The Dallas Morning News
BYLINE:Pete Slover, Diane Jennings

No visible means Source of money for Davidian sect remains a mystery

WACO -- A financial riddle lurks behind the events at the besieged Branch Davidian compound: How did an obscure religious sect manage to feed, clothe, house and heavily arm dozens of devotees, with no obvious source of income?

Neither interviews nor public records provide a definitive answer, but some members reportedly tithe their income, while others give their belongings to the cult. Federal investigators also have said privately that they are pursuing possible drug-related activity and money laundering by the sect.

Except for their large, costly cache of weapons, David Koresh and his followers seem to live modestly, according to court papers.

They collected decades-old cars, recycled building materials, fell behind on property taxes and purchased food in bulk with cash, food stamps and other public aid. Furnishings in the compound reportedly are comfortable but not plush, and although amenities include a swimming pool and satellite dish, there is no indoor plumbing.

Meanwhile, federal agents maintain, Mr. Koresh and his group accumulated a formidable arsenal, including illegal -- and expensive -- fully automatic heavy weapons.

Cult member Steve Schneider, interviewed the day after the raid by telephone from the compound, said group members "all tithe . . . we work hard and save money.'

Some cult members, including a Harvard-trained lawyer, are employed. Rick Ross, a Phoenix-based cult deprogrammer who has worked with former members of the Branch Davidian sect told The Associated Press that "good salaries earned on the outside were plowed back into the sect.' Mr. Koresh is "very much into money,' he said.

Other members however, have little or no outside income. Court records show that a 75-year-old woman arrested last week is unemployed and has an income of $509 a year. Another woman, 77, moved to the compound 20 years ago, and has given most of her money to the sect, according to her attorney, Gary Coker.

In a briefing Saturday, a federal agent said their investigation revealed that the people who joined Mr. Koresh gave up their personal goods and homes, and all of their money went to Mr. Koresh.

But a man who lived with the Davidians for two months in 1991 reported that Mr. Koresh didn't solicit contributions. He paid $40 a month for room and board, but "I never saw any interaction of money between disciples and Koresh,' said the London resident, who requested anonymity. "I don't know where he got his money from. . . . That's the weird thing. You see he can afford all these things, and none of his people seemed like they had a lot of money. There's something fishy here.'

Compound's value

The most visible asset belonging to the Branch Davidian is the 77-acre compound, valued on the McLennan County tax rolls at $122,000. Deed records show that the flat, grassy plot is part of a 941-acre compound the group purchased in 1957 for $85,000 cash, after selling a smaller compound on Lake Waco.

At that time, the sect was growing as people from around the country descended on Waco in preparation for April 22, 1959, the date foretold as "the establishment of the Kingdom of God on earth in Waco' by Florence Houteff, the wife and successor of the group's founder.

When her prediction failed, the group found itself embroiled in lawsuits by people who had sold their worldly goods to join. In that climate, the Davidians sold off all but 77 acres of their property for $181,000 in February 1961.

Since then, the group has never borrowed money against the property. No collateral-secured loans to the group or Mr. Koresh are registered at the courthouse, where they would normally be recorded by lenders. Because the compound land is held in the name of the General Association of Davidian 7th Day Adventists, title to the property has been disputed in at least six lawsuits since 1965 by factions claiming to be the successors to the General Association's assets.

Those lawsuits are legendary around the McLennan County Courthouse, recalled by clerks with a mixture of fondness and frustration. The files bulge with amateur legal pleadings -- often rambling, quasi-religious, illegible and malapropos.

Legal paper trail

Through legal pleadings, wills and deeds filed by the leaders over the years, the control of the faction and its assets can be traced to Vernon Howell, now known as David Koresh.

From 1984 until now, Mr. Koresh has engaged in numerous courtroom clashes with George Roden, son of Lois Roden, who led the sect until the mid-1980s. The documents show that Mrs. Roden supported Mr. Koresh against her son in the struggles to succeed her as master of the compound and its property.

The legal papers show that the litigants squabbled tirelessly over assets -- such as used cars and trucks, and farm equipment -- that weren't glamorous and, other than land, not inherently valuable.

When George Roden's mother died in 1986, she left an estate valued at $22,000 to the church and her children, but expressly provided that her son George would not control the estate, instead designating two of her other children as executors. Mr. Roden contested the will for years in court.

The dispute between Mr. Koresh and Mr. Roden peaked in a November 1987 gunfight at the compound. Mr. Koresh and his followers were tried on attempted murder charges, but his case was dismissed after a hung jury, and his associates were acquitted. Mr. Roden was not charged.

In the course of his lawsuits against Mr. Koresh, Mr. Roden was found in contempt of court and jailed for filing numerous obscene pleadings in which he invoked curses and wished AIDS, herpes and other misfortunes on judges.

He eventually moved to Odessa, where he was arrested and found not guilty by reason of insanity in the murder of a man he claimed was an assassin sent by Mr. Koresh. Committed to a state mental hospital, Mr. Roden continued to churn out handwritten lawsuits and legal pleadings.

State records show that the 25-year-old son of Mr. Roden, Joshua Roden, is among the 43 people who hold driver's licenses listing the compound as their home.

Always paid cash

The lack of debt on record at the courthouse is not surprising to local merchants, who said Mr. Koresh and his followers never finance purchases, always paying cash, even when the bill runs several hundred or thousand dollars.

Many of those purchases have been automobile parts and musical equipment. Records show 28 vehicles and two motorcycles, most at least 10 years old, registered to the compound address. Mr. Koresh is well known at some local automotive stores.

He's also familiar to music store owners. An aspiring musician, Mr. Koresh registered a musical production company name, Cyrus Productions, with McLennan County in 1987 but never earned much of a reputation as a local musician.

Rob Gibson, owner of Holze Music, said Mr. Koresh spent several hundred dollars in cash at his store on guitars, amplifiers and keyboards until a few years ago. "We have always understood that he was a frustrated rock musician,' Mr. Gibson said.

Melissa Ross of Lone Star Music said Mr. Koresh hasn't been to her store since the late '80s, but her customers say: "He has three times (the) equipment out there that we have in our store. He's got more guitars than he has guns evidently.' She also said Mr. Koresh may have made some money from selling musical equipment.

Unpaid taxes

He didn't use that money to pay taxes, however.

McLennan County tax records show that two acres of the compound are tax-exempt for religious purposes, but more than $3,275 in taxes on the remainder are overdue for 1991 and 1992.

In 1987, the local school district sued over more than $60,000 in back taxes, unpaid since 1968. Under threat of foreclosure, Mr. Koresh's faction managed to pay the bill and, with some legal maneuvering, took control of Mount Carmel.

According to papers filed by Mr. Koresh in a 1988 lawsuit, the group found the compound in disrepair. They burned three rotting horse stalls, tore down other buildings and used the salvaged materials to make improvements and replace the compound headquarters, which burned down in 1984. In addition to the fortresslike compound that has been erected, an attached map indicates that individuals live in 15 free-standing houses, in which they have some sort of ownership interest.

Last June, the sect filed applications with several county entities to have the entire compound declared tax-exempt. In those papers, Perry Jones, a 64-year-old compound resident, listed as the sect's vice president, revealed some details of the group's finances.

He stated that the Davidians had not borrowed or loaned any money to or from their membership. He also said that the church uses church funds only for church expenses and that no salaries are paid to any church staff.

Although tax records show that the original compound included a dairy barn, Mr. Jones' application states that none of the acreage is income-producing and all of the land is used as a place of worship.

The tax-exemption form states that the new church headquarters were under construction, with completion expected in 1995.

The Dallas Morning News
BYLINE:Lee Hancock

Cult talks stalled Agents say Koresh won't compromise

WACO -- Talks with besieged cult leader David Koresh have reached a stalemate, with the self-proclaimed messiah growing increasingly irritable, rejecting compromise offers and trying psychological warfare against federal agents, officials said Sunday.

"We are going through a very frustrating and disappointing period,' said Special Agent Bob K. Ricks, the FBI spokesman.

The deterioration in round-the-clock negotiations comes one week after federal Bureau of Alcohol, Tobacco and Firearms agents tried to storm the heavily fortified compound and arrest Mr. Koresh.

The Feb. 28 raid on the Branch Davidian compound ended in a 45-minute firefight that left four federal agents dead, 16 wounded, and three to 14 cult members dead.

As darkness fell Sunday, two trucks began moving large banks of lights toward the isolated rural compound. ATF officials referred questions about the lights to FBI officials, who would not comment.

But one hostage negotiating expert said the lights could be used to illuminate the compound in an effort to disrupt the group's sleep cycles.

"It's a technique that's been used before when they feel like negotiations have stalled,' said Peter DiVasto of Albuquerque, N.M., head of the U.S. Department of Energy's hostage negotiation program. "Their next move could be playing loud music.'

In the last two days, Agent Ricks said, the 33-year-old cult leader has become intent on avoiding discussion of ways to end the standoff.

He has responded to government pleas for compromise with evasive tirades, Scripture recitations and descriptions of his childhood, Agent Ricks said.

"We have thrown out to Mr. Koresh, "Tell us what we can do to get these negotiations moving forward again. . . . Give us something that we can deal with,' ' Agent Ricks said. "We will do almost anything within our power to get this matter over with and settled.'

No children freed

Authorities have become increasingly concerned that no children have been released since Friday morning, when an 8-year-old girl was let go.

That -- and the fact that none of the 21 children released so far was fathered by Mr. Koresh -- have heightened fears among authorities that the heavily armed, polygamist leader may be planning a violent end to the standoff or a mass suicide among his followers.

Mr. Koresh talked Saturday about allowing a 6-year-old girl named Melissa to leave, even permitting the child and her mother to speak with federal negotiators, Agent Ricks said.

But Mr. Koresh and Steve Schneider, a sect member considered to be Mr. Koresh's "right-hand man,' later told negotiators that the girl had changed her mind.

Federal officials also expressed more forcefully than before that they are increasingly frustrated with Mr. Koresh's rambling talks with negotiators.

In one discussion of "urgent concern' to the cult leader, Agent Ricks said, "We offered to compromise. . . . In fact we offered a specific settlement. Once that offer was made to Mr. Koresh, he rejected it and refused to discuss it further.'

Agent Ricks said he could not detail the proposal because it involves tactical areas of the federal operation.

But he said he obliquely raised the matter at a news media briefing to show negotiators' sincerity -- another demonstration of authorities' acute awareness that the cult leader monitors every briefing and televised report.

Offers rejected

Even on subjects as seemingly benign as the need for milk for 17 children believed to be inside the compound, Agent Ricks said, the 33-year-old cult leader has first proposed and then rejected compromises.

"They demanded milk for the children. They got a number of individuals on the phone and talked to us about how they needed milk,' Agent Ricks said. "We said we're ready and willing to bring the milk in, and they rejected the offer to deliver milk. Now we're back on talking about the delivery of the milk.'

He also has accused officials of sending in blank videotapes when they announced that tapes showing children who had been released were being sent in. Agent Ricks said the tape, which accompanied 19 pictures of children, did contain video images of the children when it was dropped outside the compound Friday.

And late Saturday night, as Mr. Koresh was shifting talk from his potential treatment in federal courts to religion, his followers began blasting taped rock music from the compound, authorities said.

The music, apparently a tape recording of Mr. Koresh playing electric guitar, could be heard up to two miles from the compound. Mr. Koresh told negotiators that it "was their effort to harass the people out at the site.'

As talks continue, Agent Ricks said, the cult leader has displayed growing ire "that pops up almost without notice.'

He said Mr. Schneider increasingly warns federal negotiators that "we do not know what we are dealing with when we are dealing wih Mr. Koresh, that he has powers that we're not aware of, and for us to even challenge him, we're making great mistakes.'

When Mr. Koresh has talked about giving up, he continues assuring negotiators that he is waiting for a sign from God that he should surrender.

Trying to play on his desire for publicity, negotiators have assured Mr. Koresh that he will "in fact will have greater exposure once he goes into the judicial system than he has ever had in his history,' Agent Ricks said.

Mr. Koresh has asked for renewed contact with reporters and has said he "feels frustrated' by an FBI decision Tuesday to sever his contacts with the outside world.

Dr. DiVasto, the Energy Department negotiations expert, said the growing intransigence of Mr. Koresh is an indication that the standoff won't end soon.

"As negotiations progress, people typically get more workable rather than less. There are peaks and valleys,' he said. "It may be reaching the point where they're starting to look at other options, tactical options.'

Disrupting sleep would be just such an option, one that might convince Mr. Koresh to begin making concessions, he said. In an 11-day standoff with an Idaho white supremacist, FBI negotiators blared loud music and aimed bright lights at his rural cabin after negotiations stalled.

The Albuquerque psychologist said convincing Mr. Koresh to give up peacefully could be difficult if he truly believes that he is communicating with God, as federal negotiators have indicated.