Anatomy of a Fraud: Inside the Finances of the PTL Ministries.

Professor Gary Tidwell of College of Charleston's School of Business & Economics has given us a not-too-guilty pleasure in the form of his new book Anatomy of a Fraud: Inside the Finances of the PTL Ministries. The book is a pleasure for those of us who enjoy reading about the ignominious fall of the excessively self-righteous. And the reading is all the more enjoyable if tinged with sexual peccadillos (anyone remember Jessica Hahn?), outright buffoonery (Tammy's makeup) and outrageous overconsumption ($570 shower curtains).

However, this pleasure need not be too guiltily taken because Professor Tidwell's study does not focus upon the many laughable foibles of Jim and Tammy Bakker and their fellow travelers at the PTL Ministry.(1) Rather, Professor Tidwell's book is an academic study(2) of PTL's financial practices. Most importantly, Professor Tidwell analyzes in detail (a) the fraudulent practices that led to PTL's downfall and Jim Bakker's imprisonment, and (b) the carelessness of PTL's officers, directors, attorneys, and accountants that allowed the frauds to occur. Central to Professor Tidwell's inquiry is the question: "Where were the auditors"?

THE PTL CON

Without giving away too much, let me summarize quickly the essence of the fraudulent financial practices of PTL that Professor Tidwell examines in great detail in Anatomy of a Fraud. In my view, there were two major components of the fraud.

First, PTL oversold interests in four different resort hotels and other structures that it built or planned to build. For example, PTL planned to build a 504-room "Grand Hotel" on its Heritage USA Property.(3) Bakker repeatedly told viewers of his television show that construction would be financed by sale of "lifetime partnerships" to persons who would "donate" $1,000. In exchange for the "gift", the donor and his or her immediate family would be entitled to stay in the hotel for four days and three nights, annually, for the rest of their lives. To induce quick action, Bakker explained that only 25,000 lifetime partnerships would be sold and that once they were gone it would be too late for others to take advantage of this wonderful opportunity to stay at the "largest Christian center of its kind in the history of the world." Early on, Bakker often exaggerated the number of lifetime partnerships that had been sold, attempting to induce action by potential investors, warning them that the opportunity would soon be lost if they did not act quickly. After the interests were tremendously oversold, however, that fact was never announced.