Money Money Money

Posted on October 6, 2010 by


– L. Ron Hubbard, HCO Policy Letter, 9 March 1972, MS OEC 384.

I read that Scientology has a billion dollars in off-shore bank accounts and that annually it rakes in half a billion dollars in cash, skimmed off courses and book sales, its Narconon and Criminon scams, WISE membership fees, Flag courses, Applied Scholastics licences, and who knows how many other major and minor frauds, scams, swindles, and downright crimes. But, apart from its income, Scientology has so much money stashed away it doesn’t ever need to sell another book or vitamin pill.

Moreover, it can cover its expansion plans simply by asking its members for money. They rise to their feet, their minds ablaze with programmed enthusiasm, and chuck their millions into the War Chest. A single prestige event in the UK is said to have raised $50 million. And by moving the stuff adroitly and even quite openly from one country to another, Scientology can avoid paying taxes anywhere.

From the beginning Scientology’s main field of operations has been the United States. An important element of their success in the States is their tax status there, which is extremely favorable. Churches have always been exempt from taxation in the United States. For a long time there was no apparent need to document their income as churches were generally small congregations made up of the residents of the communities who had given the land and paid to build them.

But society changed, churches changed, and after 1954 it became advantageous for a church to register as a 501(c)(3) organization. Such an organisation does not have to pay income tax but it does have to file a return if grossing more than $25,000. Church property (buildings, land, vehicles and airplanes) is tax-exempt. It became very desirable for Scientology to gain similar advantages.  But except for a few of the early years, during Hubbard’s reign Scientology was not regarded as a church. Bit by bit it got all the trappings, the cross, the creed, the dog-collars, the “ministers”. They have come almost to believe their own invention.

There is however a vital difference: money. A normal church has income in the form of offerings, which are usually entirely voluntary. Scientology prefers pyramid selling, bait-and-switch, and bullying. Ex-Scientology staff members and former members have revealed how new recruits were manipulated new recruits into cashing life insurance policies, selling cars, and mortgaging their homes to pay for Scientology courses. The CoS uses every strategy from calculated emotional manipulation to hypnotic techniques to persuade its members to part with their money.  Not only young people are at risk.  There have been several notorious suicides among businessmen who have given all their capital to the so-called Church and suffered bankruptcy. Steve Bracket of California is a recent example.


This is an edited account of the story from the inside, from recent posts by Gottabrain on WWP

I am a personal witness. I worked in USGO Finances for 1 year, in AOLA Treasury for 3 years and was on AOLA FP Committee for 4 years. Somewhere there are Flag Orders and directives for the FBO Network – but this is how it works.

Approximately 70-80% of the weekly gross incomes of all the churches of Scientology is sent to the C of S International Reserves accounts every week. These were once Florida accounts. However, the C of S has overseas accounts in Switzerland and the Cayman Islands (that are tracked by number, rather than name, so not easily traceable) and sometimes funds are sent directly there. This is not including the percents that are sent to IAS accounts and OSA WW accounts (also overseas).

“In a normal Financial Planning of a Church of Scientology, in the 1980s, the Flag Banking Officer decides how much money to take from the gross income to send to International Reserves, usually allocating a nominal amount, maybe $20,000 or $30,000 out of $350,000 to $500,000 gross income per week to the organization to scrape by to pay its basic expenses. This small amount was used for the paying of bills, including staff pay, utilities, food, basic necessities, supplies, staff medical care and vitamins, refunds, child care, including costs of the Child Estates Organization (CEO) to support each child from that org, soap, toilet paper, cleaning supplies, uniforms, materials such as paper, pens, etc, promotional materials (required by policy to be 10% of this) and outside staff who were paid wages of approx $600-$700/wk. Of 150 staff, about 120-130 were SO, who were paid in peanuts, and 20 were non SO receiving regular wages and working pretty normal hours.

“From the USGO accounts (now OSA US) I saw international transfers from reserves to the C of S remote accounts in the Cayman Islands and Switzerland totalling over 36 million US dollars. The C of S has used these sort of international accounts for many, many years and there is no reason at all to believe it has stopped doing so since that time.

“If an Org is making a pile of money on auditing people to Clear at £27,000 (or more) a time and taking in maybe £20,000 a week (£1 million a year) then how can its accounts show they are making a loss? The answer appears to be that they pay inflated amounts for sending people for training to senior Orgs such as Flag. They also get regular services and missions, as when Sea Org missions are sent in to correct the situation when income drops and the Org has to pay for this. The USGO mission bill to the Riverside, California, org when it was having legal battles was in excess of $500,000, but actual costs were closer to $80,000.

“The controlling Church has an interest in keeping the Orgs in debt. It has somehow got to get money out of the various countries and make sure they pay no tax on it so it all gets to them. They might do this using false accounting. Alternatively, they might do it by making sure the Orgs in any country always owe them more than they can earn.”

In the States in 1993 its religious disguise, awarded in circumstances that appear like a compromise enforced by blackmail, has given it a yearly bonanza. Otherwise, at the last reckoning, Scientology was treated as a religion in only ten other countries: South Australia, Brazil, Croatia, Indonesia, Kyrgyzstan, Portugal, Spain, Sweden, Slovenia, and Venezuela. But it uses these assorted outposts creatively, notably its South Australian post-box for COSRECI (Church of Scientology, Religious Education Collect, Inc.), revealed a few months ago as a suburban bungalow belonging to a Greek market gardener.

This story has barely begun to unravel. The Church of Scientology says allegations it is using Adelaide as an off-shore base for its international operations to avoid paying tax are “offensive”. It likes to pretend to be a blameless religious organisation.

The story was told by Universal News, Wednesday, 23 June 2010:

“Ten years ago authorities in Britain told the Church of Scientology it would have to pay tax, that it was not a charity. To avoid paying tax in the UK it’s alleged they made the entire Church of Scientology in Britain a member of a tiny little association incorporated here in South Australia.

“From its non-existent offices in Adelaide the tiny incorporated association boasts as its members, not people, but Churches of Scientology from the United Kingdom, Denmark, Belgium, France, Holland, Germany and Sweden. They have a member in South Africa too. Today Tonight discovered a global multinational corporation boasting more members in Canada, including Montreal, Ottawa, Toronto and British Columbia.

“It might also be fate that in Scientology’s universe of planetary confederates and intergalactic warlords, they chose Adelaide, the city of Churches. The Independent Senator Nick Xenophon is one of South Australia’s favorite sons. He championed the former members of Scientology who spoke out about the abuse inflicted on them. This latest intrigue surprised even him.

“Given what now has been revealed, you need to ask some very serious questions about how this group operates internationally in terms of the flow of money, where the money goes and how it’s treated in terms of its tax free status,” Senator Xenophon said. “It’s a case of follow the money and also show me the money.” The Senator adds, “I’d like to think the corporate regulators in the UK will be scratching their heads over this one. To say that the Church of Scientology in the UK is a South Australian charity seems pretty bizarre when you look at the evidence.”

COSRECI was incorporated in Australia as a religious charity on 19 October 1976 and began to operate in the UK on 1 May 1977. Says it all.

Meanwhile courts and tax authorities in the United Kingdom, France, Germany, Belgium, Switzerland and Russia, which are all relatively well-informed about the real nature and purpose of the cult, have with good reason refused Scientology religious status.

But what does Scientology plan to do with its billions? Hubbard had political ambitions and plans to “clear the planet” but could seldom clear his own tangled legal affairs long enough to gain freedom of movement. Hubbard liked money but he apparently did not like to spend it. Collecting money, for him, seems to have been an end in itself.

He predicted his financial success even before Dianetics was published.  In his Admissions he wrote:
“Money will flood in upon you, for you are wise and able. You have no phobias about the rich. The rich are only people. You need not be offended or impressed by them. …  You are wiser than the rich. Your money will exist to serve you. As you spend it, more will flood in for you will spend wisely if well. You have no fears about money. You will always make it. You do not care how much you have. Having money gives you a comfortable feeling. You do not worry if you do not have it. You just make more. You want to make and spent money. It is not a primary concern with you, you do it with such ease and have such
boundless energy. “

And yet he died the death of a miser, or a madman, hiding from the world in a trailer home, thin and unkempt.

His successors also know how to draw in huge amounts of money.  They also pursue the dream of global domination but their direction is uncertain and they are badly-equipped for any kind of interaction with the real world.

In recent years they have certainly spent a lot of money but hardly enough to dent their income. The wonderfully-renovated historic buildings in important locations in Washington DC, Brussels, London, Rome, even in Clearwater, Florida, may not be thronged with bodies routed in from the street but they are seen as a good investment, especially as most of the renovation work has been done by various categories of slave labor. On the other hand, if the economy continues to wobble, who other than Scientology will ever want these huge white elephants, these redundant churches, hospitals, colleges, hotels and old folks’ homes? Who other than Scientology would buy a country club that costs a million dollars a month to heat?

The organisation is not losing sleep over its property portfolio. The cash for these new buildings is generally raised by local Scientologists but they do not spend it or own the building. Title to new purchases is held by the International Board, not by the local orgs who raised the cash. There is also a general impression that far more is raised for specific projects than they ever cost. But this again was covered long ago by Hubbard, a far-sighted and single-minded man. “Building fund moneys, being under the control of only the International Board, may also be used for other Board purposes without local consultation.” (HCOPL of 18 January 1965, Financial Management Building Fund Account.) The International Board is the controlling board of Scientology. The system ensures that money flows only one way, towards the center.

The cult has also spent lavishly to keep Freewinds, its flagship and floating prison, afloat. Between 2008 and 2009 it is reliably said (by recent escapee, JB) to have spent $28 million on structural repairs and an interior makeover more suited to an up-market brothel than a serious place of religious retreat and spiritual growth. $28 million is infinitely more than the market value of this 40-year old converted car ferry, which, as the world now knows, is generously insulated with decaying blue asbestos.  Like the Idle Orgs, Freewinds appears to have a value to the cult which is not evident to other eyes.  But it can afford such minor eccentricities.

Another recent investment was in state-of-the-art printing plants. CoS is now flooding the planet with The Way to Happiness, one of Ron Hubbard’s more anodyne publications, translated into every conceivable language on earth. From illiterate Samburu elders in Kenya to the Colombian police, everyone has their copy. Improvement in the political situation in Venezuela in 2004 was credited to TWTH and Hubbard’s magic.

Finally, Scientology has recently spent a lot of money on a series of very attractive well-done television and Web advertisements. It is a pity that as soon as viewers read the word “Scientology”, as they must do, sooner or later, interest plummets to zero and they switch channels.

All this conspicuous and even enthusiastic expenditure is presumably designed to pull in the paying public, all eager to join in the wealth and havingness and have their capacity for independent thought knocked out of their heads. But the whole amount could be and has been raised by a single IAS event. Scientology is one of the more remarkable money-making machines ever created. All the expenditure listed was probably paid for out of current income. It is peanuts, pocket-money.

Which still leaves me with a question. What is all their money for?


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