The empire was founded a quarter-century ago today, when 35 people gathered in the former warehouse of a soft-drink bottling company, the floor sticky with the residue of Donald Duck Cola, to listen to a 22-year-old Baptist preacher named Jerry Falwell. That day the Thomas Road Baptist Church collected $125.
This week the church, now the nation's second largest, will collect more than $1 million, but not by passing the collection plate among its 18,000-member congregation. The pastor will raise the money through the electronic church, from people who watch the Sunday service on their television sets and mail in their offerings.
Tonight thousands will jam the massive, red brick church to celebrate its silver anniversary and pay tribute to the pastor who presides over a religious empire with a budget larger than that of this city of 70,000. At first glance the church seems the picture of financial health. But even as the congregation is enjoying the congratulatory telegram from President Reagan and the presentation of "This Is Your Life, Jerry Falwell," complete with mystery guests, there are signs of serious financial trouble.
In recent impassioned letters to supporters of his weekly "The Old-Time Gospel Hour" carried on 392 television stations, Falwell blamed "inflation, recession [and] vicious media attacks" for a $3 million deficit, and threatened to pull the show off the air. A similar and simultaneous fund-raising plea was mailed to supporters of Moral Majority, the conservative national political lobby Falwell founded two years ago.
Only Falwell and his closest associates know the real extent of his financial problems. Several times in the past few years Falwell has, in biblical terms, "put out the fleece," saying he would pull the show unless emergency contributions were forthcoming. Each time, Falwell says, his followers have always come through with millions of dollars.
What emerges from audit reports of the Thomas Road ministries and interviews with the 47-year-old evangelist and his current and former associates is a portrait of an empire that is heavily mortgaged and deeply in debt. The empire, which along with the "Gospel Hour" includes a college, seminary, private school, summer camp and home for alcoholics, has provided millions of dollars in lucrative employment to Falwell's relatives and friends and has enabled him to live like a millionaire. And all of it depends entirely on the presence and popularity of Falwell, who has a $15 million insurance policy on his life.
"Some might call it overextension," said Falwell. "We call it stepping out by faith."
The faith may be wearing dangerously thin. For example:
Revenues for Falwell's combined ministries, mostly raised through the "Gospel Hour," rose from $22 million in 1977 to $51 million in 1980. But the church-commissioned audit report for the year ending June 1980 showed the ministries were $19 million in debt, some of it through mortgages bearing interest rates several points above the prime. Two months after the audit, Falwell borrowed a total of $6.5 million through a bond issue.
Between 1979 and 1980, expenses rose nearly 19 percent from $39.6 million to $47 million while the amount of revenues left after expenses dropped by 57 percent, from $6.6 million to $3.8 million.
In the past year while Falwell periodically threatened to pull the "Gospel Hour" off the air because of mounting deficits and the increased cost of air time, his organization bought time on 50 more TV stations.
Two firms have filed mechanics liens -- usually a sign that an organization is having trouble paying its bills -- totalling more than $240,000 against Falwell's ministries. They were removed after Falwell paid his bills.
Few in Lynchburg, particularly in the business community, will publicly criticize Falwell, partly because his ministries are the city's fourth largest employer. But his ideology and his habit of castigating those he dislikes from the pulpit have clearly polarized this city, his hometown and headquarters, located 180 miles southwest of Washington.
Several months ago the Rev. John Killinger, pastor of First Presbyterian Church, whose congregation includes some of this city's most prominent families, delivered a sermon entitled "Would Jesus Have Appeared on the Old-Time Gospel Hour?" His answer was a resounding no.
"Falwell certainly doesn't act like he's in trouble," said Elliot Schewel, a Democratic state senator who runs a furniture store in downtown Lynchburg."Jerry's a constant subject of conversation, a real phenomenon, a local boy who's done so fantastically well. His ministries are certainly a great shot in the arm economically."
One city official familiar with Falwell's operations agreed. "His ministries are a hell of a growth industry, but as much cash flow as he's got, it's never enough. It's well known around here Jerry has a desperate need for money, partly because he's building Liberty Baptist College. Financially, he's pretty strung out and he seems to have trouble paying his bills."
Falwell denies that but says that much of his money is tied up building Liberty Baptist College, which he founded in 1971 and would like to expand from its current enrollment of 2,900 to 50,000.
The only bills Falwell says he has refused to pay total $81,000, and represent 1980 property taxes on more than 4,000 acres of land his ministries own in and around Lynchburg.
Those tax bills are the subject of a lawsuit now pending in a state court. Falwell claims that the property which includes a popular bar and A & P food store, part of a shopping center the ministry bought last year for $2 million, should be tax-exempt. City officials disagree. They argue that there is nothing religious about those businesses and claim that the Gospel Hour is a profit-making enterprise and therefore ineligible for tax-exempt status.
With offices located in an unmarked, circular brick building across town from the Thomas Road Church, the "Gospel Hour" is the crown jewel of Falwell's empire. It raises the money that supports all of Falwell's other enterprises, including the college.
About 840 of Falwell's 1,200 employes work for the "Gospel Hour" headquarters, the counting house where each day more than $100,000 arrives in the mail in color-coded envelopes. On one day recently, the take was $184,000.
Inside the warren of offices, staffed by church members who tithe 10 percent of their salaries to Thomas Road, is a 30-member stewardship department whose employes try to persuade people to remember Falwell in their wills, sometimes visiting the sick and elderly in hospitals.
Another large room contains a bank of 30 telephones bearing Falwell's toll-free 800 number. Above them hangs a giant chart detailing the gifts contributors can receive: "Faith Partner Bibles," gold-plated "Jesus First" pins, a parchment "Christian Bill of Rights," eight cassette tapes of Falwell's sermons, a copy of Falwell's newest book, "Armageddon: The Coming War With Russia."
Every week sophisticated computers and word processors spit out at least 500,000 "personalized" fund-raising letters that go the the 4.5 million contributors on Falwell's mailing lists.
The atmosphere inside the windowless "Gospel Hour" offices, formerly a warehouse, is reminiscent of a high-tech bunker. Everyone wears security badges. The main door is locked. Concealed closed-circuit TV cameras constantly monitor the hallways and offices. Each morning at 8 o'clock the staff meets for devotions, during which they are warned about visitors -- especially reporters -- who may be in the building.
Few of the office doors have signs or nameplates. The building itself has no sign because, in the words of one employe, "Anyone who needs to know where we are can find us."
Finding Falwell's house isn't nearly as difficult.
The preacher, who says his salary is $42,500, his wife and their three teenage children live rent-free in what he calls "the parsonage," a 12-room, white-columned mansion located on 6 acres, complete with a swimming pool. The house was bought by a wealthy Atlanta businessman and member of the "Gospel Hour" board of directors who gave it to the church.
The house sits atop a hill in the midst of a pleasant subdivision of modest brick ramblers. At night, bathed in floodlights like the White House, the house is visible for miles, making it something of a tourist attraction. It is ringed by an 8-foot-high concrete wall and guarded around the clock by a security force -- all needed, Falwell says, because of the 200 threats on his life that he receives each month.
The church also owns an Israeli-made Jet Commander that is reserved for Falwell's use. Falwell says he expects to log 300,000 miles this year in the jet, making personal appearances on behalf of Moral Majority or the ministries.
The ministries have also been profitable for Falwell's relatives and friends.
A construction firm owned by Falwell's late brother Lewis was paid more than $1.6 million for excavation work done at the college, audit reports show.
A firm owned by a Tennessee publisher who recently resigned from the "Gospel Hour" board was paid more than $6 million for Bibles and other gifts bought by the ministry.
Falwell's brother-in-law, Sam Pate, runs an agency that buys television and radio time for "The Old-Time Gospel Hour." Pate's firm was paid a total of $183,000 in 1979 and 1980, according to the audits.
Pate was one of the employes fired by a committee composed of five prominent Lynchburg businessmen who took over the ministries' financial operations in 1973, following a lawsuit by the Securities and Exchange Commission. The SEC charged the ministries with "fraud and deceit" and "gross insolvency" in the sale of $6.6 million in church bonds to raise money for Falwell's operations.
That committee, the equivalent of a receivership, was disbanded in 1977 by a federal judge. As a result of a consent decree, Falwell agreed to pay back money raised in the bond sale and the SEC agreed to erase the words "fraud and deceit" from its complaint. Last year the "Gospel Hour" returned to the bond market, this time through the sale of $6.5 million worth of five-year bonds in order to repay other loans and consolidate debts.
"No bank would loan us that much," said DeWitt Braud, the chief executive officer of the "Gospel Hour," who earned $100,000 last year in salary and expenses. Braud has said that bonds give the "Gospel Hour" considerably more freedom in how money is spent than do bank loans.
Falwell blamed financial "ignorance" for his earlier troubles with the SEC.
That would be the most charitable assessment of his decision in 1979 to transfer the health insurance policies of "Gospel Hour" employes from Blue Cross and Blue Shield to a newly formed, Texas-based "Christian" insurance company.
The company, Ministers Benefit Trust, had earlier been barred from doing business in Florida and was placed in receivership last year by a Texas judge. An investigation by the Labor Department and Texas insurance authorities revealed it was unlicensed, had assets of about $128 and unpaid claims totaling nearly $300,000.
While authorities were probing complaints that claims, including those of Falwell's employes were not being paid, the ministry signed a $50,000 contract with Bob Browning, the insurance company's administrator, to study the feasibility of building a retirement village in Lynchburg for the ministry.
Browning said that several months before the "Gospel Hour" swtiched insurance companies, he introduced Falwell to the Heitner Corp., the St. Louis firm that underwrote the $6.5 million bond issue. Both Falwell and Browning say that the insurance deal was not consummated in exchange for the bond issue.
Another business deal that proved embarrassing to Falwell involved the late F. William Menge, a self-described Christian businessman from the Midwest.
In 1977 Menge, then on probation for securities fraud in Missouri, moved to Lynchburg. He became a close friend of Falwell and joined the board of the "Gospel Hour."
"Mr. Menge told me that he and his family wanted to do substantial things for Liberty Baptist College," Falwell recalled.
Menge did arrange a $500,000 loan for the ministry with his wealthy mother-in-law, and in 1978 accompanied Falwell on a trip to the Middle East. There Falwell met with Israeli Prime Minister Menachem Begin, Egyptian President Anwar el-Sadat, and Jacob Levinson, chairman of the Bank Hapoalim, the biggest bank in Israel.
Menge also used his association with the "Gospel Hour" to arrange nearly $9 million in loans on which he later defaulted. Some were for a travel agency that was supposed to arrange tours to the Holy Land. When Menge filed for bankruptcy last June, three months before his death, he listed among his creditors the Bank Hapoalim and Ashraf Bakir, Sadat's appointments secretary.
By that time, however, Menge and Falwell were not speaking. Falwell said that in 1978 when he and other Gospel Hour officials learned Menge was improperly using his connection with Falwell, Menge was voted off the "Gospel Hour" board.
Last September, Menge was decapitated after being thrown from his tractor. A coroner ruled the death an accident.
"If there's a guy with bad judgment, it's Jerry Falwell," Falwell said of his alliances with Browning and Menge. "If I have a chink in the armor that's it."
But some of those who know him well say that the biggest chink in Falwell's armor may be his ego and the grandiose plans he has for his empire.
"Jerry has an astounding amount of faith that things will work out," said a businessman who worked for Falwell and tried unsuccessfully to convince the preacher that his penchant for deficit spending could have disastrous consequences. "If there's one thing Jerry is, it's a great salesman. So far he's been able to bail himself out."