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Updated 1/10/2013
2011 Form 990

Updated 6/22/2011
3ABN sued
over Tommy!

Added 3/14/2010
Can 3ABN Survive?

Added 11/16/2010
Judge Rejects
Plea Deal

Updated 4/2/2010
Tommy Shelton

Must Read:
Mom in Pain #1

Mene, Mene,
Tekel, Parsin

The Actual Lawsuit
IRS Criminal Investigation

3ABN's Property Tax Case Appeal

Opening Brief of Appellant 3ABN

Part Four

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Typographical errors may actually be copied from the original.

"Danny Shelton testified that ... they did not receive retirement benefits." It may depend on how one defines retirement benefits. For example, some might think that Danny and Linda being given a life estate in Lot 6 was a type of retirement benefit.

And then, as Dr. Walt Thompson has stated, some time after being granted the life estate, "Danny and Linda decided they would like to build a house so as to build up some equity for retirement, being as 3abn did not provide retirement benefits to its employees. It was then that they approached the board and requested that they purchase the house they were living in from 3abn for the amount of its value at the end of their lives as calculated by tables designed for that purpose. Our board saw no problem with this, and voted to proceed accordingly." No retirement benefits of any sort?

The other highlighted statements in this part merely reinforce statements already highlighted elsewhere, with the one additional detail that Mollie Steenson is an ordained minister, and that one of her responsibilities is to assist "four Seventh-day Adventist ministers" with ensuring that all 3ABN's programming is in line with the 3ABN Board's mandate that all programming be Seventh-day Adventist in content.

Part Four of 3ABN's Appellant Brief

B.  Issue of Sheltons' Salary and Alleged Linda Shelton Royalty.

With respect to the wages earned by the Sheltons, Danny Shelton testified that they each earned about $50,000 a year, their salaries were set by the board of directors, they received medical and dental benefits, but they did not receive retirement benefits. TT 141-145. Dr. Thompson, chairman of the Three Angels' board, testified that board members do not receive any compensation for their services as directors and are not reimbursed for travel expenses. TT 500-501.

Although Mr. Shelton's testimony was unimpeached, the hearing judge, sua sponte, questioned the veracity of the testimony because it was not verified by "any other evidence." RD 35. The hearing judge's comment overlooks the fact that Mr. Shelton's testimony on the issue of wages was entirely uncontradicted. In the absence of some evidence on which to base the opposite inference, Mr. Shelton's testimony on this point should be accepted. As Illinois courts have noted, the record must contain "some evidence supporting the agency's decision" for a finding of fact to stand.9

Not only is Mr. Shelton's testimony on this point undisputed in the record, there is documentary evidence that supports it. As noted above this court may take administrative notice of Three Angels' federal forms 990 which substantiates the testimony of the Sheltons as to their compensation.10 Accordingly, Applicant requests that administrative notice be taken of Three Angels federal form 990 for the years 2000 and 2001, and that the finding of the hearing

9 Abrahamson, 153 Ill.2d at 88, 180 Ill.Dec. 34, 606 N.E.2d at 1117. Caterpillar, Inc. v. Illinois Commerce Com'n, 348 Ill.App.3d 823 at 828, 283 Ill.Dec. 482, 485-86 (Ill.App. 1 Dist., 2004).

10 The 990 forms confirm that Danny Shelton made $53,365 and $55,504 during 2000 and 2001 respectively, and Linda Shelton made $47,453 and $49,354.

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judge be reversed, based on Mr. Shelton's unimpeached testimony as substantiated by the federal forms.

With respect to the sale of Three Angels' CDs on which Linda Shelton sings, the hearing judge found that Linda Shelton was operating a "commercial enterprise." RD 36. The opinion was based on the erroneous factual conclusion that Ms. Shelton obtained royalties from Three Angels from the sales of the CDs. RD 29, 33. The evidence, however, does not substantiate and is contrary to such a finding.

At trial, Ms. Shelton testified that she receives no royalties at all from Three Angels for her CDs. 641-642. Mr. Shelton confirmed the same. TT 142. Linda explained that as the author she owns the copyright to the individual songs, but she donates the CD project to Three ABN," i.e., Three Angels owns and sells the CDs. TT 620. The CDs are offered for sale in Three Angels' catalogs and Three Angels receives the sales revenue. Three Angels does not pay Ms. Shelton a royalty on the sales or any other part of the CD production. Ms. Shelton testified that she makes the CDs for Three Angles as a gift to help Three Angels spread the gospel. TT 595.

When Mrs. Shelton was asked more broadly about her CDs, she explained that although she does not receive any royalties for the sales of the CDs, she retains the copyright to the songs that she writes. She licenses these to Broadcast Music Inc. ("BMI"), an organization with no ties or links with either the Sheltons or Three Angels. TT 618-619; Applicant Ex. 3. BMI collects license fees from music users, e.g., radio stations, and in turn BMI pays Ms. Shelton a royalty if her songs receive "massive airplay." TT 619.

This arrangement is common in the music industry. Organizations like BMI monitor television and radio stations to determine whether any of the songs to which they hold a license are played by the station. Depending on the amount of airplay a song receives, the station is

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required to pay BMI a license fee. BMI in turn pays a royalty check to the musician that has licensed his or her music to BMI. Ms. Shelton testified that she does not receive royalties for any airplay by Three Angles' broadcast networks. TT 641-642 She stated that the largest royalty check she ever received from BMI was approximately $20. TT 619.

There is no evidence to support the claim that Mrs. Shelton receives royalties of any kind from Three Angels. Rather, she has received de minimis royalties from a third party for the use of her personal properly. In light of the fact that Ms Shelton receives no royalties on the sale of the CDs or for any airplay on Three Angels' networks, and receives no royalties from Three Angels at all, it can hardly be said that Ms. Shelton is operating a "commercial enterprise for the production of her CDs." This court should reverse the hearing judge's application of law to fact RD 29, 33, and 36 that led her to conclude that Linda Shelton receives personal inurement from Three Angels, because this conclusion is clearly erroneous.

C.  Donated Items and Other Giveaways.

The hearing judge further erred when she found that Three Angels "did not establish that they gave anything away free except for the catalogues that list the merchandise that is for sale." DR 29. Both the documentary and testimonial evidence contradict the judge's finding on this point. Mr. Shelton testified that every day Three Angels gives away religious materials on topics from the gospel to health, all of which are part of the fundamental tenets of the Seventh-day Adventist religion. TT 171-172, 181-182. This testimony was unrebutted.

Applicant's exhibits 18 through 21 were admitted into evidence and identify the items given away to promote spiritual growth during the years 2000 and 2001. TT 652; Applicant Exs. 18-21. They reveal that in 2000, well over 14,000 items were given away, the majority of which were books and magazine pamphlets, and in 2001 nearly 18,000 were given away. In

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addition, on Thursday nights other spiritual books and magazines were also given away. Over one hundred items were offered on Thursday nights over the two years.11

Linda Shelton testified that Three Angels sends out a newsletter 9 to 10 times a year and a magazine twice a year to between 100,000 and 150,000 people. These publications are free and contain miracle stories, testimonials, and information on Three Angels' initiatives and articles on devotional thought. TT 593-94.

With respect to satellite dishes, Mr. Shelton testified that he instructed his engineering team to sell the Three Angels' satellite systems at cost, i.e., $350. TT 167. Subsequently the price was reduced by $50 so the satellite systems were sold below Three Angels' cost in order to keep them affordable to the public. TT 325. Further, Mr. Shelton stated that there was an operational policy for the free distribution of satellite system equipment to those with financial hardship. TT 296-97.

He testified that when someone requests a system for free, Three Angels checks with a pastor from the individual's church to verify that there is a financial need. If the pastor confirms there is a hardship situation, Three Angels will attempt to split the cost of the satellite system with the parishioner's church. If the church is unwilling to absorb part of the cost, the system is given away. TT 296-297. Mr. Shelton testified that approximately 5 or 6 satellite systems were given away in each of the years in question due to financial hardship of the recipient. TT 300, 331.

Several witnesses testified that Three Angels also gives away significant amounts programming airtime. Three Angels charged $600 per half hour of airtime, but programs were

11 The hearing officer viewed the documents supporting these figures as not qualifying as business records, yet this misunderstands there purpose, as they are illustrative exhibits, or compilations of data, and the underlying data was available to all parties during the discovery process. If taken seriously, the hearing judge's standard would require copies of all the books given away, or perhaps signed receipts from all

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generally aired an additional two times at no charge. TT 146, 370. Mr. Shelton testified that as a matter of course, if a church or lay ministry could not afford to pay the airtime charges, Three Angels would reduce its charges, or in some instances would give the airtime away for free. TT 146-147. By way of example Mr. Shelton testified that in 2000, Three Angels broadcast the meetings of the General Conference of the Seventh-day Adventist Church which took place over a ten-day period in Toronto, Canada. Because of the location, Three Angels had to send out a remote crew and trucks to broadcast the session. Although the cost to Three Angels was approximately $200,000, no fee was charged for the broadcast. TT 105-108.

During the year 2000, Three Angels also broadcast a separate five week evangelist preaching and worship series at no charge featuring Samuel Thomas in Ohio. TT 105-106. The same year Three Angels also broadcast at no charge an evangelist preaching series known as Pentecost 2000. The series featured pastor Steven Lewis and took place at, and was broadcast from, Three Angels' property. The program series ran for about a month. Id.

Danny Shelton's testimony was corroborated by an independent witness, Kenneth Denslow, the President of the Illinois Conference of the Seventh Day Adventist. Mr. Denslow testified that during 2000 through 2001, Three Angels televised the Conference's church organizational meetings, known as town hall meetings, for Adventist churches throughout the state. The Conference was only charged for Three Angels' third party costs. No charge was made for Three Angels' services. TT 551-556, 563.

Three Angels also televised the Net 2000 Series at no charge. Net 2000 was a series of biblical preaching services resulting from a cooperative effort between the Illinois Conference and the North American Division of Seventh-day Adventist. The series lasted almost five weeks with broadcasts airing almost every night of the week. TT 556-557. Three Angels also

those receiving the books. Such an evidentiary standard is impracticable enough to be impossible.

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hosted and televised the Illinois Conference's camp meeting at no charge, which involved religious meetings and worship services. TT 557-558.

In short, there was significant evidence that Three Angels gave away substantial amounts of religious materials and programming airtime, as well as a small amount of satellite systems. During 2000 and 2001, an operational "give-away" policy was clearly in effect and used broadly. This testimony and evidence would have been further substantiated and supported by the testimony of Elder Ted Wilson, had his testimony been admitted, as described below.

Equally important, there was no evidence to the contrary presented, and no attempt was made to impeach the witnesses on these points. Their testimony stands as uncontradicted, and it is plain error for the hearing judge to draw opposite conclusions when there was no testimony or evidence upon which to base those contrary conclusions.

To the extent the hearing judge's opinion at pages 21, 29 and 38 are inconsistent with the evidence, Applicant requests that those portions of the opinion be overruled and disregarded, and that this Court accept the vast weight of the evidence that that Three Angels gave away or reduced the charges for numerous items as reflected in the testimony and documents.

D.  Officers Directly Involved in Religious Ministry and Teaching.

Three Angels leadership constantly travels to preach, pray, and teach the Bible at churches around the country. This makes particularly perplexing the hearing judge's conclusion that "3ABN has not established that it has officers deeply involved in religious teaching that serve to accomplish the promotion of Christian education." DR 30. Relatedly, she concluded at page 34 that "[n]or is there any indication in the record that Danny Shelton is traveling to advocate the Seventh-day Adventist doctrine or faith." DR 34. Such conclusions are squarely contradicted by the evidence.

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Danny Shelton is a director and the president of Three Angels. He is an ordained elder in the Seventh-day Adventist Church. As such, he participates in the distribution of the communion elements, baptisms and foot washings and represents the church on prayer missions. TT 38. He is a lay minister of the gospel. Id. Mr. Shelton has taught bible studies and lessons on the doctrines and teachings of the Seventh-day Adventist beliefs, and has written three books on the subject. TT 155-158.

At the property in question, Mr. Shelton hosts a daily program entitled "Three ABN Presents" that is aired on Three Angels networks. TT 73. The program is devoted to religious instruction and missionary work. Mr. Shelton co-hosts the program with his wife, Linda Shelton, who is also a director and vice president. They host the show to spread the gospel and involve the viewers in the missionary work of the Seventh-day Adventist Church. TT 85-86, 130.

They begin the program by reading Bible scripture and praying. Id. Gospel music is then played. Thereafter they interview people on church-related topics. Id. They interview people from other ministries as well as officials and missionaries of the Seventh Day Adventist church regarding the global missions of the church, such as the building of orphanages, schools and churches in places like Bangladesh. TT 85, 130-13 1, 247

Mr. and Mrs. Shelton also travel extensively on the weekends to promote the Christian teachings of the Seventh-day Adventist Church directly and to educate people about Three Angels' religious programming which offers instruction and education on Seventh-day Adventist beliefs. Typically they travel to a Seventh-day Adventist church in the United States. Seventh-day Adventists observe the Sabbath from sundown Friday evening to sundown Saturday evening. TT 258.

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The Sheltons begin their Sabbath services on Friday night with gospel music. Mr. Shelton then preaches. TT 131-132 Saturday morning they teach "Sabbath School" which is akin to Christian Sunday School. TT 132 Formal church services are held around 11 a.m. and Mr. Shelton usually preaches the sermon. Id. Saturday afternoon they usually participate in a religious revival where gospel music is played and testimonials are shared. TT 130-31.

Danny and Linda's involvement in religious instruction and education is not limited to their weekend travels. Both Sheltons are intimately involved in spreading the gospel through Three Angels' broadcasts. TT 130 To this end, Linda testified that Three Angles' Board of Directors voted to limit Three Angels programming to shows and music that reflect and promote the 27 fundamental beliefs of the Seventh-day Adventist Church, and that promote the Christian gospel around the world to the extent it is consistent with Seventh-day Adventist beliefs. TT 598. Danny and Linda are charged with carrying out this responsibility. The Sheltons, together with Mollie Steenson, the Department Coordinator and an ordained minister, plus the four pastors on staff at Three Angels, review all programming to assure that it is doctrinally consistent with Seventh-day Adventist views. TT 332, 532-533, 598-599. The pastors are also charged with engaging in worldwide prayer with Three Angels' viewers. They take daily prayer requests from 8 a.m. until midnight from viewers that call in on an 800 telephone number. TT 81, 531-532.

Linda Shelton is also actively involved in spreading the gospel through the monthly newsletter/magazines that Three Angels sends for free to its viewers. TT 593 The newsletter contains devotional thought and stories and is written primarily by Ms. Shelton. Id.

Doctor Walter Thompson is the Chairman of the Board of Directors for Three Angels and is an officer pursuant to Section 5.1 of the by-laws. Dr. Thompson has been a member of the

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Seventh-day Adventist Church since childhood and testified that as an adult he has been involved in projects for the church for many years. TT 498. He volunteers several days a month at the free medical clinic operated by Three Angels, performing medical services. TT 193. He is actively involved in reviewing Three Angels programming to make sure it is consistent with the fundamental tenants of the Seventh-day Adventist beliefs. TT 513-514. In addition, he has appeared as a host and as a guest on various programs and videos shown by Three Angels in order to instruct people as to the health-related beliefs adopted by the Seventh-day Adventist faith. TT 516.

In short, the evidence established that Dr. Thompson, Danny and Linda Shelton, and other Three Angels leaders lead lives of service and devotion to the teachings of the Seventh-day Adventist faith, promoting the instruction and education of such beliefs. The hearing judge's conclusions at pages 30 and 34 that "3ABN has not established that it has officers deeply involved in religious teaching" and that there is no indication in the record that Danny Shelton travels to advocate the Seventh-day Adventist doctrine or faith is thus directly contrary to the evidence and should be overturned.

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