IRS

Criminality and the Church of Scientology


James Kirchick’s recent op-ed in the Los Angeles Times asks, “In the world of religious tax exemptions, does Scientology measure up?”

Kirchick incisively cuts right to the bone:

Today, America’s recognition of Scientology as a religion stands as an anomaly in the Western world, the result not of impartial jurisprudence but of harassment. Four years ago, France’s highest court upheld a fraud conviction against the church, ruling that, “Far from being a violation of freedom of religion, as this American organization contends, this decision lifts the veil on the illegal and highly detrimental practices.”

Kirchick is quite correct in taking the matter of Scientology directly to the matter of criminality. Since it’s inception in 1954, the Church of Scientology has at all times operated as a criminal organization. A straightforward historical reading of L. Ron Hubbard and Scientology’s machinations, plans, and designs will bear this out. Fair Game. The Guardian’s Office. Conspiracy. Domestic espionage. Tax evasion. Infiltration. Theft. Spying. Blackmail. Coercion. Money laundering. OSA. Phony front groups. Private investigators. Forced interrogations. Beatings. Agents provocateurs. Hacking computers. It’s all there. Scientology is a classic criminal organization.

The FBI raid of July 8, 1977 on Scientology was massive; over 150 agents participated. The raid was the direct result of L. Ron Hubbard’s Program Snow White. A demonstration of Scientology’s criminality writ large, Program Snow White brought Mary Sue Hubbard to ruination:

Russia

June 2017: The Russian Federal Security Service (FSB) conduct a raid on Scientology’s Moscow Headquarters.

The Russian Federal Security Service (FSB) has raided Scientology Orgs numerous times. From the Moscow Times of June 7, 2017:

The headquarters of the Church of Scientology in St. Petersburg has been raided by Russia’s Federal Security Service (FSB) on June 6 according to the MediaZona news site. The security services accused the Church of extremism, inciting hatred, and operating an illegal business.

Hungary

Hungarian Police during the raid of Scientology’s Budapest Headquarters.

On October 22,2017 — a scant three weeks ago — The Daily Mail reported on the massive raid of Scientology made by Hungarian police:

Hungarian police carried out a search at a Church of Scientology centre in Budapest amid a probe into suspected misuse of personal information and ‘other crimes’.

More than 50 officers surrounded the church’s Budapest headquarters on one of the Hungarian capital’s busiest roads early on Wednesday.

Detectives from the National Investigation Bureau have listed the target as ‘unknown persons’ – a common designation when a specific suspect has not been identified.

In terms of comparison, 156 FBI agents participated in the raid of Scientology’s Los Angeles complex, such was the sheer volume of documents Scientology had stolen from the US government. For Hungary to send in more than 50 police officers to raid Scientology offices there indicates the seriousness and scope of the criminal investigation.

Cover Ups of Rapes and Child Sexual Abuse

The criminality of Scientology extends to the cover ups of rape and child sexual abuse. At this writing, Scientologist Danny Masterson is alleged to have committed four rapes that were covered up by the Church.

Danny Masterson and Netflix co-star Ashton Kutcher at the 2017 CMT Music Awards in June. Photo by Jason Davis/WireImage.

The Los Angeles Police Department & The Los Angeles District Attorney’s Office

Scientology’s hideous reputation has tainted the Los Angeles Police Department as well as the Los Angeles District Attorney’s Office. People are asking why the case against Danny Masterson is not moving forward despite “overwhelming evidence” as reported by the Huffington Post. Netflix has even come in for criticism as it has not stopped production of its series The Ranch in which Masterson stars. As reported by the Los Angeles Times:

A woman who previously accused actor Danny Masterson of rape — an allegation he has denied — has gone on the record to criticize Netflix for continuing with his show “The Ranch” even as it has severed ties with Kevin Spacey and Louis C.K. after allegations of sexual misconduct.

“For me, what Netflix has done feels like a continuation of how the Church of Scientology made me feel when I reported my rape to them, as well as how Danny Masterson made me feel when I would beg him for an apology, an explanation, anything,” Chrissie Carnell Bixler told the Daily Beast. “I was made to feel unimportant. I was made to feel like I didn’t matter.”

Leah Remini’s Emmy award winning A&E show Scientology and the Aftermath has given courage to many of Scientology’s victims who were in the shadows. Terrified of incurring Scientology’s vengeance for speaking out, these people are no longer afraid. Even as the mask is being ripped off the sexual abuse and culture of cover-ups in Hollywood and Washington D.C., the same is happening to Scientology. The predators are being named and called out.

Revoke Scientology’s Tax Exemption Now

The Church of Scientology is able to ply its evil trade only because its ill-gotten 1993 IRS tax exemption. According to Doug Frantz’s seminal 1997 article in the New York Times
Scientology’s Puzzling Journey From Tax Rebel to Tax Exempt it appears that then IRS Commissioner Fred Goldberg unfairly rigged the examination in favor of Scientology. As Frantz noted in his article:

Scientology entities were required to submit new applications for exemption, which were to be evaluated by the agency’s exempt organizations division. But something unusual occurred there, too.

Mr. Schoenfeld, the negotiations chairman, ordered the two tax analysts assigned to the review not to consider any substantive matters, according to I.R.S. memorandums and records in the Tax Analysts case. Those issues, Mr. Schoenfeld informed them, had been resolved…

Both analysts, Donna Moore and Terrell M. Berkovsky, wrote memorandums specifying that they had been instructed not to address issues like whether the church was engaged in too much commercial activity or whether its activities provided undue private benefit to its leaders.

IRS tax analysts were forbidden from considering substantive matters. Why did Commissioner Goldberg give such an order? This seems to be a serious violation of IRS rules. Did Commissioner Goldberg violate the US Constitution he was sworn to uphold?

As the 9th Circuit Court noted in Sklar v. Commissioner, the IRS expressed an unconstitutional denominational preference for Scientology by granting it tax exemption:

The Supreme Court has developed a framework for determining whether a statute grants an unconstitutional denominational preference. Under that test, articulated in Larson v. Valente, 456 U.S. 228, 246-47, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982), the first inquiry is whether or not the law facially discriminates amongst religions. The second inquiry, should it be found that the law does so discriminate, is whether or not, applying strict scrutiny, that discrimination is justified by a compelling governmental interest. Applying this test to the policy of the IRS towards the Church of Scientology, the initial inquiry must be whether the policy facially discriminates amongst religions. Clearly it does, as this tax deduction is available only to members of the Church of Scientology…

Because the facial preference for the Church of Scientology embodied in the IRS’s policy regarding its members cannot be justified by a compelling governmental interest, we would, if required to decide the case on the ground urged by the Sklars, first determine that the IRS policy constitutes an unconstitutional denominational preference under Larson, 456 U.S. at 230, 102 S.Ct. 1673.

It is time for acting IRS Commissioner David Kautter and Secretary of the Treasury Steven Mnuchin to jointly call for an investigation into Scientology’s tax exemption. Scientology engaged in fraud and misrepresented material facts to the IRS to gain its tax exemption. The 9th Circuit opined in Sklar that the IRS granting Scientology tax exemption constituted an unconstitutional denominational preference.

Since gaining tax exemption Scientology has continued to engage in violations of public policy, bad faith, lies, and psycho-terrorism all funded by tax exempt dollars. This is an outrage. The illegality doctrine clearly applies in the case of the Church of Scientology:

HuffPost: Trump Thinks Scientology Should Have Tax Exemption Revoked, Longtime Aide Says

HuffPost: Trump Thinks Scientology Should Have Tax Exemption Revoked, Longtime Aide Says

Quite an article today in the Huffington Post in which Leah Remini figures prominently:

President Donald Trump believes the Church of Scientology should have its tax exemption revoked, a longtime family aide and current top official at the Department of Housing and Urban Development told an actress and producer in May.

In an unsolicited Twitter message, Lynne Patton, who has worked for the Trump family since 2009, told actress Leah Remini of Trump’s position and said she would interface with the IRS directly to seek more information in an effort to initiate revocation. Remini sent HuffPost copies of Patton’s messages and has declined to comment further…

Leah won an Emmy for her A&E show Scientology and the Aftermath. Leah has influence in Washington DC. All “VGI’s” (Very Good Indicators) as they say in Scientology.

US Bankruptcy Court Ruling: Scientologists Matt and Kathy Feshbach Cannot Discharge $3.8 Million in Income Taxes

Fessbachs

An excellent article in Forbes by Jay D. Adkisson concerns Scientologists Matt and Kathy Feshbach. Adkisson’s article was the feature subject of a recent column Tony Ortega’s Underground Bunker. The community commentary was fascinating.

Essentially, the US Bankruptcy Court refused to allow the Fessbach’s to discharge $3.8 million in their Chapter 7 bankruptcy.

In her 40 page ruling, US Bankruptcy Judge Catherine McEwen cited both the Fessbach’s refusal to curb their lavish spending and large donations to their church (Scientology) as among the reasons for refusing to discharge their substantial tax debt via bankruptcy.

In September 2008, the Fessbach’s made an Offer in Compromise (OIC) to the IRS to settle their 2001 tax debt of $3.6 million for $120,000, this to be made in payments over 48 months. The IRS declined the Fessbach’s unreasonable offer to settle for pennies on the dollar of the amount owed.

Judge McEwen wrote:

Feshbach.1
The Fessbach’s made “in excess of $21 million in income” and yet sought to discharge $3.8 million in taxes owed. The court remarked that the Feshbach’s clearly had the money to pay their tax debt but did not do so. The Feshbach’s tried to claim their lucrative income as “phantom income” that they never really had. The court rejected their line of argument in its ruling:

US-v-Feshbach-Memo-on-Dischargeability

Note: Hover over the document with your pointer to get the control panel to appear.

The Bankruptcy Court’s ruling stands in stark contrast to the Feshbach’s 2011 declaration in which they represented themselves as veritable paupers:

Feshbach-Declaration.2011

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Keeping Up with Matt Feshbach.

Even during his Chapter 7 bankruptcy, Matt Feshbach was still promoting his “World Famous” Finance Seminar to his fellow Scientologists:


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In her 2017 ruling against the Feshbach’s, US Bankruptcy Court Judge Catherine Peek McEwen noted:

“…how does any portion of the Feshbachs’ half-million dollars-plus in charitable contributions aid them to repay their tax debt? If there’s an explanation, it wasn’t offered at trial. As a rule, it’s hard to imagine how giving money away would bolster an individual’s future income potential. And this case is no exception to that rule. The overwhelming majority of the Feshbachs’ charitable giving benefitted a church that happened to be one to which Mrs. Feshbach’s personal interests were directly tied. In fact, Mrs. Feshbach owned and operated her own mission, with the main purpose of “introduc[ing] people to what [her church’s religion] is.”Thus, it’s quite clear that there was no link at all between the hundreds of thousands of dollars that the Feshbachs donated to the church and Mr. Feshbach’s earnings, but rather, there was a direct link between the charitable spending and Mrs. Feshbach’s religious pursuits. The Court does not admonish the Feshbachs (or any other debtors) for supporting worthy charitable causes. However, “[i]f individuals choose to donate part of their income to charity, whether religious or secular, they must adjust their expenditures accordingly to live within the confines of their available income.”

Judge McEwen continued:

More to the point, the Feshbachs could have immediately reduced their tax debt by more than $1 million by simply canceling their personal vacations and giving up the rented house in Aspen. They could have saved a similar amount by dramatically reducing their unreasonable clothing allowance and foregoing charitable giving altogether. These are just a few of the available examples that prove the superficiality of their claimed inability to pay.

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Like Richie Acunto before them, Matt and Kathy Feshbach become bankrupt Scientologists. Richie Acunto’s $10 million dollar IAS trophy ignominiously wound up for sale on eBay. That money could have helped Acunto rescue his company Survival Insurance. See Tony Ortega’s excellent article The Scientologist who wouldn’t fly: The rise and fall of insurance mogul Richie Acunto. Likewise, the millions the Feshbach’s gave Scientology over the decades could have paid their income tax liability.

Matt Feshbach, the one time master of the trading world with his brothers and their “shorting against the box” strategy was ultimately financially ruined because he simply did not pay his income taxes when he had the money to do so. Feshbach claimed changes in the tax code were responsible but the court established that despite these changes Feshbach had the income to pay his tax bill.

The US Bankruptcy Court noted that the Feshbach’s could have paid their entire tax debt had they simply curbed their excessive and lavish spending on a luxury lifestyle. The Feshbach’s thought they could ultimately beat the IRS by going bankrupt. However, they lost that bet when the court found that the couple had, “willfully attempted to evade their tax debt within the meaning of 11 U.S.C. § 523(a)(1)(C).

Judge Catherine Peek McEwen will enter a separate final judgment in favor of the United States in this proceeding. Matt and Kathy Feshbach will have to pay the $3.8 million in back taxes they owe the IRS.

In the conclusion to her ruling, Judge Catherine Peek McEwen said something that both the Feshbach’s and the Church of Scientology itself should take heed of but never will:

Sometimes, as with the facts in this proceeding, it is tragically foolish to hold firm to a spend-money-to-make-money conviction. The Feshbachs made poor spending decisions, continually leading a life of excess in the face of serious, known financial obstacles. At all times, their primary concern should have been reducing their substantial tax debt. But as their immoderate spending choices show, they were far more focused on living in the lap of luxury. They would have been wise to heed the proverb which cautions that enough is better than too much. As it is, however, the Feshbachs’ misjudgment ultimately cost them complete relief. Having concluded that the Feshbachs willfully attempted to evade their tax debt within the meaning of 11 U.S.C. § 523(a)(1)(C), the Court rules that such debt is nondischargeable. Accordingly, the Court will enter a separate final judgment in favor of the United States in this proceeding.

“Enough is better than too much” is a lesson that the rapacious Church of Scientology will never learn. Wanting too much of everything — money, breaking up families, punishing people, using child labor and so many other things — is one of the main reasons why Scientology is collapsing.

Church of Scientology Hustling Donations in the Aftermath of Hurricane Harvey


As we reported in our previous post, The Church of Scientology has been caught red-handed in a social media fraud in which it used stock photos to pose as Scientologists. These fake Scientologists were then used to launch social media attacks on Leah Remini, Mike Rinder, A&E, A&E’s sponsors, and the courageous people who appear on Leah’s show Scientology and the Aftermath. This is a scandal and a disgrace for Scientology.

There is yet another Church of Scientology scam to cover today. For over a decade Scientology leader David Miscavige has claimed that the Scientology Volunteer Ministers formed the “largest independent relief force on Earth.” This has always been a lie and will always be a lie. However, Scientology still makes this claim:

The Scientology Volunteer Ministers program (VMs) was established by Scientology founder, L. Ron Hubbard, in 1976. Some 100,000 VMs in 120 nations helped more than 1.6 million people in the last year alone, making the Scientology Volunteer Ministers the largest independent relief organization on Earth.

Mike Rinder challenged this claim in an excellent post on Scientology’s Volunteer Ministers at his blog. Mike added this photo of the Scientology’s empty “Hurricane Harvey Relief Forces Headquarters” here in Los Angeles to support his criticisms. We see only two very bored members of the “largest independent relief force on Earth” seated on folding chairs nonchalantly texting:

IAS.HH.LA

I would add this: At the present time the IAS claims there are 130 Scientology Volunteer Ministers in the areas decimated by Hurricane Harvey. This is what the IAS posted on its website as of today August 31, 2017:

How does the “largest independent relief organization on Earth” only manage to get 130 people to the scene of a widespread catastrophe? Particularly when the IAS — Scientology’s slush fund with an estimated cash pile in excess of $1.5 billion — has made an emergency grant:

As brought to my attention by Collette James on Twitter, Scientology’s Volunteer Ministers posted a misleading tweet. This tweet used a photo of the Louisiana Rescue Group that was shot at by looters. The tweet and photo could mislead the public into thinking that Scientology’s Volunteer Ministers were somehow involved in this particular operation:

So to recap:

1. The Scientology Volunteer Ministers are not, and never were, the “largest independent relief organization on Earth.” And yet Scientology continues to lie about it and raise money based upon this false claim.

2. Scientology’s IAS has hoarded an estimated ~$1.5 billion in cash and does not need donations. Just a fraction of the the interest generated by the IAS cash hoard would pay for all 130 Volunteer Ministers that are allegedly  on the ground in the areas affected by Hurricane Harvey.

3. Scientology has been caught lying on social media in its attacks on Leah Remini’s show. Therefore, how do we know that Scientology is not lying about the number of Volunteer Ministers in the hurricane-stricken areas? That is the problem with Scientology’s habitual lying: Nothing it says can be taken at face value.

Please sign my petition at Change.org demanding that the IRS open an investigation into Scientology’s tax exemption.

4. I have seen photos of fewer than twenty VM’s in areas affected by Hurricane Harvey. There may be more faces to count; I just haven’t seen the photos. The IAS main page shows two photos in which only two VM’s are seen. The bald-headed VM appears in both photos; we see his back toward us in the photo (left) and his face in the other photo (right):

5. Because Scientology’s IAS has zero financial transparency we don’t know the size of the IAS “emergency grant.” It could be a very small and insignificant grant. I say this because, as a rule, Scientology Volunteer Ministers are expected to pay their own expenses to travel to and from the scene of a disaster. The IAS should publicly disclose on the record how much Scientology is actually spending to help. Absent disclosure, all IAS claims are meaningless. The IAS could have donated a token sum of $1,000 for all we know.

6. Scientology Volunteer Ministers largely function to get PR photos and videos so that Scientology can raise more money as they are doing now with Hurricane Harvey. Scientology is infamous for its disaster capitalism and has used everything from 911 to Whitney Houston’s death to raise money. Scientology VM’s literally walked over the backs of the dead at the Virginia Tech massacre to pitch a tent and get in front of cameras. See Radar’s story: First Photos: Scientologists Invade Virginia Tech Campus.

7. Here is a Scientology camera crew filming a staged VM event in Haiti:

8. While the Scientologists working on the ground are to be saluted for helping, they also know that their work is being done for “Church PR.” They will also be promoting Scientology at the scene of the disaster while giving Scientology touch assists.

9. Noticeably absent from Hurricane Harvey relief efforts is Scientology leader David Miscavige. Although Miscavige boasts about the VM’s he has never, to the best of my knowledge, actually volunteered at any disaster. This is odd considering that no less an eminence than former President Jimmy Carter routinely rolls up his sleeves and helps to build homes for Habitat for Humanity.

The Tale of Two Dueling Petitions

The numbers on the Change.Org petitions as of August 28, 2017 as of 12:15 AM PST tell the story:

6054 vs. 5304 signatures

Our petition is only 751 signatures away from passing Scientology’s petition:


But wait a minute! Scientology claims millions of members! And the Scientology’s “Stop Leah” petition began one week before our petition and had a 5,000+ signature head start. Our team began only one week ago and we are now closing fast on Scientology. Imagine it: Our team will soon  beat a $3 billion dollar Cult that has movie stars and a private Mafia.

See Tampa Bay Times coverage of the Dueling Petitions

My goal is hundreds of thousands or a million signatures for the IRS to open an investigation in Scientology’s tax exemption. Please spread the word. I think that everyone from Atheists to Evangelicals can agree that the Scientology Cult must be stripped of its IRS tax exemption.

Underground Bunker commenter Harpoona Frittata offered a trenchant analysis. The first two paragraphs must surely burn deep into David Miscavige’s deviant psyche:

The Church of Scientology Doesn’t Like My IRS Petition

In a Tampa Bay Times story published today, staff writer Tracey McManus covered the details of two dueling Change.org petitions. The first petition is mine and calls for the IRS to open an investigation in Scientology’s tax exemption. I am asking people to please read, sign, and share my petition. The petition and details are here.

IRS.Header

In the TBT article, Scientology spokesperson Karin Pouw attacked both myself and my petition. This attack occurred because I am going directly to the source of Scientology’s ability to ply its evil trade: Scientology’s ill-gotten 1993 IRS tax exemption.

If the Scientology Cult loses its tax exemption, then it is game over for this brutal, dishonest, and greedy business that masquerades as a religion. Scientology simply does not merit or deserve First Amendment religious protections.

The other petition was created by a young Scientologist; it calls for fascist censorship equivalent to book burning:


No one is stopping Scientology’s right of Free Speech and yet this Scientologist is calling for Leah Remini’s constitutional right of Free Speech to be revoked. This is typical Scientology hypocrisy. Scientology demands its rights and yet it insists that no one should ever have the right to criticize Scientology.

Scientology has published extensive and vicious “Fair Game” smear websites on Leah Remini, her guests, A&E, and companies that sponsor A&E’s programming. Scientology is using its Free Speech to engage in an unchecked frenzy of hysteria, hatred, lies, and paranoia. And yet Scientology wants the Free Speech of Leah Remini, her guests, and A&E taken away. This glaring double standard never occurs to Scientologists.

Scientology is even using fake bots paid for with tax exempt dollars to spam Twitter with hate tweets:

Cultus.Hystericus
The time is now for the IRS to open an investigation into Scientology’s undeserved, unmerited, and ill-gotten tax exemption.

Petition: We Demand the IRS Commissioner Begin an Investigation into Scientology’s Tax Exempt Status

Shocking But True: There are only three people in the entire US Government who can call for an investigation into Scientology’s tax exemption. I outlined this in my previous detailed article on the IRS. The cut-to-the-chase version for non-wonks was published by Tony Ortega.

Bottom Line: In order to maximize our collective power, we need to petition the IRS Commissioner John Koskinen to open an investigation into Scientology’s tax exemption. Accordingly, I am asking everyone to please sign and share my Change.Org Petition: We Demand the IRS Commissioner Begin an Investigation into Scientology’s Tax Exempt Status. You do not need to be a US citizen to sign the petition.

Leah Remini and Mike Rinder are doing an incredible job and we need to support their work. This petition is all about a call to action whereby we demand the IRS do its job and open an investigation into Scientology’s tax exemption.

Click here to go to the petition.

IRS Commissioner Mr. John Koskinen has the legal and statutory authority to open an investigation into the Church of Scientology’s 501(c)3 tax exemption. We demand Commissioner Koskinen open an investigation for the following reasons:

1. Scientology’s lack of corporate governance as it represented to the IRS in its 1023 application for tax exemption. David Miscavige is the managing agent of Scientology and has pierced all corporate veils. Scientology is the alter ego of David Miscavige and he wields unchallenged and dictatorial control.

2. Scientology’s refusal to grant refunds or repayments to dissatisfied members as it represented to the IRS in its 1023 application for tax exemption.

3. Scientology use of tax-exempt dollars to engage in harassing former members, critics, and journalists. One example is the use of tax-exempt dollars to create slanderous hate websites and videos against former members, critics, and journalists who speak out and expose Scientology’s inhumane practices.

4. Scientology’s internal cover-ups of child sexual abuse and rape as described by the very victims of the sexual abuse and rape.

5. Scientology use of tax-exempt dollars to hire private investigators to spy on, stalk, and harass former members, critics, and journalists who speak out and expose Scientology’s inhumane practices. This is Scientology’s malicious policy of Fair Game and it is funded by tax-exempt dollars.

6. Scientology’s abuse of US religious worker visas to recruit non-US citizens to work in the Sea Org. Once in the US, these non-Americans have their passports confiscated and are forced to work 100 hour work weeks for wages far below the poverty level. Sometimes these workers receive no pay at all for weeks or months on end.

7. Scientology’s use of onerous contracts of adhesion to strip Scientologists of their legal and civil rights.

8. Scientology’s use of child labor.

9. Scientology’s predatory fundraising practices and use of commission salespeople to raise money.

10. Scientology’s use of a system of brutal and inhumane gulags known as the RPF (Rehabilitation Project Force). The RPF is a thought reform camp used to crush dissent. People in the RPF are often imprisoned for years and are stripped of their civil and legal rights.

11. The forced breaking up of families by Scientology’s inhumane practice of Disconnection.