The Money Man Behind Rev. Sheldon

Without the backing of a man sometimes called “Mr. Anaheim,” the Rev. Louis P. Sheldon agrees that his influence as a religious lobbyist would be considerably less.

Sheldon acknowledges that the support he has received from Herbert B. Leo, a retired Anaheim businessman and longtime civic booster, has been critical.

Leo has given Sheldon’s two organizations more than $250,000 over the past five years, about a third of what both groups have drawn in contributions. Leo serves as chairman of the board of the Traditional Values Coalition and the American Liberties Institute, and is in almost daily contact with the controversial campaigner against homosexual rights and abortions.

A longtime member of Anaheim’s Community Redevelopment Commission and the city’s Visitor and Convention Bureau, Leo served as president of the Chamber of Commerce, which is where he first met and worked with Sheldon. After a prayer breakfast one day, Sheldon went to Leo’s home.

“I was very impressed with his knowledge of the Bible and his ability to answer questions,” Leo recalls. The two men say they developed several slide shows--one attacking the concept of separation of church and state--and out of this relationship, they say, came Sheldon’s two organizations. Leo takes credit for more than just bankrolling Sheldon’s moral crusade:

“I suppose it was really my idea,” Leo says. “My feeling was that I wanted to be on the cutting edge, talking to agnostics and those who weren’t Christians. It was really an outreach program. . . . Our goal is to get Christians involved in what’s going on in everyday life.”

Sheldon agrees, saying it was Leo who “opened my eyes to the body politic in Anaheim and, because of that opening, it then went to the county and the state and now to the nation.”

Leo, a 72-year-old Baptist who gave up a seat on the Redevelopment Commission rather than turn in the lifetime pass he had been given to Disneyland, was a top executive of MCP Foods Inc., which makes citrus products, including frozen juices.

Apart from his opposition to homosexuality, abortion and the teaching of evolution, Leo shares another strong belief with Sheldon: that religion and commerce do not always make a profitable marriage. Over the last decade, Sheldon has lost money in financial ventures with Leo and others in the religious community.

A rehabilitation project aimed at renovating run-down houses in the South Central Los Angeles neighborhood of Watts, physically moving them to other lots and reselling them, went bust. “We lost our shirt on that baby,” Sheldon said, estimating that he lost more than $40,000 in a partnership that included David Balsiger, a Costa Mesa publisher of Christian literature.

Sheldon also invested in the New City Bank of Orange, a so-called “Christian bank” organized in 1983 in part to make land and construction loans to church congregations. Leo was chairman of the board and one of three major investors.

Wallace D. Linn, who was president and chief executive officer of New City--named for the “new city of Jerusalem”--joined Leo on the board of Sheldon’s American Liberties Institute in 1985, serving as chief financial officer, records show.

New City’s loans to religious organizations--including $10,000 given to American Liberties Institute to finance a direct-mail fund-raising campaign--were all repaid, Leo and Sheldon say.

However, the bank’s commercial loans did not fare so well. A Buena Park travel agency went bankrupt, owing New City $250,000. The partners of a San Diego firm, which promoted a plan to manufacture “space-age wood” from South American weeds on Pat Robertson’s “700 Club” program, also received a credit line from the bank. They were subsequently convicted in federal court of conspiracy to defraud New City of $200,000.

In an effort to save the bank, Leo and two of his partners invested an additional $1.5 million into its capital base, but New City was closed by state regulators in 1987 and some of its accounts sold to Colonial Bank N.A., in Orange. In all, Leo estimates that the endeavor cost him $750,000.

According to Gerry Findley, a Brea-based financial institutions consultant who engineered the sale to Colonial, New City “operated like a charity more than a bank. It seemed like they had a strong tendency toward giving things away.”

“The lesson we learned,” Leo says, “is that you need loan officers making loans and not missionaries.”

Leo says Sheldon lost $25,000 in the New City Bank failure. Sheldon would not confirm the extent of his loss, except to say that it was “not of the same magnitude as Herb’s.”

Sheldon says he has taken his painful investment experiences to heart. “A minister who lives by the Gospel must earn his money by the Gospel,” he says. “I am to depend on God and the Gospel by faith for living and substance.”