1. Undisputed Factual Background
A. Three Angels Structure and Organization
Three Angels Broadcasting Network, Inc. was incorporated under
the General Not For Profit Corporation Act of the State of Illinois
on March 1, 1985 for purposes that are "exclusively religious,
charitable or educational within the meaning of Section 501(c)(3)
of the Internal Revenue Code." Barbara Rowe's Recommendation
for Disposition of January 28, 2004, at p. 5 (hereafter referred
to as "RD #"). Among its specific purposes, Three Angels was
to "plan, promote, produce and direct . . . all types of religious
programming" for television and radio, to buy and sell television
and radio equipment to further this purpose, and to promote and
produce "recorded music and video" programs to further the religious
mission of the organization. RD 5.
Further, the Articles of Incorporation and Bylaws require
that, upon dissolution, the assets of the organization must go
to a similar, not-for-profit, charitable organization. Trial
Transcript 54-60 (hereafter "TT#"); Order Purs. Applicant's Pet.
Rehear p. 2 (hereafter "OPR #").1 The directors and officers
of Three Angels broadcasting were, and are, members, leaders
and elders of the Seventh-day Adventist church. RD 7, fn 2; TT
92-96. The board meets regularly several times a year to oversee
and guide the work of Three Angels and to approve its
There was some confusion on this point in the judge's initial
opinion caused by an incomplete set of bylaws inadvertently submitted
at trial. RD par. 3, fn. 3. This caused the judge to initially
rule that Three Angels' by-laws lacked the important dissolution
language. RD 30. But when the error in the by-laws exhibits was
brought to the judge's attention in a motion for reconsideration,
she ruled that the complete set of bylaws would be accepted as
part of the record, and she acknowledged that they did contain
the appropriate dissolution clause language. OPR 2.
budget and strategic planning. RD 7 par. 9-10, fn. 2; TT 95.
The board members are not paid for their services, and neither
are they reimbursed for their travel expenses to board meetings. TT 500-501.
B. The Three Angels' Properties and Their Religious Uses.
The planning, organizing, support, and most of the production
of the religious programs described below took place at Three
Angels headquarter facilities at issue in this action. TT 103.
Three Angels acquired the 5 acre parcel at issue in 1991, and
during the relevant time period, had three buildings on it. RD
par. 3. The first building is a three-story administrative offices/filming/production
center that contains about 30,000 square feet. This building
contains two studios where Three Angels films its programs, and
a production area. RD par. 4. This building also houses the administrative
areas for finance, engineering, as well as Three Angels management.
Id. It also contains two pastoral care offices, offices for the
president and vice-president, and also an area where the graphics,
maintenance, and computer department are located. RD. par. 4.
The first building also contains the 10,800 square foot BOS Auditorium,
where a number of evangelistic meetings were held.. RD. par.
The second building is a maintenance/carpenters shop of about
2,400 square feet, where the maintenance materials required in
the upkeep of the studios, offices, as well as the construction
of television sets is handled. RD. par. 3, 6. The final building
is the 7,000 square foot call center, where Three Angels stores
the books, videos, CDs and other materials that it gives away
and otherwise distributes. RD. par. 3, 5. It is also at the call
center that Three Angels responds to the calls that come in inquiring
about Three Angels' books, videos and other materials. Id.
The major amount of Three Angels programming originates from
the above properties, most notably the studios and production
center. It is there that the programming is filmed, edited, produced,
and made ready for broadcast. TT 84-87. The President and Vice-President
of Three Angels had a daily religious program filmed at the studios
entitled Three ABN Presents. This program consists of scripture
reading, prayer, devotional thoughts, and interviews with religious
leaders and missionaries from around the world. RD par. 26; TT
Other ministry programs are filmed in the same studios, including
Christian lifestyle programs that highlight Children's Bible
programs, Bible reading sessions, health and nutrition segments,
and cooking classes based on Bible-based vegetarian diet. RD
par. 26-27; TT 86. None of the programming Three Angels creates
is copyrighted, and viewers are encouraged to copy the programs
to share as a witnessing tool with friends. TT 574.
C. Three Angels Promotion of Seventh-day
Adventist Gospel Beliefs.
The Three Angels board has voted that all programming of Three
Angels is to reflect the 27 fundamental beliefs of the Seventh-day
Adventist Church. TT 598. The very name of the organization, "Three
Angels," has a special meaning for Seventh-day Adventists. It
is based on the three angels discussed in Revelation 14:6-12,
that herald the "everlasting gospel" to "every nation, tribe,
tongue and people." TT 47. The three angels' messages relate
to unique and central doctrines of the Adventist church, such
as the Sabbath, the final judgment, and the second coming of
Jesus Christ. TT 48. This message also includes the need to take
care of our bodies and health as directed by our Creator, Jesus
Christ, as the body, mind and spirit are closely linked. TT 71-72.
The Three Angels ministry spreads this message through preaching,
Bible teaching, and gospel music and singing that it airs on
various satellite, broadcast and cable television stations, as
well as satellite radio stations, in America and throughout the
world. RD 13-14; TT 70, 73-76. The leadership of Three Angels,
along with a filming crew, traveled between twenty and thirty
weekends a year to hold Three Angels' praise, prayer and gospel
preaching rallies at Seventh-day Adventist churches in America
and overseas. RD 10, 34; TT 131-132. Three Angels also has a
number of overseas gospel workers that it directly supports in
missionary media work in Russia and the Philippines. Three Angels
also paid for and continues to support religious broadcast centers
in these locations. RD 8 par. 15; TT 134-135.
D. Three Angels Cooperation with the Seventh-day Adventist Church
Three Angels has a formal agreement with the Seventh-day
Adventist Church to cooperate together to advance the ministry and missionary
work of the Church. RD 19-20; TT 97. In the "Joint Declaration
of Commitment," Three Angels agrees to work with the church "in
the proclamation of the everlasting gospel to the entire world,"
to proclaim the "gospel in its purity," and to encourage "membership
in the church." RD 19 par. 66.
Three Angels works closely with ministries of the church to
support and promote its missionary projects. TT 108-110. These
organizations include Global Missions, for which Three Angels
produced 20 or 30 programs a year that focused on overseas mission
projects, such as building churches, orphanages, or religious
schools. RD 12 par. 40; TT 108-109. Three Angels produces and/or
airs programs for the Church's evangelistic, preaching programs
of the Quite Hour, Voice of Prophecy, and Amazing Facts. RD 15
par. 55; TT 109-110.
Indeed, from 70% to 80% of Three Angels' programming is made
by or features employees, largely pastors, of the Seventh-day
Adventist church. TT 112. These church programs do contribute
to the expense of producing and/or broadcasting the programs.
But Three Angels sets the base rate at only $1,200 per hour,
which is well below commercial market rates, and is below the
actual cost of that hour to Three Angels. RD 15 par. 54; TT 160-161.
E. Three Angels Provision of Free or Reduced Fee Programming and Airtime.
Three Angels often adjusts its airtime rates downward, based
on a particular ministry's ability to pay. TT 161-162. A review
of the rates charged and hours given shows that many ministries
were charged less than $1,000 per hour, and that some were charged
around $500 per hour. RD par. 55, 57. The only other evidence
in the record of airtime charges were those of CNN, which range
from $2,800 to $24,000 per minute. TT 160-161.
Three Angels has also provided the Adventist Church with a
significant amount of free programming during the years under
consideration. Three Angels produced and broadcast the General
Conference Session of Seventh-day Adventists held in Toronto,
Canada, in the summer of 2000. RD par. 39; TT 105, 107. This
international church business meeting lasted two full weeks,
and Three Angels covered it at no charge to the church. TT 108.
Three Angels also broadcast a number of worldwide evangelistic
meetings for the church, known as "Net Series." RD 38. These
gospel preaching presentations went for five nights a week for
about a month. RD 37; TT 101-103, 106. Once again, Three Angels
did not charge the church for these Net Series, two of which
occurred in the year 2000. TT 105-106, 108, 556-557.
Three Angels also supported its local church conference, the
Illinois Conference of Seventh-day Adventists, by providing down-link
services for the church's town-hall meetings at 80 sites throughout
the state of Illinois. TT 552-553. Three Angels charged the church
only for the cost of special equipment that Three Angels had
to rent to broadcast the meetings. TT 554.
Three Angels allowed its headquarters' property to be used
for no charge by the Illinois Conference as a camp-meeting headquarters
on a yearly basis. 557-558. It also provides, similarly at no
charge, property on which the conference runs and operates a
church and a school. TT 558-559. Three Angels also financially
funds and supports a full-time Seventh-day Adventist evangelist
through the Illinois Conference. 559-561.
F. The Religious Content of Three Angels Programming.
All the programming created and/or aired over the Three Angels
network is screened to ensure that it supports and is consistent
with the fundamental beliefs of the Seventh-day Adventist Church.
TT 598-599. This screening is carried out by various persons,
including the on-site staff of four Seventh-day Adventist ministers
who are very familiar with the teachings and beliefs of the Adventist
Church. RD par. 74; TT 598. These pastors also pray and counsel
with viewers who call in on the ministry's prayer hotline. Id.
These pastors also conduct religious services and worship at
the headquarters facility for Three Angels employees, as well
as at the local Adventist church and school. TT 533-34.