Fifty thousand dollars is less than half of one percent of Three Angels Broadcasting Network’s (3ABN’s) annual revenues, but the absence of an entry for this much annual rental income in the television ministry’s financial statements caught the attention of the judge presiding over a challenge to its exemption from property taxes by Franklin County, Illinois. This was just one of the irregularities cited by Judge Barbara S. Rowe in her January 28, 2004, ruling against 3ABN in a tax case in which 3ABN had claimed tax exemption as a religious organization. The judge instead ruled that 3ABN was a closely held business run by the Shelton family and did recommend granting tax exemption for a few square feet of office space used by 3ABN chaplains. In a July 2005 Liberty Magazine article by attorney Lee Boothby critical of Judge Rowe’s decision, Boothby focused on the criteria used by the judge to decide whether 3ABN formally qualified as a religious organization under Illinois law. He did not address the question of whether 3ABN was a properly governed nonprofit organization.

Judge Rowe noted a number of other irregularities in 3ABN’s operation. According to the documents presented by 3ABN, its board of directors consisted of only four people, all with the last name Shelton and all residing on the same rural route in Franklin County. Ms. Rowe was strongly critical of 3ABN’s failure to follow Generally Accepted Accounting Practices (GAAP). One particular category of giving–real estate revocable trusts–was singled out as being outside GAAP. The judge indicated that she did not receive the information she needed to assess this item.

In light of controversy surrounding the 3ABN jet aircraft–leased for $40,000 per month, not counting pilot and fuel costs and landing fees and questions about the effectiveness of board supervision at the ministry—the irregularities brought to light in the Franklin County tax case deserve attention from the Church.

It is beyond dispute that 3ABN promotes Adventist beliefs and values through its programming. There is no question about the sincerity of donors or the dramatic effectiveness of Danny Shelton as a fund-raiser and media ministry leader. However, questions are being raised about the management of 3ABN. Specifically, has the board instituted adequate accounting mechanisms to ensure that contributions are being used in the manner intended by donors?

In one instance, a donor subsidized the purchase of a piano worth $15,000. This same piano was sold to a Shelton family member for $2,000. Needless to say, the donor was not happy about this use of her sacrificial gift to the ministry.

Two years ago, Danny Shelton claimed that his salary was about $50,000 per year and that of his wife, Linda, $65,000. But these figures do not include new cars that are bought every year and maintained by 3ABN for Shelton’s unrestricted use, nor does this include the fine home built and maintained by the ministry for the Sheltons. There is nothing illegal about the cars or the home, but there is the question of transparency to donors and honesty to the IRS. Is the value of the home and the cars properly reported to the IRS? Of greater concern are allegations regarding the diversion of significant amounts of cash and in-kind giving from the ministry coffers. Are these allegations true? Where is the $50,000 per year of rental income going?

Another area of concern has been Internet sales. Does the income from Internet sales of in-kind gifts and other items under 3ABN aegis generate income for the ministry, or does this income bypass the ministry books and go to members of the Shelton family? Adventist Today contacted Danny Shelton for his response to these questions, but he declined to comment because he felt we would not fairly represent him.

Since 3ABN is an independent ministry, there are two places where these kinds of concerns can be addressed: 1) The media and thus the court of public opinion, and 2) The 3ABN board. The board is charged with the governance of the ministry. For the board to do its job, it needs to be strong and independent. The 3ABN bylaws submitted in evidence at the tax trial specifically stated that the board members were not paid and did not even have their travel expenses covered by 3ABN. Of course, there was the inconsistency between these bylaws and the board members of record in the documents–all reported as Shelton family members and all 3ABN employees– but this was apparently an error on the part of 3ABN’s legal team, which did not ensure that the judge was provided with an accurate roll of current board members.

A different list is given in Kay Kuzma’s 2005 book, Mending Broken People: The Vision, The Lives, The Blessings, where eight board members are named for the TV ministry: May Chung, a philanthropist from southern California; Kenneth Denslow, president of the Illinois Conference; Bill Hulsey, retired CEO of Collegedale Wood Products and mayor of Collegedale, Tennessee; Ellsworth McKee, chairman of the board of McKee Foods, Inc.; G. Ralph Thompson, retired, former Secretary of the General Conference; Walter Thompson, retired surgeon and current chairman of the 3ABN board; Owen Troy, retired director of communication for North American Division; and Larry Welch, long-time friend of Danny Shelton and construction manager for 3ABN.

Walter Thompson, the board chair, has declared that the board does not attempt to exercise close supervision of Shelton’s management of the ministry. They have implicit trust in Shelton’s character and competence to run it.

Even if the board did wish to “rein in” Shelton, it would be difficult for them to do so. Oversight of a ministry like 3ABN is not easy. The founder is the head of the ministry. Most “founders” of Christian ministries are very strong-willed people who do not take kindly to supervision or “policies” or anything else that interferes with their drive to achieve and accomplish for the Lord, as they see it. This willfulness of Danny Shelton is highlighted by his Guam divorce. Since he and Linda lived in Illinois, why were they divorced in Guam? Was it because doing so presented fewer impediments to Danny’s arranging things just the way he wanted them?

The same drive that made Danny effective in creating a $13-million-a-year ministry from nothing makes it very difficult for anyone to hold him accountable for the way he handles money or people. Repeatedly, in our interviews with people who have ties to the ministry, they would tell us we could not identify them because they had relatives who still worked at 3ABN. They worried that these employees would suffer repercussions if Danny knew that any of their relatives had talked with Adventist Today. Danny is not used to being denied. He is not used to being challenged. He does not tolerate dissent within his ministry.

According to our sources, Shelton does respond to concerns voiced by donors. If you are a donor to 3ABN, you should feel free to ask pointed questions about how your gift will be managed. This kind of questions from donors appear to be their best way to encourage greater care and transparency by those involved in the financial operations of this ministry.

pp.11,12 adventist today | vol. 14 issue 1