The New Republic
Chris Lehmann <https://newrepublic.com/authors/chris-lehmann>/August 25,
2020
Jerry Falwell Jr.’s Filthy, Predatory Finances
The son of the late evangelical titan may be embroiled in a scandal
made for reality TV, but it’s not as tawdry as his Trumpian path to
riches.
ALEX WONG/GETTY IMAGES
The overnight fall of Jerry Falwell Jr. from high evangelical grace
feels in many ways like a Trump-era gloss on the fabled preacher sex
scandals that have dogged our self-appointed Protestant moralists
throughout the modern era. Instead of absconding with a church secretary
like Jim Bakker or patronizing sex workers like Jimmy Swaggart, Falwell
Jr. allegedly upped the scandal ante by arranging a threesome with his
wife, Becki, and a pool boy. And instead of adjourning directly into the
fleshpots of temptation, Falwell Jr. elected,reportedly
<https://www.reuters.com/investigates/special-report/usa-falwell-relationship/>,
to watch; in a conservative movement long given to deriding betrayers of
the one true faith as virtual cucks, Falwell Jr. decided to go for the
real thing.
When photo evidence of the junior Falwell’s predilections surfaced, his
perch atop the billion-dollar Liberty University empire he inherited
from his dad wasswiftly threatened
<https://www.nytimes.com/2020/08/24/us/jerry-falwell-resigns-liberty.html>.
For connoisseurs of American religious scandal, there was a weird karmic
symmetry to it all, since Jerry Falwell Sr. had helped broker a key
institutional alliance between his Southern Baptist denomination and the
rival Pentecostalist faith when he assumed control of the beleaguered
(and debt-ridden) preaching franchise of Jim Bakker, disgraced by his
own dalliances with Jessica Hahn back in the 1980s.
But as is usually the case with our name-brand Protestant preaching
franchises, the salaciousness is largely a sideshow—and by now, a rather
depressingly familiar one. It’s not really any more surprising to see
Falwell fils hoisted by his own tumescent petard than it was to learn
circa 2016 that his chief political ally, Donald Trump, was a serial
sexual assaulter. No, the real scandal associated with the Falwell clan
is hiding in plain sight at its best-known institutional legacy: the
sprawling campus of Liberty University in Lynchburg, Virginia, which,
regardless of the ultimate disposition of Falwell Jr.’s fate there, will
continue paying a handsome pension to the institution’s newly minted
cuck emeritus for the balance of his earthly pilgrimage.
Liberty is the last surviving stronghold of the senior Falwell’s once
forbidding network of influence, from the/Old Time Gospel Hour/TV show
(and later network) that catapulted him into national renown to the
great religious-right lobbying combine called the Moral Majority, which
was present at the creation of the Reagan Revolution and sought to
consolidate many of its founding culture-war gains. But the elder
Falwell fell abruptly on hard times by the early 1990s; he disbanded the
Moral Majority in 1989, and spiraling debt—much of it left over from an
ill-advised Bakker takeover deal—forced him to shutter his gospel TV
network in all but a handful of local Virginia markets. That left
Liberty as the family’s safe harbor by default. But the university, too,
was teetering on the brink of insolvency, thanks to the paterfamilias’s
loose hold on the institution’s finances.
A thorough review of the books sparked some desperate efforts to save
the institution. As documented in Dirk Smillie’s illuminating and
detailed book,/Falwell, Inc.
<https://www.amazon.com/Falwell-Inc-Religious-Political-Educational/dp/0312376294>/,
one such rescue operation was the founding of a nonprofit shell
operation to wipe out $29 million in the school’s debts for pennies on
the dollar. A key Liberty benefactor—a Texas-based church bond kingpin
and former fundamentalist preacher named Willard May—orchestrated a $32
million bond issue in 1987 to fund expansion plans at the Liberty Campus
and kicked in $1.5 million to help pay for a new football stadium, which
Falwell Sr. named in his honor. In short order, though, the Texas
insurance commission and the U.S. Securities and Exchange Commission
caught up with May on various financial improprieties; the federal
government seized his trust company, which turned out to include the
deed to Falwell Sr.’s home congregation, the Thomas Road Baptist Church,
his TV network headquarters, and around 130 acres of the preacher’s real
estate holdings. In other words, the great name-brand preacher of the
anti-government Reagan gospel was now all but owned outright by the
federal government.
Things got worse. Liberty had been banking, quite literally, on a
pending interest-free $60 million bond issue already approved by the
city of Lynchburg. But church-state separationists challenged the
pending outlay in court and won. Unable to meet a $6 million loan
obligation that had come due, the elder Falwell had to foreclose on
Liberty’s North Campus, where the central administration had centralized
its dominion. He was thus forced to cart his own belongings across
campus to a more remote spot near the now accursed football field, which
had by then been quietly stripped of the Willard May name.
The school’s plans for self-rescue having largely proved a bust, Liberty
fell back on the largess of big-name donors. The $29 million marked for
retirement by the nonprofit shell company appears to have been wiped out
by none other than the maximum leader of the Unification Church,
Reverend Sun Myung-moon, an ideologically and financially convenient
ally but a highly embarrassing theological bedfellow for the
fundamentalist Baptist college. And as if to compound the humiliation of
it all, the legal enforcer that orchestrated the elder Falwell’s
humiliating eviction from his office was the Arkansas-based Rose Law
Firm, where Hillary Rodham Clinton was a longtime partner. The sting of
that moment of reckoning likely played no small part in Falwell senior’s
decision to help bankroll and distribute the incendiary and
high-conspiratorial 1994 video/The Clinton Chronicles/, which accused
the sitting president of all manner of shady dealings, up to and
including murder. Even though Falwell was still $60 million in debt at
the time, he managed to put together a $40,000 direct-mail appeal to
help ensure the video got produced and widely distributed in the fever
swamps of the Clinton hating right. (All of these edifying details come
courtesy of Smillie’s aforementioned 2008 chronicle/./)
Eventually, another financial angel engineered the retirement of
Liberty’s debt—and the school’s financial operations fell largely into
the hands of Falwell Jr., then recently graduated from University of
Virginia Law School. (Like our age’s other great name-brand scion of an
evangelical empire, Joel Osteen, the younger Falwell has very little
formal theological training.) Sizing up the school’s still dim prospects
when he succeeded to Liberty’s presidency in 2007, Jerry junior elected
to go big into online learning—a strategy that soon yielded enormous
returns. In 2018,/Pro Publica/reporter Alec MacGillischarted the full
reach of Liberty’s online empire
<https://www.propublica.org/article/liberty-university-online-jerry-falwell-jr>;
while the college boasts an in-person enrollment of 15,500, it enrolls
as many as 95,000 remote students in a given year. It’s the nation’s
second-largest online college after the for-profit behemoth University
of Phoenix. However, since Liberty is still chartered as a nonprofit
university, it uses a laxer regime of regulatory oversight to load up on
government-funded subventions; while the feds no longer own the campus
and its collateral outright, this great manufactory of spiritually
inflected right-wing dogma still thrives on the public dime, as
MacGillisexplains
<https://www.nytimes.com/2018/04/17/magazine/how-liberty-university-built-a-billion-dollar-empire-online.html#:~:text=By%202017%2C%20Liberty%20students%20were,ranked%20sixth%20in%20federal%20aid.>:
By 2017, Liberty students were receiving more than $772 million in
total aid from the Department of Education — nearly $100 million of
it in the form of Pell grants and the rest in federal student loans.
Among universities nationwide, it ranked sixth in federal aid.
Liberty students also received Department of Veterans Affairs
benefits, some $42 million in 2016, the most recent year for which
figures are available. Although some of that money went to textbooks
and nontuition expenses, a vast majority of Liberty’s total revenue
that year, which was just above $1 billion, came from
taxpayer-funded sources.
MacGillis notes as well that Liberty, like other for-profit colleges,
recruits its client base from a central call center, headquartered in a
former Sears store that once anchored a Lynchburg mall, which Liberty
holds a controlling interest in. And like other such boiler-room
operations, Liberty’s sales come-ons veer on the predatory:
A separate division of about 60 people focuses on courting members
of the military, who have access to even greater federal tuition
assistance, and then advising them on campus. A former employee in
that division said that given the smaller crew, the work there was
if anything even more intense than in the main branch: More than
30,000 Liberty University Online (L.U.O.) students are from the
military or military families.
Two recruiters told me they were instructed to quote L.U.O.’s cost
on a per-credit basis, rather than per-course, which makes it sound
more affordable. Undergraduate courses for part-time students are
$455 per credit, or $1,365 for a typical course; master’s courses
are typically about $600 per credit. They are instructed not to
press prospective applicants too hard on their academic
qualifications. Applicants have to submit past transcripts, but any
grade point average above 0.5 — equivalent to a D-minus — would
suffice, said the former employee in the nonmilitary division.
Recruiters, he told me, “would say, ‘Congratulations, you’ve been
accepted.’ They’d make it seem competitive.”
Meanwhile, the school’s operating costs are also driven far below what
the academic market usually bears. In 2016, Liberty spent a mere $2,609
per pupil in both online and in-person instruction; Notre Dame, by
contrast, averages nearly $24,000 per student, while even the bare-bones
University of Phoenix musters $4,000 per student. As a result, a 2013
audit of Liberty found that, while it raked in $749 million in tuition
and fees, it spent just $260 million on instruction, student support,
and financial services. That gap makes Liberty one of the most
well-heeled nonprofits in the country, MacGillis notes, on a par with
some of the country’s biggest nonprofit hospital systems.
For students, however, hidden costs abound. Nearly 10 percent of the
school’s online student body winds up defaulting on their student
loans—a percentage that’s all too likely to increase as the Covid-19
recession runs its course, even as lockdown conditions might prove a
boon to enrollment at virtual diploma mills like Liberty. But as a
nonprofit, Liberty can bank the proceeds from defaulted loans
regardless. And disenchanted former students of the school report that
they see precious little educational return on their tuition. One who’d
been enrolled in Liberty’s graduate education program reported that her
interactions with her instructor were fugitive and cursory while the
course materials were presented so haphazardly that they appeared to be
generated by algorithms. When she expressed her exasperation over a
chaotic final exam format to her instructor, he replied by email that
she should “remember that God is in control and he works all things for
our good.” Instead, she withdrew from the program and filed a complaint
with a Virginia higher-ed watchdog agency; 49 online Liberty students
have filed similar complaints, the highest contingent from any school in
the state.
So, yes, by all means chortle and smirk online at the consensual private
trespasses of Jerry Falwell Jr., yet another great Protestant hypocrite
laid low. But spare a moment’s prayerful reflection for the deeper
affinities he shares with his benefactor in the Oval Office. Both men
steered badly damaged properties from the brink of financial extinction
in the 1990s. Both managed to leverage oceans of debt into lucrative
branding franchises and preached a tireless message of ruthless
rent-seeking to shore up their respective gospels of success. Trump, of
course, even had his own eponymous online university; but in part
because it fell afoul of for-profit regulations, he was forced to
dissolve the school andpay out a $25 million settlementafter a class
action suit alleged rampant fraud. It may be, in other words, that we’re
not actually the ones who’ll be smirking over the long haul here—and
that the scandal that perhaps has expelled Jerry Falwell Jr. from public
spiritual eminence is a symptom of far greater predatory sins than the
tabloid news cycle is prepared to recognize.
Chris Lehmann
<https://newrepublic.com/authors/chris-lehmann>@lehmannchris
<https://twitter.com/lehmannchris>
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