The following is excerpted from Pat Robertson's God Inc., Esquire, November, 1994, by John Taylor.

How Pat Robertson converted a tax-exempt charity into $90 million for himself and his son

...Robertson, who is nothing if not innovative, founded the Family Channel in 1977 as a division of CBN. The first basic-cable television network to be carried by satellite, its primary purpose was to bring Robertson's religious programming to a national market. To fill in the remaining time, it also broadcast old family-oriented movies and television programs like Father Knows Best and The Waltons. By 1989, the Family Channel had become so profitable that it threatened CBN's tax-exempt status.

So that year, Robertson. his son Tim, and John Malone, the founder of Tele-Communications, Inc., the country's largest cable operator, undertook a classic leveraged buyout of the Family Channel. Malone put up $45 million, Robertson and his son invested a total of $183,000, and their shell corporation issued CBN $250 million in convertible debt. " [Robertson ] actually approached us," Malone said in testimony before the Senate Judiciary Committee last year [1993]. "[He] said, 'If you'll make an investment in my channel, I'll be able to restructure it, take it out of the church, pay the church for the channel, and retain the format.'"

Just how good a deal this was for the Robertsons can be seen from the fact that in the LBO, they bought 1.5 million shares of a special variety of the company's common stock for 2.2 cents a share. At the subsequent public offering in 1992, the stock was valued at fifteen dollars a share. The very year that Robertson had prophesised upheaval in the stock market, he and his son converted their $183,000 investment into shares of stock worth $90 million.

Robertson vigorously defends the deal. But critics have complained that using charitable contributions made to a tax-exempt organization to create a profit-making enterprise and then selling that enterprise to yourself is, while legal, shamelessly unethical. In introducing a bill last year that would, as he put it, restrict such "self-dealing," California congressman Pete Stark attacked the Robertson LBO, saying, "Assets accumulated by organizations enjoying tax-exempt status are being raided through certain business transactions."...