Falling from Grace: The PTL Scandal

On March 19,1987, Jim Bakker, head of the $172 million PTL television ministry, resigned after admitting to a "sexual encounter" with church secretary, Jessica Hahn, in 1980. Bakker put partial blame for his resignation on a series of articles about to be published by the Charlotte Observer. Although the Observer staff had known about the affair for three years, they did not disclose it until reporter Charles Shepard had evidence that money was given to try to buy Hahn's silence —money he eventually learned was siphoned from funds donated by PTL viewers for the ministry. 

Financial impropriety, rather than sexual indiscretion, had long been of interest to the Observer, and its stories in previous years had led to investigations of PTL operations by several state and federal agencies. The following excerpts from Shepard and Elizabeth Leland's 1987 reports illustrate how the temptations to excess led a man of God into a ministry of greed. 

 

March 20

Resignation and the Affair 

The PTL President Jim Bakker, who built a fledgling Christian TV show in Charlotte into one of the nation's most popular TV ministries, resigned Thursday from PTL. 

"I have decided that for the good of my family, the church and all of our related ministries that I should resign and step down immediately from PTL. 

"I have also today resigned from the Assemblies of God. I am not able to muster the resources needed to combat a new wave of attacks that I have learned is about to be launched against us by the Charlotte Observer, which has attacked us incessantly for the past 12 years. 

"I am appalled at the baseness of this present campaign to defame and vilify me. I categorically deny that I have ever sexually assaulted or harassed anyone. 

"I sorrowfully acknowledge that seven years ago, in an isolated incident, I was wickedly manipulated by treacherous former friends and then colleagues who victimized me with the aid of a female confederate. 

"They conspired to betray me into a sexual encounter at a time of great stress in my marital life. Vulnerable as I was at the time, I was set up as part of a scheme to co-opt me and obtain some advantage for themselves over me in connection with their hope for position in the ministry. 

"I now, in hindsight, realize payment should have been resisted and we ought to have exposed the blackmailers to the penalties of the law. I've asked my friend, Jerry Falwell, to help me in this crisis." 

 

Bakker made the comments as the Observer was investigating allegations that a New York woman and her representatives received $115,000 in 1985 after she told PTL she had sexual relations with Bakker in a Florida hotel room. 

Richard Oppel, editor of the Observer, responded in a statement "We were investigating allegations about PTL's Jim Bakker at the time of his resignation. . . . No article would have been published unless we were convinced of the accuracy and fairness of the information, which did involve allegations of a sexual encounter and subsequent payments. 

"Mr. Bakker often has questioned our motives in pursuing coverage of PTL's activities. The accuracy of our coverage has never been successfully challenged. 

"We have covered PTL closely for more than 10 years because it is a major institution in our community. It has many employees, substantial real estate holdings, an image that is projected nationally and raises millions of dollars from public broadcasts." 

A lawyer representing PTL, Norman Roy Grutman of New York, refused Thursday to answer whether PTL, Bakker personally or some other source supplied the money Bakker said was paid. He also declined to say how much money was paid. 

Thursday's events have their roots on a sunny, breezy Saturday afternoon in Clearwater Beach, Fla., six years ago. 

Bakker, then 40, was in Florida Dec. 6, 1980, to appear on a broadcast for a nearby Christian TV station. At the time his marriage was troubled — a fact Bakker touched on Thursday. 

Among those accompanying Bakker in Florida was Oklahoma City evangelist John Wesley Fletcher, then a friend of Bakker's and a regular guest on PTL broadcasts. 

Also at Bakker's hotel in Clearwater Beach was a 21-year-old church secretary from New York named Jessica Hahn. Fletcher had arranged for her to fly to Florida to meet Bakker and see the broadcast, according to Fletcher and Hahn. 

She said she was emotionally troubled by the encounter, which she said she did not expect, and by gossip that she said followed. 

Hahn said Thursday, "There was no blackmail, no extortion. Jim Bakker is obviously trying to protect himself. . . . I know what the truth is. . . . I don't want Jim Bakker to leave PTL." 

In a 1984 interview, Hahn said she had complained to PTL and met twice with PTL executive director Richard Dortch in New York. In the second meeting in November 1984, she said, she signed a document recanting her allegations. 

In late 1984 or early 1985, Hahn met with Paul Roper, an Anaheim, Calif, businessman. By early February 1985, Roper had sent PTL officials the draft of a lawsuit detailing the woman's allegations and seeking millions of dollars in damages from PTL, Bakker and others. 

At least twice in Feb. 1985, Roper met with Dortch or Los Angeles lawyer Howard Weitzman and his partner Scott Furstman. 

Roper said he presented the woman's allegations and suggested compensation, including a trust fund, if her story was true. Also discussed was a provision that the woman forfeit the money if she sued or otherwise made her charges public. 

On Feb. 27,1985, a check for $115,000 drawn on the "Howard L. Weitzman clients trust account" was given to Roper on the woman's behalf. 

 

March 20

Jim Bakker's Humble Roots 

Jim Bakker's ambitions had humble beginnings. 

His father, Raleigh Bakker, worked as a machine repairman in a piston ring factory in Muskegon, Mich. Bom Jan. 2, 1940, the youngest of four children, Jim Bakker was embarrassed by his family's garish orange cement home and his poor grades. He compensated with an outgoing personality. By his final year at Muskegon Senior High he was class president. 

He was reared in the Assembly of God church, but didn't realize his faith until a snowy night in 1958 when he skipped a church service and ran over a young boy with his father's 1952 Cadillac. Bakker thought he had killed little Jimmy Summerfield, but the boy survived. 

"At that moment Jesus became the only thing in my life," Bakker wrote in his autobiography. "I knew I couldn't control my own destiny any more." 

After graduation he enrolled in North Central Bible College, where he decided on a life of evangelism. There, he met Tamara Faye LaValley, 18, who would become his wife. The two were married in April 1961 and spent the next five years crusading. While in North Carolina, Bakker was ordained a minister. 

In a 1965 crusade in Portsmouth, Va., the Bakkers met Pat Robertson, who offered them jobs at his Christian Broadcasting Network. Later, Bakker became cohost with Robertson of the "700 Club," which was the model for PTL. 

PTL began modestly in a glass-covered office building on Independence Boulevard in Charlotte. Pushed by Bakker, PTL — for Praise The Lord or People That Love — grew so fast that sometimes it suffered financial difficulty and often became embroiled in controversy. 

PTL moved to northern South Carolina, where it built Heritage USA. PTL now employs about 2,000 people and reported $129 million in revenues in 1986. 

Bakker believes that God is able to solve even the most trivial and material problems. He once said, "Why should I apologize because God throws in crystal chandeliers, mahogany floors and the finest construction in the world?" 

Though drawn to possessions — expensive homes and fancy cars—Bakker's friends describe him as loving, committed and still humble. 

 

March 21

Departure May Crimp Future 

The Bakkers' departure — and the ascension of Falwell and a board dominated by fellow fundamentalists — could affect the size, enthusiasm, and generosity of PTL's largely charismatic audience. 

"I want to be realistic," Falwell said in a telephone interview Friday. "I don't want to go in with a pie-in-the-sky attitude that everything is going to be terrific from the beginning." 

Falwell said he expects the new board he appointed Thursday to proceed "very, very carefully" financially. 

He sounded surprised to learn of a $10 million dollar debt to Kansas contractor Roe Messner, who is building a 21-story hotel and other major projects at Heritage USA, PTL's headquarters south of Charlotte. 

"My goodness," Falwell said. 

 

March 24

Swaggart Denies He Schemed 

On a day of discord in the ranks of America's TV preachers, evangelist Jimmy Swaggart said Monday it is "totally false" that he schemed to expose allegations of sexual misconduct by Jim Bakker so he could take over the PTL television ministry. 

In a videotape aired on the weekday PTL broadcast Monday, Bakker said publicity over an alleged sexual encounter with a New York church secretary seven years ago was "the first part of the plot of the downfall of PTL." 

He said he resigned last week not because of the allegations or payment, which were being investigated by the Observer, but to thwart a "hostile takeover." 

The charge was also made by Tulsa, Okla., evangelist Oral Roberts. Roberts, an occasional guest on PTL broadcasts, said an "individual, major ministry" and the "headquarters of a major denomination" had, in collusion with a major newspaper, sought to bring down a "young prophet of God." 

Swaggart said he considers the "hostile takeover" charge to be a "smoke screen to get people's sympathy (and) to raise more money. I think they want to get people's minds off of Dortch and Bakker. And so they want to accuse me of bringing down Jim Bakker. . . . He brought himself down." 

 

March 26

New Total For Pay-Off 

PTL attorneys paid or set aside $265,000 to benefit the New York woman whose allegations of a sexual encounter led to Jim Bakker's resignation a week ago. The payments include $115,000 given to Jessica Hahn's representatives in February 1985 and a fund of $150,000 from which the 27-year-old former church secretary has received monthly payments of $800 to $1,200. 

Documents obtained Wednesday by the Observer disclosed the fund, which has operated since spring 1985. Hahn received $10,045 in 1985 from the $150,000, deposited in the Bank of Los Angeles. 

The documents obtained by the Observer do not reveal the source of the money. 

 

April 18

Bakkers Got $1.6 Million 

Jim and Tammy Bakker received nearly $1.6 million in pay from the PTL television ministry last year, and an additional $640,000 over the past three months, the Observer has learned. 

Between January 1984 and last month, the former cohosts of PTL's weekday talk show drew a total of $4.8 million in salary, bonuses and other payments, according to a source with access to ministry records. 

Figures made available to the Observer show that other PTL executives — including PTL's new president, Richard Dortch, and both Bakker's personal aide and secretary — received bonuses in 1986 more than twice their yearly salaries. 

The compensation figures apparently do not include pay received by family members such as the Bakkers' children and Dortch's wife, son and daughter. 

They also apparently do not include all the executives' fringe benefits, such as the lakefront home Dortch lives in. The house is valued at $256,170 for tax purposes. 

In addition to a PTL home in a ministry compound on Lake Wylie, the Bakkers have been supplied cars, most recently Mercedes-Benzes. The ministry also has paid for their utilities, maids, grounds keepers and around-the-clock security. 

In past statements on the air, Bakker has complained that the press misrepresented his financial resources and held an unfair standard for a minister's lifestyle. 

 

April 28

PTL Pays Hahn 

PTL President Richard Dortch used ministry money to pay Jessica Hahn, channeling the $265,000 payment through PTL's building contractor, the Observer has leamed. Dortch asked Kansas contractor Roe Messner to send the money to a California lawyer handling Hahn's complaint over a 1980 sexual encounter with Bakker. 

According to sources, Dortch told Messner to include the expenditure on one of his company's invoices to PTL. PTL later paid the bill, the sources say. 

New PTL Chairman Jerry Falwell confirmed the account Monday and said he believed Messner was manipulated. "I am personally convinced that Roe Messner is an honorable businessman," Falwell said. 

Falwell criticized PTL for using ministry money for Hahn. 

"The part that bothers me most is that the settlement was on behalf of Jim Bakker, not PTL," Falwell said. "The sexual encounter was a result of Jim Bakker's misbehavior — not PTL's — and all settlements should have been covered by Rev. Bakker personally." 

Falwell did not explicitly criticize Dortch who took the president's post when Bakker resigned March 19. Dortch is the only former PTL executive on the board Falwell appointed last month. 

 

April 28

Tax Status of PTL Attacked 

The IRS has told PTL it wants to revoke the TV ministry's tax-exempt status for 1981-1983 because a "substantial portion of PTL's net earning" those years went to benefit Jim Bakker, his relatives and other PTL officers, IRS documents show. 

In a confidential 1985 report, the IRS contends Bakker was paid nearly $1 million more than was reasonable those three years. It also asserts that Bakker and other officers spent money lavishly, holding $8,000 dinner parties and renting $350-a-night hotel rooms. And the IRS says PTL failed to report all of Bakker's income on his W-2 forms. 

In a separate matter, the S.C. Tax Commission is demanding PTL pay $5.5 million in penalties, interest and back taxes for 1984-1985, documents obtained by the Observer show. 

 

April 29

Shakeup at the Top (of PTL) 

The Rev. Jerry Falwell asserted control over PTL Tuesday, removing top aides to Jim and Tammy Bakker and declaring that the exiled evangelists had no future at the television ministry. 

It was a day of upheaval. 

The Rev. Richard Dortch, who succeeded Bakker as president last month, left the PTL ministry. David Taggart, Bakker's personal aide, was dismissed. And the Rev. Rex Humbard, a frequent guest on the former "Jim and Tammy Show," stepped down from the PTL board. 

Ever since Falwell named Dortch to the new PTL board, questions persisted about Dortch's role in negotiating payments to Hahn and about multi-million-dollar salaries and bonuses paid to Dortch, the Bakkers and other key PTL aides. 

 

May 16

$92 Million Unaccounted For 

As much as $92 million in cash, a 1939 Rolls-Royce and scores of financial records are unaccounted for at PTL. 

But the ministry's new executives on Friday stopped short of saying anything illegal had occurred. Federal agents approached the ministry this week concerning possible criminal violations, including wire fraud, tax fraud, extortion and other wrongdoing. 

Said Jerry Nims, the ministry's chief executive officer, "Ninety-two million dollars is a lot of money not to be accounted for and it certainly does give you pause for reflection about what happened." 

The ministry owes $67 million — including $8 million to TV stations and $ 14 million to a building contractor. In California on Friday, San Jose television station KICU sued for $ 140,000 in back payments and for breach of contract. 

Nims hopes to avoid such lawsuits and foster goodwill among creditors by paying some money now towards debts. That's why the Rev. Jerry Falwell launched a "May Emergency" campaign to raise $7 million by May 31 and $25 million more by the end of August.

 

May 22

Extravagant Evangelism 

As cohosts of PTL, Jim Bakker and his wife, Tammy, lived well. They didn't take a double room at the Ilachi Hotel in Hawaii, but the $350-a-night presidential suite. 

Tammy Bakker didn't buy one leather outfit on a trip to Washington. She bought 10. 

The couple enjoyed a $500,000 condominium on Florida's Gold Coast, with $22,000 in floor-to-ceiling mirrors, a flight to Europe aboard the Concorde, a $45,000-a-year housekeeper. Their doghouse was air-conditioned and heated. 

Between the spring of 1983 and fall of 1986, the Bakkers acquired more than $900,000 in cars, real estate and other property. Sometimes they spent their own money. Often they spent PTL's money. 

Bakker often said God deserves the best, and in a November 1985 broadcast defended the expensive decoration of the Heritage Grand Hotel. 

"The newspaper people think we should still be back in the trash," he told viewers. "They really think Christians ought to be shabby, tacky, crummy, worthless people because we threaten them when we have things as nice as they have. . . . 

"I'm excessive. Dear Lord, I'm excessive. . . . God is a great God. He deserves my best." 

Other times, Bakker has pleaded poverty. Last September, he said, 'There have been times over the last few years I didn't have $500, even in my savings." But that year, 1986, the Observer reported in April, PTL paid the Bakkers $1.6 million dollars.