On March 19, 1987, Jim Bakker resigned from PTL after admitting to a 1980 sexual encounter with church secretary Jessica Hahn, who later described the encounter as rape and said she had been paid to stay silent about it. He turned the ministry's assets over to fellow broadcaster Jerry Falwell. The resignation opened a wider investigation into PTL's finances that proved far more consequential than the affair itself.
Between 1984 and 1987, PTL had sold more than 400,000,000 dollars in Heritage USA "lifetime partnerships," which promised buyers an annual hotel stay in exchange for a one time payment. Federal investigators found that PTL sold far more partnerships than the resort's single completed 500 room hotel could ever honor, using new partnership sales to fund operating costs and the Bakkers' personal lifestyle rather than the additional hotel construction the sales were meant to finance.
A federal grand jury indicted Bakker on December 5, 1988, and a jury convicted him on October 5, 1989, in the United States District Court for the Western District of North Carolina, on all 24 counts: 8 of mail fraud, 15 of wire fraud and 1 of conspiracy. Judge Robert Potter sentenced Bakker to 45 years in prison and a 500,000 dollar fine. In 1991 the Fourth Circuit Court of Appeals upheld all 24 convictions but vacated the sentence, ruling that Potter's remarks about "money grubbing preachers" showed judicial bias. Resentenced to 8 years, Bakker was paroled in 1994. He divorced Tammy Faye in 1992 and resumed televangelism from Missouri in 2003.