The Scientology Money Project

The Garcia vs. Scientology Lawsuit: Religious Arbitration vs. Illegality and Public Policy Considerations

The Garcia case represents the unholy fusion of religious First Amendment protections and American secular contract law. Religions want it both ways: They want First Amendment protections and they want the protections offered by secular arbitration contracts. This unholy fusions deprives religious people who sign such agreements of virtually any legal protections or justice. This is why the Doctrine of Illegality exists

An IRS paper discusses the Doctrine of Illegality: document from the IRS’ website. Entitled  Illegality and Public Policy Considerations, the document is authored by Jean Wright and Jay H. Rotz. The authors offer the following analysis:

“All organizations seeking exemption under 501(c)(3) must conform to certain fundamental legal principles applicable to all charitable organizations. Treas. Reg. 1.501(c)(3)-1(d)(2); Rev. Rul. 67-325, 1967-2 C.B. 113, 116-7. See also Rev. Rul. 71-447, 1971-2 C.B. 230; Rev. Rul. 75-231, 1975-1 C.B. 158. One of these basic charitable principles is that charitable organizations may not engage in behavior that is illegal or violates public policy.

“The Service views illegality as one of the criteria by which an organization’s activities are evaluated. Rev. Rul. 80-278, 1980-2 C.B. 175, established a three-part test to determine whether an organization’s activities will be considered permissible under 501(c)(3)

“(1) the purpose of the organization is charitable;

“(2) the activities are not illegal, contrary to a clearly defined and established public policy, or in conflict with express statutory restrictions; and

“(3) the activities are in furtherance of the organization’s exempt purpose and are reasonably related to the accomplishment of the purpose.

“…If an organization has an illegal purpose, it will not qualify for exemption. In Church of Scientology of California v. Commissioner, supra, the court did not need to address the issue of substantiality because it found that one of the organization’s purposes was criminal tax fraud. However, assuming that an organization’s purposes are legal, the substantiality of the illegal activities will determine whether the exempt status is jeopardized. An organization will not qualify for exempt status if it engages in substantial illegal activity.”

The IRS document is here:


The Church of Scientology routinely violates public policy in numerous ways. For example, the new Non-Disparagement Agreement is an egregious violation of public policy that seeks to impose a chilling effect on whistleblowers, i.e. those who may have knowledge of illegal activities and/or conditions within the Church. Likewise, the Church practice here in Los Angeles of sending Sea Org members to county hospitals to receive free medical treatment by claiming penury or indigent status is fraudulent. and, it allows the Church to engage in fraudulent enrichment at the expense of taxpayers. Matters such as the violations of Building Safety Codes and the constant lying about expansion to IAS members are also violations of public policy. The list of violations is extensive and the Church of Scientology is dirty.


6 replies »

  1. I want to say jm praying got X’d that they av to pay these people back it theyv taken the piss for so long even clearwater police will hurry to a call if D.Mis calls WHY nobody benefits from scientoligy Homeless people Empty buildings dosnt make sence ,The FBI no wot this cult will do yet why dont they look into deaths clearwater police id bet most are on the payroll

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