The Shadowy Story Behind Scientology's Tax-Exempt
Status
New York Times, 9 March 1997
By DOUGLAS FRANTZ
On Oct. 8, 1993, 10,000 cheering Scientologists thronged the Los
Angeles Sports
Arena to celebrate the most important milestone in the church's recent
history:
victory in its all-out war against the Internal Revenue Service.
For 25 years, IRS agents had branded Scientology a commercial
enterprise and
refused to give it the tax exemption granted to churches. The refusals
had been
upheld in every court. But that night the crowd learned of an
astonishing turnaround.
The IRS had granted tax exemptions to every Scientology entity in the
United States.
"The war is over," David Miscavige, the church's leader,
declared
to tumultuous applause.
The landmark reversal shocked tax experts and saved the church tens
of millions
of dollars in taxes. More significantly, the decision was an invaluable
public
relations tool in Scientology's worldwide campaign for acceptance as a
mainstream
religion.
On the basis of the IRS ruling, the State Department formally
criticized Germany
for discriminating against Scientologists. The German government regards
the organization
as a business, not a tax-exempt religion, the very position maintained
for 25
years by the U.S. government.
The full story of the turnabout by the IRS has remained hidden behind
taxpayer
privacy laws for nearly four years. But an examination by The New York
Times found
that the exemption followed a series of unusual internal IRS actions
that came
after an extraordinary campaign orchestrated by Scientology against the
agency
and people who work there. Among the findings of the review by The New
York Times,
based on more than 30 interviews and thousands of pages of public and
internal
church records, were these:
Scientology's lawyers hired private investigators to dig into the
private
lives of IRS officials and to conduct surveillance operations to uncover
potential
vulnerabilities, according to interviews and documents. One investigator
said
he had interviewed tenants in buildings owned by three IRS officials,
looking
for housing code violations. He also said he had taken documents from an
IRS conference
and sent them to church officials and created a phony news bureau in
Washington
to gather information on church critics. The church also financed an
organization
of IRS whistle-blowers that attacked the agency publicly.
The decision to negotiate with the church came after Fred T. Goldberg
Jr.,
the commissioner of the Internal Revenue Service at the time, had an
unusual meeting
with Miscavige in 1991. Scientology's own version of what occurred
offers a remarkable
account of how the church leader walked into IRS headquarters without an
appointment
and got in to see Goldberg, the nation's top tax official. Miscavige
offered to
call a halt to Scientology's suits against the IRS in exchange for tax
exemptions.
After that meeting, Goldberg created a special committee to negotiate
a settlement
with Scientology outside normal agency procedures. When the committee
determined
that all Scientology entities should be exempt from taxes, IRS tax
analysts were
ordered to ignore the substantive issues in reviewing the decision,
according
to IRS memorandums and court files.
The IRS refused to disclose any terms of the agreement, including
whether the
church was required to pay back taxes, contending that it was
confidential taxpayer
information. The agency has maintained that position in a lengthy court
fight,
and in rejecting a request for access by The New York Times under the
Freedom
of Information Act. But the position is in stark contrast to the
agency's handling
of some other church organizations. Both the Jimmy Swaggart Ministries
and an
affiliate of the Rev. Jerry Falwell were required by the IRS to disclose
that
they had paid back taxes in settling disputes in recent years. In
interviews,
senior Scientology officials and the IRS denied that the church's
aggressive tactics
had any effect on the agency's decision.
They said the ruling was based on a two-year inquiry and voluminous
documents
that showed the church was qualified for the exemptions.
Goldberg, who left as IRS commissioner in January 1992 to become an
assistant
secretary at the Treasury Department, said privacy laws prohibited him
from discussing
Scientology or his impromptu meeting with Miscavige.
The meeting was not listed on Goldberg's appointment calendar, which
was obtained
by The New York Times through the Freedom of Information Act.
The IRS reversal on Scientology was nearly as unprecedented as the
long and
bitter war between the organizations. Over the years, the IRS had
steadfastly
refused exemptions to most Scientology entities, and its agents had
targeted the
church for numerous investigations and audits.
Throughout the battle, the agency's view was supported by the courts.
Indeed,
just a year before the agency reversal, the U.S. Claims Court had upheld
the IRS
denial of an exemption to Scientology's Church of Spiritual Technology,
which
had been created to safeguard the writings and lectures of L. Ron
Hubbard, the
late science fiction writer whose preachings form the church's
scripture.
Among the reasons listed by the court for denying the exemption were
"the
commercial character of much of Scientology," its "virtually
incomprehensible
financial procedures" and its "scripturally based hostility to
taxation."
Small wonder that the world of tax lawyers and experts was surprised
in October
1993 when the IRS announced that it was issuing 30 exemption letters
covering
about 150 Scientology churches, missions and corporations. Among them
was the
Church of Spiritual Technology.
"It was a very surprising decision," said Lawrence B.
Gibbs, the
IRS commissioner from 1986 to 1989 and Goldberg's predecessor. "
When you
have as much litigation over as much time, with the general uniformity
of results
that the service had with Scientology, it is surprising to have the
ultimate decision
be favorable. It was even more surprising that the service made the
decision without
full disclosure, in light of the prior background."
While IRS officials insisted that Scientology's tactics did not
affect the
decision, some officials acknowledged that ruling against the church
would have
prolonged a fight that had consumed extensive government resources and
exposed
individual officials to personal lawsuits. At one time, the church and
its members
had more than 50 suits pending against the IRS and its officials.
"Ultimately the decision was made on a legal basis," said a
senior
IRS official who was involved in the case and spoke on the condition
that he not
be identified. "I'm not saying Scientology wasn't taking up a lot
of resources,
but the decision was made on a legal basis."
The church's tactics appeared to violate no laws, and its officials
and lawyers
argued strenuously in a three-hour interview at church offices in Los
Angeles
last month that the exemptions were decided solely on the merits. They
said the
church had been the victim of a campaign of harassment and
discrimination by "rogue
agents" within the IRS. Once the agency agreed to review the record
fairly,
they said, it was inevitable that the church would be granted its
exemptions.
"The facts speak for themselves," said Monique E. Yingling,
a Washington
lawyer who represented the church in the tax case. "The decision
was made
based on the information that the church provided in response to the
inquiry by
the Internal Revenue Service."
Church officials and lawyers acknowledged that Scientology had used
private
investigators to look into their opponents, including IRS officials, but
they
said the practice had nothing to do with the IRS decision.
"This is a church organization that has been subjected to more
harassment
and more attacks certainly than any religion in this century and
probably any
religion ever, and they have had to perhaps take unusual steps in order
to survive,"
Ms. Yingling said.
THE ORIGINS: AN EXPANDING CHURCH ON A COLLISION COURSE
Since its founding in 1950, Scientology has grown into a worldwide
movement
that boasts 8 million members, although defectors say the actual number
is much
smaller. The church, which has vast real estate holdings around the
world and
operates a yacht based in the Caribbean, describes itself as the only
major new
religion to have emerged in the 20th century.
Its founder, Hubbard, asserted that people are immortal spirits who
have lived
through many lifetimes. In Scientology teachings, Hubbard described
humans as
clusters of spirits that were trapped in ice and banished to Earth 75
million
years ago by Xenu, the ruler of the 26-planet Galactic Confederation.
Scientology describes its goal as "a civilization without
insanity, without
criminals and without war, where the able can prosper and honest beings
can have
rights, and where Man is free to rise to greater heights." To reach
those
heights, Scientologists believe, each individual must be "
cleared" of
problems and afflictions through a series of counseling sessions known
as "auditing."
The sessions are performed by a trained auditor assisted by a device
similar to
a lie detector, known as an E-meter.
Although Scientology's complicated finances make a total estimate
difficult,
records on file at the IRS indicate that in the early 1990s the church
was earning
about $300 million a year from auditing fees, the sale of Scientology
literature
and recordings, management services and the franchising of its
philosophy. Church
officials said those figures were higher than actual earnings.
The original mother church, the Church of Scientology of California,
was established
by Hubbard in Los Angeles in 1954. Three years later, it was recognized
as tax
exempt by the IRS. But in 1967, the agency stripped the church of its
exemption,
and a fierce struggle broke out between the agency and the church.
In its revocation letter, the agency said that Scientology's
activities were
commercial and that it was being operated for the benefit of Hubbard, a
view supported
by the courts several times in the ensuing 25 years. The church ignored
the action,
which it deemed unlawful, and withheld taxes.
The IRS put Scientology on its hit list. Minutes of IRS meetings
indicate that
some agents engaged in a campaign to shut down Scientology, an effort
that church
officials cite as evidence of bias. Some of the tactics led to rebukes
by judges,
including a 1990 ruling in Boston that criticized the IRS for abusive
practices
in seeking access to church records.
Scientology retaliated. In 1973 the church embarked on a program code
named
Snow White. In a document labeled "secret," Hubbard outlined a
strategy
to root out all "false and secret files" held by governments
around
the world regarding Scientology.
"Attack is necessary to an effective defense," Hubbard
wrote.
Snow White soon turned sinister. Under the supervision of Hubbard's
third wife,
Mary Sue, Scientologists infiltrated the Department of Justice and the
IRS to
uncover information on Hubbard. They broke into offices at night and
copied mountains
of documents. At one point, an electronic bugging device was hidden
inside an
IRS conference room the day before a meeting about Scientology.
Critics say those actions fell under a church doctrine that Hubbard
had called
the Fair Game policy. Hubbard wrote that church enemies may "be
deprived
of property or injured by any means by any Scientologist without any
discipline
of the Scientologist. May be tricked, sued or lied to or
destroyed."
The conspiracy was uncovered in 1977, and Mrs. Hubbard and 10 others
were eventually
sentenced to prison. Hubbard was named an unindicted co-conspirator
because investigators
could not link him to the crimes.
The church promised to change its ways. Scientologists said members
who broke
the law were purged, including Mrs. Hubbard, and the church was
restructured to
protect against a recurrence. The Fair Game policy, they said, has been
misinterpreted
by courts and critics.
"There is nothing like that," said Elliot J. Abelson, the
church's
general counsel. "It doesn't happen."
THE COVERT WAR: WHISTLE-BLOWERS AND 'VULNERABILITIES'
But interviews and an examination of court files across the country
show that
after the criminal conspiracy was broken up, the church's battle against
the IRS
continued on other fronts. When Hubbard died in January 1986, his
opposition to
taxes lived on among the new generation of leaders, including Miscavige,
a second-generation
Scientologist.
Part of the battle was public. A leading role was played by the
National Coalition
of IRS Whistle-Blowers, which Scientology created and financed for
nearly a decade.
On the surface, the coalition was like many independent groups that
provide
support for insiders who want to go public with stories of corruption.
But Stacy
B. Young, a senior Scientology staff member until she defected in 1989,
said she
helped plan the coalition as part of Scientology's battle against the
IRS in late
1984 while she was managing editor of the church's Freedom Magazine.
"The IRS was not giving Scientology its tax exemption, so they
were considered
to be a pretty major enemy," Ms. Young said. "What you do with
an enemy
is you go after them and harass them and intimidate them and try to
expose their
crimes until they decide to play ball with you. The whole idea was to
create a
coalition that was at arm's length from Scientology so that it had more
credibility."
Ms. Young said she recruited Paul J. DesFosses, a former IRS agent
who had
spoken out against the agency, to serve as the group's president.
DesFosses acknowledged
that Scientology provided substantial financing, but he denied that the
church
created or ran the coalition.
"We got support from lots of church groups, including the Church
of Scientology,"
DesFosses said in a recent interview.
The coalition's biggest success came in 1989 when it helped spark
congressional
hearings into accusations of wrongdoing by IRS officials. Using public
records
and leaked IRS documents, the coalition showed that a supervisor in Los
Angeles
and some colleagues had bought property from a firm being audited by the
agency.
Soon after the purchase, the audit was dropped and the firm paid no
money.
Kendrick L. Moxon, a longtime church lawyer, acknowledged that the
coalition
was founded by Freedom Magazine. He said its work was well known and
part of a
campaign by Scientology and others to reform the IRS.
The church's war had a covert side, too, and its soldiers were
private investigators.
While there have been previous articles about the church's use of
private investigators,
the full extent of its effort against the IRS is only now coming to
light through
interviews and records provided to The New York Times.
Octavio Pena, a private investigator in Fort Lee, N.J., achieved a
measure
of reknown in the late 1980s when he helped expose problems within the
Internal
Revenue Service while working on a case for Jordache Enterprises, the
jeans manufacturer.
In the summer of 1989, Pena disclosed in an interview, a man who
identified
himself as Ben Shaw came to his office. Shaw, who said he was a
Scientologist,
explained that the church was concerned about IRS corruption and would
pay $1
million for Pena to investigate IRS officials, Pena said.
"I had had an early experience with the Scientologists, and I
told him
that I didn't feel comfortable with him, even though he was willing to
pay me
$1 million," Pena said.
Scientology officials acknowledged that Shaw worked for the church at
the time,
but they scoffed at the notion that he had tried to hire Pena. "The
Martians
were offered $2 million; that's our answer," said Moxon, whose firm
often
hired private investigators for the church.
Michael L. Shomers, another private investigator, said he shared none
of Pena's
qualms, at least initially.
Describing his work on behalf of Scientology in a series of
interviews, Shomers
said that he and his boss, Thomas J. Krywucki, worked for the church for
at least
18 months in 1990 and 1991.
Working from his Maryland office, he said, he set up a phony
operation, the
Washington News Bureau, to pose as a reporter and gather information
about church
critics. He also said he had infiltrated IRS conferences to gather
information
about officials who might be skipping meetings, drinking too much or
having affairs.
"I was looking for vulnerabilities," Shomers said.
Shomers said he had turned over information to his Scientology
contact about
officials who seemed to drink too much. He also said he once spent
several hours
wooing a female IRS official in a bar at a conference, then provided her
name
and personal information about her to Scientology.
In one instance, information that Shomers said he had gathered at an
IRS conference
in the Pocono Mountains was turned over to an associate of Jack
Anderson, the
columnist, and appeared in one of Anderson's columns criticizing top IRS
managers
for high living at taxpayer expense.
Shomers said he had received his instructions in meetings with a man
who identified
himself as Jake Thorn and said he was connected with the church. Shomers
said
he believed the name was a pseudonym.
Shomers said he had looked into several apartment buildings in
Pennsylvania
owned by three IRS officials. He obtained public files to determine
whether the
buildings had violated housing codes, he said, and interviewed residents
looking
for complaints, but found none.
In July 1991, Shomers said, he posed as a member of the IRS whistle-
blowers
coalition and worked with a producer and cameraman from NBC-TV to get
information
about a conference for senior IRS officials in Walnut Creek, Calif. The
producer
said that she recalled Shomers as a representative of the whistle-
blowers, but
knew nothing of his connection to Scientology. The segment never ran.
At one point, Shomers said, he slipped into a meeting room at the
Embassy Suites,
where the conference was held, and took a stack of internal IRS
documents. He
said he mailed the material to an address provided by his church
contact.
Krywucki acknowledged that he had worked for Scientology's lawyers in
1990
and 1991, though he declined to discuss what he did. He said he would
ask the
lawyers for permission to speak about the inquiry, but he failed to
return telephone
calls after that conversation.
It is impossible to verify all of Shomers' statements or determine
whether
his actions were based on specific instructions from church
representatives. He
said he had often been paid in cash and sometimes by checks from Bowles
&
Moxon, a Los Angeles law firm that served as the church's lead counsel.
He said
he had not retained any of the paychecks.
Shomers provided The New York Times with copies of records that he
said he
had obtained for the church as well as copies of hotel receipts showing
that he
had stayed at hotels where the IRS held three conferences, in
Pennsylvania, West
Virginia and California. He also provided copies of business cards, with
fake
names, that he said had been created for the phony news bureau in
Washington and
copies of photographs taken as part of his surveillance work.
One of the IRS officials investigated by Shomers recalled that a
private investigator
had been snooping around properties he managed on behalf of himself and
two other
mid-level agency officials.
The official, Arthur C. Scholz, who has since left the IRS, said he
was alerted
by tenants that a man who identified himself as a private investigator
had questioned
tenants about him and the other landlords. He said the tenants had not
recalled
the man's name but had noted that he was driving a car with Maryland
license plates.
"He went to the courthouse and found the properties, and then
went out
banging on doors of these tenants and made a number of allegations
dealing with
things that were totally bull," said Scholz, who had no involvement
with
the IRS review of Scientology and was at a loss to explain why the
church would
have been interested in him. "I notified the local police about
it."
Shomers, who has since left the private-investigation business, said
he was
willing to describe his work for the church because he had come to
distrust Scientology
and because of a financial dispute with Krywucki.
Moxon, the Scientology lawyer, said the IRS was well aware of the
church's
use of private investigators to expose agency abuses when it granted the
exemptions.
Moxon did not deny hiring Shomers, but he said the activities described
by Shomers
to The New York Times were legal and proper.
Moxon and other church lawyers said the church needed to use private
investigators
to counter lies spread by rogue government agents.
"The IRS uses investigators, too," said a church lawyer,
Gerald A.
Feffer, a former deputy assistant attorney general now with Williams
& Connolly,
one of Washington's most influential law firms. "They're called CID
agents"
-- for Criminal Investigation Division -- "and the CID agents put
this church
under intense scrutiny for years with a mission to destroy the
church."
A blunt assessment of Scientology's victorious strategy against the
IRS was
contained in a lengthy 1994 article in International Scientology News,
an internally
distributed magazine. The article said:
"This public exposure of criminals within the IRS had the
desired effect.
The Church of Scientology became known across the country as the only
group willing
to take on the IRS."
"And the IRS knew it," the article continued. "It
became obvious
to them that we weren't about to fold up or fade away. Our attack was
impinging
on their resources in a major way, and our exposes of their crimes were
beginning
to have serious political reverberations. It was becoming a costly war
of attrition,
with no clear-cut winner in sight."
THE UNUSUAL PEACE: AFTER A MEETING, A 180-DEGREE TURN
Scientology made the initial gesture toward a cease-fire when
Miscavige, the
church leader, paid an unscheduled visit to the IRS commissioner,
Goldberg.
The first full account of that meeting and the events that followed
inside
the IRS was assembled from interviews, Scientology's own internal
account, IRS
documents and records in a pending suit brought by Tax Analysts, a
nonprofit trade
publisher, seeking the release of IRS agreements with Scientology and
other tax-exempt
organizations.
Feffer, a church lawyer since 1984, said he approached officials at
the Justice
Department and the IRS in 1991 with an offer to sit down and negotiate
an end
to the dispute.
The church's version of what followed is quite remarkable. Miscavige
and Marty
Rathbun, another church official, were walking past the IRS building in
Washington
with a few hours to spare one afternoon in late October 1991 when they
decided
to talk to Goldberg.
After signing the visitors' log at the imposing building on
Constitution Avenue,
the two men asked to see the commissioner. They told the security guard
that they
did not have an appointment but were certain Goldberg would want to see
them.
And, according to the church account, he did.
Goldberg said he could not discuss the meeting, although a former
senior official
confirmed that it occurred. An IRS spokesman said it would be unusual
for someone
to meet with the commissioner without an appointment.
Miscavige does not grant interviews, church officials said, but
Rathbun said
the Goldberg meeting was an opportunity for the church to offer to end
its long
dispute with the agency, including the dozens of suits brought against
the IRS,
in exchange for the exemptions that Scientology believed it deserved.
"Let's resolve everything," Rathbun recalled saying. "
This is
insane. It's reached insane levels."
Goldberg's response was also out of the ordinary. He created a
special five-member
working group to resolve the dispute, bypassing the agency's exempt
organizations
division, which normally handles those matters. Howard M. Schoenfeld,
the IRS
official picked as the committee's chairman in 1991, said later in a
deposition
in the Tax Analysts case that he recalled only one similar committee in
30 years
at the agency.
The IRS negotiators and Scientology's tax lawyers held numerous
meetings over
nearly two years. An IRS official who participated, and who spoke about
the meetings
on condition that his name not be used, described the sessions as
occasionally
rancorous, but he said the general tone was far friendlier than over the
preceding
years.
There are indications that the early momentum was toward resolution.
In a letter
to Ms. Yingling on Jan. 19, 1992, John E. Burke, the assistant
commissioner for
exempt organizations, brushed aside what could have been a stumbling
block. Ms.
Yingling had apparently objected to the potential public disclosure of
information
that the church was providing to the IRS.
Burke said he did not want the dispute to delay the talks, and he
committed
the IRS to allowing only a portion of the information to become public.
He said
the only hitch would come "in the event that our discussions break
down,
an eventuality that I have no reason to believe will occur."
An IRS official involved in the talks said it was not unusual for the
agency
to negotiate with a taxpayer over what is made public in an agreement.
By agreeing
at the outset that information could be withheld, however, the IRS
seemed to relinquish
a big bargaining chip.
Paul Streckfus, a former official in the IRS exempt organization
division,
first disclosed the existence of the negotiating committee in a trade
journal
after the agreement was announced. He said in an interview that creating
the group
meant a settlement was almost preordained.
"Once the IRS decided to set up this rather extraordinary group,
the wheels
were in motion for a deal," Streckfus said.
Not even a stinging court decision in favor of the IRS could derail
the talks.
Midway through the negotiations, in June 1992, the U.S. Claims Court
handed down
its decision upholding the IRS denial of a tax exemption for
Scientology's Church
of Spiritual Technology. The ruling underscored the agency's
longstanding concerns
over the commercial nature of Scientology and other matters.
Ms. Yingling, the church's tax lawyer, said the Claims Court ruling
ignored
the facts and was filled with gratuitous comments. She said the IRS
negotiators
were fairer in considering the evidence.
A portion of the correspondence between the agency and church from
the two
years of negotiations was released when the exemptions were granted
three and
a half years ago. It fills part of a large bookcase in the IRS reading
room in
Washington.
The central issues are discussed in a series of lengthy answers by
Scientology's
lawyers to questions from the IRS. The church provided extensive
information on
its finances and operational structure.
The senior IRS official involved in the negotiations, who asked not
to be identified,
said the church satisfied the agency in the three critical areas. He
said the
committee was persuaded that those involved in the Snow White crimes had
been
purged, that church money was devoted to tax-exempt purposes and that,
with Hubbard's
death, no one was getting rich from Scientology.
Ms. Yingling argued that nothing substantive had changed. She said
the church
had been qualified for tax exemption for years, but biased elements
within the
IRS had stood in its way.
"There were no changes in the operations or activities of the
church,"
she said. "What came about was finally that they looked at all the
information
and saw that the church qualified for exemption, and they were
satisfied."
In August 1993, the two sides reached an agreement. The church would
receive
its coveted exemptions for every Scientology entity in the country and
end its
legal assault on the IRS and its personnel.
There was just one more step. 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.
Schoenfeld, the negotiations chairman, ordered the two tax analysts
assigned
to the review not to consider any substantive matters, according to IRS
memorandums
and records in the Tax Analysts case. Those issues, 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.
Schoenfeld, who has since left the IRS, said he could not discuss the
case.
But the senior IRS official involved in the talks said there was nothing
sinister
about the instructions because those matters had been decided by the
negotiating
committee. He acknowledged, however, that this was not the typical
procedure.
The agreement was announced on Oct. 13, 1993. The IRS refused to make
public
any of its terms, including whether the church paid any back taxes. The
IRS also
refused to discuss the legal reasoning behind one of the biggest
turnarounds in
tax history.
Tax lawyers said the IRS could have required the church to disclose
terms of
the agreement, which it has done in the past. In 1991, the IRS required
the Jimmy
Swaggart Ministries to disclose that the group had paid $171,000 in back
taxes
for violations. In 1993, just a few months before the Scientology
agreement, the
IRS required the Old Time Gospel Hour, a group affiliated with the Rev.
Jerry
Falwell, to publicize its payment of $50,000 in back taxes.
"The IRS actually specified which media outlets we were to
notify and
approved the release," said Mark DeMoss, a spokesman for Falwell.
"When
nobody picked it up, they put out their own press release."
William J. Lehrfeld, who represents Tax Analysts in its suit to make
the Scientology
agreement public, said, "You and I, as taxpayers, are subsidizing
these people,
and we should see this information."
THE AFTERMATH: A FORMER ENEMY BECOMES AN ALLY
Five days before the official announcement, Miscavige went before the
Scientology
gathering in Los Angeles and declared victory. In a two-hour speech,
according
to the account in International Scientology News, Miscavige described
years of
attacks against Hubbard and Scientology by the government.
"No other group in the history of this country has ever been
subject to
the assault I have briefed you on tonight," he said, calling it
"the
war to end all wars."
As part of the settlement, Miscavige said, the IRS had agreed to
distribute
a fact sheet describing Scientology and Hubbard. "It is very
complete and
very accurate," Miscavige said. "Now, how do I know? We wrote
it! And
the IRS will be sending it out to every government in the world."
Feffer, Ms. Yingling and Thomas C. Spring, another of the church's
tax lawyers,
appeared in formal attire on stage that night and received Waterford
crystal trophies
in recognition of their efforts.
Miscavige called the agreement a peace treaty that would mark the
biggest expansion
in Scientology history.
The church immediately began citing the IRS decision in its efforts
to win
acceptance from other governments and to silence critics. But the
biggest public
relations benefit may have come from the U.S. government itself.
Four months after the exemptions were granted, the State Department
released
its influential human rights report for 1993, a litany of the countries
that abuse
their citizens. For the first time, the report contained a paragraph
noting that
Scientologists had complained of harassment and discrimination in
Germany. The
matter was mentioned briefly in the 1994 and 1995 reports, too.
Throughout those years, the dispute between Scientologists and the
German government
escalated. In an intense publicity campaign that included advertisements
in this
newspaper, the church said that businesses owned by Scientologists were
boycotted
and that its members were excluded from political parties and denied
access to
public schools. The church asserted that the German actions paralleled
early Nazi
persecution of Jews.
The German government responded that Scientology was not a church
worthy of
tax exemption, but a commercial enterprise -- the very position the IRS
had maintained
in its 25-year war against the church. German officials said equating
the treatment
of Scientologists with that of Jews under the Nazi regime was a
distortion and
an insult to victims of the Holocaust, a view supported by some Jewish
leaders
in Germany.
The dispute turned into a diplomatic ruckus in January when the State
Department
released its 1996 human rights report, with an expanded section on
Scientology
that said German scrutiny of the religion had increased. Artists had
been prevented
from performing because of their membership in the church and the youth
wing of
the governing Christian Democratic Union had urged a boycott of the film
"Mission:
Impossible" because its star, Tom Cruise, is a prominent
Scientologist, the
State Department said.
German officials were angered by the criticism, and Foreign Minister
Klaus
Kinkel raised the matter with Secretary of State Madeleine K. Albright
when she
was in Bonn on Feb. 18. Ms. Albright told him that the issue was a
subject for
bilateral discussions, but she said she found claims by Scientologists
that they
are the victims of Nazi-style persecution "distasteful."
Nicholas Burns, the State Department spokesman, said that, despite
the belief
that Scientologists had gone too far in drawing comparisons to
persecution of
Jews, the department had felt compelled to expand on the church's
troubles with
the Germans in its latest human rights report.
"The Germans are quite adamant, based on their own history, that
these
are the kinds of groups that ought to be outlawed," Burns said.
"However,
for our purposes, we classify Scientology as a religion because they
were granted
tax-exempt status by the American government."
------------------------------------------------------------------------
--------
An Ultra-Aggressive Use of Investigators and
the Courts
By DOUGLAS FRANTZ
For years, Scientology has gone to great lengths to defend itself
from critics.
Often its defense has involved private investigators working for its
lawyers.
While the use of private investigators is common in the legal
profession, some
instances involving the church have been unusual.
Scientology officials said that the investigators operated within the
law and
that the tactics were necessary to counter attacks made over the years
by Internal
Revenue Service agents and the press.
"When people stop spreading lies about them and stop printing
false allegations
about them in newspapers, the church will stop using private
investigators,"
said Monique E. Yingling, a church lawyer.
In 1986 the Federal Court of Appeals in Boston said evidence in an
extortion
case indicated that Scientology investigators had induced witnesses to
lie. It
identified one investigator as Eugene M. Ingram.
Eight years later, Ingram was charged with impersonating a police
officer in
seeking information about a sheriff in Tampa, Fla., while working as a
church
investigator. He and a Scientology employee flashed badges and told a
woman that
they were police detectives before questioning her about possible links
between
a county sheriff and what was said to be a prostitution ring, police
records say.
Court officials said a warrant for Ingram's arrest was still
outstanding.
Ingram had been dismissed from the Los Angeles Police Department in
1981 after
accusations that he was involved in running a prostitution ring and had
provided
information to a drug dealer. He was acquitted of criminal charges in
that case.
Elliot J. Abelson, the church's general counsel, said he had used
Ingram often
as an investigator and had the highest regard for him. He said the Tampa
case
was phony.
Richard Behar, an investigative reporter, incurred Scientology's
wrath when
he wrote a cover article about the church in Time magazine in 1991. The
article
called the church "a hugely profitable global racket that survives
by intimidating
members and critics in a Mafia-like manner."
The church and a member sued Time and Behar for libel, and the
company spent
more than $7 million defending the cases. The church's suit was
dismissed last
year by a Federal District Court judge, an action being appealed by
Scientology.
The individual's suit was settled with a corrective paragraph but no
money.
Behar contends in a countersuit that even before the article ran,
church investigators
questioned his acquaintances about his health and whether he had had tax
or drug
problems. Behar said that after the article ran, he had been followed by
Scientology
agents and had been so concerned he had hired bodyguards.
In 1992, Judge Ronald Swearinger of Los Angeles County Superior Court
told
The American Lawyer magazine that he believed Scientologists had slashed
his car
tires and drowned his collie while he was presiding over a suit against
the church.
The church denied the accusations.
In 1993, Judge James M. Ideman was presiding over a suit involving
Scientology
in Federal District Court in Los Angeles when he took the unusual step
of withdrawing
from the case. In a court statement, he said he could no longer preside
fairly
because the church "has recently begun to harass my former law
clerk who
assisted me on this case."
Kendrick L. Moxon, the church's lawyer in the case, said he had tried
to question
the former clerk about accusations that there was a framed Time magazine
cover
about Scientology in the judge's chambers. He said that the former clerk
had refused
to talk to him and that his subpoena for her testimony had been quashed.
Scientology's tactics in court have also drawn judicial rebukes. Last
year,
the California Court of Appeal accused Scientology of using "the
litigation
process to bludgeon the opponent into submission." The Federal
Court of Appeals
in San Francisco said last year that Scientology had played "fast
and loose
with the judicial system" and levied $2.9 million in sanctions
against the
church.
By aggressively pursuing its opponents in court, the church seems to
heed the
preaching of L. Ron Hubbard, its founder, who once wrote: "The
purpose of
the suit is to harass and discourage rather than win. The law can be
used very
easily to harass, and enough harassment on somebody who is simply on the
thin
edge anyway ... will generally be sufficient to cause his professional
decrease.
If possible, of course, ruin him utterly."
One focus of suits by Scientologists was the Cult Awareness Network,
a nonprofit
organization dedicated to countering religious groups it perceived as
dangerous.
Scientology has long regarded the network, known as CAN, as an
opponent of
religious freedom and a hate group. Church officials said the network
used "deprogrammers"
to kidnap people in an effort to persuade them to leave small religious
groups.
Deprogrammers affiliated with the network have been convicted of crimes
in connection
with efforts to force people to leave religious organizations.
Beginning in 1992, Scientologists filed 40 to 50 suits against the
network
and its officers, contending that they discriminated by refusing to
allow Scientologists
to attend conventions or join chapters. Some Scientologists prevailed in
court.
Moxon, who represented many Scientologists, said the suits had been
intended
to address network discrimination against people who wanted to reform
it.
But Daniel A. Leipold, who represented the network, said during
depositions
in some of the suits that the actions had been part of a campaign by
Scientology
to destroy the network.
Last year, the network declared bankruptcy after a $1.8 million
judgment against
it in a suit brought by a young man who had been a member of a
Pentecostal group.
The jury found that the man had been forcibly detained by a
deprogrammer. Moxon,
who represented the man, said that he had taken the case as a religious
freedom
matter and that his expenses had been paid by the Pentecostal group.
After the network filed for bankruptcy, its name, logo and telephone
were bought
by a group represented by a lawyer who is a Scientologist. While the
church said
it had no connection with the purchasers, a brochure mailed by the new
Cult Awareness
Network in January was a glowing description of Scientology as a means
to "increase
happiness and improve conditions for oneself and for others."