawsuit.
While I was quite suspicious of Kuhn, I agreed to let Jack proceed further in contacting him. There was certainly doubt in my mind as to the motives of Kuhn and his associates, as they were publically in support of Rader, if only by their silence. I thought, “Could it be that they did actually cooperate with Rader against Ted, only to be later kicked aside? Or, were they truly innocent puppets of Rader? And, were their motives sincere now, or did they just want to get in on what looked like a possible wining situation in order to save their jobs?” There could be no answer at this time. I had no choice but to trust Jack’s good judgment, and allow him to continue his discussion with Kuhn.
A few days later, Jack asked me to call Kuhn. We agreed that no one would know of these contacts, except our attorneys, Perlman and Herrmann, and of course Ron Quinlain and Gordon Muir. Earl Timmons was not going to know at this time. The Pasadena area was now rife with rumors of pending class action suits, IRS investigations, attorney general investigations, a lawsuit by Garner Ted, an expose by Bert Mann, and an expose by the TV program 60 Minutes. Some of these rumors seemed to have their foundation in fact, but were so distorted that any leaks appeared to become swallowed up in the rumor mill. Without our realizing it at first, the rumor mill turned out to be our best protection against any leaks from our own associates. Some of the leaks were the inevitable result of our having to confide in others in order to gather evidence. As even the slightest rumor regarding involvement of Kuhn would destroy his effectiveness, we decided that only those with a need to know would have any knowledge of his activities.
(pg 151) Prior to my calling Kuhn, he had been meeting with Cole. He told Cole that some sort of legal action was being prepared, and would be filed near the end of the year. Cole asked, “What kind of legal action? Who is behind it? There are a lot of rumors around here and if one of them is true, I think that I should know about it.” Kuhn responded, “Wayne, I just can’t tell you anymore at this time. I know more, but please don’t ask. This is enough for now, and I’ll tell you more as I can. If you know the details, I know that out of loyalty to Mr. Armstrong, that you’ll feel obligated to inform him. Then he’ll immediately call Stan, and then the action may run into problems. All I can tell you about it is that the people want to save the Church. They aren’t dissidents, but feel that strong action must be taken to clean this place out.”
Cole realized that all efforts within the Church just weren’t working. He had a constant battle with his conscience, as he continued to write and preach to the membership that all was well and the leadership was in full unity now that Garner Ted had been removed. While maintaining this position publically, he agonized over the fact that he was deceiving the people. He continued to rationalize that it was the right thing to do while he tried to work from within with Herbert Armstrong to remove Rader and establish a legitimate board of directors.
As Jack had asked, I phoned Kuhn a few days after Jack had informed me of what he now called his private diplomatic mission. Kuhn’s main concern was to be fully assured that we were not out to destroy the Church, but rather were sincere in our desire to save the Church. I assured him that this was the feeling of all those involved. He then told me of his meeting with Cole, and that Cole in turn would keep a few of the top ministers informed of developments. Over the next couple of weeks, it was his plan to continue slowly feeding additional information to Cole and the others, who were not to be identified to me until later. He planned to have them already to make a decisive move the day the suit was filed. It was his and Jack’s hope that by swift action, the leading ministers could be effective in reducing the traumatic effects of what was to be a legal action much more drastic than they, or even we, could have ever anticipated.
Kuhn was very upset that he was to be a defendant, along with at least twenty others at the time. He reminded me that I had been told by Jack about his situation. “Understand one thing, “ I (pg 152) said, “this is bigger than you or anyone else. This is God’s Church and it is our responsibility before Him to clean it up. If you’ve done no wrong, you’ll be vindicated, but you must be named, as your name is linked to Wright’s in the embezzlement. It’s all through the Church as a result of the story being in the latest ‘Pastor’s Report.’”
Kuhn responded, “Okay, I guess I’ll have to live with that for now. In the meantime I’ll see what I can do to help. In fact I think that I can even get Ray Wright to come forward voluntarily.”
The possibility of Wright helping was almost unbelievable. No one knew more about the daily functioning and procedures of the business and accounting offices than he did. I wondered of he was sincere, or if he just hoped to save his own skin by helping us.
Kuhn assured me that he would contact Wright, who was visiting with his parents in Texas, and begin to prepare him for the possibility of speaking to our attorneys. Wright was still recovering from the trauma of his ordeal, as he had been totally disgraced before the entire Church as an embezzler of $219,000. It was necessary for Kuhn to use the eyedropper approach in preparing Wright to agree to do something that could be totally contrary to his own best personal interests.
After several days of phone calls with Wright, Kuhn felt it was time for Jack to contact Wright. Jack was successful in convincing Wright that he had a spiritual obligation to assist us in any way possible. He then obtained Wright’s agreement to meet with us at the offices of Cohn and Lifland in Saddle Brook, New Jersey. The meeting was to be only a few days later, on December 22, 1978.
On December 21st, Kuhn met us at the attorney’s office for a meeting in preparation for the following day. While seated at the conference table, it struck me that this was a most unusual meeting. Here were Ron Quinlain and I, along with Church employees Gordon Muir and Jack martin, witnessing the questioning of the former executive assistant to Garner Ted Armstrong by attorneys Pearlman and Herrmann. I thought, “What an unlikely situation, Robert Kuhn voluntarily submitting to questioning by my attorneys an entire continent away from Church headquarters in Pasadena.”
Kuhn proceeded to outline the entire purpose of the Church and his main responsibilities in doctrinal research. He said that the Church was not fulfilling its main purpose of worldwide evangelism as it should due to internal problems. He was pleased (pg 153) that something was finally going to be done to remove those who were misusing the Church and its money for their own purposes. After listening to Kuhn for a while, Pearlman said: “Mr. Kuhn, it appears that your main role was a theologian, as you have stated. But you haven’t really told me anything concrete about the alleged misdeeds of the top officials. Surely, as a close associate of the Armstrong’s, Rader, and others, you must know something more specific.”
Kun could see that Perlman was skeptical of his willingness to be totally candid, and said, “It may sound crazy, but while I heard a lot of rumors, I actually never knew the facts. The documents that you have shown me today: the ‘Pastor General’s Report’ and the ‘Executive Expense Analysis,’ are the first items of proof that I have seen. It is quite shocking to see in black and white the confirmation of rumors that I have heard for so long. You must realize how the Church is run. Mr. Armstrong is a total dictator, calling himself God’s apostle, and Rader controls the entire business and the board is not what I would call a functioning body at all. Everything is very secretive. Even Ted had no knowledge of the finances of the Church. He was just used as a front, but actually had no real authority, except for a short period of time when he began to assert himself. That was when it looked as though he was succeeding in getting Rader pushed into the background, and nearly had him out. Then, Rader apparently threatened Mr. Armstrong, and last May, Ted was thrown out. His own father sacrificed him for Rader.”
Herrmann then asked Kuhn, “What does Rader have on Herbert Armstrong, that he can seem to control him in that way?” “I’m not sure, “responded Kuhn sadly, “but there are rumors of sexual compromise, in addition to the vast expenditures of money. I also believe that Rader has a lot of powerful connections, I don’t know how they fit in to Mr. Armstrong’s international travels, but there may be something there. As an example, Rader was very well acquainted with H. R Halderman. During the Nixon administration, Rader’s oldest daughter worked in the White House and is now an attorney with the prosecutor’s office for either the city of the county of Los Angeles. During the Nixon years there were some IRS audits of the college books and Ted’s return was audited. I understand that they were also going to do Rader’s return, but through some contacts in Washington he had that stopped.”
(pg 154) Pearlman asked, “What about yourself? Have you ever been engaged in a business dealing with the Church in a personal way other than employment? Kuhn said, “No, not at all, other than the purchase of my home from the Church. I was very fortunate in that transaction, as the Church was good enough to sell it to me at a discount below market value.” That struck me as very strange. Apparently, Kuhn did not see any particular significance in such a transaction, and it was hard to believe that he would volunteer this information if he had consciously engaged in self-dealing. Yet someone must have had a motive in allowing him to buy a Church-owned home at below market value. A transaction such as this, where a director of a charitable non-profit corporation is permitted to buy a property from the organization at discount, would seem to be in violation of the state law.
Kuhn said that he hoped that we would have a good meeting with Ray Wright on the following day, and that he was very concerned about Wright. He said at first he was quit angry over the fact that Wright had taken Church money and put it into their jointly owned Environmental Plastic Corporation, which for a while made it appear as though he was also implicated. He said that later when the whole matter came to light he had lengthy talks with Wright about the situation and came to understand that Wright was under considerable personal pressure of one nature or another and that, while not condoning Wright’s actions, could understand the. Kuhn said, “I have forgiven Wright and now my only concern is to see that he gets himself straightened out. Perhaps by you giving him this opportunity to help here tomorrow, you will be helping him get one-step closer to a normal life.”
In listening to Kuhn, I felt that he was sincere in his desire to help save the Church. He had worked very hard at arranging for Wright to appear at the following day’s meeting with the attorneys. He was now involved with us to a degree that would make it very difficult for him to back out.
As the meeting drew to a close, Pearlman announced: ‘Don’t worry about being a defendant, Mr. Kuhn. Chodos informed me yesterday that he will name the Church and its subsidiaries; plus Herbert Armstrong, Stanley Rader and Does one through one hundred. If you’re clean, you won’t have to worry, but if evidence shows otherwise, you’ll be one of the Does. I have agreed with Chodos in naming the defendants in this way in order that the main (pg 155) thrust of the action is clearly identified.” While the statement pleased Kuhn, it also set the stage for considerable problems which were to develop in less than two weeks.,
The following day, December 22nd, was when IO first met Ray Wright. I had arranged to meet Jack and Gordon at a restaurant near the attorney’s office. They arrived with Wright, who had flown into Newark from Dallas the previous evening. I immediately recognized Wright from photographs in Church publications, but was struck at his appearance. He seemed much thinner now than in photographs of only a few months ago. The rumors that he had lost over twenty pounds as a result of his recent ordeal seemed valid as son as I saw him.
As I talked over a hurried lunch, Wright said, “I have been totally destroyed by Rader as a result of what he has written about me to the Church. While some of the money that was given to Environment Plastics didn’t go to the attorney’s as it should have, Rader makes it look as though I stole the entire $219,000. I have already paid back a good portion of it my mortgaging my house, but he will try to control me because I tried to help Ted expose him. I want to help you people, but only if your motives are right, If you just want to destroy the Church as others have tried to do, I would rather go to jail than to help you.”
I assure him that our propose was to expose those ensnared in financial improprieties and remove them form the organization, as well as to establish a board of directors that would never allow an autocracy to develop again. This was the only way we would be protected against further problems of the type we were now facing.
Wright seemed to be satisfied that our attitude was proper, and realized that of he didn’t help us, he would come out worse in the end, as the Attorney General would certainly investigate his situation thoroughly. He was between a rock and hard place, and he knew it. Any help he could provide at this time might just enable him to get a lighter treatment later by authorities, although no promises could be made to him.
After lunch we met Ron Quinlain in the lobby of the attorney’s office, and proceeded to our meeting.
Again, as in the meeting with Kuhn, I was struck by the fact that only a few months ago, I would never have thought that I would be engaged in such a situation.
Pearlman, speaking in his best lawyerly manner, advised Wright (pg 156) that he was appearing voluntarily without counsel, and could leave at any time, but that anything he said may be used against him, as he may be a defendant in the lawsuit before it is all over. “You must realize,” said Perlman, “that although the Church will be named as a defendant, it is merely for technical reasons to enable us to have access to the documents without having to wait for pre-trail discovery proceedings to take place. In reality, we are acting on behalf of the Church, and that is our first responsibility. Once the suit is filed, no one is immune if they were engaged in any wrongdoing. And”, he continued, pointing to each one of us seated around the conference table, “that means you, or Jack Martin, Gordon Muir, or even the relators!”
Wright appeared to be stunned by the firmness of Perlman’s statement. He said, “That’s quit clear. I feel that to be right before God, I must tell what I know. There are rumors of pending lawsuits in the past. I understand that Rader always managed to get them quashed or bought people off…” Perlman then interrupted: “Mr. Wright, this action is going forward, it will not be stopped and no one will be bought. It is about time that organizations such as the Worldwide Church of God be released from the grip of those individuals who seek to use religion for personal gain. Now, if we may, let’s begin by your telling me about yourself, and what you know about these matters, Mr. Wright.”
Wright then began telling a lengthy story of his having been a top executive of Texas Instruments, with responsibility over certain aspects of their British and European operations. While living in England several years ago, he came into contact with the Church. Later he and his wife were baptized, and he decided to commit himself to the work of the Church. He began by working in the British office, and after a few years was appointed business manager at headquarters in Pasadena.
“One of the first things that came to my attention, “ he said, “was the $25,000 in cash going out the door tin Gotoh’s briefcase. Someone in the accounting office thought it was strange that Gotoh would take $25,000 on frequent occasions, and thought that I should know about it. When I brought it to Rader’s attention, he told me that it was needed for foreign campaign expenses, and that I was not to ask any more questions.”
“That kind of cash can’t leave the country without being declared,” said Herrmann, pausing a moment, then continuing (pg 157) “Strange, very strange way to run a Church. Isn’t this the same Gotoh who bought thousands of dollars worth of cameras, and spent hundreds of thousands at Gucci, Cartier, etc.?’ What were all those cameras for, by the way?”
“I don't know”, said Wright, “but there is a story that he was caught for smuggling such items into the country on the G-II, but Rader had it quashed.”
Perlman responded in astonishment, “How can Rader get a smuggling charge quashed? All right, so he’s been hobnobbing with all those foreign politicians, but who does he know in Washington?”
“Well,” said Wright, “there was an IRS investigation some years back, but it was only superficial. It only dealt with the college, but not Church books. Rader saw to it that his personal returns weren’t audited. That was when Nixon was President. One of Rader’s friends was H.R. Halderman.”
On hearing this reference to Halderman again, I couldn’t help but think that the comments that I had made weeks earlier that we were onto a Watergate might mean more than I had realized.
Pearlman then handed Wright some papers entitled ‘Executive Expense Analysis’ and a twenty seven page document entitled ‘Pastor General Department, Report of Expenditures.’ “Do you recognize these documents?” he asked.
“Yes,” said Wright,. “the ‘Executive Expenses Analysis’ came from the Church accounting office. The ‘Pastor General Report’ was complied by my people, by extracting figures from various accounts and assembling them into a single document, to show how money was being wasted, and perhaps stolen. These figures were scattered through different accounts, and it too a lot of digging to get them together. I did this when Ted asked me to investigate Rader’s financial activities. At the same time, the lawyers in Texas who were being paid through my company so Rader Wouldn’t know that we were hiring lawyers, were investigating Rader’s leasing companies. These were companies that owned the jets that were leased to the Church. We could have made a better deal elsewhere than we had with his companies “Then,” said Perlman, “these figures, such as $7,284.476 for taxes on Rader’s home in Beverly Hills, $2,400 mortgage payments on his home, $7,508.65 for furnishings in his Tucson home, a total of over $51,000 for one month, are correct? And also over $10,000 (pg 158) in nine entries on one day at the Hilton Hotel in Jerusalem on Rader’s Diners Club Card? And over $19,.000 spoon on an Ambassador Mugo, including his visit to Disneyland. And Dr. Singh, a justice of the World Court in the Hague, several thousand dollars in air fare for him? It goes into the hundreds of thousands, with places listed such as Gucci, Cartier, Harrods’s, Patek Phillipe, Steuben Glass, etc., etc. Incredible!”
“Yes,” Said Wright, “I’m afraid that those figures are correct. And that doesn’t show what was spent through the special executive checking account, which’s how Mr. Armstrong’s and Rader’s salaries were handled. The checkbook for that account was maintained at Rader’s law and accounting offices in Century City. We just made a bulk transfer into that account, as we were instructed to do. We never knew how it was spent. That was also the location of Worldwide Advertising, run by Rader and Cornwall. This was the company that bought several million dollars per year of radio and TV time for the Church. We only get a monthly bill from them for services, but never a breakdown or supporting invoices from broadcast stations. I later found out that we could get much better prices for broadcasting time, than we were getting through Worldwide Advertising. That was before Ted finally dumped them and made a deal with Ed Libov Associates.
Wright continued, talking almost non-stop. He commented that even Alfred Hitchcock couldn’t dream up a story as this true one. He told how money had been spent on personal homes; about executives speculating in previous metals on margin for their own accounts using Church funds; about an account at Union Bank of Switzerland that was used to cover margin requirements for speculation in foreign currency. Then, there was the home that Rader purchased from the Church for $450,000 with little more than $100,000 down payment, and with the Church holding the mortgage. He then paid the mortgage loan from money received from the Church for that purpose. Over $500,000 was spent by the Church to remodel the home. He then sold the home for $1.8 million dollars, with the Church paying his capital gains tax for him.
Perlman said, after Wright talked for some time, “I’d like to get back to this matter of the $219,000 which you transferred to Environmental Plastics. That seems to play a very important part in this entire situation.”
(pg 159) Wright then explained that he and Kuhn bought Environmental Plastics in March of 1976 for $90,000. It was strictly an investment and was to be operated in absentee ownership.
Wright then said, “I guess this really started boiling back in March of 1977 when I was called down to Tucson by Mr. Armstrong. He demanded that I produce evidence of Ted’s wrongdoing and produce proof that he was a playboy engaged in frivolous expenditures of Church money. He wanted to get rid of his son then, but shortly after Ted and his father made up and there was no investigation conducted on Ted.”
There was apparently was a concerted effort to remove Garner Ted at that time. At the very same time Wright was being pressured to produce evidence against Garner Ted, other officials in the Church had been asked to do the same thing. Also at the time, Herbert Armstrong had initiated meetings with Albert J. Portune who had left the Church in 1974 as one of the leaders of the 1974 Rebellion. Portune had been a minister and had held several high positions in the Church including that of business manager. Not only was Herbert Armstrong asking Portune to return to the Church and have his disfellowshipment lifted, he was actually offering to bring him in as Garner Ted’s replacement. l garner Ted had been led by his father to believe that Portune may be coming back into the Church as a minister, but was not aware of the full range of his father’s plans. Portune, however, revealed the entire scheme to Garner ted, who then wrote a memo to his father indicating that Portune would not be coming back.
Herbert Armstrong called Garner Ted to his office and said, “Now Ted, what is this about Al Portune? What do you mean here? You mean All is not coming back?”
Garner Ted then said, “No, he’s not coming back. He’s not coming back because of what you said to him about me.”
Herbert Armstrong then said, “Why Ted, your name never even came up. Your name wasn’t even mentioned.”
This type of conversation went back and forth for sometime with Garner Ted just allowing his father to lie to him.
Garner Ted then finally said, “Dad, you called me a wild jackass, an ass of man, absolutely irresponsible and so on. You totally just took me apart to Al Portune. “Herbert Armstrong continued to deny having done or said any such thing. And Garner Ted then said, “Al and I just went to breakfast this morning.”
(pg 160) Turning white, almost as though he were going into a state of shock, Herbert Armstrong lowered his head and mumbled, “Oh, I just guess I ought to just go out and kill myself.”
Pieces were beginning to fit. Ray Wright was filling in the pieces that, together with this account of what took place between Garner Ted and his father, made it quite clear that there would have been no reconciliation had Ted not caught his father in a horrendous series of lies. God’s apostle, the very representative of Jesus Christ on earth, the head of God’s Church, scheming and conniving and lying, and of all things maneuvering against his own son.
Getting back to Ray Wright’s startling revelation, he then continued, “At about this time, Ted realized he had to do something and being suspicious of Rader said that he wanted to compile a complete dossier. He decided to investigate Rader’s financial dealings and his association with the companies that lease the planes to the Church, Worldwide Advertising, is mortgages and so on.”
Wright then continued to explain how it was decided to retain attorneys to conduct certain investigation while he would internally prepare summaries of various expenditures. The “Pastor Generals’ Report” was a result of that effort. They were concerned that any expenditure for outside attorneys would be noticed and brought to Rader’s attention. Wright came up with the idea of funneling money through Environment Plastics and then have Environmental Plastics pay the attorney’s.
Wright then reached into his pocket and said, “I have a copy of a memo right here form Ted authorizing the use of Environmental Plastics for that purpose. “ The memo was dated July 13, 1977, addressed from Garner Ted Armstrong to Ray Wright, and said, “I hereby authorize Ray Wright to use the firm of Environmental Plastics, Incorporate for very special projects and studies as and are necessary.” Only about $30,000 went to the attorneys for the studies. The balance of he $219,000 went into Environmental Plastics and was used for proposes other than those which Garner Ted had in mind.
That memo was Wright’s blank check and , when he found himself in a financial difficulties, he was able to use the authority he had been given to ‘borrow’ from the Church at any time. It was a strange picture here of a man conducting an investigation to expose financial misdeeds on the part of the top office of the Church, himself engaging in the same activity
(pg 161) On hearing Wright’s statement and seeing the memo, it struck me that only a couple of months earlier Ted had told me that he had never heard of Environmental Plastics. It was during our phone conversation that he informed me that the manager of Environmental Plastics had called him with information of suspicious movements of money from the Church into the company. Why, I thought, did Garner Ted tell me that he had never heard of the company? Was it an oversight? That’s hard to believe. Or, realizing that I had determined to expose the wrongdoing in the Church, he decided to funnel additional information to me, hoping to keep himself out of it as much as possible. It’s doubtful that he ever expected Wright to turn stoolpigeon in hopes of saving his own neck.
Wright continued revealing even more as he rattled on like an LP record. He said: “We came up with all sorts of things. Rader’s home is just full of art purchased by the Church and then given to him as gifts by Herbert Armstrong. Of course, it’s a pretty well known fact that Herbert Armstrong has huge art collection appraised at somewhere between a half million and a million dollars. That was all paid for by the Church, too. And there was the Currier Insurance Company, there was some sort of connection between that company and Rader. Interestingly enough, the Church placed its insurance business with Currier.”
At the end of 1977, Wright confronted Rader with his findings. It was never made clear whether this was done with Garner Ted’s approval or if Wright did it prematurely realizing that he may be in trouble for taking $219,000, finding it necessary to protect himself on all fronts. At any rate the outcome of that was as Wright said: “Rader was shocked. He was absolutely shocked. He went into a rage when he found out what we had done.”
At this point it was becoming open war between Garner Ted and Rader and would only be a matter of time until the events of the following spring leading to Garner Ted’s ouster would take place.
As I listened to Wright’s story, I couldn’t help but wonder what would be the reaction of the people in the Church when this was made known. Would they finally wake up and demand that corrective measures be taken? I didn’t expect that all of them would but I thought it would be reasonable to expect that at least half would finally revolt against the apostle.
Herrmann then said, “This is incredible, but do you mean to tell (pg 162) me that these things could go on for so many years with no one before this time deciding to do something about it. It’s hard to believe how so many people could close their eyes to such a thin.”
‘well, there were others,” said Wright, “there was a Jim Johnson who I understand is from Florida. He is a CPA who was brought back in 1972 or 1973 to look into tings It was kind of an undercover deal. But he didn’t last long and he was sent back to Florida, out of a job.”
Jim Johnson had been hired by others in the church business office who were suspicious of Rader’s dealings. He was originally brought in as a cost accountant with the fact of his being a CPA kept secret. After working for the Church for two months, Rader was so impressed with him that for six months he was put on the payroll of Rader’s accounting firm of Rader, Cornwall and Kessler. The he was transferred back to the Church payroll and began to on his own to conduct an internal audit. His investigation produced details regarding many questionable dealings and possible conflicts of interest. He found that First Pennsylvania Corporation financed the planes for the Rader owned leasing companies which in turn leased jets planes to the Church. There were many questions regarding the property of the furnishing of top officials’ homes and then their subsequent sale to various outsiders. Johnson began to reveal some of his findings to Frank Brown, who was then the business manager of the Church. It was then that Brown realized that those under him had brought Johnson in to the accounting offices and that he had looked upon as a spy functioning right under his nose. The solution was obvious. Late in 1974, Frank Brown informed Johnson that due to budgetary considerations, Johnson’s salary could no longer be justified and that he was being terminated. After his termination he returned back to Florida and submitted the details of his findings to the Ethic’s Committee of the California State Accounting Board.
Shortly thereafter, Rader “voluntarily” announced that he was withdrawing from the accounting firm and turning it over to his partners. Then to insure the continuity of his relationship with the Church, Rader had Herbert Armstrong baptize him in the Hong Kong bathtub.
Again, everything was beginning to fit. It became more and more apparent that whenever anyone became too inquisitive or shoed too much personal initiative their job was quickly placed in jeopardy.
(pg 163) It appeared that the major consideration regarding one’s continued employment at Church headquarters was not one of qualification but rather one of continued unquestioning loyalty to Armstrong and Rader.
Pearlman then said to Wright, “There have been several references to dealings in real estate, other than the transaction on Rader’s homes, do you have anything further on that?”
Wright replied, “ Yes, one of the strange things about the real estate transactions is the fact that most property sales seem to have been handled by William Evans a real estate broker in Pasadena. He’s been a deacon in the Church for about twenty years and prior to becoming a real estate broker was employed in the Church offices. He was in charge of managing the Church-owned homes. He sold properties owned by the Church. I don’t know how improper that may be in itself, but I did wonder about some of the transactions. There were cases of Church –owned homes being sold at a certain price and then immediately resold by that buyer to someone else at a substantially higher price. It all seems rather strange.”
I wondered about the significance of what Wright had just said. All of Garner Ted’s recent talks and writings out of the Church of God International seemed to indicate that others had been defrauding the Church and that he was thrown out in an attempt to expose it with he himself being innocent of any such abuses. Yet Evans was a close friend of Garner Ted’s and it seemed highly unlikely that he had no awareness of Evan’s activities. Pearlman had also been wondering if it could be so that Garner Ted was so totally innocent of any wrongdoing, when just about everyone else seemed to be accused of an involvement one way or another.
Perlman said to Wright, “all this seems to center around Stanley Rader, but I don’t think Herbert Armstrong is free from involvement either, and none of this could be going on without the collaboration of many others. Do you really think that Garner Ted Armstrong had pure motives for attempting to expose Rader? Or is it that he saw Rader as a threat to his own position?”
Wright responded: “I really don't know. But Garner Ted has been accused many times of excessive spending also. He lived quite well in his several homes and jet planes. There have been many stories widely circulated regarding Ted’s gambling activities. One that comes to mind is that the Church had to bail him out of a (pg 164) massive debt in Las Vegas. He likes to play blackjack and has been known to drop a lot of money at the blackjack tables. Ted denies the story and claims he just needed a small amount of money sent to him in Las Vegas as he was out of cash which he needed for personal expenses.”
Herrmann then asked, “Would Rader, if he were an enemy of Garner Ted actually bail him out of a large gambling debt?”
Wright replied, “Yes, he probably would. That’s the way Rader operates. Then it would give him something that he could hold over Garner Ted’s head to use whenever he saw fit. Rader maintains meticulous files and a detailed diary of his every activity. HE would to that very type of thing if he thought it could provide him the tool he needed to control Ted at a later date. But there were other expenditures on Ted’s behalf. He frequently got large cash advances, which seemed rather strange considering that everyone had a credit card. And then of course there were his flying lessons. All of his flying lessons were paid for out of Church funds, including those which he required to obtain his jet pilot’s license. All of those payments were made out of the general expense fund. When you get right down to it, the Falcon jet was more of a toy than a business tool because it was used mostly for his personal use. The same applied to the Cessna Citation which was used by Ron Dart and some other top ministers.”
Again, Herrmann brought up the same question that he had asked Kuhn, and a question that constantly prayed upon all of our minds. He asked, “This is incredible. I really find it all hard to believe. I just don’t see how this man Rader can stay so tightly locked in to the point of coming out on top of Herbert Armstrong’s own son. He must have something on Herbert Armstrong that no one knows about. Do you have any idea what it might be?”
Wright stumbled and stammered a bit and acted as though he wished that the question had never been asked.. He then said, ‘Well, of course Armstrong has spent more than his share of money, too. Rader was the guy who knows where every penny has gone. He has threatened Mr. Armstrong many times that if he were ever let go he would tell the world everything knows. He has also threatened many times to sue the Church and sue Herbert Armstrong. His knowledge seems to go far beyond money. A lot of the hold that he has over Herbert Armstrong seems to be centered around Armstrong’s own weaknesses. He has a drinking problem and (pg 165) that just leads to all other types of problems. I think the whole key to the thin is Dr. Floyd Lochner. He’s a Ph.D. who used to teach at the college, but most of the time he accompanied Mr. Armstrong as one of his aides and also as his masseur. Lochner claims to have made several tape recordings of Herbert Armstrong revealing very intimate things to him. He has acknowledged that he knows that he is not an apostle, but that it is through the use of such a title that he can control the Church. And then I understand that there were many sexual sins, but I don't know the details about it. I would say that the validity of all this is confirmed by the fact that Dr. Lochner is on a salary from the college of about $25,000 a year. He has absolutely no duties and no responsibilities. It is strictly a no-show job.”
I had heard such stories many times, but they were always probably about tenth-hand rumors. Other than the comments made to me by Mark Armstrong, this was the first I had heard such things from someone close to the situation. Wright was asked whether he still had any information in his personal files regarding all of his investigations, and he said that he had very little remaining. At about the time Garner Ted was ousted later in the year, Rader seized all of Wright’s files in his office. He did say, however, that he had removed some documents from the premises and had them stored in his garage at his home and had only hoped that they would still be there.
At the end of the meeting, Wright assured us that he would contact Chodos by phone, and arrange to bring him Church documents that he had stored in his garage in Altadena. He promised that after spending the weekend in Texas, where his family was staying, that he would return to his home, and see that the documents were given to Chodos.
Both Ron and I were quite stunned by all of what we had heard. Even though we had heard rumors of all sorts of wrongdoings for so long, even after having seen several documents, to hear it all confirmed intimate detail by one who was there was almost more than we could cope with. How it could have gone on so long, we wondered. Could everyone either have been so blinded, or such a past of it themselves that such a monstrous abomination could continue to exist in the guise of a church? It would be so easy to become totally disillusioned and just check out on religion altogether. Yet we knew that was not the answer, for we knew God (pg 166) is real and Jesus Christ is our Savior, ever-living High Priest and soon coming King. Yet how could this be, such corruption in the very Church that seems to have more of the truths of God than any other religious organization?
Of course, it was nothing new. Both Old and the New Testaments have several accounts of corruption among religious leaders. Even one of Christ’s own disciples, Judas Iscariot, was able to be bought. If one who lived with Christ and actually witnessed his miracles could fall to such temptation, then none of us are immune but for the grace of our Savior. Perhaps there is an interesting parallel here. Judas Iscariot not only took a payoff to betray Christ, but he was actually the treasurer. Not only was he the treasurer, but he had been dipping in the till. This point was clearly made in the twelfth chapter of John when Mary, the sister of Lazarus, anointed Christ’s feet with a very expensive ointment and then wiped his feet with her hair. Judas Iscariot said, in response to that, “Why was not this ointment sold for 300 pence and given to the poor?” He seemed to be so concerned for the poor. What he really meant was that they should sell the ointment with the proceeds being given to him, the treasurer, to, in turn, distribute to the poor. But was he really giving all the money to the poor as he claimed? The next verse makes it very plain. John states in Verse 6: “This he said not that he had cared for the poor, but because he was a thief and had the bag.
, and bare what was put therein.”
Here was Judas Iscariot the bag man, the treasurer for the disciples, acting so concerned for the poor, when in fact he wanted to replenish the treasury which had been running low because had been stealing from it. Jesus, knowing he was soon to be crucified and realizing that Mary was anointing him for his burial said, “Let her alone; against the day of my burying had she kept this.”
The parallels here are amazing. Jesus Christ had a thief and a traitor right beside him, so we must realize that there is no reason why we should expect any less difficulties today.
With Kuhn and Wright on their way back to California, and the lawsuit just about ready to go, we were expecting that sometime during the following week that it would be served. The information that we had obtained was sure to be very helpful, and we were quite (pg 167) relieved that we had been successful in obtaining it before the service of the complaint would have everyone scrambling for their own individual necks.
