Inside Scientology
Page 20
Staffed by some of Miscavige's closest associates, OSA also employed numerous former Guardian's Office officials who, having survived the purges of the early 1980s, had been offered a second chance. "The measuring stick in the Church of Scientology has never been whether you were participating in illegal activities#x2014;it's whether you were caught," Jesse Prince, who took part in several intelligence operations in his capacity as an RTC executive, told me. "Those who weren't caught and punished were still used."
Like the old Guardian's Office, OSA handled public-facing activities: legal affairs, public relations, and Scientology's various social betterment programs. It also handled its most secret undertakings and continued to use Scientologists as informants and operatives, as well as employing a cadre of private investigators. It had been OSA that had ruined David Mayo and destroyed his independent Scientology network, using private investigators like Eugene Ingram, who served OSA for many years. The Office of Special Affairs had also created Scientology's Crusade for Religious Freedom as a public relations strategy.
But whereas the Guardian's Office had been an impregnable entity so covert as to not even appear by name on the church's organizational chart, OSA was listed in Scientology's incorporation papers. "Where OSA differs from the Guardian's Office," explained one former Scientologist who was an operative for both intelligence bureaus, "is that OSA wants to seem above board and approachable. That makes Scientology seem more approachable, which, they hope, will help the church operate as a religion freely, without harassment." In service to this goal, OSA made more of an effort to create a legal wall between the church and any covert activities, relying much more on private investigators, and paying a legion of outside attorneys.*
They kept busy. Throughout the late 1980s and into the early 1990s, the Church of Scientology filed some two hundred lawsuits against the IRS, while more than twenty-three hundred individual Scientologists sued the agency over its refusal to allow them to claim their Scientology contributions as tax deductible. These "cookie-cutter suits," as Rathbun described them, soon became cases that cost Scientology tens of millions of dollars in legal fees—with presumably similar cost to the IRS.
At the same time, the church, long an expert on using the Freedom of Information Act, filed hundreds of requests for internal IRS documents. Some of their findings were published in Freedom, a magazine created by the Office of Special Affairs to shed light on various government agencies and their abuses. In Washington, D.C., OSA deployed Scientology operatives to flock Capitol Hill, attend congressional hearings, and network with Hill staffers. One former OSA official explained that for more than a year, she'd fed congressional aides information on the IRS's handling of groups as divergent as the Amish and owners of small businesses, to shed light on its often prejudicial auditing and investigative practices. "They all knew we were from the church. It was a public relations thing," she said. "We were trying to get people to come forward and show that there were attacks on other members of the public, not just on Scientology."
To further this effort, OSA created, and financed, a grassroots lobbying organization known as the National Coalition of IRS Whistleblowers to support IRS employees who wanted to expose corruption. The coalition was planned through Freedom magazine and hired as its president a former IRS agent named Paul DesFosses. Stacy Young, then the managing editor of Freedom, later told the New York Times that "the whole idea was to create a coalition that was at arm's length from Scientology so that it had more credibility."
By the summer of 1989, these efforts were beginning to pay off. The National Coalition of IRS Whistleblowers helped spark congressional hearings on IRS abuses, based on leaked documents and other records that showed, among other things, that several Los Angeles IRS agents had shielded a California apparel manufacturer from a tax investigation after the agents bought property from the manufacturer. The New York Times, in an op-ed published on July 24, 1989, predicted that the proceedings might be the "most startling Congressional hearings since Watergate."
The hearings did expose significant abuse within the agency. The Church of Scientology, emboldened, began to press for further IRS reform. On April 16, 1990, David Miscavige wrote an editorial in USA Today calling for the abolition of the IRS and the creation of a new "value added" tax on goods and services. In October 1990, bands of whistle-blowing Scientologists with the National Coalition of IRS Whistleblowers protested in front of the IRS offices in Washington, D.C., offering a $10,000 reward to any agent willing to expose IRS abuses.
The church also spent roughly $6 million on a series of full-page advertisements that ran in USA Today and the Wall Street Journal. One advertisement, with the heading "Don't You Kill My Daddy!" addressed an incident in which "a band of armed IRS agents" supposedly tried to choke an Idaho man who hadn't paid his taxes. Several of the ads also featured photographs of individual agents, including the IRS chief, Fred Goldberg Jr.
Scientology did not confine its war to the IRS as an organization. Following the well-worn path that L. Ron Hubbard had laid out, the church hired private investigators to dig into the lives of IRS employees. One of these investigators, Michael L. Shomers, later told the New York Times that in 1990 and 1991, he was retained by the Church of Scientology to perform a variety of services, including "looking for [the] vulnerabilities" of various IRS agents. Posing as an IRS employee, Shomers said he attended IRS conferences, where he took notes on those agents who seemed to have a drinking problem or were being unfaithful to a spouse. He then provided the church with the names, and in some cases the phone numbers, of agents he thought it might be easy to blackmail.*
In August 1991, the church filed a $120 million federal lawsuit against seventeen individual IRS officials, accusing them of various illegal acts, including infiltrating the church using paid informants, conspiring to plant phony documents in Scientology's files, and in one case, attempting to rewrite the IRS definition of church to enable the agency to deny the Church of Scientology its exemption.
The agency, overwhelmed, began to feel the cumulative effect of the church's pressure campaign. "It was blatant harassment," opined one formerly high-ranking IRS official. He'd been harassed by Scientologists, he noted, since the 1970s. "They have a nasty habit of finding your unlisted telephone number and calling you at two A.M., just to let you know they're there." One assistant commissioner repeatedly found his garden hose mysteriously turned on in the middle of the night. Other agents reported that their dogs and cats had disappeared.
In the fall of 1991, Miscavige proposed meeting with the IRS commissioner Fred Goldberg, personally, to work out a deal. He floated the idea, said Rathbun, during a meeting with the church's lawyers based in Washington, D.C. The attorneys balked. But Miscavige insisted, and Goldberg agreed to see them later that week.
As Rathbun later recalled, Miscavige opened the meeting with a twenty-minute speech that included a passionate defense of Scientology as a legitimate religion. He acknowledged the Church of Scientology's history of harassment and lawsuits, but claimed that the church had never had much choice. "We're just trying to defend ourselves," he said.
Then he made a peace offering. "Look, we can just turn this off," he told Goldberg, in reference to the lawsuits—provided that the Church of Scientology could get "what we feel we are actually entitled to," which was full exemption. Goldberg had been with the IRS since 1982, and was, by all accounts, eager to make the messy Scientology battles go away. During a break Goldberg came up to Rathbun and asked if Miscavige was serious. "We can really turn it off?"
Rathbun looked at the commissioner. "Like a faucet."
For the next two years, Rathbun and Miscavige made weekly trips to Washington, D.C., to meet with a five-man working group of IRS officials that had been put together by Commissioner Goldberg, outside normal channels. The group was highly irregular; it bypassed the IRS's Exempt Organizations Division, which would have normally handled the review of the Church of Scientology's status. When asked about this
, Rathbun suggested that Goldberg had tried to eliminate the "Scientology haters" from the review process, which required creating his own side group to review the claims.
Every week, Rathbun and Miscavige returned to Los Angeles with questions from the tax authorities; their aides would work diligently to prepare answers for the officials' next trip. "There was a huge number of people putting together all of this information: binders and pictures, charts," recalled Tanja Castle, who was one of David Miscavige's secretaries at the time. "The whole religion of Scientology was basically explained to the IRS: the Grade Chart, the ethics conditions ... [Dave and Marty] were trying to show these guys how Scientology is a religion, how it actually did conform to the basic tenets of a religion, how it wasn't for profit—we gave them all the finance records from all the treasuries, all the way down to the lowest org. The entirety of Scientology had to get their financial records straight"—a difficult task, as most of the organizations kept few if any records.
Indeed, said one church finance officer, the church's finances were such a mess, it had to reconstruct its books wholesale. "There really were no books," she said. "Had anyone from the IRS come in and looked at our finances, they would have never given us any kind of exemption. Some of these orgs hadn't recorded their income, yet their members were claiming on their tax forms that they'd donated tens of thousands of dollars to Scientology, and no one could prove it. They had no records that actually gave you any idea of what a church had, or what it spent—and I'm talking about all the organizations all over the country."
To fix this problem, David Miscavige had created an "audit task force" in 1987 to do forensic accounting. In Los Angeles, Scientology's Pacific Area Command Base became the site of a frenzied audit involving 120 Scientologists who worked nearly round the clock to make sense of the church's finances. In New York, a task force of around 50 people set up shop on a floor of the New York Org in midtown Manhattan and did the same thing. Over the next several years, as the church's lawsuits and investigations of the IRS ballooned, these Scientologists pieced together the books of every Scientology organization, mission, and church-affiliated entity in the United States.
Finally, in the fall of 1993 the two sides reach a settlement, the details of which would not be fully known until the end of 1997. In a highly unusual move, the IRS had declared the agreement secret, not subject to release through the Freedom of Information Act or its own code of regulations.* It was a sharp departure from how other religious organizations had been treated. As the New York Times later noted, both the Jimmy Swaggart Ministries and an affiliate of the Reverend Jerry Falwell's had been "required by the I.R.S. to disclose that they had paid back taxes in settling disputes in recent years."
The excuse given within the agency was that the Scientology fight had been tying up IRS resources for too long. But it was puzzling, the official noted, because the IRS staff involved in the agreement had also been fairly confident they'd ultimately win the war.
For twenty-five years, the IRS had steadfastly insisted that Scientology was a business, and it had prevailed in all of the substantive suits brought by the church. As late as June 1992, the U.S. Claims Court had upheld the IRS's denial of tax-exempt status to the Church of Scientology. The ruling strongly supported the agency's position that the church was a commercial organization, and again the judge reproved it for deliberately deceptive practices—this time in designing its financial structure. "The decision [to settle] came as an enormous shock to all of us," the official said.
In an editorial, the St. Petersburg Times wrote that the IRS had "surrendered" to the Scientologists. "Instead of tough tax law enforcement, taxpayers are seeing a Scientology sellout." Privately, many people within the IRS agreed. Several agents who'd been assigned to process the church's formal application after the agreement was reached later confessed that they had been instructed to ignore substantive issues while processing the application. "If you ask me, Goldberg couldn't put up with the harassment like the rest of us did," said the former high-ranking IRS official, whose tenure with the agency dated back to the 1970s and Operation Snow White.
On the evening of October 8, 1993, more than ten thousand Scientologists, the largest meeting of Scientologists in history, gathered at the Los Angeles Sports Arena. The stage at one end of the arena was draped in blue banners, with gilded romanesque columns and torches. Miscavige stood at the podium in a black tuxedo, beaming.
"There will be no billion dollar tax bill [to the IRS] which we can't pay," Miscavige announced. "There will be no more discrimination. There will be no more twenty-five hundred cases against parishioners across the United States. The pipeline of IRS false reports [about Scientology's activities] won't keep flowing across the planet. There will be no more nothing—because"—Miscavige paused for dramatic effect—"the war is over!" The band launched into triumphant music and the audience rose to their feet, screaming and cheering as the words "THE WAR IS OVER!" flashed on giant screens behind Miscavige's head.
Marty Rathbun has always insisted that the Church of Scientology won its exemption legitimately, through lawsuits and other above-board forms of pressure. Aside from the testimony of Michael Shomers, there has never been any evidence to prove that Scientologists brought into play some of the more underhanded tactics they had used, for example, in the prior assault on the IRS, Operation Snow White. But the sheer magnitude of the church's exemption was astounding. The deal granted tax exemption to all of Scientology's 150 U.S. entities, including Miscavige's RTC; the seat of its international management, the Church of Scientology International; the Flag Service Organization in Clearwater, Scientology's largest and most successful "church"; and its advanced organizations in Los Angeles. It also gave exemption to the church's various social betterment programs. These included Narconon, a franchised network of drug treatment and rehabilitation centers, whose directors often claim to have no direct association with the Church of Scientology; Applied Scholastics, an organization that licenses a special, Hubbard-endorsed educational method called "study technology" to Scientology-run schools as well as to secular public schools and tutoring programs; and the Citizens Commission for Human Rights, a lobbying organization that promotes Scientology's anti-psychiatry agenda in Washington and elsewhere. Also exempt were the two publishing houses that were the exclusive publishers of Hubbard's books, both the Scientology-related texts and his wholly secular, and profit-generating, fictional works.
Though it owed roughly $1 billion in back taxes, Scientology had been fined just $12.5 million. The IRS also canceled payroll taxes and penalties against seven top Scientology officials, including Miscavige, and dropped audits of thirteen Scientology organizations, including the Church of Scientology International. In exchange for all of this, Scientology agreed to drop the thousands of lawsuits it had brought against the IRS and its officials.
And not only that, Miscavige announced triumphantly, but all future Scientology churches would never have to go through the exhaustive paperwork the IRS requires to prove tax-exempt status: all they would have to do would be to meet specific qualifications laid out and enforced by Scientology's Mother Church, which would grant these new organizations exemption themselves and then pass along the pertinent data to the IRS for its records.
Every audit or tax action currently pending against Scientologists was canceled. "There are no more tax court cases, there are no more disallowed deductions," Miscavige said. The IRS had even agreed to send, at U.S. taxpayers' expense, a special church-written fact sheet, "Description of the Scientology Religion," to many foreign governments, with a letter explaining that after thorough review, the U.S. tax authorities found Scientology to be "organized and operated exclusively for religious or charitable purposes." It would be a significant step, church leaders hoped, in resolving some of Scientology's conflicts abroad—and, like everything else about the agreement, this was an unusual step.
While many other religious groups in America have been given sweeping exemptions,
no organization with the contentious history of the Church of Scientology has ever been exempted in such an overarching manner. In 1994, one year after Scientology's tax exemption was announced, an Orthodox Jewish couple from Los Angeles, Michael and Marla Sklar, tested the fairness of this agreement by suing the IRS for the right to deduct their children's religious education from their taxes just as Scientologists were allowed to deduct the price of auditing.* The Sklars lost and appealed, and ultimately took their case all the way to the Supreme Court. In October 2009, the justices refused to hear the case, without comment.†
"The power of our group is greater than you can imagine," Miscavige, in his victory speech, told his flock, who had met his announcement with almost ten minutes of uninterrupted applause. Scientology was now a religion, protected by the laws of the U.S. government. Those Scientologists who'd ever doubted the mission, or Miscavige, had long since departed. Those who remained were the truest of believers, and David Miscavige, the young disciple of L. Ron Hubbard, was unequivocally their leader. Scientologists would follow him anywhere, unquestioningly, from now on.
"What exactly does this [exemption] mean?" Miscavige said. "My answer is: everything. The magnitude of this is greater than you may imagine ... The future is ours."
Not a soul in the audience had reason to doubt him.
PART III
Chapter 9
Lisa
TRY TO DEFINE Scientology, and even those who understand its basic concepts will inevitably come up with a multiplicity of descriptions: alternative to psychotherapy, social movement, transnational corporation, cult, religion. One of its essential characteristics is its aggressive response to challenges, whether they arise from within the movement or outside it. Some journalists have referred to Scientology as a hydra for this uncanny ability to restore itself despite numerous blows to the head. This power to reinvent itself lies at the heart of the church's business plan.