Major-league bad blood is now gushing over at the Calvary Satellite Network, the Clear Channel of godcasting. A couple of months ago a civil suit surfaced, filed by Michael Kestler, pastor of Calvary Chapel of Twin Falls, Idaho, against Jeff Smith – son of Chuck Smith, founder of the Calvary Chapel fellowship itself. Kestler accused Smith and several anonymous accomplices of siphoning money from CSN to finance other projects, like Chuck Smith’s syndicated radio program, The Word for Today.
Smith et al. have now responded – big time. In a 112-page counter-complaint, it is as if Kestler’s accusations are thrown back at him, amplified. Before getting into the dirty details, though, a bit of back-story is required.
The Calvary Satellite Network began around 1996, when Michael Kestler and Jeff Smith hatched a plan to utilize FM translator stations to build a national bible-teaching network. According to a development agreement signed by both men that lays out the basics of the CSN collaboration, Kestler and Calvary Chapel of Twin Falls would be responsible for building and maintaining the CSN network infrastructure. They would hold the licenses to the network’s translator stations; the Smiths, via Calvary Chapel of Costa Mesa (the “mother church”), bankrolled the network’s actual construction and would be responsible for the network’s finances (including the collection of listener donations). The Smiths provided the initial seed money to launch the project.
CSN would be overseen by a two-man board of directors – Jeff Smith and Michael Kestler. The agreement would expire in five years unless replaced with a new one.
By the time 2001 came along, CSN had exploded onto the godcasting scene, with nearly 400 rebroadcasting nodes around the country. However, in the intervening five years there had been a falling out between Jeff Smith and Michael Kestler – so much so that the development agreement was not renewed. According to the counter-complaint, Smith then made a play to assume full control of CSN, but was blocked by Kestler, who still asserted his authority as a CSN board member and as the man with technical control of the network infrastructure.
Between then and now, according to Smith’s counterclaim, Kestler and a group of accomplices (including his wife and brother-in-law) essentially pillaged CSN for their own personal gain. Allegations include:
1. Siphoning off so much money from CSN that the network became insolvent, forcing it to sell 19 of its radio stations to avoid collapse, and skimming at least $3 million from those transactions.
2. Using CSN money to finance other businesses: it seems Kestler owns a stable of television stations in Idaho and has launched another godcast radio network, Effect Radio, which can be heard on some 50 stations in 15 states. Kestler also owns an automotive restoration business (“Mike’s Automotive”) on which, it is alleged, CSN funds were also spent.
3. Taking payola – cash and/or merchandise in exchange for program airplay. The counterclaim does not name the programs involved, nor does it detail what sort of payola may have been involved. If true, I believe this may be the first payola scandal ever reported in religious broadcasting.
4. Mismanaging the CSN network infrastructure to a point where several of its stations (both full-power and translator) now operate beyond the bounds of accepted FCC engineering regulations. The counterclaim references “ongoing violations at various CSN broadcast stations,” and asserts that were the FCC to inspect any of these stations it would “likely” shut them down immediately.
5. Falsifying or otherwise modifying license information on file with the FCC for CSN stations, like changing contact information from an address in Costa Mesa to one in Twin Falls. It is also alleged that Kestler et al. intentionally delayed or spiked CSN applications for full-power stations in certain markets so that Twin Falls-controlled translators could be placed there instead.
Of course, no religious media scandal would be complete without the sex. There’s plenty of that in the mix here as well: according to Jeff Smith and his attorneys, Kestler frequently engaged in “illicit ungodly relationships” with women who were not his wife. In this context, CSN money got spent on things designed to facilitate the ungodliness, like “charges at Victoria’s Secret, evenings of romantic dinner/drinks, vacation/travel expenses, car parts, gas, airline tickets, food and lodging,” and “at least one gun.”
Kestler is the defendant in a sexual harassment lawsuit in Idaho; Chuck Smith himself has publicly spoken on this issue (8:06, 3.8 MB). Chuck has also reportedly revoked Kestler’s right to use the Calvary Chapel “brand,” thus making his entire church a renegade.
In all, the Smith suit values CSN’s assets in the “hundreds of millions” of dollars, while it accuses Kestler of diverting “tens of millions” for various purposes. It seeks full ownership and control of the Calvary Satellite Network and mega-damages against Kestler and his crew.
This is only the latest volley in an all-out legal war taking place between Calvary Chapel of Twin Falls and Calvary Chapel of Costa Mesa, in which CSN is the richest prize. Decoding rightful ownership will likely be a mess because, during the course of their failed collaboration, the two parties “became inextricably entangled at some broadcast locations, leaving CSN owning equipment and other resources, on TWIN FALLS owned and/or leased tower sites, and at broadcast stations and translators licensed in the name of TWIN FALLS, while those broadcasting assets that were in dominion and control of TWIN FALLS, were actually paid for by CSN monies.”
The Phoenix Preacher blog has watched the war pretty closely since it erupted late last year and has much of the relevant legal correspondence online, including The Word for Today’s million-dollar claim against Calvary Chapel of Twin Falls (2/14/06 – note fax header information) and CCTF’s response (3/16/06), as well as Michael Kestler’s two responses to the sexual harassment litigation (1/31/06 and 2/2/06).
For what it’s worth, Phoenix Preacher’s nutshell take is, “A pox on both houses.” Calvary Chapel’s organizational structure and leadership certainly leave a lot to be desired: the shepherd-centric focus of the brand seems to breed dynasty-building and quasi-dictatorial tendencies. This means there really is no morally definitive side to take on this scandal. If any of it goes to trial, we’ll be able to see the lust, greed, envy, and pride involved in radio empire-building on full display.