FORT MILL, S.C., JUNE 12 -- The beleaguered PTL ministry today filed for reorganization under federal bankruptcy laws -- a move officials blamed on the "fiscal sins" of its founder, defrocked televangelist Jim Bakker.
"From a business standpoint, I believe what went on here broke God's law -- and that those in charge had no regard for man's law," said Jerry Nims, the ministry's chief operating officer appointed by the Rev. Jerry Falwell. "The only opportunity to move forward for this organization was a Chapter 11 filing."
The move -- likened by PTL officials to similar actions taken in recent years by Texaco and Chrysler -- is expected to cause no immediate disruption to operations at the ministry's giant theme park, luxury hotel, cable TV network and syndicated gospel talk show on the outskirts of Charlotte, N.C.
(At a press conference tonight in Lynchburg, Va., Falwell said the PTL action was intended in part to buy time for a fight to keep Christian programs on cable television.
("Our problem is not raising money," Falwell said. "Our problem is we have 10 people asking for every dollar that comes in. We just need a little time to put our house in order.")
"For people who believe in PTL, it will be business as usual," said Norman Roy Grutman, PTL's general counsel, who likened the Bakker management of the ministry to a "Ponzi scheme." "PTL is not bankrupt . . . Its assets are enormous." He predicted the ministry would be out of reorganization within 12 months.
But ministry sources said today's action was triggered principally by a bitter dispute with Roe Messner, a Kansas-based construction magnate who claims a tab of nearly $15 million, mostly for work done on an unfinished high-rise adjacent to the luxury Heritage Grand Hotel.
Ministry sources said by filing for reorganization in Columbia, S.C., federal court, they hoped to force Messner to produce contracts and records of work PTL officials claim may not exist.
Messner, America's largest church builder and a close Bakker friend, was chosen by Bakker as sole contractor for his 2,300-acre Heritage USA complex, serving as chief architect, builder and supplier -- frequently without formal contracts or competitive bids, ministry officials said.
"They were working on a handshake agreement, with no bidding, incomplete and irregular records," said Nims.
But Messner's attorney, Donald Stubbs of Columbia, S.C., said today in a telephone interview that his client "can back up everything he has done." He said Messner did, in fact, have a formal contract for the Heritage Towers, which forms the bulk of his nearly $15 million claim.
However, in many instances, he said, rather than a contract, Messner reached oral agreements with Bakker or other PTL officials, then dispatched a letter to PTL documenting the understanding.
"There are volumes of letters, which all taken together, will provide a very good paper trail of the work Mr. Messner has done," said Stubbs.
Messner had recently filed a mechanic's lien and lawsuit for more than $14 million against the ministry. But today's action halts all such litigation while the federal court allows PTL to reorganize to pay its creditors.
Although ministry assets exceed liabilities by more than $100 million, PTL officials said there was no way to pay $70 million in debts without buying time from Messner and other creditors, including the state of South Carolina and the Internal Revenue Service.
The ministry recently negotiated an agreement with the South Carolina Tax Commission to pay $1.3 million in back sales taxes on the rental of its hotel rooms here. A first payment of $300,000 was recently made, and as part of the settlement, a 7 percent tax will be charged on future rentals. Tax officials had originally sought up to $7 million in back taxes.
In addition, PTL faces an even more potentially crippling blow from the IRS. The agency has recommended stripping PTL of its tax-exempt status after finding that up to $1 million in charitable donations was spent to support lavish salaries and perks for founders Jim and Tammy Bakker between 1980 and 1983.
Earlier this week, the IRS notified PTL that it was referring its ongoing audit to its criminal division for further investigation.
One possible solution to PTL's problems that could emerge in the bankruptcy case would be for the ministry to break out such entities as the theme park, replete with model railroad and giant water slide, into a separate profit-making corporation. Nims said one federal investigator asked him to explain how PTL's amusement park differed in any way from the nearby Carowinds amusement park.
"I could not explain to him the difference," said Nims.
The bankruptcy petition came after weeks of sometimes heated wrangling behind closed doors between Falwell and his PTL board over what action to take against Messner, said ministry sources. Grutman had prepared a stinging counterclaim, but Falwell vetoed filing it, the sources said. Grutman today declined to comment on its contents, saying he wanted to say nothing that might prevent "our privately arriving at a fair and drastically reduced obligation, if any, to Mr. Messner."
Falwell also opposed filing bankruptcy to save the $129 million media ministry Bakker asked him to take over in March.
"Jerry Falwell had an aversion to doing something that might . . . suggest something other than success," said Grutman. "He is dedicated to the idea of victory in this thing." But Falwell acknowledged his "fiduciary" obligation to file under Chapter 11, said Grutman. "It was the only responsible thing to do."
John Lewis, managing partner of the Carolinas for Arthur Andersen auditors, also made a statement supporting the bankruptcy petition.
Bakker, defrocked by the Assemblies of God denomination for financial misconduct and "alleged bisexual" acts, stepped down March 19 after confessing to paying $265,000 in hush money to a former church secretary with whom he had a sexual encounter in 1980.
It was Messner who wired the money to a Los Angeles lawyer to set up a trust fund for the secretary, Jessica Hahn, at the request of Bakker's top lieutenant, the Rev. Richard Dortch, ministry sources said. Messner then billed PTL for a similar amount by submitting a phony invoice for work never done on the outdoor amphitheater here, which features performances of the Passion Play, a retelling of the crucifixion and resurrection of Jesus, the sources said.
Falwell has called Messner an "unwitting" accomplice in the transaction.
Among other matters on PTL's agenda and under discussion today was how to settle accounts with Bakker and his wife Tammy Faye, who arrived here Wednesday night and caused a stir Thursday by touring their former domain in a friend's Mercedes.
There was little evidence of any impending grass-roots revolt seeking their return to power here. Only a handful of worshipers approached Tammy Faye at the Thursday night worship service, where her escort, portly gospel singer Howard "Happy" Goodman, delivered a stinging elbow to the ribs of a local TV cameraman, prompting some stations to tout the story on their nightly news shows as "Violence at PTL!"
"No one wants them back," said Warren Marcus, Falwell's acting chief of operations. "Ask anyone on the staff here and they will tell you that when Jim Bakker was here, he ruled by fear and intimidation ... yesterday, Tammy Faye bawled out a security guard here because he wouldn't open a studio garage door. The Bakkers don't realize no one here takes orders from them anymore."
Marcus dismissed Bakker as "a melting snowflake ... a winded lion."
Even veteran security guard Don Hardister, an 11-year employe especially close to the Bakkers, marched off in a huff yesterday when Bakker countermanded his order and stopped at the Heritage Grand Hotel to greet tourists.
But today all was quiet on the waterfront at nearby Lake Wylie, where the Bakkers were settled in at PTL's $400,000 parsonage. Bakker spent the day reading the Bible, according to daughter Tammy Sue Chapman, 17. Son Jamie Charles, 11, was playing with buddies at the giant water slide his father built at the nearby Christian resort, and his mother Tammy Faye sneaked off in a neighbor's Mercedes "to visit a friend."
There was no indication that the Bakkers would meet a Monday eviction deadline set by the new management.
"It's been our home for seven years and we're going to try as hard as we can to keep it," said Chapman.
"No boxes are packed," she said, flanked by her new husband, Doug, a PTL lifeguard. "The only stuff that's been moved out was mine and I moved it to get married."
But Hardister said he expected them to be packing up soon after they resolve the ownership of such household goods as a $2,200 wide-screen TV, furniture, a weight machine and Tammy Faye Bakker's "knickknacks."
PTL officials said they would hold the Bakkers to a Monday checkout. "This is a free country and they can come back any time as guests -- paying guests," said Harry Hargrave, PTL's president.
"We will do what we have to do" to get them out of the house, which PTL aims to sell to help pay its bills, said Grutman. "We hope we don't have to do anything unpleasant."