Scientology’s billion-dollar slush fund, its slick operators, and how it gets around regulation

(Authored by Jeffrey Augustine, this essay was originally published by Tony Ortega at the Underground Bunker and is reprinted here for archival purposes)

As discussed previously, the International Association of Scientologists (IAS) is not a church; it is an unincorporated membership organization. Per its charter, the IAS functions autonomously from the so-called “Mother Church” i.e. the Church of Scientology International (CSI):

IAS3

In the classic Scientology game of evasion, the Church of Scientology International (CSI) told the IRS that it does not have access to IAS membership records: IAS3bAlthough the Church of Scientology International itself does not have the IAS membership list, CSI nevertheless blindly voted to allow the IAS to become the sole membership organization for Scientologists; this as it told the IRS: IAS3c

The Church of Scientology International also told the IRS that it does not have ready access to IAS financial records. However, in a pinch, CSI can somehow manage to find the records. This is classic Scientology doublespeak:
IAS3dOnce we cut through the hype concerning the exalted purpose of the IAS, the naked fact is that the IAS is nothing more than a fundraising organization that pays commissions ranging from 2-10%. As the Church told the IRS, there are different classes of IAS fundraisers: IAS3e

IAS commissions can run into serious money. Perhaps some financially savvy Bunkerite will do us the favor of adjusting these 1989-1991 “IAS 10% commissions paid” numbers for inflation:
IAS3f
IAS commissions reveal part of the “vested interests” inside the Church of Scientology who benefit from the status quo and want no changes to anything. There are plenty of people who make great money as fundraisers,. FSM’s, consultants, and conducting IAS Tours. They don’t want to rock the boat. There is no way at present to answer the really big question: Does David Miscavige earn IAS commissions? The answer we can give is that nothing in the IAS rules would prevent Miscavige from earning fundraising commissions. It would not be unfair to speculate that IAS commissions would certainly be one way to get around charges of inurement that plagued L. Ron Hubbard and cost Scientology its tax exempt status in 1967.

Judging by its behavior, the actual goal of the IAS is to raise unrestricted funds for David Miscavige and the Church of Scientology International. “Unrestricted funds” is an important concept in US tax law relating to groups with 501(c)(3) tax exempt status. For example, if a church raises money for specific purposes such as a food bank it cannot then spend these monies on a new building without risking penalties or even the loss of tax exempt status. Therefore, it is in the self-serving interest of David Miscavige and the Church to raise unrestricted funds that can be spent on anything relating to broadly defined general purposes such as “planetary dissemination” or “defense of the Scientology religion.”

In the case of legal defense, the IAS can use unrestricted donations to pay for scores of non-Scientology lawyers who work for, and are supervised by, the Office of Special Affairs. In turn, these lawyers hire and pay private investigators. There is no direct involvement on the part of the Church in hiring or paying private eyes. This allows David Miscavige and OSA to have the best of both worlds, for they can use tax-exempt dollars to conduct campaigns of spying, stalking, and harassment while having plausible deniability. If OSA activities are exposed, as happened with the Squirrel Busters, the Church can claim that any spying or other covert activities are a part of “pretrial litigation.” We also saw Miscavige’s fallback position in the Monique Rathbun v. Miscavige case: The Church of Scientology International (CSI) fell on its spear for Miscavige by admitting responsibility for the Squirrel Buster operation.

Plausible deniability also allowed Karin Pouw to lurch into profanity during her recent heated denial that Scientology leader David Miscavige had any knowledge of the private investigators who claimed that he, Miscavige, told them to let his father die:

“So let me be clear: No such conversation with Mr. Miscavige ever took place and any claim that one did is provable bullshit.”As an aside, the Church’s excursion into public profanity suggests to me that the tensions inside are becoming unbearable. There is never any good or sane reason for any public entity, particularly a church, to devolve into profanity. Indeed, the hyper-competitive and often ego-driven world of professional sports imposes heavy financial fines on any player, coach, manager, or official for public utterances of profanity. The Church’s use of profanity is growing and even Freedom magazine of late has used profanity.

Scientology’s intelligence apparatus is not cheap and that is why the IAS must endlessly fundraise. My educated guess is that the IAS has in excess of one billion dollars in cash. Given that the IAS is not a part of the Church of Scientology hierarchy, we ask who controls the IAS money.

Does the IAS Board of Directors control the money?

The answer is no. The IAS Board of Directors does not control the money.

As an unincorporated membership organization, the IAS cannot do actually anything in and of itself. Therefore, the IAS has an operating arm called the International Association of Scientologists Administrations (IASA). The IASA was formerly called the Foundation International Membership Services Administrations Inc. The name was changed to the IASA in 2007 when the corporation moved from the Netherland Antilles and became a Delaware Corporation.

As we see in this 2008 vintage recruiting ad, the IASA is staffed by Sea Org members:
LRHAd

The IASA is not a church. As recently as 2010, the US Department of Homeland Security, US Citizenship and Immigration Services, denied a religious worker visa to a non-US member of the Sea Org. The US Citizenship and Immigration Services stated:
IAS3g
The Church appealed this decision; the results of the appeal are unknown. The point is that Sea Org members operate the IASA, and, the IASA has no religious function according to a publicly available US Government document.

Our next question logically follows: Do the Sea Org members who run the IASA Inc. control the IAS slush fund?

Again, the answer is no. The IASA administers the affairs of the IAS but does not control the giant IAS slush fund.

So who controls the IAS money?

The answer is the US IAS Members Trust (US IAS MT) controls the money. Created in late August 1993, the US IAS MT became operational just prior to the Church receiving IRS tax exempt status. The Grantor of the US IAS MT was IAS Board member and Sea Org officer Captain Janet Light: IAS3h

Captain Janet Light put up $1.00 in cash to as the “Original Property” of the US IAS MT. The actual purpose of the US IAS MT is to receive donations made by IAS members residing in the USA:
IAS3iThe news gets even more startling: The US IAS Members Trust is not even a part of the IAS!
IAS3jIn one of Miscavige’s periodic purges, Captain Janet Light was removed from her job as the head of the US IAS MT. This was in 2007. The departure of Janet Light left the US IAS MT with only two Trustees. A third Trustee was required. Documents from the Garcia lawsuit posted here at the Underground Bunker revealed a bombshell: OSA Spy Boss Linda Hamel had been named a Trustee of the billion dollar IAS slush fund:
IAS3k

The bottom line on the IAS is revealing:

— The IAS is not a part of the Church of Scientology.

— IAS fundraisers are paid commissions and thus have a vested interest in raising donations for the IAS.

— All monies raised by IAS fundraisers is deposited into accounts controlled by the legally separate US IAS MT.

— Per the IAS donation contract, all donations made to the IAS are nonrefundable.

— The IAS is legally separate from the US IAS MT.

— The IASA is legally separate from US IAS MT.

— The US IAS MT wholly unaccountable to the IAS and may reject any IAS request for funding.

— As of February 2010, the US IAS MT was controlled by four Sea Org members who are Miscavige rubber stamps: Carol Bragin; Deborah Fraser; Carole Warren; Linda Hamel.

— Sea Org “Commanding Officer OSA” Linda Hamel is a Trustee of the US IAS MT. Hamel can therefore act to approve all monies needed to fund David Miscavige’s orders as executed by and OSA. This inherent and disturbing conflict of interest raises very serious questions that go to the tax exempt status of the Church of Scientology and its unholy fundraising trinity of the IAS-IASA-US IAS MT.

— David Miscavige controls the Sea Org and therefore controls the US IAS MT billion-dollar slush fund.
— Jeffrey Augustine

 

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