The Tax Man Cometh

Among the allegations publicly aired by whistleblowers are claims that David Miscavige executed a “takeover” of Scientology’s governing institutions, eliminated his potential rivals and undid the managerial checks and balances put in place by LRH (namely, the Watch Dog Committee and the International Executive Strata).[1]

Miscavige then reportedly created an empire for himself, a lavish lifestyle fit for a king, and bestowed on his purported best friend, Tom Cruise, gifts in the form of thousands of hours of Sea Org labor. (See, e.g., Excess Benefits Worksheet)

Tax ManIt is no wonder that various media outlets have publicly called for a revocation of the Church’s tax exempt status, including such prominent media as ABC News Nightline, on October 23, 2009 and The New York Times, Sunday edition (the article appearing on page one, above the fold), on March 7, 2010.

The reports of Miscavige’s financial and management irregularities strike at the core qualifications for tax-exempt status. The affairs and activities of nonprofit religious corporations must be governed by a board of independent directors. And private benefit by individuals from the assets and income of a charitable organization is unlawful and grounds for revocation of tax-exempt status.

Tax-Exempt Status Primer

Tax law entitles qualified nonprofit corporations with a charitable purpose to exemption from taxation. The law is set forth in the Internal Revenue Code (“IRC) Section 501(c)(3), and it specifically requires that “no part of the net earnings of [the organization] inures to the benefit of any private shareholder or individual . . . .”

Inure and inurement are arcane legal terms that refer to receipt of an improper benefit from a charitable organization. The goal of the inurement prohibition is to prevent “insiders” from siphoning off income or assets – from profiting off a nonprofit organization, in other words.

The rule is absolute. An organization in violation of it does not qualify for tax-exemption, or will cease to qualify, no matter how small the inurement, in theory even one dollar.

Intermediate Sanctions

Because revocation amounts to a “death penalty” for exempt organizations and punishes the organization and everyone affiliated with it, not just the individuals responsible for the improper benefits, inurement was rarely invoked. This effectively meant that most inurement was not penalized, which led to more violations. To combat this enforcement deficiency, in 1996 Congress enacted penalties for “excess benefit transactions.”[2]

These rules gave the IRS the power to penalize actual wrongdoers with lesser penalties than revocation, sparing the organization and its innocent members and affiliates in those cases where the inurement was not so bad as to justify revocation. Hence the term “intermediate sanctions.”

Excess Benefit Transactions & Disqualified Persons

Under the new rules, “disqualified persons” cannot receive “excess benefits” from a tax-exempt organization.

A “disqualified person” is a person who is in a position to exercise substantial influence over the affairs of the organization (whether such influence is formal or informal). The definition includes the organization’s directors as well as certain officers and key employees, and anyone else who, depending on the facts and circumstances, exercises substantial influence over its activities. Beginning in August 2006 the term also includes donors.[3]

An “excess benefit transaction” is a transaction in which an economic benefit is provided by a tax-exempt organization to or for the benefit of any disqualified person, if the value of the economic benefit provided by the exempt organization exceeds the value of consideration (including performance of services) received for providing the benefit. Reasonable compensation to disqualified employees, for example, is not considered an excess benefit.[4]

Automatic Excess Benefit Transactions

If a benefit is received by a disqualified person AND if the benefit was not reported to the IRS by either the organization or the recipient of the benefit, the benefit received is deemed an “Automatic Excess Benefit.”

If a benefit received by a disqualified person IS reported as income on his or her tax returns (i.e., the fair market value (FMV) of the benefit received is reported as income) BUT IF the organization did not duly authorize the benefit, ahead of time, it is an Automatic Excess Benefit. And the recipient CANNOT authorize his own benefit, even if it is a fair benefit.

In the compensation of a senior executive, if the benefits are approved by a rubber stamp board of directors (i.e., not an active, independent board), they are not “duly” authorized and the benefits are Automatic Excess Benefits.

Example: Assume that a fair salary for spiritual leader Jones is $100,000 a year. Jones is paid a salary of $30,000. Jones receives, in addition, expensive personal benefits, like a personal valet, scuba diving trips (reportedly enjoyed by Miscavige), etc. Say the FMV of these personal benefits total $50,000. The personal benefits plus the $30,000 salary total $80,000, which is below Jones’ FMV of $100,000. BUT, if the $50,000 of personal benefits were not duly and properly authorized (completely independently from Jones) OR if they were not reported as income, the personal benefits would be deemed Automatic Excess Benefits.

Penalties – Intermediate Sanctions

Penalties for excess benefit transactions with a disqualified person can be severe. In all cases, the excess benefit must be corrected and the organization made whole. This usually requires full payment for the benefit received plus interest. In addition to correction, an excise tax[5] in the amount of 25% is assessed the recipient of the benefit.

If the full correction does not occur within the taxable period (i.e., the date between the occurrence of the excess benefit and the notice of deficiency) an additional 200% penalty is added.

Control people who are in a position to authorize the benefit, and who thus allowed it, are subject to a 10% penalty, up to a maximum $20,000 per transaction.

These are penalties personal to the wrongdoers. Fat cat donors can’t cover the penalties. Nor can the organization reimburse the wrongdoers. That, too, would be an excess benefit.

For examples calculating intermediate sanctions, see below: Allegations of Excess Benefits.

Income Tax Evasion

Jail ManAdditionally, there are criminal liabilites. Income tax evasion is a felony punishable by up to five years in prison and by a fine up to $100,000. Excess benefits are a form of income. If the recipient of an excess benefit fails to report the fair market value of the benefit as income, he or she may be liable for arrest and prosecution.

Statute of Limitations

The “statute of limitations” is the time period during which a person can be prosecuted for a civil or criminal wrong. After the statute of limitations time period has passed, a violator is “off the hook.” The statute of limitations for a criminal violation is seven years; the statute for a civil violation is three years.

The difference between criminal and civil is the penalty being sought by the IRS. The statute for criminal violations begins to run when the tax evasion occurred (i.e., when the return that didn’t report the benefit was filed). But the statute for civil violations does not begin to run until the tax return is amended and the failure to report the benefit is corrected, meaning that the statute of limitations can be unlimited.

Allegations of Excess Benefit Transactions

We have compiled two lists of allegations culled from various media and web sites and made by whistleblowers, former high-ranking Sea Org members, insiders who were in a position to know. We refer to one as “Worksheet” and the other as “Memorandum” (although an incomplete one).

Clink on the links to access:WorksheetMemorandum

In summary, the allegations fall into two major categories: excess benefits to David Miscavige and excess benefits to Tom Cruise. Clearly, Miscavige is a disqualified person. Given the well-documented close personal relationship between the two, coupled with his donor status, Tom will likely be considered a person with substantial influence in Scientology. (For more on this, please refer to section 2 of the Memorandum.)

Please note: (1) Our lists of alleged excess benefit transactions are not complete due to time constraints. We conducted enough research to identify potential risks to the Church. (2) The allegations are just that, allegations. Still, all revocations and intermediate sanctions – and criminal convictions, for that matter – start with allegations. So, the allegations should be treated seriously. They should be investigated and confirmed, or proven false, by an independent tribunal, one over which interested parties have no influence, something we are calling for the Church to convene. (3) Our investigation reveals that the Church is not winning the PR/credibility battle with the whistleblowers; its credibility is largely shot. We feel safe in predicting, therefore, that a trier of fact, such as a tax court or a jury, will probably side with the whistleblowers. (4) And thus, the risk to the Church should be regarded as both real and grave.

Items from the lists, such as Miscavige’s personal valet, trainer, personal chef, designer clothes and shoes, scuba diving trips, multiple luxury automobiles, etc. are all benefits that need to be reported. Items such as elaborate dinners, exclusive travel and accommodations may also be deemed excess benefit transactions.

The test is two-fold: was the item (1) necessary for the business of the organization and (2) reasonable in amount. Using this test, one can see that many of the reported benefits received by Tom Cruise and David Miscavige constitute excess benefit transactions and, with respect to Miscavige, also inurement.

Examples: Calculating Intermediate Sanctions

Example 1:Excess Benefit Transactions – Tom Cruise

In the February 28, 2011 edition of Star magazine, former high-ranking Sea Org member John Brousseau is quoted as estimating his personal labor for the customization of a Ford SUV for Tom Cruise at 2,000 man-hours. Mark Rathbun, former Miscavige right hand man turned whistleblower, stated that more than 9,000 hours of Sea Org labor went into building a luxury bus for Tom named the Silver Screen.

If the fair market value of the labor is calculated to be $50 per hour, which is not unreasonable judging the fine craftsmanship of the work depicted in the photographs, the excess benefits to Tom – for the Ford SUV and Silver Screen bus alone – is 11,000 hours x $50 per hour = $450,000. Therefore, potential penalties are:

Tom Cruise:

Excise tax (25%)$112,500
Cost of correction450,000 + interest
Penalty (200%)900,000 (if not timely corrected)
Potential Total$1,462,500

David Miscavige:As Operational Manager (10% up to $20,000 for each benefit)

Ford SUV benefit10% of 2,000 hours x $50/hour = $10,000
Silver Screen benefit10% of 9,000 x $50 = $45,000 = 20,000 (maximum)
Total$30,000

Example 2:Excess Benefit Transactions – David Miscavige

Miscavige reportedly has seven vehicles and two custom made motorcycles. Assuming that three of the more reasonably priced vehicles are considered necessary and reasonable, the other four, plus the motorcycles (clearly personal and recreational), constitute excess benefits.

Range Rover$80,000
Bullet proof GMC Van150,000
BMW M6110,000
Acura (mostly parked)45,000
Handcrafted Motorcycles50,000
Total$435,000

David Miscavige:

Excise tax (25%)$108,750
Cost of correction435,000 + interest
Penalty (200%)870,000 (if not timely corrected)
Potential Total$1,413,750

Notes: (1) Miscavige may not have title to the vehicles, in which case the excess benefit will be valued on a rental basis, which potentially could reach the same amounts, or more. (2) The IRS could choose to proceed with a criminal charge for tax evasion; (3) The IRS could also seek revocation of tax-exempt status; (4) The IRS could require removal of Miscavige from any executive position in Scientology as a condition for continued tax-exempt status.

Intermediate Sanctions + Revocation

Under current rules, the IRS may impose the intermediate sanctions in lieu of or in addition to revocation of tax-exempt status. In 2008, the IRS published standards that it will use to determine whether to also revoke tax-exempt status of an organization that has engaged in a transaction occurring after March 28, 2008 that constitutes both inurement to an insider and an excess benefit transaction.

Factors the IRS consider include:

The size and scope of the organization’s regular and ongoing activities that further exempt purposes before and after one or more excess benefit transactions occurred;
The size and scope of one or more excess benefit transactions relative to the size and scope of the organization’s regular and ongoing exempt functions;
Whether the organization has been involved in repeated excess benefit transactions;
Whether the organization has implemented safeguards that are reasonably calculated to prevent future violations; and
Whether the excess benefit transaction has been corrected or the organization has made a good faith effort to seek correction from the disqualified person or persons who benefited from the excess benefit transaction.

The new regulations also state that the factors listed above will weigh more heavily in favor of continuing to recognize exemption where the organization discovers the excess benefit transaction or transactions and acts before the IRS discovers the excess benefit transaction or transactions.

Furthermore, the IRS places a premium on good governance, active, independent boards, and safeguards, particularly in regard to compensation of executives in control of the organization.[6]

Sham Corporations Increase the Risk of Revocation

Nonprofit corporations with weak, rubber stamp (i.e., not active and independent) boards are referred to as sham corporations, and are unlawful because “[t]he activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.”[7]

A director (or trustee) is required to perform his or her duties “in good faith, in a manner the director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as is appropriate under the circumstances.”[8] Transactions with the corporation in which a director has a material financial interest constitute “self-dealing,” and are unlawful.[9]

Failure to have knowledgeable, active, and engaged boards governing the organization jeopardizes tax-exempt status. IRS guidelines check for the existence of independent board members who are not dominated by employees of the organization or who are not, by their very nature, independent, in order to identify the potential for insider transactions that could result in misuse of corporate assets.[10]

Sham corporations potentially render all benefits taken by persons in control Automatic Excess Benefits. And, as highlighted above in the bullet pointed list, the lack of corporate safeguards is a factor the IRS considers in determining whether to revoke tax-exempt status. The lack of active, independent boards, therefore, increases the risk for a revocation action

Increasing the risk further, documents submitted to the IRS by the Miscavige administration during the application for the Church’s tax-exempt status in the early 1990s painted a false picture of its corporate governance. The papers submitted to the IRS showed fully functioning corporate boards, with active, independent members attending board meetings, resolutions by trustees electing and removing general directors, and so on and so forth, exactly in accordance with LRH’s intention and the governing corporate documents of CST, RTC, and CSI.

As depicted in the Existing Scene, however, Miscavige dominates and controls the boards and the affairs of Scientology, across all organizations and management.

Each and every former trustee and general director personally interviewed by us independently provided the same story: There were no board meetings. Even though it was their express duty to elect and remove general directors, the trustees never were allowed to do this. In fact, the trustees didn’t even know who sat as directors during their tenures. No trustee or director was trained in or permitted to independently do their trustee/director functions as required by law.

Reportedly, no lawyer ever explained to the trustees and directors their duties, or inquired whether they were acting independently and in accordance with the law. From time to time, staff from the legal department in Office of Special Affairs International came by their normal post desks and presented documents for them to sign. No examination, inquiry, deliberation or discussions with other trustees and directors ever occurred. They were merely told to sign documents placed in front of them. Their only function was to act as David Miscavige’s rubber stamp.

If all true, the record supplied the IRS on which tax-exemption was granted was a fraud, and is, itself, justification for revocation.

What LRH Intended

LRH had it right. Multiple corporations with multiple boards and cross checks and balances would have averted the current situation by preventing a single person to gain total control of Scientology. The system specified by LRH satisfied the IRS: the IRS granted tax-exempt status based on what was reported as having been put in place for the governance of Scientology.

So intent on obtaining tax-exempt status was LRH that he made sure each set of corporate bylaws made it a “special duty” of directors of the corporations “to assure: i. That no part of the net earnings of the corporation inure to the benefit of any person.” See, e.g., CST Bylaws, Article VII, section 1(e); CSI Bylaws, Article VII, section 1(c); and RTC Bylaws, Article VII, section 1, section (c).

More than that, LRH went to the extraordinary length to create in CST a “Special Board” of directors comprised solely of lawyers (Stephen Lenske, Sherman Lenske, and Lawrence Heller, of Lenske, Lenske & Heller, a law firm in Woodland Hills, CA). They were mandated to ensure the following:

i. That the corporation attains tax exempt status, as soon as practical, and that such status is maintained throughout the existence of the corporation.
ii. That no part of the corporation inure to the benefit of any private individual, firm or corporation.
iii. That the assets of the corporation are not subject to waste and/or extravagance but are instead increased in value.
iv. That proper Scientology management is correctly applied to the end that the purposes of the corporation are accomplished.

(CST Bylaws, Article VIII, section 1(d))

Unlike the trustees and general directors, the special directors were compensated, which exposes them to civil liability if they fail in their tasks or cause harm to the organization and its members through breaches or dereliction of their fiduciary duties – duties owed, not to Miscavige, but to CST and Scientology organizations generally.

Why didn’t the lawyers make sure that the trustees and general directors understood their roles and were functioning independently? Why didn’t they at least, in fulfillment of their fiduciary duties of care, inquiry, and loyalty[11], brief the trustees and general directors of CST on their legal obligations and LRH’s wishes?

“[A] director may not close his eyes to what is going on about him in the conduct of the corporate business and, if he is put on notice by the presence of suspicious circumstances, he may be required to make such ‘reasonable inquiry’ as an ordinarily prudent person in his position would make under similar circumstances.”[12]

Directors (and trustees) are obligated to champion the best interests of the organization’s constituents (in this case the religious purposes of Scientology).[13]

Church tax attorney Monique Yingling has similar potential liability. Why didn’t she inquire into the actual practices of the boards prior to the submission of corporate papers to the IRS during the application for exemption process?

Whose interests do these lawyers really represent? If the answer is David Miscavige’s, why is this not a breach of their fiduciary duties to the Church? Has there also been self-dealing and excess benefit transactions involving the lawyers who are supposed to be acting solely for the interests of their clients, the various Scientology churches?

All of this needs to be internally investigated by an independent tribunal.

The guiding principle, we believe, should be to save Scientology, the religion, first, and its institutions (corporations), second, not individuals who have placed them all at risk. (See, LRH Intent.)

Solution

Only a meaningful internal, independent investigation, including audits of each major Scientology entity (including the International Association of Scientologists) can enable the Church to get to the bottom of whistleblower allegations. This must occur in order to “get in front of the story” and limit the exposure to IRS sanctions and potential loss of tax-exempt status.

This can likely only occur with the implementation of LRH’s intentions, contained in his last will, for the governance of Scientology after he died. LRH specified that after his death, one-man rule would cease. There was to be a dramatic change in operating basis: Scientology would be overseen by three corporations governed by seven boards containing multiple checks and balances.

The implementation of checks and balances must occur in order to come into compliance with documentation supplied the IRS during the 1990s application for exemption process and to meet IRS standards for continuing exemption. In light of the widely reported allegations of private benefits and inurement, this is absolutely essential, as we believe any independent, competent tax attorney will agree.

To not take these remedial actions is dangerously reckless.

Miscavige, the CST special directors, and Monique Yingling should spearhead the institution of remedial actions (but obviously not participate in the investigations due to their implications in the wrongdoing). Miscavige should step down pending the completion of the investigations in order to remove any question as to his possible influence on the process. If he is found innocent, he can be reinstalled.

Whether or not the IRS seeks revocation may depend on what David Miscavige and the various Church attorneys do now. Now is the time for them to act strictly for the interests of Scientology, the Church and its parishioners, brushing aside all self-interest. If not, they will likely become the subject of justice actions.

The IRS hopefully will refrain from from seeking revocation if these reform actions are immediately initiated, having gotten the message: we handled the situation ourselves; we got our own ethics in; no external justice action is needed. Both LRH policy and IRS regulations concur on this point – a party’s own actions in correcting itself are key data in assessing whether a justice action is necessary and proper.

If the IRS feels it must proceed, we request it seek intermediate sanctions against any culpable parties. Revocation would punish the tremendous number of innocent, dedicated (to charitable purposes) staff and public Scientologists.

Post Script: In the Matter of Tom Cruise

To the extent David Miscavige provided free Sea Org labor and goods, etc. (likely “excess benefits”) to significant donors, such as Tom Cruise, he has likely placed Tom and others at risk (remembering that a donor may be a disqualified person). Per LRH’s justice codes, placing a Scientologist at risk is a suppressive act.

Miscavige’s reported act of giving Tom a $200,000 birthday party, for example, paid for out of Church funds and resources (likely an excess benefit transaction), therefore, may not have been a friendly act.

Given the number of law firms retained by the Miscavige administration, given Miscavige’s own statements about his intimate involvement in the Church’s tax case in the 1990s, coupled with the fact that Monique Yingling, a chief Church lawyer, is a tax attorney, it is difficult to believe that Miscavige does not know the risks he has seemingly created for the Church and its top supporters, such as Tom Cruise.

_________________________

[1] e.g., http://www.tampabay.com/specials/2009/reports/project/rathbun.shtml

[2] Internal Revenue Code, Section 4958.

[3] ¶333.2, http://www.federaltaxissues.com/0300_private/0300_private_toc.php

[4] ¶333.4, http://www.federaltaxissues.com/0300_private/0300_private_toc.php

[5] An excise tax is a tax on the use or consumption of certain products or activities, such as gasoline or wagering, as opposed to taxes on property or income.

[6] For more on this subject, see: http://www.adlercolvin.com/pdf/public_charities/A%20%20%20C%20Web%20Resource.%20%20%27Excess%20Benefit%20Transactions%27%20%2800191414%29.PDF

[7] California Corporations Code, Sec. 9210

[8] California Corporations Code, Sec. 9241

[9] California Corporations Code, Sec. 9243

[10] Sections 3 & 4, http://www.irs.gov/pub/irs-tege/governance_practices.pdf

[11] California Corporations Code, Sec. 9241(a).

[12] C.E.B., Advising Cal. Nonprofit Corps (2d ed) §1.04, quoting Report of the Assembly Select Committee on Revision to the Corporations Code 50 (1975)

[13] C.E.B., Advising Cal. Nonprofit Corps (2d ed) § 8.105

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31 Responses to The Tax Man Cometh

  1. klaus says:

    Congratulations to your ecellent work and the precise presentation of your research.
    Klaus

  2. Hi there
    This is another excellent article – if a little dry and legal – but I welcome the information detailing the intricacies of the relationship with the IRS.
    You continue to assume throughout that the CST, RTC & CSI corporate structure was indeed mandated by LRH himself. Your approach would be more intellectually rigorous if you addressed the very real questions surrounding your assumption.
    I note that Meade Emory died in October of last year. What difference, if any, does this make to the relationship between the Church and the IRS, please?
    Finally, you seem to be relying on pressure on the Church from the IRS – and possibly the FBI – to oblige Miscavige to start doing the right thing. Is this not a little naive? Surely the best thing that could happen is if representatives of those still inside the Church, like yourselves – and those outside, like myself – started working together on re-uniting and reforming the Church?
    I look forward very much to your further communications.
    Warmest regards, Robin & Adrienne

    • admin says:

      Please refer to Site Purpose and other comments made by us. In those places we also address why we have chosen not to reveal details of our investigation and personal knowledge and steps taken internally prior to going public, to which we can add that some of the information is privileged.

      To be clear, we are not acting on assumptions.

      We have identified a situation, which is depicted in diagrams on the home page and elsewhere on the website. We have determined that there is no substance to various conspiratorial rumors floating in cyber space such as the one that places the IRS through Meade Emory in control of Scientology.

      You are free, of course, to accept or reject whatever is true or false for you.

      • FredKrueger says:

        Whenever I spoke to a Scnist about the fact that CST exists, and that CST
        keeps almost all Copyrights of LRH writings, they ask me if I am kidding. Its
        simply unknown in the field. I also could say its strictly a withhold by COB or Int MGMT. Therefore we should not wonder if a “simple” mind is trying to fill a vacuum with strange conspiratorial theories, when he hears about CST. A few weeks ago I tried to post the data on a church DA-Forum. Just the Data. No accusations, blame or similar thing. The post was completely censored. Your site gives the correct why.

        • admin says:

          Good point about the vacuum of data being filled with conspiracy theories. We have been emailed numbers of them, asking us to refute them, point out the falsity in them, etc.

          Notice that, not only are they false, but they don’t lead to a handling. Just something to talk about, engendering distrust and disaffection but giving others nothing to do to fix things.

          • FredKrueger says:

            I know, After 24 year in SCN, I noticed an out point. Mr Rinder left the church. (an earlier senior).The out point was added time. He left after 27 yrs producing.That did not make sense. I started reseaching through the whole internet. I found the early freezone movement from 1982, is almost completely based /justified on a conspiracy-theory. They did not look for omitted data, and thats the result.
            http://www.robertdam-cos.dk/

          • admin says:

            In fairness, there was missing data. When there is a vacuum of data, the mind will dub in. It was only years later that data started trickling out, and it came out in bucket loads only with the latest wave of whistleblowers who also waged an effective media/PR/Internet campaign.

            It’s not only missing data, but a missing ability to evaluate the legal data. The corporate documents have been on the Internet since the 1990s, but they weren’t properly compiled and evaluated until now.

            Added to that were the personal attacks launched against the early dissenters.

            In Part II of our series on DM and the Independent Movement, we quoted a length from the LRH lecture, Attitude and Conduct of Scientology, 3 November 1955 at the 4th London ACC. We highly recommend visitors to our web site to listen to the entire lecture, and then to consider the entirety of the independent movement, even that pre-dating the 2009 Truth Rundown.

            Having just yesterday been on the receiving end of a black PR attack obviously emanating from the office of David Miscavige, we saw first hand the inclination – reaction – to fight back, which we rose above and handled with ARC by private email.

            Someone attempted to post a piece filled with vitriol, generalities, falsehoods, make-wrong, accusations of guilt and out-ethics. Scientologists will recognize this to be entheta, something that only serves the purpose of restimulating the reactive mind, causing one to fight back. This is what creates enemies and gives wrong indications (which key-in implants; Ref: HCOB 8 May 1963, The Nature of Formation of the GPM).

            The use of ARC (Affinity, Reality, Communication), on the other hand, leads to understanding.

            The entire situation needs to be investigated internally by a tribunal independent of Miscavige, including the mission holders and Mayo situations.

            It is sad, even pathetic, how we have handled some of our own who have dedicated so much to the aims of Scientology. You cite the example of Mike Rinder. There are many, many others.

            This needs to be fixed. It will be fixed. One way or another. What Scientologists do now will echo throughout history.

  3. OK, thank you for that.
    I’m willing to put aside any suspicions that the IRS is controlling the Church, and go back to our original position that David Miscavige is effectively in sole command of the Church and all its assets – which, as your article points out, violates the terms of the Church’s tax exempt status.
    I’m also willing to set aside my reservations about the basis of LRH’s mandate for CST, RTC & CSI – on the grounds that it’s probably a good enough structure anyway, and it’s what’s in place; so let’s make it work by appointing board directors who are independent, objective and competent to do the job properly, thus ensuring the correct checks and balances you seek to install.
    How do you see us achieving that? What can I do to help bring this about? Please bear in mind that my wife Adrienne and I have been working towards the reform of the Church for more than 28 years now (on top of the years we spent in the Sea Org). Please also remember the years of abuse, harassment and criminal actions we have suffered in this cause. If some of my recent comments seem unduly harsh, place them in that context.
    I’m willing to accept that you are who you say you are, and that you are acting in good faith, if you will extend the same courtesy to me.
    What matters is how we make this right for all the thousands of people involved, and for the millions who would benefit from Scientology world wide, if we get the Church back on the rails. To achieve that we need to deal fairly with the many disparate elements involved.
    I look forward very much to your further comments.
    With kind regards, Robin & Adrienne

    • admin says:

      Dear Robin and Adrienne,

      Thanks for your communication.

      I appreciate what you wrote.

      I empathize with what you have gone through.

      What we are attempting to do on the site is simple. We are trying
      to get the word out as to the existing scene regarding governance
      of the Church vs. what LRH intended (as expressed in the legal
      documents).

      Any help you can provide in getting the work out is appreciated.

      We have no other agenda. We do not desire, NOR WILL WE ACCEPT EVEN
      IF OFFERED, any role in the governance of Scientology. We merely
      want to see LRH’s intentions implemented. Period. That will be
      more than enough reward . . . the end of abuses and getting the
      show on the road.

      Again, thanks for your communication.

      • Many thanks for this kind and considerate response. After a rocky start, I think we are building ARC and are starting to understand each other. I sincerely hope so.
        Given our active record over many years, I’m confident that we can assist you in your objectives, although it is not yet clear to me exactly how. Where there’s a will, there’s a way!
        Meanwhile, I’m going to send to you via email a copy of an article I wrote today, which I hope you will find of interest.
        Warmest regards, Robin & Adrienne

  4. Karen#1 says:

    Very Very Well Done.
    I have cross-posted the article to ESMB.

    As the poster “War and Peace” 9 months ago, I posted and posted and posted “FOLLOW the money” as a ways for the world to see what Miscavige was doing.

    Everywhere you turn there are FINANICIAL IRREGULURITES.

    Hy Levy, Veteran SO member who made MILLIONS for the Church in FSO posted this today ~~
    Another unconventional (but probably legal) thing I was aware of was how they bought properties in CW from local Scientologists. They would buy the property for an agreed upon amount and write the person a check for the full amount. In the agreement (written or verbal I don’t know), the public agreed that they would pay back in a portion of the amount (different in percentage and amount for each individual) for services. This money was then NOT invoiced as income (GI) but was separately invoiced by the Finance office as a different kind of transaction. Their services account would then be creditted for that amount of service. This bypassed the whole FP line and the money went straight back to the Building Fund account where it came from. This was explained to me by the then Finance Officer FLB. I found out when a public came to me to buy 2 12 intensive packages on a Thursday morning (about $ 130,000) and I found out I couldn’t count it as GI. So bascially the FSO had to deliver the service for free (as they received no income for it) and the property was. I assume, then owned by the Int Landlord Office (DM). A new wrinkle on getting the org to put more money into DM’s pocket (as an asset that could later be sold of course). This was done with all the condos owned by Scientologists at 300 N. Osceola as well as other properties in that vicinity. It was for the new accomodations and new Flag Solo HGC building that was planned to be built right next to the Sand Castle. Just thought I’d mention this little tidbit.

    Hy

  5. Jim Logan says:

    Karen,
    That note from Hy on the ‘free service’ at FSO just cracks the brain. What an outrageous, twisted bunch of financial irregularity and the inevitable ‘free fall’ it brings. Another twisted, off-policy and illegal manipulation from DM the master of all that is reversed.

  6. RJ says:

    Please accept my sincerest thanks for all the hard work you’ve put into this website.

    Ml

    RJ

  7. Sugar Plum Fairey says:

    I know that we got off to a bad start some weeks ago and for that I humbly apologize. The above Part IV is utter brilliance. My hat is off to your cornucopia of well researched facts.
    Thank you for being there!

  8. Karen B says:

    It was nice to review all of this information in a format that could be easily understood. I was not aware of the specific penalties that could be imposed regarding violations of the 501c status and feel much more informed about the potential liabilities if the church continues to ignore the fox in the hen house.

  9. FredKrueger says:

    Regarding entheta attacks: Though I am familiar with intel (OSA) business, knowing their operation base
    you should take into account, that there will be free-riders (real psychotics, SP´s and Anti-SCNists) using the situation to forward or cause enturbulation usually anonymously. Best is to file the inflow (Files do the work) and at some point in time evaluate. Earlier or later the make mistakes wich lead to the item. ARC

  10. Jim Logan says:

    Having just read the response to Freddy K above, I have to say this site represents by example the highest qualities of the Tone Scale and ARC/KRC at a level that is brilliant.

    Thank you, my fellow Scientologists.

    • Seeking As Isness says:

      Jim: I couldn’t agree more with your statement,”this site represents by example the highest qualities of the Tone Scale and ARC/KRC at a level that is brilliant”.

      Site Admin: Thanks for all you have done and are continuing to do. The truth you are putting forth and the easy-to-understand format is sure to bring about an as-isness.

      Much Admiration,

      SAI

      • admin says:

        Thanks SAI & Jim, and to all those who share their sentiments but don’t want to post for whatever reason.

        By the way, a person does not have to enter an email address in order to post a comment. The email box is there, but we have disabled the feature that requires it to be filled in.

  11. Sharkey says:

    Let us know what we can do to speed along the process of bringing rightness to this on-going devastation. As an Independent, I am happy to be amongst the people who are practicing the exact ideals of Ron. Spiritual Freedom and self determinism, and we all share the highest ARC every day.
    We support your actions.

    • admin says:

      Spread the word about the information that led you to your conclusion, this site included, we presume. And carry on your quest for spiritual freedom and self-determinism. Lies and force are no match for ideas, postulates, and truth. Momentum is building. If we have anything else to suggest we will say it in our articles or in replies to comments. Thanks for the support.

  12. Edie Fields says:

    What wonderful ARC being built here. Tears in my eyes, emotions of magnitude for the comm cycle being followed here. I don’t see ridges being built here and if there has been, the understanding has removed them. Whewwww, how great.

  13. John Doe says:

    Impressive and inspiring. You guys are a bunch of grown-ups. So rare in the blog space on Scientology.

  14. Neo says:

    Great work Admin and everyone who is participating in this fourm.

    I’m just wondering, you are referring to lecture we can listen to on the website
    however I’ve been going through the website but cant find the lecture.

    Also are you guys still there? Noted that nothing has been written since March.

    ML,
    Neo

    • admin says:

      The lecture is cited as the part of the London First ACC. We do not have it on the site.

      We’re still here. Getting lots of traffic. The word is spreading. Any help in letting people know about the site will be appreciated.

  15. Cowboy Poet says:

    Very nice work!
    Well, you polica de taxation, about all you gotta do is mount the horse and ride. He’s been fed, trained and now stands there groomed and saddled.
    Get off your government hindends and finish the job.
    This guy is the Al Capone of popes–probably a promotion in this for ya.
    And just think of how this would impact the other nonprofits—help keep em towing the line.

    “Did you hear how they went after that guy, David Miscavige? I’d better start wearing burlap sack robes instead of these handmade Egyptian shirts…”

    I’m tellin ya, this is a career changer.
    Sieze the moment.

  16. Neo says:

    Hi Admin,

    Thanks for your reply very much appreciated.

    Looking forward to your next article.

    ML,
    Neo

  17. James Lawson, Jr. says:

    Thank you for your work.

    The thought and effort that goes into your articles shows. Whoever writes your articles is both highly professional and brilliant. And a real Scientologist.

    The intelligence you show is a breath of fresh air.

    This high level of work – analytical and insightful – conforms to the highest of LRH standards. He would be so proud of you.

    Thank you so much,

    James

  18. Bridget says:

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