Requiem, Church of Scientology of California, 1954–2004

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Requiem, Church of Scientology of California, 1954–2004

Post by probity » Wed Feb 18, 2009 3:34 am

Requiem for the Church of Scientology of California, 1954 – 2004
J. Swift wrote:What was the fate of CSC?
Church of Scientology of California, 1954 – 2004

• The Church of Scientology of California (CSC) forms on 02/18/1954 to accept and adopt the aims, purposes, principles and creed of The Mother Church, “THE CHURCH OF AMERICAN SCIENCE”, of Camden, New Jersey. On 01/02/1957 the Internal Revenue Service exempts CSC from tax.

• The IRS revokes CSC tax-exempt status in 1967 for financial irregularities. CSC refuses to file for-profit income tax returns, instead CPA Greenberg prepares Form 990 returns (as if exempt) for years 1970 - 1972. On 03/28/1978 CSC files suit against the IRS in US Tax Court to challenge the IRS determination of tax deficiency based on filed CSC exempt returns for 1970 - 1972.

• New California corporations are formed to assimilate CSC authority in a reorganization attempt to sidestep mounting legal and tax threats: Church of Scientology International (CSI) 11/18/1981, Religious Technology Center (RTC) 01/01/1982, and Church of Spiritual Technology (CST) 05/28/1982.

• The Church of Scientology Flag Service Organization, Inc. (FSO) incorporates in Florida 05/19/1981. FSO takes over from CSC the Flag Land Base (Mecca of Scientology Gross Income) and severs CSC’s income source. In the UK, CSC assets are transferred to the Church of Scientology Religious Education College Incorporated (Australia). Bridge Publications 02/02/1981 (later Galaxy Press) perpetuate CSC financial fiction that LRH fiction income funds LRH research.

• After six years litigation the tax case between CSC and the IRS comes to a decision before the US Tax Court ("CSC vs. Commissioner of the IRS," No. 3352-78 ). On 09/24/1984 the court issues judgment against CSC, which CSC appeals. On 07/28/1987 the US Court of Appeals ruling in this case ("CSC vs. Commissioner of the IRS," No. 85-7324) upholds the 1984 decision:

“We affirm the Tax Court decision upholding the Commissioner's revocation of the Church of Scientology of California's tax exempt status on the ground that a portion of its income inured to the benefit of L. Ron Hubbard and others...”

• On 07/08/1988 the IRS (citing CSC bad acts) denies tax-exempt status to CST, RTC and CSI and demands for-profit income tax returns for all years since inception. The IRS assigns examiners full-time to audit CSC income tax for years 1967 - 1984. CSC consolidates income of both Scientology UK operations and the clandestine income siphoning to LRH via the Religious Research Foundation (RRF) during the Flagship Apollo era. CSI funds and directs the CSC tax audit legal defense. Weekly OSA INT statistics graph CSC tax liability as income and expense issues undergo examination.

• The US Supreme Court denies Scientologist charitable tax deductions in Hernandez v. Commissioner, 490 U.S. 680 (1989). CSI asserts inconsistent IRS administration in US Tax Court trial April 4-22, 1992 (Garrison v Commissioner).

• The IRS completes the CSC audit by 1993, a half billion dollars with penalty and interest. With both the final CSC tax assessment and the decision in Garrison on the horizon, the IRS abruptly pulls the plug on the CSC assessment, instead enters into the 10/01/1993 closing agreement with David Miscavige. The closing agreement is explicitly silent on the CSC income tax examination. The hot topic of CSC tax liability, which is for years the IRS primary attack target, mysteriously evaporates in a rumor cloud that David Miscavige sanctions covert operations against government officials. Here are the clear, simple facts:

• The closing agreement does not recognize CSC as tax exempt. CSI pays $12.5 million to the IRS, a suppressive (2½%) percentage of the half billion dollar CSC liability, or hardly enough to cover unreported Social Security taxes on CSC employee wages, wages which are never to appear on a Social Security earning statement despite CSI & IRS joint promises to rectify this omission.

• The State of California, long since agreed to abide by IRS findings, ultimately settles with its namesake for cents on the California tax dollar.

• Since 1993, CSC files for-profit tax returns ‘under protest’, vows to never give in only to dissolve quietly without sorrow in a 2002 to 2004 filing approved by California Attorney General Bill Lockyer (now California State Treasurer).

• CSI presently touts US tax exemption as proof of church status without mention that Hubbard’s mother church CSC is not US tax exempt but factually was considered by the IRS only a for-profit entity up to final dissolution in 2004.

• Inurement to the benefit of LRH is the undisclosed basis of Scientology.

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Post by J. Swift » Wed Feb 18, 2009 6:49 pm

Probity, thank you for this summary. If I read this correctly, Scientology essentially admitted that the old Church of Scientology of California (CSC) paid monies to L. Ron Hubbard that inured to his personal benefit. Thus, CSC engaged in inurement. Scientology paid the $12.5 million to settle this matter and then killed CSC quietly and without sorrow as you say.

I presume the monies were paid so that Scientology could sweep the inurement under the rug?

I presume that CSC was legally cremated and its ashes scattered within hours of its demise?

Repeat: To gain tax exemption, then, CoS did admit that monies from CSC inured to the personal benefit of one L. Ron Hubbard? The $12.5 million paid to the IRS was to pay taxes on monies that inured to LRH's personal benefit?

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Post by probity » Wed Feb 18, 2009 8:52 pm

The reason money changed hands between Scientology and the IRS was other than CSC Income Tax or LRH inurement. The IRS had long since established CSC/LRH inurement at the US Court of Appeals in 1987.

True, CSC had the Wollersheim albatross around it's neck, but inurement was the stake through the cold heart of CSC. It's not so much a Scientology admission CSC paid monies to L. Ron Hubbard, rather more an inescapable fact.

David Miscavige doesn't acknowledge it, Scientology doesn't acknowledge it, but the main reason to put down CSC is to distance organized Scientology from LRH inurement. CSC could never gain tax exemption because of it's record, thus was financially razed in a 'scorched earth' legal strategy.


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Post by J. Swift » Thu Feb 19, 2009 12:19 am

Probity, as I understand it from the record, LRH claimed that he spent twelve or thirteen million dollars on Scientology from out of his own pocket. He said this in a rare television interview and in "What Your Fees Buy". Wasn't CSC's argument that it paid Hubbard monies owed and that this was not inurement?

BTW, here is LRH's "What Your Fees Buy" letter for people who have never seen it. This is the fully annotated version from Caroline Letkeman's website: http://carolineletkeman.org/sp/index.ph ... Itemid=193

This version is important because Caroline's footnotes show changes to made to the LRH original.
Auditor: What Your Fees Buy
1970
Global Protection Racket
Auditor 51, © 1970 by L. Ron Hubbard pdf

WHAT YOUR FEES BUY
by L. Ron Hubbard

"I wonder if you've ever estimated how much it costs to launch a new subject into the world, keep it pure, keep it going right, make progress and defend it.

For that matter, what do you suppose it costs an organization to deliver an hour of processing?

I know that Dianetics and Scientology services should be free and I wish they were.

Personally I have tried to do my part in this. None of the researches of Dianetics and Scientology were ever actually paid for out of organizational fees. With my typewriter I paid for the research myself. Occasionally organizations were supposed to but they never did.

Independent of research costs, the 13½ million dollars that orgs owed me for services rendered, 10% (the usual author's royalties), lectures, loans, things paid out of my own pocket I never collected.

As even the royalties of the first book were given to orgs for their work, I didn't even make any thing out of that best seller. Its paperback is again a newsstand best seller in the U.S. but I don't collect those royalties either. Even today I draw less than an org staff member and they draw very little.1

So the fees you pay for service do not go to me.2

A Sea Org member draws about four pounds a week and his room and board. We run our ships and stations at a cost that would make a cost accountant disbelieve it. So not much of your fee goes to them even though they bear the full burden of management of pure services.3

Org staff members over the world work for so little that Execs occasionally get letters from their landladies demanding orgs increase their pay level so staff members can pay their rent.4

So not much of your fee goes to them.5

Occasionally some org or franchise goes on a big kick of high pay. We very soon pull the rug out from under that. So if your fee went that way for a brief period we corrected the outnesses fast as we frown on money-motivation like a thundercloud.6

Some fringe fellows know that if you had a complete monopoly on the only workable mental technology on the planet you could make billions. That's why they're on the "fringe". So we prevent your fee from going in that direction.7

Then where does your fee go?8
Since 1950, so-called "mental health" groups have fought to discredit and decrease the power of Dianetics and Scientology.

For 19 years, using their press control, government stooges and puppets, these psychiatric front groups have conducted a continuous suppressive covert operation against us.

Why? They feared that as our power increased they would lose their easy appropriations and fail in their plans for a 1984 world.

We were not even in their line of country - the insane. Yet such was their fear, they have spent untold sums to bring about our destruction.

We not only know who why and where with full documentation we also know their sordid intentions for the world. Some of your fee made the work to collect that evidence possible.9

Bad press, inquiries, bans, these are the surface you see. Those are their fingerprints.

Below that level it's a rough fight and has been for 19 years.

Our press consultants tell us we must never mention it as it "frightens the publics".10
We are in the weird position of being perhaps the only really effective Western security force. We wouldn't give five pence for the rest of them combined.11

If a definition of governing is maintaining an orderly peace in which business can be conducted, then there sure isn't any real government.

So a portion of your fee is spent on patching up the damage done, keeping going in spite of attacks and nullifying the actions against the West of a very choice lot of bad hats. If we didn't have the documentary evidence I wouldn't dare mention it.12

It costs money to bring cases up to US Supreme Court level as we have. The legal defense expenses we have in a dozen small countries is not small.

So a portion of your fee goes to keeping the subject available to you and to the world.13

We work very hard to keep technology being done well. It is nothing for us to put two people on a fast plane and send them half around the world to straighten up the Case Supervision and Auditing in an area so you can have confidence in the service you get.

It is routine to send the highest class people we have to handle "ARC Breaks of Long Duration" in the field or on admin lines or to see they get handled.

Your fee supports a long and complex set of communication lines by which tech and admin can be cared for rapidly.14

A portion of your fee just the other day began a survey of a backward country to introduce high speed educational processes to bring their people quickly from the stone age up to present time. The "Peace Corps" was also there on cushy government funds building houses for a big construction company at a nice profit. But we, unsupported, began the effective work actually needed there to help the people.15

A tiny bit of your fee neated up an area ruined for Americans by the American Navy.

Small parts of your fee heal up a lot of things over the world.16

But the biggest part of your fee stays right in your area. It is used to make training and processing and data available to the next fellow first by keeping the org there the second by letting him know about it and third by making as sure as possible that the training and processing he gets is standard and effective.17

Your fee keeps the nearest org alive and functioning and the environment safe.18

It is not easy to do, hit repeatedly as we are.

Gradually little by little we are taking the pressure off our orgs. Gradually surely and certainly the bad hats are losing their own power in the world.19

If we had the fantastic sums appropriated to "mental health" (and put largely in their own pockets or used to try to crush anyone else) we would make a lot lot lot more progress. As we wouldn't also have to fight the lies that money buys into press and government.

But we don't have appropriations. They are given only to those who deal in death, it seems.

So little by little, using the fees you give us for your service, your training and your processing, we create little by little areas of sanity.20

And these areas spread out, releasing and Clearing the community, if we continue to be alert and competent, perhaps those areas will meet one country, one continent to the next and we will have a cleaner, saner world.

Your fee is supporting and continuing the greatest hope that man has ever had and the orgs and people vital to its survival and increase.21

Your fee does what it takes to get the job done.22

Thank you."

Copyright (c) 1976 by L. Ron Hubbard. ALL RIGHTS RESERVED. THE CHURCH OF SCIENTOLOGY OF FLORIDA - a non-profit organization. Scientology is an Applied Religious Philosophy. Scientology ® and Dianetlcs ® are registered named. A Dianetlcs Publication. Dianetlcs is the trademark of L. Ron Hubbard in respect of his published works. pdf



Caroline Letkeman's footnotes:

1 The following text was omitted from the 1991 version of this article: "None of the researches of Dianetics and Scientology were ever actually paid for out of organizational fees. With my typewriter I paid for the research myself. Occasionally organizations were supposed to but they never did.

Independent of research costs, the 13½ million dollars that orgs owed me for services rendered, 10% (the usual author's royalties), lectures, loans, things paid out of my own pocket I never collected.

As even the royalties of the first book were given to orgs for their work, I didn't even make any thing out of that best seller. Its paperback is again a newsstand best seller in the U.S. but I don't collect those royalties either.

Even today I draw less than an org staff member and they draw very little."

2 This sentence is changed in the 1991 version to "The donations you make for service do not go to me."

3 The 1991 version of this paragraph reads "A Sea Org member draws only... We run our churches... that would make an accountant disbelieve it. ... So not much of your donation... they bear a full burden... "

4 The 1991 version reads "...their landladies demanding churches..."

5 The 1991 version reads "So not much of your donation goes to them."

6 The 1991 version reads "Occasionally some church or mission... So if your donation..."

7 The 1991 version reads "So we prevent your donation from going in that direction."

8 The 1976 version reads, "Then where does your fee go?" [not italicized.] The 1991 version reads "Then where does your donation go?"

9 The 1991 version reads "Some of your donation..."

10 The 1976 version reads "...publics."
The 1991 version reads "...public."

11 This paragraph is omitted from the 1991 version.

12 The 1991 version reads, "So a portion of your donation..."

13 The 1991 version reads, "So a portion of your donation..."

14 The 1991 version reads, "Your donation..."

15 The 1991 version reads, "A portion of your donation..."

16 The 1991 version reads, "Small parts of your donation..."

17 The 1991 version reads, "But the biggest part of your donation..."

18 The 1991 version reads, "Your donation keeps the [omits the word "nearest"] church alive..."

19 The 1991 version reads, "...taking the pressure off our churches."

20 The 1991 version reads, "...using [omits the word "the"] donations you give us for your service..."

21 The 1991 version reads, "Your donation..."

22 The 1991 version reads, "Your donation..."
Many thanks to Mark Plummer for original scans of The Auditor 51

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Post by probity » Fri Feb 20, 2009 4:15 am

Here we are, celebrating the 55th anniversary of CSC, which suffered an unlamented end in it's fiftieth year.

Thanks for the "What Your Fees Buy" rundown. Given that LRH was being paid a healthy salary by CSC as far back as 1967, WYFB is a flimsy attempt to deflect criticism of the cost of Scientology.
J. Swift wrote:Wasn't CSC's argument that it paid Hubbard monies owed and that this was not inurement?
That wasn't the argument at trial. It's been awhile since I read the decision in this case, but regardless of the arguments. this decision still stands. This is a decision, upheld on appeal, that Scientology income inured to the benefit of L. Ron Hubbard. The closing agreement does not alter this reality. The Scientology of CSC embodied the unfettered ego of L. Ron Hubbard.

The IRS magnanimously (or otherwise) gave Scientology a second chance to redeem itself in October, 1993. Scientology seized this opportunity to claim it had been in the right all along, or it had been infiltrated where it wasn't in the right. Unfurling the banner of "Tax Compliance", a five year probationary period was completed in 1999. Once free of tax probation, this time Scientology became not the unfettered ego of L. Ron Hubbard, but the unfettered ego of David Miscavige.

Encased in a tax-exempt vehicle, the inevitable compulsion is to test the boundaries of exemption, to try out all the angles for which one has angled. This was true of Hubbard, who bungled tax exempt law with his forays into bogus trusts, royalties and the like. In the fullness of time, David Miscavige will also find himself run aground heeding the sirens of tax exemption. Tax Exemption is an absolutely corrupting absolute power.

Had tax exemption come at the cost of the faith of the 'faithless' membership, Scientology certainly would have come a cropper. The most egregious error of the IRS was their failure to represent the membership of Scientology, to negotiate with the management of Scientology on behalf of the membership without recognition of the divergent interests of each group, without putting the dirty laundry of Scientology out for a healthy scrubbing.

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Post by J. Swift » Mon Nov 02, 2009 6:12 am

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Post by probity » Sat Dec 12, 2009 10:18 pm

Swift, the great Scientology expansion inflation of 2009 is swiftly coming to a close.

The Scientology hype of expansion touted today is the familiar fallout of failure. On the surface, any scientologist familiar with organizational statistics should be uncomfortable with these claims. Scientology unsubstantiated claims of expansion transcend mere statistical vagueness into the realm of utter non-definition. But the dissonance runs deeper.

Consider the favorite (and often the only) card that Scientology plays with the media: Expansion! Bigger than Ever! Fastest Growing! Look how Bob Adams runs this play in today's Australian media coverage of the debacle now unfolding down under:
AM, Australia's most informative morning current affairs program wrote:The full story…

Senior Scientologist says ‘no cover up’

ELIZABETH JACKSON: The international vice president of the Church of Scientology has responded to allegations that his church is a criminal organisation.

Senator Nick Xenophon used parliamentary privilege last month to declare that Scientology is not a religion but a criminal organisation which covers up offences and abuse by its members.

The Church of Scientology's vice president says the allegations have already been investigated.

Bronwyn Herbert reports.

BRONWYN HERBERT: Its status as a religion is fiercely contested, but the Church of Scientology is undisputedly one of the world's fastest growing groups, as Reverend Bob Adams explains

BOB ADAMS: From one church in 1954 to… we're in 165 nations now; we have 8,000 churches, missions and groups right across this fair earth of ours.

BRONWYN HERBERT: And that includes about a quarter of a million Australian members. But many of the church's former followers have raised serious allegations of abuse.

http://www.abc.net.au/am/content/2009/s2769823.htm
Bob’s proclamation, “From one church in 1954 to… we're in 165 nations now; we have 8,000 churches, missions and groups right across this fair earth of ours.” posesses what statistical significance? To which one church does Bob Adams refer? None other than the late and unlamented Church of Scientology of California, the 1954 mother church shuddered and shuttered into silence. The one once holy catholic and apostolic Church which begat Scientology, now shattered into 8,000 puzzle pieces of prophecy failure termed expansion!

In a world devoid of cognitive dissonance, Bob Adams would be heard to say “From one church in 1954, well within the grasp of our technology were held to be the aims of L. Ron Hubbard, first announced in 1950 to what he termed an ‘enturbulated’ world, those of a civilization without insanity, without criminals and without war, where the able can prosper, honest beings can have rights and where man is free to rise to greater heights. Regretfully, insanity, criminality and war within Scientology itself rendered that church defunct and those prophecies of L. Ron Hubbard are an unredeemable and utter failure.”

That Bob Adams won’t be heard saying this anytime soon is the prophecy by Festinger, Riecken and Schachter first published in 1956, When Prophecy Fails. Bob Adams's implicit message is Scientology is right, because it’s too big to be wrong. Akin to those institutions too big to fail, Scientology should be spiritually bailed out of its moral mire of contradiction by virtue of size alone. In his predicted cognitive dissonance, Bob plucks the pig’s ear of Scientology failure and touts it to the media as their silk purse of success. Fundamental to all other denials of cover up is the underlying cognitive dissonance which demands denial of the failure of Scientology itself.

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