Seventh Day Adventism at the Crossroads – Program 4

By: Rev. Walter Rea, Dr. Desmond Ford; ©1982

What are Adventist taught to sacrifice for what he believes?

Tithes and Offerings

Guests:

Dr. Desmond Ford—Widely respected Adventist theologian, author and pastor. He received his PhD from Manchester University, England, and has served as a theology professor at several Adventist seminaries and colleges. He is the author of nine books and many articles published in Adventist journals, and has sat on the highest doctrinal body of the church, The Biblical Research Institute.

Rev. Walter Rea—Scholar, author and pastor. Rev. Rea is recognized as the leading authority on the writings of Ellen G. White and has written more concerning her works than any other person.

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Ankerberg: Gentlemen, another part of this topic that’s also in Time magazine has to do with the giving in the Seventh-day Adventist denomination. First of all, I don’t think that people across America know how well the Seventh-day Adventist membership gives. If these figures are correct, I think they win hands down among people who are obeying the Lord and giving their tithes. It says here that “the average Adventist in America contributed $2,400 per household in 1980.” If you compare that with the Presbyterians, which isn’t bad, the Presbyterians average only $680 per household; Roman Catholics only average $275 for their tithe in 1980. So I would say they are doing exceptionally well, and yet a problem has surfaced. Walter, maybe I could ask you, because as a pastor you served on many of the boards and so on, and you also have education in accounting. You actually know what the IRS is doing, and how to add up the bottom line, and all that. And as you were sitting on these boards, some interesting things came your way and you started asking some questions. Take us back to the beginning of where you started to get curious about the financial dealings.

Rea: Two things, John, I think we should stress first, and that is that those figures you read are even more impressive when you recognize that Adventists support their own local church, which is not included in those figures, and all of the expenses of that local program in the local community. So that’s…

Ford: And education…

Rea: …And education, as well; so the figures are multiplied many times more than that. And I think they must believe in what they….

Ankerberg: Okay, you have people that must be sacrificing then, because they are no different than any other Americans out there.

Rea: Very much. I think it’s very true to say that the Adventist is taught through his faith to sacrifice for what he believes. I think the second thing that Des and I both agree on is that after you have settled the theology, whatever it might be, or even if you disagree, the practical application of that theology is whether or not Christ is operating in the practical operations of the church. And that’s what we all hope for. As a pastor and with my training, and because of my position in the church and the churches I had, I was asked to sit on the boards that distributed this money, both locally and throughout the denomination—not only the local monies but the wills and the legacies that people would bequeath to the church. While on that committee, I found that the church had investments in my particular area of approximately $300,000 with a doctor by the name of Dr. Davenport from Los Angeles. Upon inquiring as to what collateral we had, what security we had for what we had invested, I found to my surprise that there was no collateral.

Ankerberg: Did you say $300,000?

Rea: $300,000. That was just one conference in our union. Upon making inquiries we could find over and over again that, well, what we thought we had as collateral—such as a post office or a mortgage or something—was not actually there. The second thing that bothered me was that the man would sometimes get behind in his interest. I don’t remember the exact figure, but I think it was something like $30,000 interest that he was behind to pay to the church on the money that we had loaned him. And again, making it for a reason we found that he seemed to have preferential treatment. This was while I was on the committee.

Ankerberg: How long ago was this?

Rea: This must have been in the early ‘70s. This had been going on for some time. There were others that were concerned about it and had raised questions. Then I was transferred to a large church in Long Beach, where the man had originated; where his business dealings had originated. And there fell into my possession a list of approximately 250 names—many of the prominent Seventh-day Adventist leaders and administrators in the church. The significance of the list was that they had personal monies invested with Davenport, and the rates were different that the list showed than what the church was actually drawing.

Ankerberg: Give me an example.

Rea: Well, for example, we always found that the church was fairly consistently receiving eight to ten percent. But we found that—and it seemed to me, depending on the position of a man—that he could draw from 10 to 25 percent. Later information came that some of the men were receiving as much as 50 and 80 percent on their money, while the church still consistently was receiving the 8 and 10 percent.

Ankerberg: Run that by me again. Now you are saying that on their personal loans they themselves made?

Rea: That is correct.

Ankerberg: They were making how much percent?

Rea: In some cases, we have documented evidence of making 50 to 80 percent. In addition to that, some of the men who were handling the church’s money were actually receiving a finder’s fee or a kick-back of two percent on the money they were voting out of the church to the man for his investment.

Ankerberg: Okay, so did you notify the people in authority?

Rea: That’s what I did to the treasurer of the conference. I consistently objected to this and was muted many times. And on the list was the President of the General Conference. I felt from my training and background that the church was headed for trouble. I shared this information with a lawyer friend of mine whom I admire and respect very much, who is Jerry Wiley, the Associate Dean of the Law School at SC. I asked him if he thought there was a moral problem as well as a financial one, and he assured me there was. Therefore, I wrote, as the Bible says, to the President of my church. That letter is in the 14^th chapter of my book.

Ankerberg: Now that’s President….

Rea: His name was Pearson, Robert Pearson.

Ankerberg: Okay.

Rea: And I wrote and asked him, what was the meaning of this list of men who were leaders in the church who were actually dealing with the vendor of a church, and was there not a conflict of interest. And I felt sure any judge, any court, any jury would say that there was.

Ankerberg: What year did you write that letter to the President?

Rea: The letter was written in May or June of ‘79.

Ankerberg: Okay. And you received a reply?

Rea: I received a reply back—that’s also in chapter 14—assuring me that there was no impropriety and that there was no conflict of interest and none of the committees he sat on was dealing with Dr. Davenport. This, I knew from the evidence, to be untrue.

Ankerberg: Alright, I’ve got here the articles from the Sun, San Bernardino newspaper, and apparently this was May 30, 1982 when this came out, and you’re in it. And it says that, “Pearson responded to the letter by saying, ‘To my knowledge no board or committee of which I am a member has any money invested with Dr. Davenport. There can be no conflict of interest here’.” The newspaper points out that there’s a problem with that because they document from Davenport’s notes on his finances that came up during some hearings that he listed a $7,500 note to Robert H. Pearson, as President, without any specified interest, in 1972. Now you wrote your letter in 1979. After he wrote that letter, which came back to you—according to the newspaper—in May or June, in July, according to Davenport’s records he was repaid $32,000 by Davenport.

Rea: Well, I hope he is ever grateful that I encouraged him at whatever method to get out, because some were not that fortunate.

Ankerberg: But at that point you didn’t know this was going on, did you?

Rea: No. I didn’t know this at all. I suspected it…

Ankerberg: And you just got the letter saying that nobody was actually making these loans; there was no knowledge of that to your President.

Rea: This is correct.

Ankerberg: When did you find out what’s in this paper here?

Rea: In the last six months since Davenport’s records have been confiscated by the court—and those records have been made public. We now know that it was much worse than any of us suspected. That many of those men who were officials in the church not only were receiving exorbitant fees contrary to state laws and usury laws, but they also, some of them, had limited partnerships and signed limited partnership returns for the IRS with this Dr. Davenport, making their implication much greater.

Ankerberg: Tell me the rest of the story here. What happened when you got that letter then? What happened next?

Rea: The next thing I heard was the rumor that I was either going to be sued or fired. And, again, I went to the attorney and asked if he would explore these possibilities and see what I had done wrong. I really had in mind trying to keep the church from what I felt was going to be a disaster further on down the road. And after talking with knowledgeable men in finance and law, I felt that if they could get out now, at that time, they might lose $3 or $4 million, but I didn’t know what they would lose if they kept going, because of the knowledge that I had.

Ankerberg: So then what happened?

Rea: Well, we were…

Ankerberg: What do you know from the court documents that have come out that was happening while you were just kind of waiting around?

Rea: Well, from the court documents I have discovered in the last few weeks I found out that Pearson took my letter, sent that letter to Dr. Davenport, and also sent his personal reply to Dr. Davenport. And I think you have a copy of that.

Ankerberg: Okay, tell us briefly what that said.

Rea: Well, in essence, it says, “If you don’t get Rea, I’ll do it.” And that’s the language I think that it uses. It might be well to read… it says, “I have your letter dated June 23 and the copy that you wrote to the individual that has written to you. Without any effort on my part, I believe I have identified this individual as Elder Walter Rea.” And it goes on to state some of the allegations and it says, “Now to be specific,” he said, “I’m very disappointed that Elder Walter Rea should take it upon himself to try to do whatever he is doing.” He also says, “I would like to ask you a question which I don’t think you have the answer for, but I think I’m entitled to ask, and that is, when does a minister of the Seventh-day Adventist Church get a license to lie?” Well, subsequent information proves that I really understated it, I didn’t overstate it. And he also says that, “If you don’t do something to shut him up, I will do that.”

Ankerberg: People might think that you are exaggerating, but I have in my hand the letter dated July 25, 1977, from Davenport to the President. At the end of the letter: “I feel very protective of the church. I think sometimes some of us laymen must take a strong-arm position to defend the church and to shut up all of this maliciousness that is going around. If Walter Rea is not smart enough to keep his mouth shut, then I am going to move in on him.”

Rea: I’ve always had trouble with that. They once told me…

Ankerberg: Keeping your mouth shut, or with the letter?! (Laughter).

Rea: They always told me that if I had gotten my goals and done my baptizing, I might make it to the Presidency if I could just keep my mouth shut. I got the goals and the baptism, but the other was too difficult. (Laughter).

Ankerberg: Okay. What else was happening at this time behind the scenes that has now surfaced?

Rea: Well, that caused a great deal of problem, because at the time, of course, the Ellen G. White thing was surfacing, and I felt, well, here are the same men that were dealing with the problems of Ford—which impressed me greatly as to how to handle this case—and now they were dealing with me, and I was trying hard to separate the problems of the Ellen G. White and the Davenport Financial, and I was warned by respectable people that I’d better be very careful, that this thing could be very dangerous. And so I often say I stopped sitting in front of open windows and I let my wife start the car in the morning and… (Laughter) But it became obvious that there were millions of dollars involved in this program and that it was not a light thing.

Ankerberg: Alright. And then what happened to Davenport along the way?

Rea: First of all, he sent word by a member of my church that if I didn’t shut up I’d be sued. My position had always been that I was really not concerned with Davenport, I was concerned with the conflict of interests of the leaders of my church and the appearance that it would make when it finally became public. I think I have documented this evidence to know that I had no ulterior motive. So when he sent the word, I sent back that if he did then it would involve the church. So the subsequent letters that you have received, and I have, which have just come to light is that while Pearson must have convinced him, “Don’t sue him,” because the church would be involved, and that Pearson would do what he could to quiet me down. So they did do this, and since warned me, and so therefore I disseminated the material to others who couldn’t be touched, such as a man in the South and one in Southern California.

Ankerberg: Okay; and he made it public, and then what happened?

Rea: These two men went public and they subsequently were sued. When both of these men came to discovery, that is, when the courts…

Ankerberg: What is discovery?

Rea: …when the court said to these men, “We will let you go into the records of the church and to Davenport and see if your allegations are correct,” both suits were dropped in both cases. I then knew that they wouldn’t sue me because then the record would be available to me and I’d do the same thing.

Ankerberg: In other words, they did not want anybody actually looking at the figures in their records.

Rea: Davenport had promised over and over again in the letters that he would not reveal the men in the church who were involved with him in this particular area, and when we asked for a balance sheet, he used that as justification.

Ankerberg: That’s another thing. When the conference asked for a balance sheet, they never even had one.

Rea: No, sir.

Ankerberg: Just for a moment here,… I mean, all churches have financial problems, but in the Seventh-day Adventists you have something like $80 million worth of tithe in one year that comes in. You have something like $4 billion in assets, and you didn’t have a sheet on that?

Rea: Well, in our church, in many cases, our men of finance are also ministers and ministers, like theologians, are rather naïve,… and they’re very sweet and lovely, but…

Ankerberg: I see you smiling on that, Des.

Rea: They don’t have the expertise, and I’ve always felt and promoted through the years, that the finances of the church should be taken out of the hands of the theologians and given to the laymen who have expertise in that field.

Ankerberg: Okay. Let’s roll along with the story. Then, as these things were happening and the suit was brought against these other men and it didn’t go through, then what happened?

Rea: Well, it was dropped, but subsequently Davenport….

Ankerberg: How many days later did he file, after he dropped the suit against those men?

Rea: They came on this rather rapidly. I don’t remember the exact time, but I think the last suit…

Ankerberg: Looks like two weeks afterwards…

Rea: …I think the last suit against Allen was dropped either at the time of bankruptcy or immediately before or after it.

Ankerberg: Okay, he went bankrupt, and what were the implications? What happened? What surfaced at that point?

Rea: What surfaced at that time, he took the Fifth Amendment and on to the court. He wouldn’t reveal any of his assets, and it didn’t reveal that perhaps $20 to $21 million—we’re not sure of the church’s money, through its organization, was lost—but perhaps $20 million or more of the laymen and the little ladies that had given him money in the association was lost. And that in addition to that, $30 million or more was lost to the insurance companies, the banks and other mortgage companies.

Ankerberg: So the church lost around $70 million.

Rea: No. I’m saying that there is between $69 and $70 million involved in the total program. Legally, it has not been determined whether the church is liable for all of that. I understand from lawyer’s language that if it is proven that Davenport was acting as an agent for the church, then it could implicate the church. If, however, he was acting independently, we might not be liable for that amount.

Ankerberg: Now, the sad thing about this is that, how many months ago was this discovered and came out?

Rea: I think it was a year ago that he filed for bankruptcy and took the Fifth Amendment. And it was at that time that the church put out in their denominational papers that there was really nothing to this either, along with Ellen White, and it was just an unfortunate thing and tried to present to the people through the Review and Herald that maybe there was a lack of knowledge or ignorance on the part of some of the administrators, but, you know, it was really not a large thing…

Ankerberg: The point is that in terms of the people that did this, nothing has been done. They are still in positions?

Rea: To my knowledge, to this day I know of no official statement from the church in an official paper that has condemned anyone for being involved as a partner with Davenport. I know of no commitment to pay back to those who lost through the influence of the ministers or the leaders of what they lost. I know of nothing legally that has been done to reimburse completely the total sums of those who have lost through the church investment.

Ford: Perhaps one other thing should be said, John. That is, the church administration has set forward a very thorough investigation of every man named in the business with Davenport; every administrator. I have about nine feet of documents. They have gone to great lengths to try to avoid unnecessary litigation as they exercise church discipline. The axe will be falling very soon.

Ankerberg: If I can pick up on this article here for one more comment from you on something that happens to affect a lot of the people, maybe in this room, right here in the South. The Sun, this newspaper, found 13 key church officials, conference presidents, trust directors, treasurers, and others, who had personal business dealings with Davenport while their church entities were making the loans to the developer. In the South, four top regional and local church leaders had personal business ties with Davenport. One of them named is Desmond Cummings. And I don’t know Desmond, but he was the president of the Georgia Cumberland Conference from 1966 to 1979. The Sun shows the Georgia Conference during those years regularly had more than $3 million in loans to Davenport. Davenport’s records in 1972 show Cummings loaned him $75,000 at an unspecified interest rate. He then made a loan of $50,000 to Davenport in 1980, for which he received an 80 percent interest payable in advance for that loan. The report states that Davenport still owes Cummings $50,000 and that Davenport owes the Georgia Conference right now $3.7 million.

Rea: This is all documented and will, I think, come out if there is a trial. I think the problem I had, more than the finances of it, was that I was a pastor playing a dual role. While I believe we should protect the people’s money, it was my role to stand up each week before the congregation and plead with them to sacrifice to make the figures you read at the beginning, and I thought I was doing it to finish the work of God and to go toward the gospel. It was a further shock to my system to find that it was enriching doctors, and ministers, and leaders, and executives who were taking advantage of their position, and this is what I wrote Pearson, that I felt was the problem.

Ankerberg: What can the little guy in the pew do?

Rea: He can make sure that his money, where he gives, is going to what he thinks he’s giving to. That’s number one. I think that if he is a part of an organization, he certainly should exercise his franchise to vote for a system that has checks and balances. I don’t know that ministers are any weaker than others, but certainly they are untrained, many of them. And not all of the ministers on the list were evil; not all the ministers were…

Ankerberg: We should bring this up, too, that this….

Rea: …not all of them fraudulent…

Ankerberg: This quotes 257 leaders in high positions.

Rea: …nor can I say that all of those men knowingly felt there was a conflict. In some cases the men merely invested their own personal money with this man, and were not involved in the denominational set-up. I think the problem arose when they sat on a committee and thus had a difficult time separating personal interests. For example, I ran across the document in which three men, who definitely were involved with Davenport personally with large amounts and were receiving exorbitant interests, voted over $3 million of the southern money here in the South. One man voted it; the second man seconded it; and the third man said, “Let’s have prayer.” (Laughter).

Ankerberg: That was in the minutes?

Rea: That’s right; it’s in the minutes. This meeting didn’t take place here in the South where the money was being transferred, it took place in Beverly Hills. I think these are the problems.

Ford: One of the things that worries many loyal Adventists is that if the church can exercise control to the ends of the earth on doctrinal issues, why does it have problems in exercising control in financial decisions? Now, it must be said that the treasurer of the General Conference, Emerson, was very much opposed to this whole affair. The General Conference has been very blessed with some of its treasurers. Emerson did make protest after protest, but the question does remain in the minds of some as to why it was the church couldn’t exercise the same sort of control financially as it can doctrinally.