In Part Three, the penultimate segment in our examination of the third era in Scientology’s criminal evolution, we’ll look at how David Miscavige’s assumption of power reflected a continuation of Hubbard’s obsession with Scientology’s ruthless utilitarianism, as well as how Miscavige’s own violent, thuggish temperament reflected a Gotti-like use of fear as his primary mechanism of control. We’ll also examine how Scientology’s use of the legal system shifted from the harassment-focused days of Hubbard to a more nuanced strategic approach, as well as how several key incidents that occurred under Miscavige redefined how Scientology’s La Cosa Nostra (“This thing of ours” or “Our thing”) -like mindset operates to this day.
Miscavige as capo di tutti capi
While Miscavige’s behavior during the Mission Holder shakeout was emblematic of his ruthless dedication to the cause, as well as reflecting his own “take no prisoners” personality, his later actions after Hubbard’s death in 1986 were even more illuminating, as they offered a clear example of how Scientology under his authority would evolve over the following decades. More so, his actions therein made it abundantly clear that he was no Hubbard, nor was he going to try to be. Significantly, the controversy around his having seized control of Scientology from “Loyal Officers” Pat and Annie Broker, and later, his own conflicting courtroom testimony as to his then “official” role in the church versus the reality of the situation would continue to be provoke controversy. Questions about his legitimacy as LRH’s successor would engender a pattern of secrecy, abuse of power, and up until his debut on Scientology TV in 2018, an unwillingness to be seen as the public “face” of Scientology. Aside from a disastrous 1992 TV interview with ABC’s Ted Koppel, Miscavige’s absence from the public domain has all the hallmarks of a reticent La Cosa Nostra (LCN) Don, one who orchestrates behind the scenes, allowing others to suffer the consequences of his own malevolence, poor judgement, and the organization’s excesses.
In typical LCN fashion, Miscavige’s power grab emanated from his own fiefdom within Scientology, Author Services, Inc. (ASI), that in 1982 was created along with the Religious Technology Center (RTC) and the Church of Spiritual Technology (CST), as part of a complete corporate restructuring of Scientology, as a means to “release Hubbard from personal liability and to handle the Scientology founder’s personal wealth through a corporate entity outside of the Scientology organization.” It was from his position as head of ASI that Miscavige and his Sea Org enforcers, including the International Finance Police (IFP), began to consolidate his power over the various rackets within Scientology.
Beginning with his eradication of the Mission network, he then leveraged RTC’s licensing and copyright monopoly as a form of extortionate street taxation to destroy independents such as David Mayo and other “squirrels.” In keeping with the intended purposes of Scientology’s many front organizations, Miscavige used whatever entity provided the best level of plausible deniability required at the time, relative to the level of illegality in question. Interestingly enough, just as the 1929 St. Valentine’s Day massacre brought down unwanted public attention on organized crime in Chicago, the excesses of the IFP during this time, such as the Mission Holders “massacre”, also exposed Scientology to unwanted media exposure, resulting in the IFP’s temporary disbandment; however, according to former Miscavige consigliere Marty Rathbun,
“…after society in the form of the media had to step in to put ethics in, suddenly Reynolds was gone for several months (specifically April through June 1982). WDC Reserves (Mark Ingber) took Reynolds off post. Miscavige took extreme measures to distance himself from the debacle and Reynolds – at least as far as Scientology public and the public at large are concerned. When the media heat was off, and DM’s thirst for extorted money became uncontrollable – and many of the complaining public were declared and discredited – magically Wendell re-appeared leading the storm trooping Finance Police on an uninterrupted reign of terror.”
It’s clear from Rathbun’s comment above that while Hubbard viewed money as a means to perpetuate his legacy, to Miscavige, money was his primary motivation then as it is today. More so, terror would continue to be the default management norm, with Miscavige allowing absolutely no deviation whatsoever from the party line.
Defeat into Victory: Wollersheim, the IRS, and Tax Exemption
Scientology’s legal offensives continued in high gear during this time as well, using the courts as a means to legally extort money from a host of alleged enemies, apostates, malefactors and copyright violators. However, while the church enjoyed a successful run for the most part, in 1986 it would suffer a significant setback in the Wollersheim case. In 1980, former member Larry Wollersheim had sued the Church of Scientology, claiming that the practices, doctrine, and behaviors of the church had ruined him physically, emotionally, and mentally. The court’s judgment was scathing, and tellingly, includes a damning description of “fair game” as a form of retribution:
“Construing the facts most favorably to the judgment, as we must, respondent Larry Wollersheim was an incipient manic-depressive for most of his life. Appellant Scientology and its leaders were aware of Wollersheim’s susceptibility to this mental disorder: What appellant did to him during and after his years in Scientology aggravated Wollersheim’s mental condition, driving him into deep depressive episodes and causing him severe mental anguish. Furthermore, Scientology engaged in a practice of retribution and threatened retribution – often called “fair game” – against members who left or otherwise posed a threat to the organization. This practice coerced Wollersheim into continued participation in the other practices of Scientology which were harming him emotionally.”
In 1986, Larry Wollersheim was awarded $5 million in compensatory damages and $25 million in punitive damages for what jurors described as:
“intentional and negligent ‘infliction of emotional distress.’ On appeal this was reduced to $2.5 million. Scientology officials vowed never to pay, and the phrase ‘not one thin dime for Wollersheim,’ was chanted by Scientologists at court hearings. The church challenged the $2.5 million award, but the case was dismissed and Wollersheim was awarded an additional $130,506.71 in attorney’s fees.”
True to form, the church would continue to dispute the trial verdict over the next 20 years, and finally agree to a $8.7 million settlement on May 9, 2002.
The Wollersheim verdict rocked Scientology. It proved that LRH was the managing agent of Scientology and that Scientology was LRH’s alter ego. It also pierced the corporate veil of the Church of Scientology of California (CSC), leading to its eventual demise in 2004, having been replaced by the Church of Scientology International (CSI). Lastly, the discovery process laid bare much of the church’s highly secretive doctrine and beliefs. As part of the courtroom exhibits, the Xenu creation narrative was publicly exposed to the public when the Operating Thetan Level 3 (“OT-III”) levels were also included in the discovery process. Consequently, Scientology’s “‘top secret’ materials about Xenu and their beliefs in past alien invasions of Earth was filed with the LA court on his behalf and then copied from court records and published by media all over the world.”
For the first time, the secret was literally “out” as to the inner workings and beliefs of Scientology. Interestingly, in keeping with the parallels between Scientology and LCN, like Scientology’s experience in the first Wollersheim trial, LCN experienced a similar courtroom deconstruction of its secretive organizational structure, hierarchy, and operations, in a spectacular trial that ran from February 25, 1985 – November 19, 1986, in what was officially known as United States v. Anthony Salerno, et al., and unofficially as the “Mafia Commission Trial:”
“Using evidence obtained by the Federal Bureau of Investigation, eleven organized crime figures, including the heads of New York’s so-called ‘Five Families,’ were indicted by United States Attorney Rudolph Giuliani under the Racketeer Influenced and Corrupt Organizations Act (RICO) on charges including extortion, labor racketeering, and murder for hire. The case struck a blow against ‘The Commission,’ a loose organization of the New York Mafia organizations that met to resolve disputes or discuss criminal activities, sometimes likened to organized crime’s board of directors. Time magazine called this ‘Case of Cases’ possibly ‘the most significant assault on the infrastructure of organized crime since the high command of the Chicago Mafia was swept away in 1943.’”
What’s really intriguing is the way the defense’s tactics evolved, and how the defendant’s perception of their organizational loyalties resemble those of the Sea Org, relative to their effect on a favorable outcome; this becomes crystal clear in the following defense strategy outline, if one substitutes “mafia” for “Sea Org” and “omertà” for “the greatest good for the greatest number of dynamics:”
“The seven defense attorneys and Persico’s legal adviser decided to argue that membership in the Mafia and membership in the Commission were not in and of themselves evidence of criminal activity. The mafiosi were reluctant to agree to this, believing it would violate the code of omertà. However, the lawyers impressed upon their clients that there was no way they could credibly deny the Mafia existed in the face of their own recorded references to it. They ultimately agreed to this tactic as long as they did not have to personally make statements to that effect on the stand. The upshot of this was the first admission in open court that the Mafia existed.”
The ramifications for both organizations from these landmark trials were similar, yet their respective responses couldn’t have been more different. The Mafia Commission Trial spelled the end of the old LCN Five Families management structure, and having clearly understood the Government’s intent, forced the successor heads of the Five Families to move their blatant criminal activities such as prostitution, loan sharking, etc., even further underground, while restructuring their financial operations and moving their quasi-legitimate fronts, such as construction, waste haulage, hospitality management and trucking into the mainstream economy. It also introduced a more professional style of management and business practices, inclusive of accountants, lawyers and tax professionals; this somewhat neutered LCN culture remains to this day as a result of this and more recent courtroom setbacks.
Conversely, Scientology was in no way cowed by the Wollersheim trial in the way that LCN’s Five Families were from the Mafia Commission Trial. Structurally, rather than a LCN commission-like framework, Scientology resembles a single crime family with David Miscavige as uncontested capo di tutti capi who, just like Hubbard, ruthlessly suppresses any dissent or rival. If anything, given Miscavige’s level of organizational and ideological control, Wollersheim served as a rallying point for a variety of fundraising and political initiatives across Scientology. Strategically, it served as a warning that the discovery process could be used at some point in the future to uncover all sorts of unethical and illegal behavior, as well as exposing the sham organizational structure the church had instituted to mask the irregular, if not illegal financial behavior that was keeping the church’s various rackets afloat. Indeed, it would later become apparent that the primary reason the Church continued to aggressively litigate the Wollersheim case until settling in 2002, was that Wollersheim’s attorneys had plenty of evidence of church malfeasance across the board. Tony Ortega goes on to say:
“On May 9 , the Church of Scientology of California, an entity which had once been considered the ‘mother church’ but for a decade was supposed to have been dormant and broke, submitted a check to the superior court for $8,674,843 to cover the $2.5 million judgment and the interest it had accrued. A Scientology spokeswoman says that the organization was simply tired of the case. But the timing of the payment suggested another reason. The very morning that Scientology paid to end the case, superior court judge Robert L. Hess was scheduled to begin a new hearing in the 22-year-old case—a hearing Wollersheim’s attorneys had been preparing for, and demanding, for years.
Wollersheim’s attorneys were about to present evidence that they believed would not only show how Scientology had juggled assets to avoid paying Wollersheim in the past, but would also convince Hess that Scientology’s complex corporate structure itself was an elaborate sham. Contrary to what it had assured the IRS when it regained its tax exempt status in 1993, the ‘church’ and its affiliated organizations, Wollersheim’s attorneys assert, was really a dictatorship with power centered in one man, Hubbard’s successor David Miscavige, who had directed all of the litigation against Wollersheim and had ordered documents key to the case altered or destroyed.
Scientology’s attorneys had managed to keep Miscavige out of the proceedings, but the organization’s nominal president, Heber Jentzsch, was facing cross examination by Wollersheim’s attorneys if the hearing came off as planned. In the final days before the scheduled event, Scientology attorneys continued to argue for delays and outright dismissals, but Hess denied them and would not budge on the May 9 date. After inheriting the case three years earlier, Hess, in transcripts, appeared determined to turn over his courtroom to a live hearing. Scientology’s $8.7 million check arrived just an hour before the proceeding was scheduled to begin.”
The entirety of Ortega’s excellent article detailing the whole sorry Wollersheim saga, as well as providing a concise overview of Scientology’s ongoing fight with the IRS, which culminated in the 1993 consent agreement, can be found here. As we noted earlier in this series, Scientology and the IRS had an incredibly contentious relationship. In 1967 Scientology lost its tax exemption, yet like any criminal organization, continued to make vast amounts of money and ignore its tax obligations. With Hubbard, this willful avoidance was out of spite, exemplified in perhaps the ultimate act of anti-IRS hubris, Operation “Snow White.” With the mob, it was simply a business decision. As the Wollersheim saga demonstrates, Scientology’s multi-front battle against the IRS, apostates, and other perceived enemies didn’t quit with Hubbard, nor did it abate because of a single courtroom set back. Scientology ratcheted up its attack on its enemies, the IRS in particular, which eventually result in the IRS granting Scientology tax exemption in 1993.
Tax Exemption and Legitimizing the Illegitimate
The importance of the 1993 agreement cannot be overstated, certainly as it relates to the crucial role it played in furthering Scientology’s ever-expanding criminal empire. It was though the exemption resembled a license to print money as much as a hedge against legal scrutiny, something not even LCN enjoys. Significantly, the agreement provided quasi-legitimacy to the church on a variety of operational levels as well as a means to mask its rapacious financial behaviour, thus an interesting litigation paradox begins to emerge during the 90s. The church becomes more progressively nuanced in its approach to legal matters, in a way that allows its rackets to thrive, while avoiding cases where discovery could potentially threaten their viability along with exposing other suspect church behavior; while still an aggressive litigant, harassment becomes less a motivator and risk mitigation and concealment more a concern. Even with these considerations, as was demonstrated during Wollersheim, the church still was not adverse to destroying or tampering with evidence, or trying to financially coerce litigants into settlements favorable to the church. Such chicanery and opportunistic manipulation would hit its nadir in the Lisa McPherson debacle in 1995, as we’ll discuss shortly.
Institutionally, despite what it had told the IRS in 1993, Scientology was still corrupt, had no real internal oversight nor traditional forms of corporate governance, and remained nothing more than a mob-like cartel or business conglomerate in the guise of a “church.” To be safe, much of the excesses of the church were kept at bay from its general membership, so as to give the appearance of conformance to the 5-year “good conduct” probationary period required by the ‘93 agreement; thus any corporate action was always judged in terms of how a negative outcome could jeopardize tax exemption. Just like any good parolee, the church and the IRS met for regular audits and cynically, the church made a big deal of touting the benefits of tax compliance, even going so far to creating a “church tax compliance committee,” headed by Marty Rathbun. This compliance charade continues to this day and is a key factor in the church’s longevity and profitability, as well as being complicit in maintaining Miscavige’s iron grip on Scientology.
Miscavige as Master Criminal and Manipulator
As is the case with any crime boss, David Miscavige imparts a certain menace, unpredictability, and callousness in all he does; he’s also smart, ruthless, cagey, determined, and capable of wielding enormous power within Scientology. Furthermore, when backed by the infallibility of Source, he can literally get away with murder, or in the case of Lisa McPherson, negligent homicide. While Scientology would be responsible for more deaths in the future, as a result of not only its own direct complicity, but also indirectly, for example, in the case of an individual’s suicide or psychotic break, the McPherson case reflects the toxic, institutional criminality ingrained within Scientology and its management, starting with David Miscavige. Furthermore, the McPherson case resembles that of Larry Wollersheim in many ways, such as the duration of the investigation and subsequent trial, its huge legal costs, the criminal behavior by Scientology executives, Scientology’s cynical manipulation of the judicial process, as well as demonstrating yet again the inherently dangerous, indeed potentially lethal outcomes arising from Scientology’s quack remedies.
What’s unique about the McPherson case, is the depth of David Miscavige’s involvement from the beginning, starting in 1995 as her Case Supervisor. As Jeff Jacobsen writes:
“According to Marc Headley’s book, Blown for Good, in 1995 Scientology leader David Miscavige publicly stated that he would supervise Lisa McPherson’s processing in Scientology (p.177). Mike Rinder wrote a declaration in which he states “Miscavige had been personally involved in the administration of Scientology counseling (auditing) to Ms. McPherson.” In the summer of 1995 Lisa had some psychotic problems. In September 1995 she was declared ‘clear,’ (allegedly by Miscavige himself) which is a major accomplishment in Scientology processing. In November Lisa began displaying psychotic problems again.
On November 18, 1995, Lisa was involved in a minor car accident. She was apparently not hurt, but she got out of her car and took all her clothes off and seemed mentally unstable. She was taken to a hospital where she was physically evaluated as being unharmed, but the hospital wanted her to be psychologically cared for. However, some Scientologists arrived and stated that Lisa did not believe in psychiatry, and she checked out after a short evaluation and left with the Scientologists against the attending doctor’s advice. She went with them to Room 174 of the Ft. Harrison Hotel for ‘rest and relaxation’ according to the church, but church logs from Lisa’s stay there from November 18 to her death December 5 show differently. Lisa was put on the Introspection Rundown that Scientology uses to handle those who have had a psychotic break. Some logs are missing, and a high ranking ex-Scientologist has written an affidavit in which he claims that the church has in the past destroyed documents that might get the church in trouble. Marty Rathbun, a former high-ranking Scientologist, revealed that he was responsible for the missing records;
Rathbun concluded the notes had to go. ‘I said, “Lose ’em” and walked out of the room,’ he recalled, adding that the decision to destroy the records was his own.’ (St. Petersburg Times, June 22, 2009). Did Miscavige’s supervision of Lisa’s case contribute to her mental problems? Headley says as far as he knew Miscavige was not trained to be a case supervisor (p. 176). “David Miscavige had messed up big time. He knew it, and a lot of people that worked with him, for him and around him, knew it.” (p.180) Marty Rathbun states that ‘Lisa McPherson was killed at the Flag Land Base. David Miscavige killed Lisa McPherson.’”
In Part Four, we’ll examine how negligent homicide, obstruction of justice, evidence tampering, practicing medicine without a license and other felonies were adjudicated once Scientology was hauled into court. Scientology’s behaviour during the McPherson trial was just as egregious as it was in “handling” Lisa, and is a case study in extortion, coercion and judicial manipulation. We’ll also examine how as a result of the $200 million spent defending the McPherson trial, David Miscavige essentially abandoned auditing in favor of “safer” services income streams, as well as inventing the “Ideal Org” REIT (Real Estate Investment Trust) racket as a brilliant donation strategy. Lastly, we’ll examine Scientology’s criminal, financial, and organizational behaviour in the 21st century, as well as its vulnerability in an new era of financial regulation, corporate governance and human rights law.