Jack Kessler 1981 Letter
to WCG Board of Directors
This letter reveals the evil of the continuing, persistent financial abuses and shocking moral depravity and cover-up, which was taking place in the Worldwide Church of God headquarters. Includes revealing information on Herbert Armstrong's lifestyle. Also covers Joseph W. Tkach, Sr. stealing $5,000 as a "needy church member."NOTICE: In April 2009 Worldwide Church of God changed their name in the United States to Grace Communion International. (Some local church areas and countries may still carry the former name or a different one.)
Also be sure and read:
Robert Gerringer 1975 Letter to Charles Hunting (Reveals how Herbert Armstrong was confronted time and again with doctrinal issues and failed to change. Covers double standards, false prophecies, bad fruit, the lack of intellectual freedom of the members to think for themselves, etc.)
Worldwide Church of God History (Transcription of tape by Kenneth Westby; exposes the double standards of the Armstrongs and the suffering of the members that finally led to the exit of many WCG evangelists, ministers and members in the 70's.)
Hanky-Panky and Revolt in the Worldwide Church of God (Article originally published in True magazine. Covers the 1972 date; misuse of funds by the Armstrongs, how H.W.A. would not listen to charges, and exploitation and suffering of members.)
W. Jack Kessler
2982 Tiffany Circle
Los Angeles, CA 90077
December 30, 1981
The Board of Directors and Council of Elders
Worldwide Church of God
300 West Green Street
Pasadena, California 91123
The subject matter of this letter is difficult to treat in writing. An oral presentation could more clearly reflect the genuine concern I have for each of you, and perhaps I could respond to your apprehensions with more compassion were it possible for us to meet and discuss these issues. I shall nonetheless attempt to put the matter in such a way that some emotion is allowed to be expressed, and I can think of no better way than to place this entire communication in the context of our shared beliefs.
I want the tone and organization of this letter to be somewhat conversational, because I sincerely hope that you will not stiffen you resolve to ignore its message, blithely refer the matter to counsel, and go on about your business as if you had no responsibility for action. I do not wish to dissuade you from availing yourselves of competent legal counsel, however, because this letter also serves as a formal, legal demand pursuant to the laws of man (as explained below), my own standards of professional conduct, and, as I hope to show, the laws of God.
This is also the culmination of a long series of letters and memoranda. I am unsure how many of you have read or been involved in all the previous colloquy. For those who shortly will become alarmed at the unsparing commentary that this letter presents, I can only say that it is indeed a method of last resort, use only after every more moderate attempt has been contemptuously rebuffed.
The main evils in which the Church is currently engaged are not those of which a court of law should take cognizance; they are indeed Internal, ecclesiastical decisions. Their common source, however, has manifested itself in continuing, persistent, financial abuses that either you pretend are beyond your control, or else you have grown so accustomed to their occurrence that they no longer trouble your conscience. You obviously do not realize that such problems, if uncorrected, threaten the ability of the Church to fulfill its mission in this world, and that you will be held responsible for your failure to prevent this unnecessary and certain persecution. Such persecution will not be for righteousness sake. When you are delivered to the judge, and the judge delivers you to the officer, and you are cast into prison, it will do little good to then remember Christ warned that you would not be released until you've paid the uttermost farthing. (Matt 5:25-26, paraphrased.)
The human condition is such that it would shock probably only just a few to learn of the moral depravity that is reported commonly among you. Although others, such as Dave Robinson* and Floyd Lochner, apparently thought it might work to their advantage to report Mr. Armstrong's admission (which he's made to several) that he had engaged repeatedly in incestuous intercourse with his daughter during the first 10 years of his ministry, as well as more recent, self-confessed sexual perversity, such attacks have been weathered, and I know that both you and the membership have steeled yourselves against potential adverse publicity, if any, that such revelations could bring. After all, Christ did say that they that are whole don't need a physician, and he came to call not the righteous but the sinners to repentance. (Matt. 9:12-13.) [Note from ESN: See our Comment at end of article.] I mention this to you for a couple of reasons. First, because some have tried to use such information in an illegitimate way in the past, and because some of you assume that anyone in possession of such knowledge may try do so in the future (perhaps because some of you would like to think that you could use it as some kind of leverage even now), I want to draw at the outset a clear distinction between that and the approach of this letter. Second, even though by mentioning the more notorious of the scandals, some could accuse me of using it nonetheless, I feel its mention and dismissal as an issue precludes anyone from using it in the future or from construing my actions as being overshadowed by some implied threat of its later disclosure. The particular facts are a matter of fairly wide public dissemination in any event, so their mention here should defuse any remain power some feel their disclosure could bring.
The issue of morality takes on its true significance when it is not a mere weakness of the flesh, but when, coupled with blatant hypocrisy, it is used for political advantage. At the beginning of this year two people responded to a vicious smear campaign that had been launched by Mr. Kevin Dean. Mr. Dean had apparently forsaken Christ to become a disciple of Segretti and Krogh. Showing tremendous energy, if not ingenuity, he (with the assistance of his brother and fellow minister Aaron) purchased an extensive cache of electronic surveillance equipment in Hong Kong and Tokyo, organized a burglary squad, which included the campus locksmith, and set out to discredit any who stood in the way of his rise to power. If he couldn't dig up any dirt, he could always invent it. (Aaron admitted to being especially anxious to go to work on Mr. Rod Meredith's phone lines.) I suppose that such antics are par for the course in large centrally managed organizations, but it shocked some of their early targets. For those of you who are not familiar with the mundane details of these covert operations, you might check with fellow board members Tkach, LaRavia, McNair, or Walker. It would not be a good idea to reread the cover-up under Mr. Armstrong's signature in the Pastor General's report (ironically referring to Watergate as if that scandal concerned the actual burglaries rather than the web of falsehoods), unless you wish to be disillusioned by fairly clumsy fabrication.
Mr. Dean's activities are instructive not for their intrinsic evil, but for the reaction their disclosure received. This brings us closer to the heart of why I am writing to you. When Mr. John Kineston and Mr. Joseph Kotora approached Mr. Herbert Armstrong and told him of Mr. Dean's activities, and defended themselves against false accusations that Mr. Dean had made against them to Mr. Armstrong, he reacted in a way that is now probably all too familiar to most of you. First he told them that he knew them to be men of truth. Second, he told them that they would be given the chance to face their accusers and that he would "clean up this stinkpot" as soon as he returned to Pasadena. Third, he saw to it that Messrs. Kineston and Kotora were fired and disfellowshipped before such confrontation could ever take place. (This result, you see, promotes unity and harmony among the evildoers with the Church and only sacrifices a few innocent lives in the process.) And fourth, Mr. Armstrong made sure that you all saw and heard, once again, how futile it is be a whistle-blower in this Church.
It is unfortunate that we can be so easily deceived as to what our human responsibilities are. We all understand that "though hand join in hand, the wicked shall not be unpunished, but the seed of the righteous shall be delivered." (Prov. 11:21.) Elsewhere we learn how this will come about: Vengeance is the Lord's and He will repay (Rom. 12:19). Far be it from us, therefore, to judge our brother or to correct an unjust situation. If Messrs. Kineston and Kotora have been treated unfairly, and if their accusers are as bad as they seem, then God will deal with the unpleasantries, the rewards will be commensurate, and our responsibility is discharged by being sure that our superior, Mr. Armstrong, has been made aware of the situation. We are responsible to him; he is responsible to God. If God is displeased with anything Mr. Armstrong does, then He, and He alone will correct the problem. Moreover, if we want to do something terribly overt, we can pray about it.
It may surprise you to learn that I agree with the foregoing, as far as it goes. But without more, it is only half a doctrine. By forsaking any effort to entreat our aged apostle, by fearing to suffer the fate of the whistle-blower, you are doing him a grave disservice. The teaching of Matthew 18:15-17 is otherwise. It is well worth the trouble to get into the habit of trying to build a Church of the highest moral integrity in every sphere, and acting as if our lives depended upon it, without any thought for our own necks.
The reason any of these introductory comments are relevant to the principal matters about which I am concerned with is this: The way in which we have dealt with our internal morality, even if it is right (which it is not), wrongly colors the manner in which we think we should deal with external legalities. Because a Mr. Kotora or a Mr. Kineston should rather take wrong and suffer himself to be defrauded than to take his legitimate grievances to a court of law (your probable reading of 1 Cor. 6:7), and because God will deal with Mr. Armstrong, if needed, then any other context in which a legal action is discussed is automatically considered Satanic. A member threatening suit is worth of immediate disfellowshipment, and the Church need look no further for justification than the fact that the individual initiated a suit against a brother or the Church. If this is the way you think, you're wrong.
The 13th chapter of Romans is one with which we are all familiar. (Although the last four verses are generally ignored in this context as going on to another subject, they seem especially apt.) We have long been taught (some of you were my teachers) that we must be subject to man's laws and only to disobey them where they conflict with God's (as in Acts 5:28-29). This truth should inform not only our primary conduct, but also our reaction to broken statutes when we become witnesses. I'll return to this thought later, when I spell out what I feel constrained to do. But it will make more sense to discuss the types of problems first.
Mr. Armstrong is somewhat of a tragic figure. He is a man to whom a great calling has been given and through whom marvelous insight has been revealed. [Note: To understand whether or not this statement is true, go to our section: Questioning HWA (was he who he said he was?)] He is also a man motivated by strong passions, and is perhaps one of the most naturally selfish men to have walked the earth, ever. That he has been able to control his desires and egocentrism to an appreciable degree shows some measure of his tremendous will, and only God can judge to what extent he has overcome more than the rest of us, a well he may have. He is also an uneducated man, though he has proved more than any that this does not have to be a handicap; indeed, in his advantage to stick close to the source of his inspiration without trying to refine his understanding in the light of disparate thoughts. But there is a liability implicit in this background, and that is ignorance of the workings of the world, coupled with a disdain for the regulatory milieu in which the Church must survive. Christ didn't urge his disciples to needlessly insult Caesar; indeed, it is a distinct disadvantage to be neither wise nor harmless. (Cf. Matt. 10:16.) It will be easy enough to attract persecution simply by being righteous. It makes no sense to invite it for the wrong reasons.
As long as Mr. Armstrong and the Church receive competent advice on legal matters, however, the potential can be minimized. But Mr. Armstrong's advisors not only have to be knowledgeable, the must also be candid, forthright, and vigorous in curbing any of his untoward desires that run afoul of the laws of the land. Because of the tremendous power that his office has within the hierarchy, and because of the attitude of unquestioning obedience that is preached to all subordinates, and also because of the imbedded notion discussed above that he is accountable only to God, Mr. Armstrong is capable of causing considerable problems both for himself and for the Church. And he will do this damage without the benefit of competent counsel if anyone apprehends that he may be feeling a little too much like the queen of hearts on the day that they venture forth to advise.
There have been only two individuals of any consequence whom God has called to fulfill that role that has now devolved upon you. Loma Armstrong1 and Stan Rader2 were the only persistent, loving, voices of restraint. Sadly, both are now silenced. With no effective governor, it is only a matter of time before grave damage is done.
I feel a particularly acute sense of need to see some discipline re-imposed. For the past 10 years, in one way or another, I had been used by the Church to help it develop a system of internal controls so that abuses could not overrun the system.
Unfortunately, no system of controls, whether they be financial, administrative, or otherwise, can be any more sound than the people who maintain the system. And every control is capable of being overridden by top management, even more so in the Worldwide Church of God. Having seen each of the key financial personnel wrongly fired or banished in the past 12 months, and replaced by people who have neither the competence, the wisdom, nor the guts to keep the system intact, there appears little hope for the Church to reform its ways.
Mr. Willis J. Bickett, the former assistant secretary-treasurer, was asked by Mr. Armstrong to violate the system "as a test" on the day after Mr. Rader's replacement had been announced. From an outsider's viewpoint, he passed the test; that is, he refused to break the established controls with out a direct command from Mr. Armstrong after a chance to confront him in a face-to-face meeting wherein he could explain his actions. But Mr. Armstrong was clearly of the opinion that he had failed. Mr. Bickett was immediately removed from his position and sent to be on the faculty of the Church's junior college in Big Sandy, Texas. He was later threatened (in writing) with immediate termination if he did not sign a false representation letter to Arthur Anderson & Co. to show that he was thereby on Mr. Armstrong's "team". In fairness to Mr. Neff [Leroy Neff], who signed the threat, I hasten to point out that Mr. Neff's later claims not to have known that Mr. Bicket considered the representations false, and blames his alleged confusion on the resignation of auditing firm's manager who was to have to responded to Mr. Bicket's reservations some months earlier. Mr. Bicket was terminated shortly thereafter.
The specific financial abuses that have plagued the Church in the past were bred in just such a climate of intimidation. What is to prevent the same scheme that Mr. Ray Wright used to embezzle over a quarter million dollars from being used again? Who is left in the organization, other than Mr. Wright (who is now back in the financial affairs office, without having repaid the funds), who knows how he pulled it off and who wouldn't recognize it again? Who will prevent the Church from getting involved in another $50,000.00 kickback scheme to a Mexican bank when it sells another jet aircraft, other than the same legal office who so poorly monitored the first sale? Who will tell Mr. Dennis Stauffer that a scheme is more than just ill-advised whereby corporate officers are able to purchase monetized silver and gold bullion from the Church at its cost through the use of fraudulent book entries to show that the investments where purchased on behalf of the officer (through the extension of free credit) when prices have risen and on behalf of the Church's own account, or that its employee benefit fund trust, when prices fall?
Each of you should remember the letter I wrote to the entire board exactly 4 years ago today. (If you were not a board member at the time of January 1978 meeting when Mr. Rader read it into the record, and when he handed each member a personal copy, you must have reviewed by now the minutes from that meeting. At least I have to assume that none would ever undertake to accept nomination to board membership without reviewing what had gone before.) On that occasion I found it my duty to forewarn the Church of its material weaknesses in its internal controls. (See Statement on Auditing Standards No. 20, Required Communication of Material Weaknesses in Internal Accounting Control, AICPA.) I had approached Mr. Rader with the problems, the roots of which he had been trying valiantly to dig out for years, and he said that there were two things to be done. He reminded me of my professional duty to inform the board in writing, and he felt that because sufficient corrective action was unlikely to be forthcoming, he must resign from the board. It's all in the minutes of that meeting, including a sort of valedictory address by Mr. Rader warning of the consequences of continued misallocation of economic resources.
When Mr. Rader resigned for the last time, in part because he felt ineffective in (or just plain tired of) urging Mr. Armstrong to behave rationally, he received assurances from Mr. Armstrong that the job of cleaning up the Church would proceed apace. Mr. Armstrong told Mr. Rader that I would be asked to become the new treasurer and that "Jack and Jack" (referring to Mr. Bicket and myself, as well as to a famous carriage horse racing team from Mr. Armstrong's childhood) would be given a free hand to continue the job at hand. Mr. Rader even persuaded me to forego other opportunities so that my services would be available in an amount adequate to the task on a "first-call" basis. My offer to Messrs. Neff, Fahey, and Armstrong to inform them of the bases I was covering, after my services were terminated abruptly, has gone unanswered. The abuses that were in the process of being corrected in the aftermath of the attorney general's lawsuit, therefore, remain unreformed. All of them to my knowledge relate to the inurement of the earnings of the Church to Mr. Armstrong, members of his family, and close personal aides. Before its discovery, the use of Church coffers as a sort of personal piggy bank for instant credit (always interest-free) or outright appropriation had grown to outrageous proportions through constant circumvention of the system by Mr. Armstrong and his family. We hoped to reconcile the problem within the Church, and out of the cold light of the U.S. attorney's office, and then to recover the funds and thereby prevent a scandal. I feel particularly motivated in at least one respect to see this corrected because I prepared Mr. Armstrong's tax returns for years without knowing that he was consistently falsifying his expense account, abusing the trust funds of Church, and misusing Church assets for his own benefit on a relatively large scale. I also represented the Church in its successful defense in 1980-81 of its exempt status before the National Office of the Internal Revenue Service, a status that later facts may prove to have been improvidently granted.
It is ironic that the attorney general, having only part of the story, focused upon a series of highly visible transactions between the Church and Mr. Rader, all of which were in fact proper, and missed the real problem, which was Mr. Armstrong. I have never known Mr. Rader to have ever abused his trust. To his and my chagrin, however, neither of us had ever pieced together the entire picture of Mr. Armstrong's abuse, and were on the verge of solving the puzzle with Mr. Bicket's assistance when we were all drummed out of the corps. It is only in my belated abandonment of any hope in realizing a discreet dialogue with the proper Church officials, or in seeing some evidence that the errors would be corrected, that I take more direct steps implicit in the writing of this letter. Recent activities, discussed four paragraphs hence, also prompt this action.
So that there is no misunderstanding, let me be rather more specific about these particular allegations. I can only skim the surface, but you are sitting on all the documentation and can research the facts for yourselves if you have the collective competence to know where to look. (some of you need look no further than the end of your nose.) The ultimate facts are as I stated in the paragraph before last. Some f the specific instances are discussed here and, by the way of illustration, in the two attachments to this letter. (I apologize for adding to the length of this letter by including attachments, and I realize that there are many, many other attachments that you may find of even greater interest, but then again, you already have custody of all of the source documents. These particular attachments are not notable, merely illustrative) Some of you know that Mr. Armstrong takes with him on each trip in his aircraft $10,000 in cash for which he does not account, which is not treated as personal compensation, and which is used for his personal pleasure or given to his private nurses as "fun money" or else given to his wife. When such funds are insufficient to satisfy each of his desires, he has additional funds wired under false pretexts from the Church to pay for such things as a $30,000.00 rental payment for a yacht in Monte Carlo. (Some of you may recall how that he later complained that Mr. Rader (who was not there) either "forced" Mr. Armstrong and his wife to do it or else Mr. Rader had made the arrangements himself. Competent testimony will prove otherwise.) Members of his family use corporate credit cards for personal use on a persistent basis, without any present ability or apparent intention to repay, and he uses actual handwritten checks drawn on the corporate accounts. His household staff includes a full-time cook, who is probably and appropriate perquisite, but she is paid rather handsomely by most standards in that he takes out a corporate check to give her a little bonus every so often. Last year her total cash remuneration from the Church, excluding the value of interest-free loans, a company car, meals and other perks, was in excess of $50,000. Since he requires no approval for the issuance of bonus compensation to himself, he does not hesitate to increase his own issuance of bonus compensation to himself, he does not hesitate to increase his own pay when the need appears to present itself. Often, he is quite vocal about it: He recently shocked Frank Mariani (President Reagan's tailor) by loudly complaining for all to hear that with taxes so high he was going to have to give himself a bonus of $100,000.00 just pay for his clothes. Last year Mr. Armstrong's compensation, at least that which went through the payroll system, was in excess of $500,000.00. (I believe it was around $563,000.00, but that figure may include Mrs. Armstrong's salary.) I am informed that he keeps on his person cashier's checks or certificates of deposit in his name in amounts ranging into six figures so that he can, as he once expressed, get out of the country if the attorney general ever comes after him. He had wanted to place $1,000,000.00 in non-interest-bearing cashier's checks payable to him so that he and the Church would be "protected" in such an eventuality. Of course, you know that his daughter Beverly3 has a lifetime contract for "personal services" with the written proviso that she take orders only from her father and is relieved of providing any services upon his death. In point of fact, she renders no services whatsoever. Her compensation is more generous than that which Cardinal Cody is alleged to have given his friend, and it includes the use of an exquisitely furnished home in La Canada at a guaranteed monthly rental of $250.00 for life. The use of the Grumman Gulfstream II jet aircraft for personal pleasure, whether it be a trip to London for the sole purpose of purchasing a specially made prosthetic dildo (which he carries in a Hermes pouch), or just a trip from Tucson to Jurgensen's in Pasadena for groceries, is another area of concern. Speaking in Mr. Armstrong's defense, his actions may have been unthinking, uninformed, or just plain stupid. But I do not understand why do you don't seem to think of them as problems.
Even If Mr. Armstrong is not culpable in the criminal sense, his example is all too readily followed by others who must be said to know better. I am told that the illustrious Mr. Dean aforementioned felt that the he too could stock his private larder from Jurgensen's to the tune of between $700.00 to $1,000.00 per month until someone questioned why Mr. Armstrong's Pasadena household expenses were so large when only his Pasadena housekeeper was in residence. When your taste regularly runs to wine that costs $80.00 per bottle, it can be expensive. Mr. Dean may learn that it is even more expensive to brag to others about getting it for "free." According to Mr. Robin Webber, Mr. Joseph Tkach apparently felt justified in giving himself from a trust fund he controlled a little advance of $5,000.00 as a "needy Church member" to take advantage of a special investment in unregistered securities then illegally being pedaled (against the advice of counsel) by the Dean brothers. In some cases, Mr. Armstrong encouraged others to join in the fun of having treasure troves from Harrod's of London maintained in their homes so that his conscience could be easily be assuaged.
Perhaps I should also say a few words in defense of my colleagues at Arthur Andersen & Co.,4 who will be as embarrassed as I am that these things happened under our collective nose. They relied, as they were entitled, on numerous representations both from management and from myself, which now appear to have been based on incomplete information. I did tell them everything I knew at the time, but our collective knowledge proved insufficient in the face of Mr. Armstrong's unreliability. Even the work we did together, cleaning up the festival department, for example, may now be undone. I understand that once again it is becoming routine for people such as Mr. Dwight Viehe to take a 2-week trip to a tropical isle (with his wife) to make sure that the hall that the local minister recommends that the Church rents for the Feast of Tabernacles is the right size. One would think that the policy of turning such aspects of festival administration over to local Church pastors has been totally abandoned for a more "workable" policy as was extant in the "good old days." I am somewhat surprised, however, that even in light of the admonitions of SAS No. 16 (particularly the section on integrity of management) the firm would not be more careful in getting appropriate representations. Their last examinations was concluded without Mr. Rader's representation letter, even though he had served as the chief financial officer during the year in question and remained and executive vice-president of one of the entitles (whose chief financial officer was not even approached for a representation letter). Moreover, Mr. Rader had indicated to the engagement manager that he could not sign a version of the representation letter that was initially forwarded to him because it was inaccurate. In that context, it is all the more curious why they never got back to him. It is also unfortunate that they have allowed the client to backslide on Mr. Rader's promise to the brethren that full financial disclosure would be made annually in the Church newspaper by reprinting the audited financials. Even though in the recent appellate court hearing leading to the notable vindication of our battle with the attorney general Mr. Helge "misstated himself" by assuring the justices that the Church did so publish its financial affairs, the candor befitting an officer of the court should have led him to divulge that such assurances were no longer true and that the Church no longer intends to disclose any of its financial affairs to its members. (Since this paragraph is supposed to be in defense of the auditors, I should say that I haven't seen their opinion letter for 1980, and I'm sure that it must contain a scope limitation qualification for not being permitted by Mr. Neff to interview or obtain representations from departed management. They are under no obligation to insist on the lifting of such restrictions, although they undoubtedly notified each of you that management had so encumbered their engagement.)
Pt. 1 | Pt. 2
*David Robinson, author of Herbert Armstrong's Tangled Web.