Readimg the entrails - An anonymous account of finanical shenanigans within the Church of Scientology

The Report to the Council For Spiritual Integrity
(Date and Author Unknown)

Overview
Table of Contents
Other Resources
Documents Wanted


Overview

The following document was posted to alt.religion.scientology in February, 1998 by zed@magna.com.au .

Although the source is unknown, it is believed to have been part of the FACTnet archives, although it no longer appears anywhere on the FACTnet website, nor, to my knowledge, anywhere else on the web. This is a situation which, in my opinion, needs to rectified. The anonymous author  provides an excellent - if as yet uncorroborated - account of Church of Scientology financial dealings - and misdealings - from the early 70s through to the Miscavige putsch of 1981-82. It also gives a detailed description of the subsequent corporate reorganization, including the reasons behind the restructuring of now-extinct CoS entities such as Church of Scientology California (CSC), and the myriad of trusts and reserve accounts into which the bulk of church assets are poured.

On reading the document, it would seem to have been a report prepared for the Council for Spiritual Integrity sometime between 1983 and 1985. Although little information is available about this group, it appears to have an informal group of ex-scientologists, who apparently had grave misgivings as to the direction taken by David Miscavige when he seized control of the CoS in the early eighties. Then the de facto leader of the CoS due to the incapacitation of founder L. Ron Hubbard, Miscavige  is currently Chairman of the Board of the Religious Technology Center, the highest executive position in the CoS.  The schism that occurred in the aftermath of what was virtually a palace coup undertaken by Miscavige and some of his key allies has been well-documented in other briefs, and has been credited with leading to the evolution of the Free Zone, the general term used for those who use aspects of scientology outside the auspices of the official church.

This report suggests that the reorganization of 1981-82 was not merely a cosmetic endeavor to 'simplify' the corporate structure, as has been claimed by those responsible. It was, instead, a covert campaign to lay the groundwork for turning the existing missions network and satellite orgs into cash cows, using ever-increasing dues to feed a corporate nest egg under the central control of the upper echelon of the CoS organizational pyramid, including Miscavige, Pat and Anne Broeker, Norman Starkey and other top officials of the CoS.

The reorganization had other benefits for the CoS, allowing the movement of more than $100 million in assets from  then-"mother" church CSC, at the time coming under increasing legal pressure and official scrutiny. This corporate shell game made it virtually impossible for successful litigants to collect damages from the CoS, as eventually was the case in the Wollersheim decision. It also gave the CoS a far more tenable case for tax exempt status, an ongoing battle over which with the Internal Revenue Service had cost the church millions in legal fees. In this document, the rationale behind the reorganization is given, as well as a wealth of background material, including names, dates and legal information on the individuals, corporations and trusts which are claimed to have been involved in the corporate whitewash of 1982.

As a historical document, it is valuable, shining light on financial shenanigans not previously been widely known outside the inner circle of the CoS. There is, for example, the mysterious Religious Research Fund, a Liberian-incorporated trust that operated as a tax shelter for the CoS during much of the 1970s. It also gives the names and then-current positions of some of the key players in the reorganization, as well as the boards of directors of some of the newly formed corporations, including the Church of Spiritual Technology, RTC, Bridge Publications Inc. and other entities still very much a part of the current organizational structure.

The information contained in this document is not limited to simply providing a credible explanation for the actions of the CoS in the past. If these allegations can be shown to be true, it would also represent corporate and financial fraud on a dizzying scale, suggesting that certain players in the CoS hierarchy have raided tax-exempt funds for personal gain. The potential implications are enormous, both for the CoS and many of its victims, who have faced such difficulty untangling the web of corporate deception that has protected the CoS from successful litigation in the past.

It is for these reasons that I intend to follow these loose ends to see where they might lead. Suggestions, tips and guidance are very much requested, as are pointers to other online documents that could corroborate the claims made in this document. I would be interested in hearing from anyone with further information about the information contained herein, its author or the Council for Spiritual Integrity. Send any comments to tallulah@storm.ca

Note
Although the author's style is authoritative, suggesting  intimate knowledge of CoS financial practice of the time, due to the anonymity of the source, no absolute claim of veracity can be made for this document.


Table of Contents of Report to the Council for Spiritual Integrity

Introduction

Corporate Changes of 1981

Corporate Organization pre-1981
Corporate Assets pre-1981
Corporate Organization post-1981
Lawyers and CoS staffers involved in reorganization
Corporate Assets post-1981

Background on Relevent Corporations

Religious Restoration Fund
Church of Scientology International (CSI)
Church of Scientology Flag Services Organization (COS FSO)
Bridge Publications Inc. (BPI)
Reserves Committee
Church of Scientology Religious Education College

Probable Invalidation of Legal Safeguards

Individuals With Knowledge of Irregularities

Organizational Structure - Religious Technology Center and Related Organizations

Organizational Structure - Author Services Inc. and Super-church Structure

Command Line Chart [note - virtually unreadable]

Additional Resources

Technical Note
I have attempted to preserve the original formatting of this document while simultaneously providing links to related documents and files. I have also provided links to commentary and questions that were raised by myself and Zed which originally appeared on a.r.s after this document was posted. Finally, I have added some formatting - bold text and white space - to improve readability, and corrected the more glaring scanning errors. Please send any corrections, additions or suggestions to tallulah@storm.ca


Other Online Resources

This list is by no means exhaustive. I have tried to limit the selection to sites providing information relating directly to this document. For a more general selection of scientology-related material, please visit Operation Clambake, the most extensive collection of available data currently online.

Similar claims of fraudulent dealings by David Miscavige were made in this anonymous post to alt.religion.scientology, although with far less background information.

The transcript of the Missionholders Conference of May 11, 1982 gives readers a taste of what it must have been like at one of the most internally controversial events in CoS history.

The Young Rulers of Scientology describes the Miscavige powergrab from a similarly embittered perspective.

The CoS application for tax exempt status, and the resulting (formerly) secret IRS agreement give the official position on the reasons behind the corporate restructuring. 

For additional documents related to the corporate reorganization of scientology, and its impact on members, visit the Historical Background section of www.freezone.org

Documents wanted

I am actively seeking copies of the documents mentioned at the conclusion of the Council Document, namely:

1.) Scientology structure '84
2.) John Atack, Write up on unity of control
3.) Miscavige's illegal investments and control of Scientology assets,
4.) Various documents on command channels and unit.y of control,
5.) Vicky Azneran on unity of control
6.) Bill Franks statement
7.) Homer Schomer statement
8.) Armstrong Declaration of 12, May 1983, where Miscavige controls through fake Hubbard Signatures
9.) Corporate Shield, Alter Ego, Common control
10.) Don tarson on the use of fair game, (coercion,) to extract money
and signatures of the new reorganized church bylaws

If you have copies of any or all of these documents, either in hard copy or electronic format, please contact me at tallulah@storm.ca


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