William & Mary Law Review Volume 29 (1987-1988) Issue 3 Article 2 April 1988 Laying Hands on Religious Racketeers: Applying Civil RICO to Fraudulent Religious Solicitation Jonathan Turley Follow this and additional works at: https://scholarship.law.wm.edu/wmlr Part of the Criminal Law Commons Repository Citation Jonathan Turley, Laying Hands on Religious Racketeers: Applying Civil RICO to Fraudulent Religious Solicitation, 29 Wm. & Mary L. Rev. 441 (1988), https://scholarship.law.wm.edu/wmlr/ vol29/iss3/2 Copyright c 1988 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/wmlr William and Mary Law Review VOLUME 29 SPRING 1988 NUMBER 3 LAYING HANDS ON RELIGIOUS RACKETEERS: APPLYING CIVIL RICO TO FRAUDULENT RELIGIOUS SOLICITATION JONATHAN TURLEY* CONTENTS I. INTRODUCTION ....................................... 443 II. RELIGIOUS TELEVISION SOLICITATION: SHOULD THE ELEVENTH COMMANDMENT BE 'CAVEAT EMPTOR'? . 447 A. General Solicitation Fraud ................... 455 B. Goal-Specific Solicitation Fraud .............. 459 III. PRIVATE AND GOVERNMENTAL REMEDIES FOR RELIGIOUS FRAUD .......................................... 463 A. Private Enforcement ....................... 465 B. Governmental Enforcement .................. 468 1. The Federal Communications Commission: "Plugged into Heaven".................. 468 2. The Internal Revenue Service: Rendering unto Caesar ............................ 470 3. Political and PracticalProblems of Govern- mental Deterrence ...................... 474 * Federal Judicial Clerk, United States Court of Appeals for the Fifth Circuit. J.D., Northwestern University School of Law, 1987; B.A., University of Chicago, 1983. I wish to thank Thomas Eovaldi for his encouragement at various stages of this research. The respon- sibility, however, for all theories and conclusions in this Article is entirely the author's. 442 WILLIAM AND MARY LAW REVIEW [Vol. 29:441 IV. FRAUD AND THE FAITHFUL: SUING RELIGIOUS RACKE- TEERS UNDER CIVIL RICO AND THE GAINS MULTIPLICA- TION APPROACH ...................................... 476 A. Civil RICO: Penalty Maximization and the Eco- nomics of Racketeering ...................... 480 B. Religious Racketeering and the Mechanics of a Civil RICO Action ........................... 485 C. Substantial Versus Fractional Religious Racke- teers: Should Society Ruin Them All and Let God Sort Them Out? .. 488 D. Focused Penalty Maximization: The Gains Mul- tiplication Approach Applied to Cases of Reli- gious Racketeering .......................... 490 V. CONCLUSION ........................................ 496 1988] RELIGIOUS RACKETEERS 443 "Thou shalt not defraud thy neighbor."' "[I]t happens to all good Christians, to Jesus and Paul and Dr. 2 Falwell.' I. INTRODUCTION In one television commercial, an American evangelist in Africa pulls back a blanket to expose a dead child being cradled in its mother's arms.3 In another commercial, a charity representative in Portugal is shown leading five children away from their mother, who cannot feed them. As the Portuguese mother goes into a seizure brought on by malnutrition, the church spokesman assures the television audience that this is not a staged event.4 In another commercial, a California preacher announces his divinely inspired "Dare to be Rich" religion that, among other things, guarantees believers a four-fold return on every dollar given to God-via the preacher. 5 These are all examples of religious television solicita- tion, and in the United States this is big business. Every year an estimated two billion tax-deductible dollars are given to religious fund raisers.6 Of that sum, $1 billion goes directly to support tele- vision ministries such as those run by Jerry Falwell, Pat Robert- son, Jimmy Swaggart, Oral Roberts, and Robert Schuller.7 The re- maining $1 billion goes to smaller television ministries and an 1. Leviticus 19:13 (King James). 2. Pastor Carl Stevens, leader of The Bible Speaks, after being found guilty of "clerical deceit, avarice and subjugation" by a federal judge. Fisher, Controversial Church Group Resettles Near Baltimore, Wash. Post, Sept. 29, 1987, at A10, col 5. 3. See Johnston & Leonard, TV Charities:Let the Giver Beware, L.A. Times, Jan. 20, 1985, at 3, col. 1. 4. Id. 5. See United States v. Rasheed, 663 F.2d 843, 845 (9th Cir. 1981), cert. denied, 454 U.S. 1157 (1982). 6. Ostling, TV's Unholy Row, TiM, Apr. 6, 1987, at 60. Americans give $18 billion to religious organizations annually. C. BIcAL, CHARrry USA 85 (1979). 7. Johnston & Leonard, supra note 3, at 3. Figures differ radically because of the prolifer- ation of small television ministries appearing on local television stations. Nevertheless, the top five televangelists alone account for more than $500 million in annual religious revenue, mostly from solicitations. See infra note 46. Religious relief organizations receive equally impressive annual solicitations. One such organization, World Vision, takes in an estimated $237 million annually. EVANGEOICAL CoUcIL FOR FINANCIAL ACCOUNTABILITY, 1987 MEMBER REPORT 17 [hereinafter EVANGELICAL COUNCIL REPORT]. See Johnston & Leonard, supra note 3, at 3; Lindsey, Religious Group Facing Inquiries on Ethiopia Aid, N.Y. Times, Jan. 13, 1985, at 14, col. 1. 444 WILLIAM AND MARY LAW REVIEW [Vol. 29:441 assortment of religious fund-raising charities, such as International Christian Aid, that solicit donations for relief programs and minis- tries abroad, often in Africa, Asia, and Latin America.' Every year, potentially hundreds of millions of dollars are lost to religious fraud." Religious organizations use television to solicit funds for specific purposes such as African relief without any re- quirement, or apparently any desire, to verify their use. 10 Many of the top televangelists" and religious relief organizations 12 have been accused of major fraudulent solicitation, although little actual 8. International Christian Aid and its president, L. Joe Bass, have repeatedly been ac- cused of financial improprieties. See infra notes 57-58 and accompanying text. 9. Estimating how much fraudulent solicitation occurs is difficult because few cases are litigated. Nevertheless, considering the total amount of money involved, the potential num- bers are staggering. In one solicitation by a Roman Catholic order, $20.4 million was raised in an 18-month drive for hungry children in Africa, but only $500,000, or less than 3 %, was actually spent on the missions. Rakay & Sugarman, A Reconsiderationof the Religious Ex- emption: The Need for Financial Disclosure of Religious Fund Raising and Solicitation Practices,9 Loy. U. CH. L.J. 863, 864 n.7 (1978). For additional facts on this solicitation drive, see infra note 92. Other organizations that collect millions of dollars annually have been accused of diverting the money from the advertised purposes. See infra notes 70-99 and accompanying text. 10. A number of top televangelists solicit funds for missions overseas. For example, Jerry Falwell at one time raised considerable amounts of funds ostensibly for such missions. In- ability to account for the spending of these funds has prompted the continual concern of public interest groups. Woodward, The Churches vs. the State, NEWSWEEK, Feb. 23, 1981, at 78 (discussing Falwell's annual campaigns raising $50 million in unchecked funds). 11. For a discussion of the current top televangelists, see infra notes 33-45 and accompa- nying text. One expert in the area estimates that half of all televangelists engage in dubious solicitation techniques. Nightline: PTL Club Scandal Continues (2), at 5 (ABC television broadcast, Apr. 27, 1987) [hereinafter Nightline] (interview with Paul Roper, Operation Anti-Christ). Recently, one of the best-known fundamentalist broadcasters, Carl Stevens, was forced to sell all of his church assets to repay $6.6 million to a contributor. Fisher, supra note 2, at A10, col. 5. Operating mainly via satellite radio, Stevens ran The Bible Speaks, a fundamentalist church with 16,000 members in the United States and 23 other countries. Id. A federal bankruptcy judge found that Stevens had deceived a wealthy devo- tee into giving him money. In re The Bible Speaks, 73 B.R. 848 (Bankr. D. Mass. 1987), aff'd sub nom The Bible Speaks v. Dovydenas, 81 B.R. 750 (D. Mass. 1988). After selling his assets, Stevens relocated with an estimated 1,000 followers in Baltimore and has established an organization called Greater Grace. Fisher, supra note 2, at A12, col. 2. Stevens is some- what ambiguous regarding his ministry's ethical obligations. When asked recently "whether he teaches [his followers] that it is permissible to lie, Stevens said only that 'the church has always had to defend itself against people who are against Jesus Christ. There's no lying there.'" Id. at A12, col. 4. 12. Religious relief organizations include World Vision and International Christian Aid, which have both been accused of financial misconduct. See infra notes 95-99 and accompa- nying text. 1988] RELIGIOUS RACKETEERS 445 litigation, private or governmental, has ever resulted. Governmen- tal agencies face a number of legal and political disincentives in pursuing fraudulent religious solicitation and private citizens have few incentives for bringing action themselves. This Article examines the various legal remedies available to combat religious fraud. Although much of the discussion will focus on television fraud, specifically top television ministries and reli- gious