Criticism of Scientology,  Scientology and the IRS,  Scientology Org Board,  Scientology Truth

How Scientology Gets Away with Violating the 1993 IRS Agreement and Defrauding US Taxpayers

Since 2001, the Church of Scientology has lost or expelled thousands of staff members for a variety of reasons, with the initial purges of 2001-2009 primarily motivated by self-appointed “Ecclesiastical Leader” David Miscavige’s attempts to consolidate his absolute central power and authority over the entire global Scientology network of church organizations and social betterment fronts. This involved Miscavige purging the International Base in Gilman Hot Springs, California — also known as Gold Base, the existence and location of which is officially kept confidential from the rank-and-file membership and staff — of almost the entire senior leadership of International Scientology Management, most of whom comprised the so-called “Young Turks” of the Sea Organization who helped him illegally seize power between 1980-82 through brute force intimidation tactics and financial terrorism against all who stood in their way, most notoriously demonstrated during the 1982 Mission Holders Conference in San Francisco.

The David Miscavige gang of “Young Turks” included such Sea Org notables as Mark “Marty” Rathbun, Patrick and Anne Broeker, Norman Starkey, Guillame Lesevre, Marc Yager, Michael Rinder, Ray Mithoff, as well as a number of others, including non-Scientologist attorneys who were complicit in the corporate restructuring deceptions of the early 1980s. The first of these to suffer the wrath of David Miscavige were Pat and Annie Broeker, who were personally named by L. Ron Hubbard to be his legal and ecclesiastical successors and were one of a handful of individuals who were in direct contact with Hubbard during his final years, as well as being the only Sea Org members who Hubbard was willing to interact with in person. Following Hubbard’s passing in 1986, out of jealousy and spite, David Miscavige and his gang, using the same intimidation tactics they had become so notorious for, illegally booted the Broekers out of their positions by claiming — with not a shred of evidence whatsoever — that Hubbard’s original Flag Order naming the Broekers as his successors was a forgery and thus null and void.

SEA ORGANIZATION

FLAG ORDER 3879
19 January 1986

THE SEA ORG & THE FUTURE

I, LRH, Commodore, am hereby assuming the rank of ADMIRAL.

The rank of COMMODORE IS RETIRED FROM ACTIVE SERVICE in the Sea Organization at this time. As we move on up the track the Commodore rank will be reinstated as will be needed.

A new rank of LOYAL OFFICER is created directly above the rank of Captain.

Pat Broeker is hereby promoted to the first LOYAL OFFICER rank.

Annie Broeker is hereby promoted as the second LOYAL OFFICER.

There are several Sea Org Officers they will want to promote.

The SEA ORGANIZATION will always be the Sea Organization, no matter that we may leave the surface of this planet when we’re finished and operate on others (hopefully not too many devoid of seas — joke) and no matter what we will operate, in general, throughout the universe — solid, liquid, gaseous, and yes, — there are other states of matter, which are ours for the taking because nobody else seems to know about them.

I’ll be scouting the way and doing the first port survey missions. I expect your continuing backup. You’ve got a little under a billion left on your current hitch, and it is hoped you will sign up again — veterans are valuable!

So, there it is. You know what to do. You know how to do it. Hold the form of the S.O.! You’ve got the watch!!

I will be in comm.

We will meet again later.

L. RON HUBBARD
ADMIRAL

One of the principal reasons Hubbard had named Pat and Annie Broeker to succeed him was that they were a stable married couple that he considered more loyal and trustworthy than all others and that the ecclesiastical leadership should be split between two people  — husband and wife — rather than vested into a single person. For Hubbard, this aspect was a paramount and integral part of the corporate restructuring process intended to establish consistent checks and balances and legal accountability, all in order to avoid the very problems that began to arise following Miscavige’s first phase in his consolidation of power over the global Scientology network from 1986-1993.

The basic problem in this equation that Hubbard apparently had not foreseen or was unable to confront — but that the Broekers should have anticipated given their positions and level of involvement — was that the reorganization of Scientology, having been undertaken as a last ditch effort at salvaging the Church from complete self-destruction due to the criminal antics and misadventures of the Guardian’s Office, was ultimately a bad faith effort rather than a genuine attempt to reform and restore equilibrium. If anything, the reorganization of International Scientology Management made things worse by stripping individual churches and missions of the relative cultural and legal autonomy they had enjoyed since the 1950s. The cult-like aspects and behavior and far-right ultraconservativism that Scientology has become infamous for over the years really began from the early 1980s forward under the Sea Org leadership of David Miscavige, who was hell bent on eradicating all countercultural and liberal elements from Scientology’s internal culture and imposing a draconian form of religious ultraconservativism based on Christian Evangelicalism (particularly prosperity theology, of which Miscavige is a huge fan) and LDS Mormonism.

The second phase of David Miscavige’s consolidation of power began following the landmark agreement with the IRS in 1993, which firmly sealed his personal grip over all Scientology and Scientology-affiliated organizations and their day-to-day operations. The implications of this agreement cannot be overstated enough — without it, the multi-billion dollar “war chest” (slush fund) of the US International Association of Scientologists Trust and the global Ideal Org real estate racket would never have been possible. Why? Tax exemption. Prior to the 1993 agreement, it was next to impossible for Scientology fundraisers working for or on behalf of the International Association of Scientologists (IAS) to get wealthy Scientologists to donate large, let alone massive dollar amounts in exchange for nothing more than an honorary IAS status and pat on the back by David Miscavige for a single photo-op. In point of fact, L. Ron Hubbard issued policy letters expressly forbidding any form of fundraising, as clearly evidenced below:

Don’t engage in ‘fund raising’ or ‘selling postcards’ or borrowing money. Just make more income with Scientology. It’s a sign of very poor management to seek extraordinary solutions for finance outside Scientology.

— L. Ron Hubbard, HCO PL 24 Feb 1964, URGENT — ORG PROGRAMMING

solve-it-with-scientology

 

In effect, the 1993 IRS agreement turned the Church of Scientology into a domestic tax haven for the wealthiest Scientologists and a virtually unlimited personal slush fund for David Miscavige, who although as a “religious worker” and member of the unincorporated Sea Organization “religious order” is legally only able to get paid a limited annual allowance (speculated to be anywhere from as low as $35,000 to as high as $125,000 — given the fact that he has unrestricted personal access to billions of dollars in cash and liquid assets and he is able to do so without raising eyebrows of observers at the IRS, the lower sum is most likely the more correct number.)

 

 

The amount of cash and liquid assets the Church of Scientology has been able to raise since 1993 became so ridiculously high that “honorary statuses” in the IAS took on a whole new meaning toward the late 1990s and early 2000s, to the point where attaining IAS status is now considered to be paramount to any other activity in Scientology — including delivery of auditing and training, the actual purpose of Scientology and Scientology organizations. In the 1980s and 1990s, it was practically unimaginable for any Scientologist, no matter how wealthy, to donate any lump sum amount in excess of $100,000 at IAS fundraisers, which began in 1984 after Hubbard’s rapidly deteriorating health and isolation made it possible to hold such events without word reaching back to him. Since then, the amounts the IAS pressures its wealthiest members to donate increases by an order of magnitude every year. By the 2010s, when Robert Duggan had donated almost $400 million of his personal wealth to the IAS and other Scientology organizations — the bulk of which was donated from the late 2000s on — this had become a running joke within Scientology, actually making the work of IAS staff fundraisers difficult since it became common knowledge among the rank-and-file that the IAS “war chest” is not only in excess of $1 billion USD, but has since surged toward $3-5 billion thanks to stock and real estate assets donated by Duggan, Sky Dayton, Tom Cummins, the Cardone, Shawkat and Silber families, and other wealthy Scientologists with large stock, commodity and real estate portfolios, including a number of executives at Dell, Apple, Acer, Intel, HP and Oracle who also happen to be Scientologists — also known in certain corridors as the “Silicon Valley Scientology Mafia,” of which Bob Duggan is thus far the only member to have become disaffected enough with the charade to leave, albeit very quietly as part of a confidential settlement agreement following his marital separation. Thanks to the incessant internal gossip culture that permeates the Sea Organization, even at its highest echelons, Duggan’s massive surge in donations from the late 2000s forward were made as part of an informal word-of-mouth agreement between himself, his wife and David Miscavige, with the separation planned years in advance of the actual legal settlement. This is precisely what defines the Church of Scientology today: a cult of money, greed and perpetual acrimony. Everything and anything except actual religious and spiritual practice. It has degenerated from a personality cult revolving around the life and work of L. Ron Hubbard to a personality cult revolving around the scams and machinations of David Miscavige.

And it is all being done in flagrant violation of the very terms the Church of Scientology agreed to abide to in the 1993 IRS agreement. To add insult to injury, in spite of hoarding billions of dollars in both the US IAS Trust as well as overseas in various shell corporations in Caribbean, European and East Asian tax havens, the Church makes it virtually impossible for any member — current or former — to receive a repayment of donations for church services paid for in advance, but never used. This is yet another running joke throughout all levels of Scientology, within and without, because everyone knows that while the IRS agreement legally requires Scientology organizations to return in full any and all donations placed on account for services that have never been rendered. This explicitly excludes donations made to the US IAS Trust or general fundraising campaigns like the Super Power Building Project and Ideal Org Estates, which collectively comprise the global Scientology slush fund “war chest.”

Given all of the above, plus many more instances of deliberate fraud, grifting, Ponzi and pyramid schemes (with dubious penny stock schemes coming back with a vengeance, as they were prior to the 2008 economic downturn) that Scientologists are subjected to many dozens of times in a year, both from official IAS and Church fundraisers as well as individual Scientologist “investors” and “business consultants” (where the Ponzi and pyramid-type schemes enter into play, with most of the ill-gotten gains siphoned into Miscavige’s slush fund through various shells and fronts in order to attract the attention of IRS and SEC investigators), many have asked why the federal government haven’t launched multiple probes into all these allegations, many of which are able to be supported with plenty of credible evidence and testimonies?

The answer isn’t quite so simple, unfortunately, given the fact that the IRS does in fact have Scientology organizations under close review and inspection, as it does with all nonprofits. Furthermore, because of all the stocks and other securities that have been increasingly donated to the IAS and individual Scientology organizations and affiliates, the SEC also has those organizations under periodical review. The problem is that Scientology is like a massive octopus with tentacles spread out and tangled in every which way, making it difficult for federal investigators, who generally have a difficult time allocating sufficient funds and resources for such investigations, which invariably require the assistance of multiple agencies domestically and internationally. Based on testimony from former Sea Org workers who worked in the treasury and finance departments of Scientology organizations, most of the “war chest” slush fund cash is kept overseas in numerous accounts in various tax havens through dozens and dozens of third-party proxies, none of which can be connected back to Scientology. The scheme is so complex and labyrinthine and compartmentalized from the top down, so that the left hand never knows what the right hand is doing. Only a handful of individuals at the very top of the echelon, such as David Miscavige and his non-Scientologist attorneys, are fully aware of how exactly everything fits together. For the federal government to successfully investigate and ultimately prosecute this massively global octopus, it would require a multi-agency and multinational task force. A couple of FBI or ATF investigators here and there, or a small team of IRS auditors are never going to be able to mount any successful investigation. This was taken into account by Scientology attorneys during the 1980-82 corporate reorganization of International Scientology Management, and the scheme was expanded in every direction following the 1993 IRS settlement, which got the federal government sufficiently off their back for them to establish and secure all the dozens of shell corporations and third-party proxies across the globe.

The other major obstacle is the fact that most of Scientology’s billions come from a very small and closed circle of wealthy Scientologists, or “whales” as they are colloquially referred to, both by anti-Scientology critics and Scientology staffers and fundraisers. And much of what these “whales” donate is in the form of securities, real estate, private jets, expensive cars, even blue-chip art — and much of these come from wealthy foreign Scientologists in countries like Brazil, Russia, Hungary, Taiwan, Singapore, Israel, United Arab Emirates, South Africa and certain other sub-Saharan African states that make it very easy to get away with unofficial backchannel transactions to circumvent US and international regulators, not dissimilar to the way terrorist groups like al-Qaeda and ISIS get their funding from wealthy patrons from all over the world, including the US and Western Europe, in spite of all the obstacles, sanctions and countermeasures the US, Western European governments and the United Nations have put it place to prevent such covert transactions, which is how and why terrorist groups and international drug cartels never seem to go away, no matter how much blood is shed as part of the endless and absurd War on Terror and War on Drugs.

However, there is a potential bright side to all of this. With all the defections of significant Sea Org executives from International Scientology Management, regional management organizations like the Continental Liaison Orgs (CLOs), Celebrity Centre International and Flag Land Base, we have a much clearer picture of how the global scam operates and how rank-and-file parishioners are being royally screwed over and lied to. Most of Scientology’s dwindling membership (fewer than 20,000 worldwide, of which 7,000 or so are Sea org members) are not wealthy and are generally treated poorly and unfairly in stark contrast to the various VIPs (which include figures as diverse and controversial as Louis Farrakhan, Lee Baca, and a motley assortment of Russian, Ukrainian and Hungarian oligarchs being prosecuted for tax evasion and fraud in their respective homelands, who for the last few years have been calling the Manor Hotel at Celebrity Centre International and the Fort Harrison at Flag Land Base their homes away from home), celebrities and super-wealthy “whales.” In general, even in a psychologically and financially abusive cult like Scientology, people don’t like getting royally screwed over. The cult leaders and their minions can screw them over only up to a point before they finally get fed up and either walk away and/or try to get their money back.

The only real way that we can see to break apart the Scientology octopus is for a sufficient number of rank-and-file Scientologists to mount a class action lawsuit against the numerous Scientology organizations that have been scamming them and the US taxpayers since 1993, because in flagrant violation of the 1993 IRS settlement, almost all parishioner requests for repayment of advance donations — including requests made by current Scientologists in good standing — are either denied outright (usually by declaring the Scientologist making the request as a Suppressive Person, thus making them ineligible for any repayments) or totally ignored. With very few exceptions, the only repayment requests Scientology organizations have been willing to process and honor have been those made by former Scientologists who have resorted to legal action. If you can afford an attorney to write a letter on legal letterhead threatening legal action to the Scientology organizations responsible for processing your repayment request, you will get your money, although depending on you who your attorney is and how much weight their law firm carries, you could be waiting a year or two or even longer before you get the money that is rightfully owed you. In other words, Scientology organizations will, no matter what, make it as long and difficult and miserable as possible to do the right thing as required by law. It should not surprise anyone that “do the right thing,” which in Scientology parlance becomes mangled into “make it go right,” actually means, “do whatever it takes to royally screw anyone who dares try to make us follow and obey the law.”

Hence, the necessity of a class action lawsuit.

So, is Scientology evil? In this matter, the answer is a resoundingly obvious and redundant yes.

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