The Scientology Money Project

How L. Ron Hubbard devised Scientology’s most diabolical legal mechanisms


As a dishonest, misleading, and predatory organization, the Church of Scientology operates successfully only because it has manipulated Western legal systems and contract law in order to gain unfair advantages for itself.

These unfair advantages serve to harm Scientologists through legal, financial, and spiritual means. In this article, we explore the efforts of L. Ron Hubbard and the church to acquire and maintain these unfair advantages. To do so, we examine the crucial 1966-1967 period in Scientology.

As we saw earlier, all of the legally separate corporate churches in the Scientology franchise system use a series of binding contracts. These contracts are designed to strip Scientologists of their legal rights. At the heart of these contracts are legal waivers. These waivers separate Scientologists from their legal rights and protections in favor of the Church.

We are seeing the effect of these waivers at work in several civil cases where former Sea Org have been forced into binding arbitration by courts.  The Church uses arbitration contracts in an attempt to avoid the scrutiny of public court trials where damning evidence against Scientology is introduced. Contrary to what some may think, Scientology’s use of legal waivers is not a post-Hubbard legal strategy. The use of waivers is directly traceable to L. Ron Hubbard and to the period of 1966 and 1967, crucial years when Hubbard created key elements of the Church of Scientology that still exist today. As we shall see, Scientology’s malicious contracts are just the tip of a much bigger Scientology iceberg.

In 1966 and 1967 Hubbard created a secret intelligence-gathering and psycho-terrorism unit within the church. This secret part of Scientology became a “cult within a cult” answerable only to Hubbard. In its first embodiment, this secret unit was called the Guardian’s Office.

In its second and current embodiment, this secret unit is called the Office of Special Affairs. Staffed by Sea Org members, OSA’s publicly stated functions are the handling of the Church’s PR, intelligence, and legal affairs. Conversely, OSA’s covert functions are intelligence gathering and the administration of Scientology’s brand of psycho-terrorism called Fair Game. It is crucial to understand the hydra-headed nature of OSA:

— OSA contains a legal section that creates and keeps files of the malicious contracts signed by Scientologists.
— OSA manages the defense of all lawsuits against the Church.
— OSA plans and conducts the PR affairs of the Church.
— OSA secretly culls “confidential parishioner folders” for information when it needs to attack former Scientologists who speak out against the Church.
— OSA is behind the attacks and hate websites and videos on critics, former Scientologists, journalists, and documentarians such as Alex Gibney.
— OSA was behind the Squirrel Busters operation and the other attacks on Independent Scientologists.
— OSA seeks to infiltrate all “enemy groups” by various means.

The origins of the Guardian’s Office, the Sea Org, and the overt and covert affairs of OSA are, arguably, all traceable to a little known Hubbard policy letter of February 18, 1966. Entitled “ATTACKS ON SCIENTOLOGY (Continued),” section three of this policy letter enumerates what Hubbard saw as successful actions in stopping attacks on Scientology organizations:

“The third group of actions have been positive in stopping attacks:
G.3.1. 1. Investigating noisily the attackers;
G.3.2. Not being guilty of anything;
G.3.3. Having our corporate status in excellent condition;
G.3.4. Having our tax returns and books accurate and punctual;
G.3.5. Getting waivers from all people we sign up;
G.3.6. Refunding money to dissatisfied people;
G.3.7. Having our own professionals firmly on staff (but not halfway on staff);
G.3.8. Going on advertising total freedom;
G.3.9. Surviving and remaining solvent by stepping up our own usual activities;
G.3.10. My catching the dropped balls goofed by others and hired professionals;
G.3.11. Being religious in nature and corporate status.

In order to accomplish the ambitious goals outlined in his policy letter, Hubbard took the following steps in 1966 and 1967:
— Created the Guardian’s Office (GO) on March 1, 1966 in order to have Scientology’s “own professionals” firmly on staff, this where “own professionals” referred to intelligence program operators, operatives, and assorted other GO spies, and agents provocateurs.
— Established the Sea Org on August 12, 1967 and appointed himself Commodore.
— Re-emphasized the use of legal waivers against all Scientologists
— Wrote his infamous policy letter of October 18, 1967 entitled “Penalties for Lower Conditions.” This policy letter called for Fair Game against Suppressive Persons:

— Formally authorized the use of confidential PC folder data against former Scientologists who spoke out or were critical.

The last point is significant, for in 1966 Hubbard formally authorized the GO to provide Scientology’s hired private investigators with preclear folder data; this in order to malign, attack, and smear former Scientologists. Hubbard’s authorization to use of confidential parishioner folder data against former Scientologists comes from a policy letter dated February 17, 1966 entitled “PUBLIC INVESTIGATION SECTION.” In this document Hubbard wrote:

The Public Investigation Section is formed in Division 1, Dept 3, as Section 5.

The purpose of this section is:


It is composed wholly of professional investigators. Agencies may not be used…

The section may never be used on Ethics Section matters but may work with Ethics when an ex-Scientologist is involved…

The statistic of the section is dual consisting or the number of cases successfully investigated on specific projects and the number of derogatory news stories appearing that week related to enemies of Scientology related to a specific project…

It will be seen that the section has all the useful functions of an intelligence and propaganda agency. It finds the data and sees that it gets action…

The mechanism employed is very straightforward. We never use the data to threaten to expose. We simply collect it and expose…

The creation of the “Public Investigation Section” reveals Hubbard’s well-formed and documented intent to use both confidential parishioner information and tax exempt dollars to finance and engage in vicious Fair Game attacks against former Scientologists who spoke out. This policy letter also calls for investigations against non-Scientologist persons and groups who speak out. This Hubbard policy continues to this day. As such, it constitutes wanton abuse of the Church’s 501(c)(3) tax exempt status.

Of course, the only way Hubbard’s extravagantly deviant and self-serving machinations could ever possibly work is if the Church of Scientology maintained its IRS tax exemption. I say this because a secular business would be sued out of existence and its leaders arrested on criminal charges for such atrocious conduct. This is why Hubbard emphasized the need for keeping Scientology’s legal and corporate affairs in order in his policy letter of February 15, 1966:

G.3. 11. Being religious in nature and corporate status.

Tax exemption was, and remains, the linchpin of the entire Scientology scheme. Tax exemption is the ultimate unfair advantage Scientology needs and must have in order to survive and perpetuate its dishonesty, greed, and human rights abuses. The church makes money by behaving in such ways.

Scientology’s massive, bloated, and very expensive intelligence-gathering, psycho-terrorism, legal, and PR apparatus exists, in part, to protect and firewall the Church’s religious tax exemption.

In turn, religious tax exempt status allows the Church to get away with outrageous behavior. And even if Scientology spends, say, more than one hundred million dollars per year funding this apparatus, it is just a cost of doing business for the tax-free multibillion-dollar Scientology entity.

The two Hubbard policy letters we briefly examined in this article offer a behind the scenes look at the self-serving legal architecture of the Church of Scientology that the public, and most Scientologists, don’t know about.

When signing contracts, Scientologists see just the tip of the Scientology legal iceberg that could one day sink them in court. They see the tip when Sea Org members ask them to “sign some paperwork.” What the people signing don’t really read, or are not allowed to fully read and consult an attorney about, are the waivers in which they surrender their legal rights. This all goes back to L. Ron Hubbard:

There is no informed consent in Scientology. Rather, the journey into the Scientology Underworld begins by watching a short film called “Orientation” and then signing a contract in which one agrees that Scientology is a religion. And then other contracts must be constantly signed for every course. There is no end of contracts in the Church. I can think of only one other malign spiritual entity who always wants a signed contract from mortals and he has horns and a tail.

This article first appeared on Tony Ortega’s Underground Bunker and is posted here for archival reasons.

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