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John J. Quinn
Eric L. Dobberteen
QUINN, KULLY AND MORROW
520 South Grand Avenue, 8th Floor
Los Angeles, CA 90071 (213) 622-0300

William T. Drescher
23679 Calabasas Road, Suite 338
Calabasas, CA 91302
(818) 591-0039

Earle C. Cooley
COOLEY, MANION, MOORE & JONES, P.C.
21 Custom House Street
Boston, MA 02110
(617) 542-3700

 

[stamped]
FILED
CLERK U.S. DISTRICTRICT COURT

AUG 12 1991

CENTRAL DISTRICT OF CALIFORNIA
BY [initialed] DEPUTY

 

 

Kendrick L. Moxon
BOWLES & MOXON
6255 Sunset Boulevard,
Suite 2000
Hollywood, CA 90028
(213) 661-4030
James H. Berry, Jr.
BERRY & CAHALAN
2049 Century Park East
Suite 2750 Las Angeles, CA 90067
(213) 284-2183

Attorneys for Plaintiff
CHURCH OF SCIENTOLOGY INTERNATIONAL

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

CHURCH OF SCIENTOLOGY INTERNATIONAL,

Plaintiff,

vs.

C. PHILLIP XANTHOS; ALAN
LIPKIN; MARCUS OWENS; MARVIN
FRIEDLANDER; S. ALLEN
WINBORNE; ROBERT BRAUER;
JOSEPH TEDESCO; CHARLES
RUMPH; RAYMOND JUCKSCH;
MELVYN YOUNG; CARL CORSI;
GREGORY ROTH;WILLIAM
CONNETT; KEITH ALAN KUHN;
CHARLES JEGLIKOWSKI; MELVIN
BLOUGH; RODERICK DARLING;
and DOES 1 - 200,

Defendants.


 

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No. 91 4301 SVW (TX)

COMPLAINT FOR DAMAGES FOR AND
INJUNCTIVE RELIEF FROM:

1. FOURTH AMENDMENT VIOLATIONS;
2. FIRST AMENDMENT VIOLATIONS;
3. DUE PROCESS VIOLATIONS UNDER
THE FIFTH AMENDMENT: AND;
4. EQUAL PROTECTION VIOLATIONS
UNDER THE FIFTH AMENDMENT

JURY TRIAL DEMANDED

 

 

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JURISDICTION AND VENUE

1. As this action seeks damages for violations of

the United States Constitution brought under the authority of

Bivens v. Six Unknown Accents of Federal Bureau of Narcotics,

403 U.S. 388 (1971), this Court has subject matter

jurisdiction pursuant to 28 U.S.C. § 1331.

2. Venue is proper in this Court pursuant to 28 U.S.C.

§ 1391(b) in that jurisdiction is not founded solely on

diversity of citizenship and the claims arose in this judicial

district. Venue is also proper in this Court pursuant-to 28

U.S.C. § 1391(e) in that this is a civil action in which all

the defendants are or were employees of a United States agency,

some of whom are residents of this judicial district, which is

the judicial district in which plaintiff resides and in which

the causes of action set forth arose.

PARTIES

3. Plaintiff Church of Scientology International ("the

Church") is a not for profit religious corporation organized

and existing under the laws of the State of California, with

its principal place of business in Los Angeles, California. In

accordance with the ecclesiastical policies of the Scientology

religion, plaintiff is the Mother Church of the Scientology

religion, an internationally recognized religion engaged solely

in spiritual, charitable, humanitarian and community-oriented

endeavors intended to enhance adherents' spiritual knowledge of

themselves and their Creator. The Scientology religion has

more than 8 million members and Scientology Churches,

Missions and groups exist in 90 nations around the world.

 

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4. Except for three who have retired from government

service since performing the acts hereinafter averred, the

defendants are, and at all relevant times were, employees of

the Internal Revenue Service ("IRS"). The matters averred in

this Complaint are largely drawn from information only recently

discovered by the Church in the course of Freedom of Information

Act ("FOIA") litigation.

5. As the conduct which gives rise to the Church's claims

of constitutional violations occurred within different divisions

and offices of the IRS, the defendants are grouped within their

respective divisions for the purposes of the following

identifying averments:

A. Los Angeles Criminal Investigation Division.

i. Defendant Philip Xanthos ("Xanthos") is,

and at all relevant times was, a Branch Chief of

the Los Angeles Criminal Investigation Division of

the IRS ("LA CID"). Upon information and belief,

Xanthos resides in this judicial district.

ii. Defendant Alan Lipkin ("Lipkin") is, and

at all relevant times was, a Group Manager within

LA CID. Upon information and belief, Lipkin

resides in this judicial district.

B. National Office Exempt Organizations.

i. Defendant Marcus Owens ("Owens") is

currently the Director of the IRS National

Office Exempt organizations ("EO") Technical

Division, and was, at all relevant times

an official of the EO Technical Division. Upon

 

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information and belief, Owens resides in the State

of Maryland.

ii. Defendant Marvin Friedlander

("Friedlander") is, and at all relevant times was,

an IRS Senior Conferee Reviewer in the EO

Technical Division. Upon information and belief,

Friedlander resides in the State of Maryland.

iii. Defendant S. Allen Winborne ("Winbourne")

was at all relevant times until approximately

1987 IRS Assistant Commissioner for Employee Plans

and Exempt Organizations. Upon information and belief,

Winborne resides in the State of Maryland.

iv. Defendant Robert Brauer ("Brauer") was

at all relevant times from approximately

1987 to and including approximately December, 1990, IRS

Assistant Commissioner for Employee Plans and Exempt

Organizations. Since in or about January, 1991,

Brauer has been the IRS District Director in

Pittsburgh, Pennsylvania. Upon information and

belief, Brauer resides in the Commonwealth of

Pennsylvania.

v. Defendant Joseph Tedesco ("Tedesco") was

at all relevant times until approximately 1987, Chief

of the National Office Exempt Organizations

Technical Division. Since in or about 1987,

Tedesco has been in retirement. Upon information

and:belief, Tedesco resides in the Commonwealth of

Virginia.

 

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vi. Defendant Charles Rumph ("Rumph") was

at all relevant times until approximately 1986,

an attorney in the Tax Litigation Division, Office of

Chief Counsel at the National Office. Although he did

not work in EO, plaintiff is informed and believes

that Rumph worked in,conjunction with the other EO

defendants in doing the acts hereinafter averred.

Since in or about 1986, Rumph has been in

retirement. Upon information and belief, Rumph

resides in the District of Columbia.

vii. Defendant Roderick Darling ("Darling")

is, and at all relevant times was, an IRS tax law

specialist in the EO Technical Division. Upon

information and belief, Darling resides in the

State of Maryland.

C. Los Angeles Exempt Organizations Division.

i. Defendant Raymond Jucksch ("Jucksch") is,

and at all relevant times was, a Group Manager

within the Los Angeles Exempt Organizations

Division of the IRS ("LA EO"). Upon information

and belief, Jucksch resides in this judicial

district.

ii. Defendant Melvyn Young ("Young") is, and

at all relevant times was, a Revenue Agent within

LA EO. Upon information and belief, Young resides

in this judicial district.

iii. Defendant Carl Corsi ("Corsi") was at

all relevant times to and including

 

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July, 1989, a Revenue Agent within LA EO.

Since in or about July, 1989, Corsi has been

in retirement. Upon information and belief, Corsi

resides in this judicial district.

D. Los Angeles District Counsel Office.

i. Defendant Charles Jeglikowski

("Jeglikowski") is, and at all relevant times was,

an attorney within the IRS District Counsel's

office located in Thousand Oaks, California. Upon

information and belief, Jeglikowski resides in

this judicial district.

ii. Defendant Gregory Roth ("Roth") is, and

at all relevant times was, an attorney within the

IRS District Counsel's office located in Thousand

Oaks, California. Upon information and belief,

Roth resides in this judicial district.

E. Los Angeles District Office.

i. Defendant William Connett ("Connett")

was at all relevant times to and including

January, 1986, District Director of the Los

Angeles District Office of the IRS. Since in or

about 1987, Connett has been the IRS

Representative in Paris, France, where, on

information and belief, he now resides.

F. IRS National Office Internal Security

Division.

i. Defendant Keith Alan Kuhn ("Kahn") is,

and at all relevant times was, Chief of the

 

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Investigations Branch of the Internal Security

Division of the Office of the Chief Inspector of

the IRS. Upon information and belief, Kuhn

resides either in the State of Maryland or the

Commonwealth of Virginia.

G. St. Petersburg, Florida Exempt Organizations

Division.

i. Defendant Melvin Blough ("Blough") is, and

at all relevant times was, a Revenue Agent within

the Exempt Organizations Division of the St.

Petersburg, Florida office of the IRS. Upon

information and belief, Blough resides in the

state of Florida.

6. Upon information and belief, IRS employees other than

those named as defendants in this action performed acts which

are unlawful and unconstitutional in connection with the facts

set forth in this complaint. The Church will seek leave of

Court to amend this complaint when the IRS employees not named

as defendants, but whose conduct warrants their inclusion as

defendants in this action, are identified.

NATURE OF PLAINTIFF'S CLAIMS

7. By this action, the Church seeks damages for

violations of its First, Fourth, and Fifth Amendment rights

arising from the conduct of the defendants and others within

the Internal Revenue Service. While this action focuses on

recent events, it is the culmination of three decades of IRS

coercion in violation of the free Exercise Clause of the First

Amendment, discriminatory treatment in violation of the

 

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Establishment Clause of the First Amendment and the Equal

Protection component of Due Process under the Fifth Amendment,

as well as the denial of procedural Due Process rights in

violation of the Fifth Amendment, and actions in violation

of the Church's Fourth Amendment rights.

8. Although the IRS has withheld the vast majority of

documents requested by Churches of Scientology under the FOIA,

the limited FOIA information recently discovered by the Church

through the production of documents and testimony demonstrates

the actionable conduct hereinafter averred. This action,

moreover, does not arise in a vacuum. It is an outgrowth of

IRS conduct that includes:

a. Efforts by the IRS' Chief Counsel's

office to persuade at least one municipal

authority to find "local statutes and ordinances

available as tools to curtail or close down"

Scientology Churches;

b. Employment of "plants" to infiltrate

Scientology Churches to obtain copies of Church

records;

c. Recommendations of the IRS Chief Counsel

that "defining church in regulations is one method

to attack Scientology," which recommendation was

followed by the formulation of such a definition

in General Counsel Memorandum 36078 entitled

"Church of Scientology" (later promulgated as

Revenue Ruling 76-415);

d. Targeting the Church of Scientology as

 

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"subversive," and conducting non-tax-related

surveillance and intelligence gathering that a

United States Senate Subcommittee would later find

was "used to stigmatize, to set a group of

individuals and organizations apart as somehow

inherently suspect .:." and which a Senate Select

Committee found to be "an effort to employ tax

weapons for essentially nontax purposes";

e. IRS documents which refer to the

Scientology religion as "religious bunco" and a

"grab-bag of philosophical voodooism," as well as

IRS tape recordings of witness interviews in which

defendants Young, Corsi and Roth referred to

Scientologists as "crazy devotees," characterized

Scientology's religious services as a "dog and

pony show," compared adherence to the Scientology

faith to drug addiction, and called the religion

itself a "facade" and

f. Encouragement given by Corsi, Young and Roth

to individuals pursuing civil cases involving claims for

damages against plaintiff and other Scientology Churches.

9. The claims for relief asserted in this action arise

from the demise of a two-year criminal investigation of

plaintiff, other Scientology Churches, and individual

Scientologists that produced no indictments, no charges, and

nothing more than the refusal of the Department of Justice to

take any action with regard to that lengthy investigation. In

the aftermath of that investigatory debacle, defendants, as is

 

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more fully averred later in this complaint, embarked upon a

course of conduct which has included:

a. EO employees demanding documents from

plaintiff and other Scientology Churches

ostensibly to evaluate applications for exemption

under 26 U.S.C. § 501(c)(3), while in reality

making such demands so that those documents could

be turned over to IRS criminal investigators in

violation of the Fourth Amendment;

b. Inauguration of nationally and

locally coordinated campaigns to single out

plaintiff and other Churches of Scientology as

targets for tax inquiries because they were

Churches of Scientology, and to use such inquiries

as a means to generate otherwise unavailable tax

liabilities such as under the Federal Insurance

Contribution Act and the Federal Unemployment Tax

Act in violation of the Establishment and Free

Exercise Clauses of the First Amendment and the

Equal Protection component of the Due Process

Clause of the Fifth Amendment; and

c. Embarking on a nationally and

locally coordinated campaign of collections

activity which arbitrarily and capriciously

freezes and attempts to freeze bank accounts of

plaintiff and other Scientology Churches for

alleged tax obligation of still other Scientology

Churches without notice and without any

 

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opportunity to be heard before seizing plaintiff's

property in violation of the Due Process Clause of

the Fifth Amendment.

FIRST CLAIM FOR RELIEF

(For First, Fourth and Fifth Amendment Violations by

Defendants Xanthos, Lipkin, Owens, Friedlander,

Darling, Winborne, Tedesco, Rumph, Jucksch)

10. The Church repeats and realleges each and every

averment set forth in paragraphs 1 through 9, inclusive.

11. The Scientology religion has been in existence for

nearly four decades. From its earliest days, it has been a

target of IRS scrutiny and hostility. After years of

controversy and litigation, the IRS agreed with various

Churches of Scientology to conduct an examination of a

representative church and issue an exemption ruling based upon

that examination for the representative church and all others

similarly situated.

12. The IRS, for 25 consecutive days in March and April

1975, conducted an exhaustive examination of the Church of

Scientology of Hawaii ("the Hawaii Church"), addressing every

aspect of that church's operations, including Scientology

beliefs and practices. As a result of that examination, Church

of Scientology of Hawaii and twelve other Scientology churches

were granted exemptions under 26 U.S.C. § 501(c)(3).

13. The grant of exemption to the Hawaii Church followed

an unsuccessful attempt by the IRS to employ a litigation tactic

appropriately described as "harass and moot" to avoid judicial

adjudication of the exemption issue. When the Hawaii Church

 

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filed suit contesting the IRS' 1969 denial of exemption, the

IRS tendered a refund of the taxes to avoid an unfavorable

court decision. When the Church refused the refund and pressed

for a judicial determination, the IRS moved to dismiss claiming

that the issue had been rendered moot. After the Ninth Circuit

rejected this litigation ploy, the IRS settled the case and

later granted exemption.. The IRS, however, continued to resist

applications for exemption by Scientology churches despite the

fact that its only thorough, comprehensive examination of any

church had resulted, begrudgingly, in more than a dozen

exemptions.

14. Exemption applications for plaintiff Church of

Scientology International, Church of Spiritual Technology and

Religion Technology Center were filed with the Internal Revenue

Service in 1983. These exemption applications were forwarded

to the IRS National Office by the local offices where they were

filed. Responsibility for the exemption applications resided

with defendants Owens, Friedlander, and Tedesco of the

National Office EO working in conjunction with defendant Rumph

of the Office of the Chief Counsel. EO requested additional

information of the filing entities. Discussions between Church

counsel and the IRS personnel processing the applications began

with regard to the IRS' requests for additional information,

and at the request of those defendants the applicants provided

further information to the IRS based on the belief that the

newly formed churches all qualified for exemption and that the

IRS was acting in good faith in the negotiations. EO letter

requests to plaintiff and the other applicants dated July 30

 

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and October 5, 1984 and January 18 and April 22, 1985 requested

the applicants comment on specific allegations made by LA CID

informants that were at the heart of the ongoing CID

investigation. FOIA records and discovery in FOIA litigation

reveal a continuous flow of information from EO to LA CID.

15. It is now clear, however, that defendants and the IRS

were not dealing in good faith, but rather, were merely asking

for and receiving voluminous financial and other records from

plaintiff and the other churches without any intention of ever

granting any section 501(c)(3) exemptions and as an unlawful

means of obtaining data for LA CID. The use of the exemption

process to obtain information for a criminal investigation

deprived plaintiff of its rights guaranteed by the First,

Fourth and Fifth Amendments to the United States Constitution,

and violated specific IRS rules designed to protect those

rights. The Internal Revenue Manual contains specific

provisions which require EO to "immediately suspend" an inquiry

if EO learns that "an assigned case involves a taxpayer who is

the subject of a criminal investigation." The EO agents

responsible for plaintiff's exemption application did not

suspend the civil proceeding, but instead continued to use it

as a means for gathering information for CID.

16. Between 1984 and 1986, LA CID conducted an extensive

criminal investigation of plaintiff, other Scientology

churches, and individual Scientologists, under the auspices of

defendant Connett, the then-District Director, defendant

Xanthos, the LA CID Branch Chief and defendant Lipkin, the

assigned LA CID Croup Manager. That investigation included the

 

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use of mail covers, paid informants, summonses to dozens of

financial institutions and church members, and infiltration of

Scientology's ecclesiastical hierarchy. The infiltration of

the Church was planned as an undercover operation by the

LA CID along with former Church member Gerald Armstrong, who

planned to seed church files with forged documents which the

IRS could then seize in a raid. The CID actually planned to

assist Armstrong in taking over the Church of Scientology

hierarchy which would then turn over all Church documents to

the IRS for their investigation. The CID further coordinated

this plan with the Ontario Provincial Police in Canada, through

direct contacts and exchange of information, hoping that

through simultaneous assaults the "momentum of . . . charges

will cause [Scientology] to collapse." Thus, the documents

being channelled from EO to CID were being used for the

unlawful purpose of forwarding criminal investigations in both

the United States and in Canada.

17. That criminal investigation, the results of which

were ultimately rejected in full by the Department of Justice,

was doomed from its inception because it was based upon a

faulty premise -- that plaintiff and the other Churches were

engaging in criminal conduct (conspiracy to interfere with the

collection of taxes) by the mere fact that they had applied for

section 501(c)(3) exemptions. In other words, at the time that

EO was allegedly processing the exemption applications, the IRS

had already made a determination that the exemption

applications were criminal instruments because the applying

churches had already been prejudged as non-exempt.

 

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18. The IRS personnel charged with responsibility for the

exemption applications -- defendant Friedlander, and his

superiors Owens, Tedesco and Winborne -- were fully aware of

the ongoing criminal investigation, yet despite the fact that

the Fourth and Fifth Amendment and IRS written procedures

mandate that all civil IRS proceedings concerning a given tax

period be suspended during the time in which a criminal

investigation of that same period is in progress, EO personnel

continued to request and receive information and documents

from plaintiff and the other Churches and delivered such

information and documents to defendants Xanthos, Lipkin and the

other LA CID personnel conducting the criminal investigation.

19. In late July 1984, the Church learned through the

media that LA CID had initiated a criminal investigation

relating to Scientology organizations and individuals. Leaks

to the media regarding the CID investigation had already

resulted in unfavorable and harmful media reports, prior to the

time when the organizations and individuals became aware that

they were under investigation. In response to one such

article, Church counsel contacted defendant Connett who

confirmed that an investigation of Scientology's founder, L.

Ron Hubbard, and another Scientologist was in progress, but who

expressly misrepresented to counsel that the criminal

investigation was separate and distinct from the ongoing

exemption application process, and encouraged the Church to

continue the application process. Connett,, with the assent

of defendants Friedlander and Winborne, told the Church's

attorneys that the CID investigation did not directly involve

 

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any of the applicants and might not lead to charges being

filed. He stated that in that case, it would not make sense to

drop the existing team which was developing the exemption

4 applications. The truth of the matter was that defendants

Friedlander and Tedesco were turning material over to LA CID,

either directly, through Connett, or through the Los Angeles

Exempt Organizations Division (which was staffed by defendants

Jucksch, Corsi, and Young).

20. Connect did not merely misrepresent the status of the

CID investigation to the Church. He also set into motion the

coordination between the National Office employees processing

the exemption applications, and the agents of the CID. In

January 1985, Friedlander contacted Xanthos and his superior,

CID Chief Ronald Saranow, at the suggestion of defendant

Connett for the purpose of obtaining information from CID's

files. Friedlander informed defendant Tedesco of his plan to

travel to Los Angeles along with defendant Rumph, for the

purpose of reviewing CID's materials as well as CID's "draft

prosecution letter." In order to prevent plaintiff and the

other churches from learning of the CID investigation,

Friedlander proposed that EO and CID could mutually coordinate

when or if any CID material would be included in any

applicant's administrative file to preclude premature

disclosure. Tedesco approved of the trip, as did defendant

Winborne, who stated they should leave when ready.

21. In approximately February 1985, during the course of

EO's information gathering on'behalf of LA CID, defendants

Friedlander and Rumph traveled to Los Angeles and met with

 

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defendant Lipkin to acquire information about the criminal

investigation and to learn of the criminal investigators' areas

of interest so that EO and LA CID might work together more

efficiently. At that time, Friedlander was provided with a

draft copy of a "Special Agent's Report" ("SAR") prepared by the

LA CID defendants, Xanthos and Lipkin, requesting prosecution of

various Scientology Churches, entities, members and their

counsel, and setting forth the theories of prosecution.

Friedlander thereafter sought information from plaintiff and the

other applicants relating to areas addressed in the draft SAR,

representing that the information was necessary for EO's

evaluations of the pending exemption applications. The

information requested by Friedlander was supplied to EO, and

thereafter forwarded by EO to LA CID to assist in the criminal

investigation. Friedlander kept defendants Owens, Tedesco and

Winborne informed regarding the provision of information by EO

to LA CID. Moreover, Friedlander, knowing that he should have

suspended the EO examination in light of the pending CID

investigation, consulted agents of LA CID as well as Tedesco,

Winborne and others concerning the requirement of suspending

the EO proceeding. Friedlander was specifically directed to

continue the exemption process, and he did so.

22. Following Friedlander's return from viewing CID's

files in Los Angeles, EO employee Roderick Darling communicated

with Friedlander regarding the use of the CID materials.

Darling suggested that EO could pose questions to the Church

based on certain documents in CID's files, since it would not

involve reliance on any testimony solicited by CID and,

 

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therefore, would not expose the IRS to the charge that the IRS

EO function had allied itself with CID or was tainted by CID's

conspiracy theories. Darling also informed Friedlander that

CID hoped that EO would somehow be able to extract information

from the Church, and that EO would be able to turn up something

which CID had not been able to. In March 1985, defendants

Lipkin and Connett attended a meeting at the National Office to

discuss the pending exemption applications with defendants

Friedlander, Winborne, Rumph and Tedesco. They discussed the

possible timing of denials of exemption to coincide with the

CID's prosecution. Connett also assured the EO defendants that

CID would provide them with the Special Agent's Report when it

was completed.

23. Numerous instances of the provision of information

from defendants responsible for EO functions to defendants

responsible for LA CID functions are presently known to

plaintiff through FOIA requests, FOIA litigation and discovery

in such actions, and numerous other instances of such unlawful

acts are believed to exist but have not.yet been discovered by

plaintiff. The IRS has even attempted to thwart such Freedom

of Information Act discoveries by improperly withholding

documents and portions thereof concerning the unlawful

collusion between EO and CID which should have been released.

The IRS has improperly asserted that records revealing the

collusion were not discloseable based on the IRS' "deliberative

process privilege," and thereby seeking to keep its unlawful

acts from coming to view.

24. To prevent the revelation of the unlawful and

 

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unconstitutional collusion between EO and LA CID, Friedlander

destroyed copies of memoranda and notes taken during his visits

to LA CID, and on information and belief, notes of subsequent

telephone communications with Lipkin and others. Friedlander

also destroyed documents he requested from LA CID because he did

not want to place them in the application files and thereby be

required to supply them to the applicant churches. Darling

also supplied documents obtained during EO's examination to LA

CID for its use in its criminal investigation and received a

copy of the draft SAR.

25. The initial conduit for transmitting information and

documents from the Church through the EO in Washington, D.C.

(defendants Owens, Tedesco, Rumph, Darling and Friedlander) to

LA CID (defendants Xanthos and Lipkin, under the supervision of

defendant Connett) was the Los Angeles Exempt Organizations

Division (defendants Jucksch, Corsi and Young). At some time

during the concurrent EO examination and LA CID criminal

investigation, defendant Connett agreed to assume personal

responsibility for transmitting the material from EO to LA CID.

26. Plaintiff and the other applicant Churches were

unaware that EO and LA CID were colluding with one another

behind the scenes, and continued to cooperate with EO personnel

in conducting the examinations which the IRS represented were

being conducted in good faith. Any potential suspicions by

plaintiff or the other Churches that the information gathering

may not have been completely for civil purposes, were allayed by

the receipt of a letter to CST dated July 26, 1985, written by

Friedlander and Darling, in which they stated: "We assure you

 

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that our questions (in previous correspondence) have heretofore

been solely directed at developing the applications to the

point where your purpose and activities have been sufficiently

described in accordance with the standards for issuing rulings

...." These representations were fraudulent, as the SAR,

written 2 months earlier, unequivocally called for denial of

tax exemption.

27. Notwithstanding that representation, EO continued to

gather information for use by LA CID. A copy of the SAR

obtained in FOIA litigation makes it clear that the purpose of

the defendants who participated in the EO - LA CID collusion was

for defendants to combine their efforts to create "another round

of denial of exempt status," a circumstance which the SAR states

was intended to cause "a final halt to" and "the ultimate

disintegration of" the Scientology religion.

28. In September of 1985, plaintiff and the other

applicants learned that LA CID had forwarded a recommendation

for criminal prosecution to the IRS LA District Counsel's

office, and that at least RTC and CST were named as targets of

the investigation. On information and belief, plaintiff was

also a target of the criminal investigation. By December 1985,

the District Counsel's office had concluded that the SAR did

not warrant immediate prosecution and forwarded the matter to

the Justice Department with a request that an investigative

grand jury be convened.

29. The request for a grand jury coincided with the

January 7, 1986 issuance of letters by the IRS National Office

proposing the denial of exempt status to plaintiff, RTC and

 

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CST. Defendant Friedlander made the decision to issue those

letters at that time. At the same time, January of 1986,

defendants Jucksch, Corsi and Young, on behalf of the IRS' LA

Exempt Organizations Division, prepared to launch a third prong

of attack (to coincide with the grand jury request and the

proposed exempt status denials) in the form of examinations

conducted by LA EO. Those examinations were an outgrowth of

the stalled LA CID investigation, and LA EO defendant Corsi had

held a series of meetings during the course of the criminal

investigation with LA CID defendant Xanthos.

30. The three prongs of attack which defendants had

coordinated to begin'in January 1986 were all delayed, first,

because the Justice Department did not convene a grand jury

and, second, because plaintiff, RTC and CST submitted an

approximately 500-page protest of the proposed exemption

denials.

31. By October 1986, LA CID's criminal investigation of

the various Scientology Churches and individuals was

moribund, and since the Justice Department had refused to

pursue the matter before a grand jury, the case was about to be

officially closed. By that time, the protests to the proposed

denial of exempt status had bogged down the efforts of the EO

defendants. In October 1986, with the investigation about to

close, agents of LA CID attempted to utilize the news media to

revive the investigation. The October 1986 issue of "Forbes"

magazine contained an article by writer Richard Behar which

falsely stated that the CID investigation was "gathering

momentum." On information and belief, these and other

 

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allegations which appeared in the Forbes article were "leaked"

to Behar by defendants Lipkin with the knowledge and consent

of defendant Xanthos to encourage the Department of Justice to

more seriously consider the allegations set forth in the

Special Agents Report. Indeed, Behar openly applauded the

SAR's stated goal - the "ultimate disintegration" of the

Church - in a recent Time magazine article. Defendant Owens,

in turn, was quoted by Behar in the recent article, stating

that there have been thousands of IRS agents involved in Church

related tax matters for years. The IRS also apparently

provided Behar with information concerning the Church's FOIA

cases, as Behar was able to report on the number of such

matters filed. Thus, the IRS' pattern of utilizing media to

flank its actions against the Church continues to the present.

32. In November 1986, the Department of Justice rejected

the request made by LA CID through LA District Counsel to

convene a grand jury to continue the criminal investigation.

The LA CID defendants, however, remained undaunted, and further

sought to exploit their collusive connection to the EO and the

LA EO defendants. In that regard:

a. On or before December 16, 1986, defendant

Lipkin of LA CID met with defendant Corsi of LA EO

to arrange for a meeting between Lipkin and

Corsi's Group Manager, defendant Jucksch. At that

December meeting, Lipkin discussed the LA CID

files on the Church with Corsi and explained that

defendant Friedlander of National Office EO had

reviewed those files

 

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b. Defendants Lipkin, Corsi, and Jucksch met

on January 5, 1987 to coordinate further actions

with respect to plaintiff and other Scientology

Churches;

c. In conjunction with National Office EO,

LA CID and LA EO planned, coordinated, and

implemented a plan to audit fourteen Churches of

Scientology and two related trusts, all already

exempt: and

d. LA District employees were invited to the

National Office to review the data submitted by

plaintiff, CST and RTC during the exemption

application process.

Plaintiff and the other applicants, unaware of the ongoing

collusion among the EO, LA EO, and LA CID defendants, continued

to negotiate with EO to attain rulings of exempt status under 26

U.S.C. § 501(c)(3). Those negotiations continued throughout

1987.

33. As a result of the conduct of the defendants, and

each of them, plaintiff has been coerced into diverting

resources and attention away from the pursuit of its religious

beliefs in order to defend itself against defendants actions.

Plaintiff also has been burdened in the free exercise of its

religious beliefs by the intrusion of defendants into its

records practices, beliefs and ecclesiastical structure and

policies by the defendants as is hereinabove averred. Such

coercion and burden each constitutes a violation of the, Free

Exercise Clause of the First Amendment to the United States

 

 

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Constitution.

34. The collusion between the EO defendants, the LA EO

defendants, and the LA CID defendants by which plaintiff was

misled to believe that documents sought by defendants were for

the purpose of a good faith exemption examination (rather than

a sham exemption examination) when in fact such documents were

being funnelled directly to criminal investigators, constitutes

a violation of the Fourth Amendment to the United States

Constitution.

35. The defendants, and each of them, by their conduct

alleged herein, have singled out plaintiff for invidious

discrimination in the application of the laws of the United

States on the basis of plaintiff's religious affiliation, in

violation of the Equal Protection component of the Due Process

Clause of the Fifth Amendment to the United States Constitution.

36. The conduct of the defendants, and each of them, has

been arbitrary and capricious, and has resulted in the

deprivation of plaintiff's property. Such conduct, motivated

by religiously rooted bias and prejudice, is a violation of the

Due Process Clause of the Fifth Amendment to the United States

Constitution.

37. Plaintiff has been damaged and continues to be

damaged thereby in an amount to be proven at trial. That

amount is not presently capable of precise calculation but

is believed to be in excess of $20,792,850 which represents

direct expenditures by plaintiff. Plaintiff has also suffered

consequential and resulting damages in an amount to be proven

at trial, but which is in an amount in excess of $100 million.

 

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SECOND CLAIM FOR RELIEF

(For First and Fifth Amendment Violations by All Defendants)

38. The Church repeats and realleges each and every

averment set forth in paragraphs 1 through 35, inclusive.

39. On or about December 4, 1987, defendant Friedlander

informed Church representatives that the IRS insisted upon a

"limited" review of the financial records of plaintiff RTC,

and CST for 1986, to be conducted by the Los Angeles District

Office, for the purpose of verifying the integrity of their

records and to rule out the existence of any private inurement,

the only remaining potentially disqualifying factor. In early

1988, defendants Friedlander and Brauer assured plaintiff of

favorable exemption determinations as long as the limited

review did not uncover inurement or an inadequate accounting

system.

40. Those representations were false. Documents released

by the IRS in later FOIA litigation included drafts of final

denial letters for plaintiff, RTC and CST written by

Friedlander and Darling in January of 1988, at the very time

when defendants Brauer and Friedlander were representing to

Church counsel that exemption was imminent. In fact, the

representations were no more than a ploy to entice plaintiff and

the other Scientology Churches to continue turning over

detailed information to the IRS in violation of the Church's

civil and constitutional rights.

41. On March 17, 1988, the National office provided

plaintiff, RTC and CST with new letters of assurance stating

that the IRS was prepared to conduct a review so that "we may

 

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complete favorable consideration" of the exemption

applications. The letters further stated that the purpose of

the review was to "determine the integrity of your financial

and accounting systems" and "verify that no part of your net

earnings inures to the benefit of any private shareholder or

individual and that there is no other disqualifying activity."

Each Church executed its letter of assurance, permitting the

extremely unusual process of an on-site document review of

plaintiff's records to proceed.

42. Extensive, on-site reviews began, starting with CST,

in March of 1988. Despite the initial statement by Friedlander

that the review would be limited, the Los Angeles office

initially assigned four full-time agents to the review, and

after eight weeks, another four full-time agents were added.

This staffing represented 48 personnel weeks or roughly one

year of IRS time. Friedlander and his superior, defendant

Owens, testified that these examinations were the "most

sweeping" examinations these officials had witnessed, "far

exceeding" any they had previously experienced, and that the

volume of information provided was "truly record-breaking."

43. The examination of CST was completed on June 2, 1988.

At that time, the IRS Branch Chief responsible for the review

stated that the agents had found nothing to show inurement and

affirmed that, as to CST, "we have no concerns at this time."

These statements confirm the findings of a memorandum written by

defendant Friedlander in November 1987 which stated that private

benefit ceased to be an issue following the death of L. Ron

Hubbard in January 1986. Following the completion. of the

 

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examination fo CST, the IRS Los Angeles office began its review

of RTC, which was completed in June 1988 -- again with no

concerns raised by the agents.

44. On June 22, 1988, the Church discovered that in May

1988, defendants Corsi, Young and Roth secretly interviewed two

disaffected Scientologists, Richard and Vicki Aznaran, who were

suing CSI and other Scientology churches. Prior to leaving the

Scientology faith in 1987, Vicki Aznaran had served as one of

RTC's officers. These defendants had engaged in deceitful

conduct designed to prevent the Churches from discovering that

the IRS investigation was actually proceeding on two tracks:

one known to the Churches, which was based ostensibly on good

faith cooperation between the churches and the IRS, and the

other which was covert and designed to undermine the progress

the Churches believed had been made towards the granting of

exempt status. The discovery of this conduct raised serious

concerns about whether the IRS was proceeding in good faith and

in accordance with the March 17, 1988 agreement. The Churches

immediately sought a meeting with the IRS to discuss their

concerns.

45. It was later revealed that defendant Lipkin of the

CID was instrumental in arranging the interview of the Aznarans

by the EO agents, thus demonstrating the continuing ties

between EO and CID. Plaintiff, RTC and CST were also not aware

at the time that the two senior LA EO agents in the

examination, defendants Young and Corsi, had met several times

with LA CID during the review, that defendant Lipkin had

briefed all of the agents involved in conducting the review,

 

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and that defendants Corsi and Young had by this time received

and reviewed the Special Agent's Report. Thus, CID collusion

with LA EO did not end in 1985 when IRS District Counsel

rejected CID's request for prosecution, nor in 1986 when the

Justice Department refused to convene a grand jury.

46. During their interview of the Aznarans, defendants

Corsi, Young and Roth openly displayed their animus toward the

Church and the Scientology religion. The agents referred to

Church religious services as a "dog and pony show", and

referred to members of the Church as "crazy devotees".

Defendant Young actually encouraged the Aznarans to "take a

stand" against the Church. Defendant Roth compared the

Scientology religion to drug addiction. These actions violate

Internal Revenue Service policies which require an employee to

maintain "strict impartiality" between the taxpayer and the

government. These agents, who openly denigrated the

Scientology religion, should have been removed from any

examinations of Scientology churches under The Internal Revenue

Manual, Handbook of the Rules of Conduct which indicates that

an agent should be removed if his actions could lead others

reasonably to question the employee's impartiality. I.R.M.

0735.1, Handbook of Employee Responsibilities and Conduct

§ 232.21, MT 0735.1-17 (November 26, 1986).

47. On June 22, 1988, plaintiff contacted IRS

representatives from the Los Angeles office and asked why the

the summonses had been issued to the Aznarans. The IRS refused

to discuss the interview or confirm that it had taken place.

Church counsel informed the IRS that the document review was

 

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accordingly being suspended until the matter was resolved with

the National office. On June 24, 1988, in response to a letter

from the Church regarding its concerns that the document review

was apparently being conducted in bad faith, defendant

Friedlander admitted that the IRS "owed [the churches] an

explanation."

48. In January of 1988, prior to the start of the on

site review, final adverse determinations were already drafted and

circulated by Friedlander and Darling. After June 27, 1988,

while the Churches were awaiting defendant Friedlander's

promised explanation, the IRS finalized the adverse

determination letters from the pre-existing drafts without

substantive amendment. On July 7, 1988, the IRS informed CST

that in its view the IRS had proceeded in accordance with the

March 17 agreement and that it viewed the suspension of the

audit as a termination of that agreement.

49. The following day, July 8, 1988, plaintiff and the

other Churches wrote the IRS reiterating that they had not

terminated the examination, but were waiting for the promised

explanation regarding the Aznaran interview. The letters stated

that the Churches did wish to fulfill the terms of the March 17,

1988 agreement, and that all they sought was a meeting with the

IRS to clarify matters before the examination procedure

resumed. That same day the IRS issued final adverse ruling

letters to all three churches denying tax-exempt status. These

letters were nearly identical to those drafted six months

earlier by Friedlander and Darling. Despite previous

assurances to the contrary, the denials of the applications of

 

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plaintiff and RTC were based, in part, on alleged commercialism

in the sale of religious goods and services.

50. The IRS on-site review procedure was an utter sham,

designed not to make any good faith determination of the tax

exempt status of plaintiff, but merely to continue to

collect information which would not otherwise have been

provided to the IRS. The on-site reviews also included

examination of myriad ecclesiastical and confidential Church

scriptural materials and other materials concerning the

religious practices of the Churches which had no reasonable

relation to any tax exemption issue.

51. The defendants, and each of them, by their conduct

alleged herein, have singled out plaintiff because of its

position as Mother Church of the Scientology religion and,

through those acts, have invidiously discriminated against

plaintiff in their application of the laws of the United

States, in violation of the Establishment Clause of the First

Amendment to the United States Constitution.

52. The defendants, and each of them, by their conduct

alleged herein, have singled out plaintiff for invidious

discrimination in the application of the laws of the United

States on the basis of plaintiff's religious affiliation, in

violation of the Equal Protection component of the Due Process

Clause of the Fifth Amendment to the United States Constitution.

53. The conduct of the defendants, and each of them, has

been arbitrary and capricious, and has resulted in the

deprivation of plaintiff's property. Such conduct, motivated

by religiously rooted bias and prejudice, is a violation of the

 

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Due Process Clause of the Fifth Amendment to the United States

Constitution.

54. Plaintiff has been damaged and continues to be

damaged thereby in an amount to be proven at trial. That

amount is not presently capable of precise calculation but

is believed to be in excess of $20,792,850 which represents

direct expenditures by plaintiff. Plaintiff has also suffered

consequential and resulting damages in an amount to be proven

at trial, but which is in an amount in excess of $100 million.

THIRD CLAIM FOR RELIEF

(For First and Fifth Amendment Violations by All Defendants)

55. The Church repeats and realleges each and every

averment set forth in paragraphs 1 through 54, inclusive.

56. The IRS began additional harassive actions against

plaintiff and Scientology parishioners commencing in October,

1988, when the IRS issued letters to several Scientologist

taxpayers, who had claimed deductions on their tax returns for

money paid to their Scientology churches for religious

services, informing them that their cases were part of a

"designated tax shelter litigation project entitled

Scientology." Such a designation was blatantly improper and

demonstrated discriminatory bias and creation of a suspect

category of members of the Scientology religion.

57. Similarly, on February 14, 1989, the IRS office in

Laguna Niguel, California sent a letter to two Scientologists

concerning Church-related deductions, stating that no deduction

would be allowed as they had not shown that Scientology is

"other than a sham designed for the purpose of claiming

 

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fictitious charitable contributions." This statement, too, was

blatantly false and the result of bias, since even the IRS has

repeatedly acknowledged that Scientology is a bona fide

religion and that Scientology churches are bona fide churches.

The IRS was forced to correct their files to delete these

references after the Scientologists who received this letter

prevailed in Smith v. Brady, No. CV 89-2584-RG(Bx) (C.D.

Cal. 1990). Indeed, the IRS acknowledged that such

designations were improper in a national office memorandum

issued in 1986, yet the IRS continued labelling Scientologists

as tax protestors as late as 1989.

58. Documents obtained in FOIA litigation reveal an

entire set of procedures set up for the purpose of targetting

the tax returns of individual Scientologists, monitoring and

coordinating the investigations of these individuals, and

falsely designating them as "tax protestors." These documents,

from the Los Angeles District, show that the returns of

Scientologists who claim deductions for their contributions to

the Church are designated with a special code for "Alleged

Contributions (incl. Scientology & Alleged Church)". This

code is part of the Tax Protestor Program described in the

Internal Revenue Manual, and allows the returns, which are

treated as "priority cases," to be "controlled" through the

IRS' nationwide computer system. A special questionnaire for

Scientology cases is included for use by IRS examiners. An

internal memo, designed to assist IRS examiners in handling

these cases, lists several organizations which have never even

existed, and claims that these are names used by the "Church of

 

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Scientology."

59. Defendant Melvin Blough attempted to utilize the

Church audit procedures of 26 U.S.C. § 7611 to identify

thousands of parishioners of the Church of Scientology Flag

Service organization ("CSFSO") for the purpose of selecting

their personal tax returns for audit. Blough testified that he

wished to obtain records from CSFSO which would: (a) identify all

of its parishioners for a three year period: (b) identify each

of the courses delivered by CSFSO and describe them: (c)

identify the courses taken by the parishioners; and (d) pull the

tax returns of a number of these individuals. Blough stated

that CSFSO provides courses to an estimated 8,000 parishioners a

year, and further claimed that the IRS would use as many agents

as needed to compile this information. In fact, nearly 100

parishioners of CSFSO have received audit notices regarding

their contributions to the Church since Blough announced his

plans. Blough also utilized the Cult Awareness Network ("CAN")

as a means to improperly gather information regarding the

Church. CAN is a modern day hate group, whose tactics include

kidnapping, brainwashing and beating of individuals found to be

guilty of holding "unacceptable" religious convictions.

Despite these activities, CAN was granted tax exempt status by

the IRS, and was used by Blough as an information gathering

arm, for the purpose of procuring information on individual

Scientologists and their businesses.

60. Assaults on churches of Scientology by or as a result

of actions by IRS personnel have not been limited to the

borders of the United States. William Connett is now stationed

 

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as the IRS' foreign representative in France where he has a

wide range of influence in European countries. Since his

posting there have been raids on churches of Scientology by

police and taxing authorities and unwarranted arrests of

individual Scientologists in France, Italy and Spain. When two

staff members of the Church of Scientology in Brussells were

initially denied visas to travel to the United States, this was

traced directly back to false information provided to the

consulate officials by Connett.

61. In an effort to harass, discredit and smear

plaintiff, to intimidate IRS employees who might otherwise

treat plaintiff fairly or disclose IRS misconduct, and to

evade FOIA disclosure obligations, defendant Keith Alan Kuhn has

begun to proliferate unsubstantiated and patently false

allegations against Scientology and Scientologists, which have

been used as a pretext to manufacture security risks to IRS

employees. In or about May 1990, Kuhn sent out a memorandum to

each of the Regional Inspectors around the country, directing

them to contact specifically named EO employees who were

working on Scientology cases. Based on scurillous and

unsubstantiated charges, Kuhn directed that these EO employees

be told that there was a potential for harassment against them

from the Church, thus creating a climate where plaintiff and

other Scientology churches could not possibly receive unbiased

treatment from any EO agent throughout the country. Kuhn's

allegations themselves are entirely without merit. The IRS

filed a declaration by Kuhn which contained these charges in a

FOIA case brought by a Scientology Church. The District Court

 

 

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judge in that case ordered the declaration stricken from the

record, describing it as "scurrilous" and "unfounded".

62. After the collapse of the criminal investigation and

after denying section 501(c)(3) exemption to plaintiff, RTC

and CST, the nationwide examination of exempt and nonexempt

Scientology Churches and entities which had been planned early

in 1986 was resuscitated by defendants and the IRS. A

three-day meeting on Scientology was convened at the IRS

National Office on October 19, 20 and 21, 1988 to coordinate

nationwide actions against various Scientology Churches,

including plaintiff.

63. That three-day meeting was ordered by defendant

Brauer, organized and convened by defendant Owens, and chaired

by defendant Friedlander. Also in attendance were:

a. EO Operations employee Tom Miller, who had

drafted the 1986 proposal to re-examine the exempt

Scientology Churches;

b. Roderick Darling;

c. LA EO Branch Chief Mel Joseph, along with

defendants Young and Corsi;

d. Defendant Blough;

e. IRS agents from at least the Brooklyn,

Baltimore, and Los Angeles Regional

offices; and

f. IRS National office representatives.

64. Various strategic plans for a continued IRS campaign

directed at Scientology were discussed at the three-day meeting

in October 1988. Defendant Young prepared and delivered a

 

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briefing at that conference in which he proposed that and

explained how the IRS could use the assessment of tax

liabilities under the Federal Insurance Contribution Act

("FICA") and the Federal Unemployment Tax Act ("FUTA") to

exploit the non-exempt status of various Scientology Churches,

completely disregarding the fact that the Churches in question,

including plaintiff, had filed waivers seeking exemption

from those employment taxes which had been accepted by the IRS.

65. At that same three-day meeting, format material for

a nationwide campaign of examinations of exempt and non-exempt

Scientology Churches was distributed and discussed, and the

decision was made during that meeting to commence tax inquiries

of plaintiff, Church of Scientology Western United States

("CSWUS"), Church of Scientology Flag service organization

("CSFSO"), Founding Church of Scientology of Washington, D.C.

("FCDC") and Church of Scientology of Boston ("Boston Church").

Those inquiries in fact did commence, upon the issuance of

notices of tax inquiry to those Churches which were circulated

during that three-day meeting.

66. Upon receipt of the virtually identical notices of

tax inquiry, plaintiff, CSWUS, CSFSO, FCDC, and the Boston

Church responded by pointing out inaccuracies and deficiencies

in the standardized, coordinated notices and, despite those

infirmities, responded to the questions posed by those notices.

In each instance, however, the IRS issued a notice of church

examination under the Church Audit Procedures Act, 26 U.S.C.

§ 7611. In four of those, summonses were issued and summons

enforcement proceedings commenced in the appropriate district

 

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court. In the CSFSO case, the matter is still pending in the

United States District Court for Middle District of Florida;

this Court, the Honorable Harry L. Hupp, presiding, quashed

the majority of both the summonses issued to CSWUS and

plaintiff; the United States District Court for the District of

Massachusetts quashed the summons to the Boston Church

outright. The FCDC examination was conducted, and despite

nearly two years of intrusive inquiry, the IRS declined to

cancel FCDC's exemption.

67. The coordinated examinations of those five distinct

churches were coupled with concurrently timed IRS activities

directed against other Scientology Churches and individual

Scientologists. These various coordinated activities against

Scientology are the responsibility of what defendant Owens has

described as "thousands of [IRS] employees in key districts and

district offices around the country and the National Office."

Those coordinated actions have also been the subject of later

meetings on Scientology at the IRS National Office, involving

as many as 40 attendees from different IRS regions and

divisions, in pursuit of what the SAR termed the "final halt

to" and "ultimate disintegration of" Scientology.

68. Such coordination of IRS offenses against Scientology

Churches and Scientologists generally also reaches down to the

LA District level. Since approximately July 1989, monthly

meetings have been held at the Pasadena, California courthouse

that houses the United States Court of Appeals for the Ninth

Circuit, to coordinate the actions of the Los Angeles EO

(represented at such meetings by defendant Young), Examinations

 

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Division, and upon information and belief, LA CID. These

monthly meetings are arranged and coordinated by the Los

Angeles District Counsel's office, and are attended by a number

of District Counsel staff and, in fact, are chaired by

defendant Jeglikowski, who supervises the meetings and the

matters coordinated therein, against plaintiff and other

Scientology Churches in disregard of the Constitution, the

Internal Revenue Code, and policies set forth in the Internal

Revenue Code. A regular topic of these meetings has been civil

lawsuits involving plaintiff and other Scientology churches.

The cases specifically include the civil suit filed by the

Aznarans, and a case involving a former attorney for the

Church. Defendant Jeglikowski has met with an attorney for one

of the civil litigants, for purposes of coordinating actions

between the IRS and the civil litigants against plaintiff.

69. The monthly meetings in Pasadena, like the meetings

held from time to time at the National Office, are the vehicles

by which defendants have singled out a religion and its

churches and parishioners for singular and unfair treatment

based upon their religious affiliation and set about to

administer the Internal Revenue Code in a manner designed

specifically to affect such co-religionists in an arbitrary and

capricious manner, and to cause the harm hereinafter averred.

70. Plaintiff has made repeated efforts to resolve any

legitimate concerns on the part of the IRS. As shown above,

the Church has provided voluminous information to the IRS over

the years to allay any concerns and to respond to any

legitimate questions. These efforts on the part of the Church

 

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have been either been perverted (as in the use of this

information for purposes of a CID investigation), or rebuffed.

Within the past few months, plaintiff once again attempted to

resolve various issues with EP/EO representatives, including

defendant Owens. However, the IRS continuously demanded the

production of voluminous quantities of documents as a

precondition for further talks. Most of the information

requested had previously been provided to the IRS over the past

years, yet the EP/EO representatives demanded it once again.

When informed that the production of documents being requested

on a voluntary basis was so extensive as to require months if

not years to review, one representative of EP/EO remarked that

this did not concern him, as he had twelve years left in the

IRS before retirement.

71. The defendants, and each of them, by their conduct

alleged herein, have singled out plaintiff for invidious

discrimination in the application of the laws of the United

States on the basis of plaintiff's religious affiliation, in

violation of the Equal Protection component of the Due Process

Clause of the Fifth Amendment to the United States Constitution.

72. Plaintiff has been damaged and continues to be

damaged thereby in an amount to be proven at trial. That

amount is not presently capable of precise calculation but

is believed to be in excess of $20,792,850 which represents

direct expenditures by plaintiff. Plaintiff has also suffered

consequential and resulting damages in an amount to be proven

at trial, but which is in an amount in excess of $100 million.

73. The conduct alleged herein is ongoing and, unless

 

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enjoined by this Court through an order forbidding defendants

from any and all further participation in any matter involving

the IRS and plaintiff or any other Scientology Churches or any

other Scientology entities or parishioners, the harm alleged

herein will continue and the Constitutional violations will

persist to plaintiff's detriment.

FOURTH CLAIM FOR RELIEF

(For Fifth Amendment Violations by All Defendants)

74. The Church repeats and realleges each and every

averment set forth in paragraphs 1 through 73, inclusive.

75. Defendants have, in the course of conduct hereinabove

averred, acted in violation of the Constitution, the laws of

the United States, and the policies, and procedures, and

practices of the IRS created by the IRS for the benefit of

taxpayers. Such conduct is a denial of plaintiff's due process

rights as set forth in the Fifth Amendment to the United States

Constitution.

76. Plaintiff has been damaged and continues to be

damaged thereby in an amount to be proven at trial. That

amount is not presently capable of precise calculation but

is believed to be in excess of $20,792,850 which represents

direct expenditures by plaintiff. Plaintiff has also suffered

consequential and resulting damages in an amount to be proven

at trial, but which is in an amount in excess of $100 million.

77. The conduct alleged herein is ongoing and, unless

enjoined by this Court through an order forbidding defendants

from any and all further participation in any matter involving

the IRS and plaintiff or any other Scientology churches or any

 

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other Scientology entities or parishioners, the harm alleged

herein will continue and the Constitutional violations will

persist to plaintiff's detriment.

WHEREFORE, plaintiff Church of Scientology International

prays that:

78. Defendants, and'each of them, be preliminarily and

permanently enjoined from any and all further participation in

and responsibility for any matter involving the IRS and

plaintiff or any other Scientology Church or entity, or any

Scientology parishioner;

79. Plaintiff be awarded damages according to proof,

which are believed to be in excess of $20,792,850 in

direct expenditures by plaintiff, and consequential and

resulting damages in an amount to be proven at trial, but which

is in an amount in excess of $100 million, and

80. The Court award and order such other and further

relief that it deems appropriate under these circumstances.

Dated: August 12, 1991

Respectfully submitted,

QUINN, KULLY AND MORROW

COOLEY, MANION, MOORE &
JONES, P.C.

BERRY & CAHALAN

BOWLES & MOXON

WILLIAM T. DRESCHER

By: [signed]
William T. Drescher

Attorneys for Plaintiff
CHURCH OF SCIENTOLOGY
INTERNATIONAL

 

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