Scientology Financial Fraud


 * Monetary Fraud and Exploitation

"By charging money for obscure expert services which are part of a religion and which have as their product an ambiguous subjective condition, Hubbard created a sales and recruitment machine virtually immune from legal accountability." Social Control in Scientology

Scientology is a money machine
"MAKE MONEY. MAKE MORE MONEY. MAKE OTHER PEOPLE PRODUCE SO AS TO MAKE MORE MONEY." — L. Ron Hubbard, in a church policy letter 1.

"Every week, when we had a staff meeting, "How much money did we get?" That was the first thing; everything was secondary to that". David Ray

"[I]f you said, "They did better today," it was - no one wanted to hear this. It was only announced how much money we made." Lori Taverna

''"... you would be looked at as to how many services we could get out of you, how much money we could milk you for." Stuart Boote 2

"[O]ur office would call them and try to get them to show up earlier than they had anticipated or just get them to show up. ... And then after they showed up, then we could deliver the service and then sell them more. You can't sell them any more if they haven't done what they already paid for." Casey Kelley

"Money. That’s all it was about as far as I could see. It wasn’t about spiritual enlightenment, helping people, or making my life better. They wanted to take me for my hard-earned dollars through persuasion, aggression, and good old-fashioned guilt tripping. (Don’t you want to get better? Then buy this book! Attend this conference!)" New York Enquirer: Scientology's Hard Sell

"The purpose of the registrar is to make more money all the time for Scientology. At the time, Scientology had various sales courses that taught registrars to strip resistance from people they were 'regging.' Registrars were taught how to push various buttons with regard to their mortality and their spirituality and their ability to be at peace as a being. Every button that could possibly pushed was pushed in order to get a person to make large advance payments." Affidavit of Scott Mayer

"In 1980, when Scientology worldwide bought a whole bunch of buildings around the world -- they bought somewhere in the neighborhood of twenty-five million dollars worth of buildings around the world, and they paid cash for all of them." Casey Kelley

"Take a current Scientology course and break it into several parts. Then sell each part for more than the cost of the original course. If we expand a course without adding any substance, we will rake more money. We will triple the revenue without offering anything more. It is the "oldest trick" in the book to cut a course in two, make each more expensive than the original. That way we charge more without giving more." Silvana Garritano, quoting L. Ron Hubbard, in her affidavit of 1980

Buying Books
Scientology's founder, L. Ron Hubbard, wrote a large number of books, both science fiction and Scientology (the distinction is difficult to establish). His entire output is aggressively sold to members. At various times, the Scientology organization has also mounted campaigns to buy a huge number of copies of one or the other of his works, to push it onto the Best-Seller List. Ex-Scientologists have observed back rooms stacked high with these unwanted books.

"Scientologist Adrian Hayman told the bankruptcy court that he had paid the church £30,000 for an E Meter "therapy box and three leather-bound books signed by the cult's founder L. Ron Hubbard.

Mr Hayman said the artefacts were an "investment" and that there was a "specialist market for them where they could be re-sold for at least the same price.

Indeed the promotion literature for Scientology's limited edition books makes grand claims about the investment potential of Mr Hubbard's works.

A sales leaflet printed by one of the cult's two publishing companies New Era Publications quotes some staggering price rises for a "Special First Edition" of Hubbard's last science fiction yarn, Battlefield Earth. It reads: "This was a signed limited edition of 550 copies. The market price escalated from $900 to $8,000 in early 1985 with a top price of $24,000 being paid in early 1985 for a low-numbered copy."

However a valuation expert in the book department of international auctioneers Christie's said this week that despite keeping "pretty exhaustive" records of world book auctions there was no sign of Hubbard's special editions appearing on the international market: "Given that they haven't come up for sale it doesn't sound like a good investment," he concluded.

In a celebrated case in 1985 when a 22-year-old was rescued from the cult after spending £90,000 on Scientology literature, an expert at the auctioneer's Glasgow office was far more dismissive about the books' worth.

When the boy's parents sent Christie's the leatherbound volumes for valuation, he concluded: "This is the worst example of profiteering from cheap and fairly commonplace material I have ever seen. Not only do I think the prices being asked are outrageous, but I also think the investment will never be recoverable."

He continued: "I cannot but reel back in astonishment that anybody has the gall to offer them for such extortionate sums." East Grinstead Courier

Extortion
"I recall an old man Ed or Howard Pughes being made to pay the totality of his savings for Flag services. He was an 82 year old man who knew he had little time to live and he was made to spend all of his money in a few months. The main motive was: to get money. I recall the registrar (Felice Brand) saying: "He is a sweet old man who wants to give us all of his money before he dies." As stated earlier, the priest in Lyon and the nurse in Paris exploited the terminatedly ill to sway them into paying money to Scientology." Pierre Ethier (13)

"Let's say you paid for, let's say, twenty-five hours to complete such and such a rundown, and you got to the end of that twenty-five hours and you still hadn't finished, that was the common technique: "You're going to get sick if you don't finish this," you know. So, you have to buy --" The Clearwater Commission

"If targets had no ready cash or property to sell they'd be persuaded to take out a loan. To make borrowing easier [Scientology] Registrars kept a handy stock of forms from all the major lending financial institutions. They then persuaded people to lie about the purpose of the loans. This constitutes criminal deception." ITV - The Big Story - The S Files

Franchise/Mission Holders
"Cathy Brewer (the sister of Ed  Brewer [q.v.]) told me that she  had seen written orders stating that as soon as a franchise was established and making money in a regular manner and was profitable  - then it was to be taken over by [S]cientology and made into a Sea Org mission."

Scientology missions or franchises were largely independent, operated by mission holders in different areas. They brought millions of dollars and thousands of members into the Scientology organization. In 1982, the mission holders were forced to give up all their assets, built over years of personal investment, and give up all their influence and goodwill in their areas, to the Sea Org. They were completely dispossessed.

"[T]he Mission Holder Conference was held in order to perpetrate an enormous financial fraud and scam on CSI [the Church of Scientology International] and individual Mission Holders, and was done with the full knowledge and participation of Miscavige, others present as well as Hubbard as follows:
 * 1) Through massive intimidation and coercion ("Fair Game"), the wealthy and independent Mission Holders were forced to pay huge sums of money through CSI to ASI.
 * 2) ASI funneled the money through a Liberian shell corporation, Religious Research Foundation, and through Canada, into Hubbard's private bank accounts in Luxembourg and Lichtenstein.
 * 3) During only part of 1982, over forty million dollars from the non-profit CSI was funneled through the for profit ASI [Author Services International] into Hubbard's personal bank accounts." Affidavit

Hard Sell
Hard Sell

"Hard selling techniques are another aspect of the use of undue influence or destructive persuasion upon members. Clients of Scientology are harassed with demands for ever increasing "donations" for auditing and indoctrination Completion of the Scientology "Bridge" costs in the region of £200,000 or $350,000 (there are Scientologists who have paid even more). Many Scientologists have found themselves homeless and deeply in debt as a result of high pressure selling. Sales interviews can last for as much as 13 hours; and depend upon the sophisticated manipulation techniques described in Les Dane's Big League Sales Closing Techniques." Jon Atack: The Total Freedom Trap

"One such [hard-selling] tactic was called the "postulate check", where the person would be asked to write a check for an amount that they didn't have in the bank account. The theory behind this was that by writing such a check, the person would be given the incentive to create the money (Scientologists call creating something "mocking it up"). If a person really had a strong intention to get the money, he or she could mock it up." Affidavit of Monica Pignotti

"The job of the registrar in Scientology is to use high pressure sales tactics to sign people up for courses. This is especially true for front groups, such as Sterling Management, Singer and numerous others. Once the registrar gets the person into his/her office, the person is not allowed to leave until he/she has signed up for a course and paid. If the person says, "I’d like time to think this over", this is not allowed. The staff at Sterling is told that the person should not be allowed to "think" about it because that would give his "reactive mind" a chance to take over and so they must pay immediately. I have personally talked to many people who have been held for hours in the registrars office, sometimes all night, until out of sheer exhaustion, they gave in." Monica Pignotti

Front Groups
Scientology Front Groups

2 3 4 5 6 7 8

"In 1984, I experienced a disaster with a CSI front group, Sterling Management Systems, ("SMS"). SMS promoted Hubbard's business management policies to doctors, dentists and chiropractors as a way to way to expand their business and double their income. SMS claimed no connection to CSI though its consultants, including myself, knew otherwise. The despicable treatment I saw meted out to two decent dentists in a San Bernadino clinic, and to me and my superior, by Sterling staff and by Scientologists, shocked me so deeply that I left CSI." Hana Whitfield's affidavit


 * MR. LeCHER: You've got Scientology front groups: Apple Schools, Narcanon, ASI, Citizens' Commission for Human Rights, CCHR, Gerus Society, and the Safe Environment Fund. These are all front groups for Scientology?
 * MS. PETERSON: Yes. ... Narcanon is a rehabilitation drug program which is run by Scientology. My experience with it was that it was not very successful. I really don't know about any of the other — all these groups are set up and there's various programs in the Guardian's Office on how to set them up. Also, part of the training received while you're in the Guardian's Office is that if you're asked by anyone if the Guardian's Office runs these schools, you're to tell them, "No." You're to say that you're involved with or that you help out or that they use the technology of Scientology. However, you're never to tell, outside of the Guardian's Office, that you are, in fact, running it or that the money goes into the Church of Scientology from these groups.
 * The Clearwater Commission

Uninformed Consent
"... most people entering Scientology, they're made to sign these [waiver] documents at the outset and, for the most part, they have no idea what they're signing. ... these people are made to believe that these documents are enforceable in a court of law. ... I would say that the thing is utterly unenforceable. But the issue is whether or not the people are made to believe that it might be enforceable." The Clearwater Commission

Baer, Peggy
Scientology persuaded Peggy Baer to give them $33,000 in just two weeks, shortly after her husband died. 1

Bowernan, Alex
Alex lost £25,000 to Scientology in just one week. ITV - The Big Story - The S Files

Gardini, Maria Pia
Maria was bullied into giving millions of dollars to the Scientology organization. "[The Scientology registrar] then started right in telling me she wanted $35,000 from me for a Cornerstone donation to the project. She told me she would not leave the house until I paid. This went on until 8:00 p.m. as I tried to resist her in every way, even locking myself in the bathroom for half an hour with her banging on the outside saying she would never leave." Affidavit

Geary, Robert and Dodie
"Over five months, the Gearys say, they spent $130,000 for services, plus $50,000 for "gold-embossed, investment-grade" books signed by Hubbard. Geary contends that Scientologists not only called his bank to increase his credit card limit but also forged his signature on a $20,000 loan application. "It was insane," he recalls. "I couldn't even get an accounting from them of what I was paying for." Time Magazine – Scientology: The Thriving Cult of Greed and Power 2

Hayman, Adrian
"Computer analyst Adrian Hayman, 38, of The Ferns, Woodshill Lane, Ashurst Wood, gave £175,000 in 15 years to the Church of Scientology." This included £71,000 in the 17 months before his bankruptcy. He ended up owing £109,000. 1

Hayman, Jocelyn
Adrian Hayman's wife also went bankrupt after paying large sums of money to Scientology. 1

Johnston, Mary
Mary was aggressively sold Scientology "courses", regardless of her lack of cash. She was told to borrow money or sell her shop. "By the time they had finished with me after five hours had elapsed, I had agreed I was going to sell my business." Irish Times article

Penny, Robert (Bob)
"Hard Sell technique that I observed (and was subjected to) consisted of a fast-paced and disorienting swirl of asserted and presumed agreements, trumped-up emergencies, plays on loyalty, physical exhaustion, sophistical arguments, accusations of betrayal, guilt-trips, browbeating, physical and verbal intimidation, humiliations, attacks, threats, insults, alienations of affection, ganging-up-on, asserted and presumed commitments, promises, demands, orders, invalidations, ridicule, plays on deeply felt needs, pleas, misidentifications, misrepresentations, putting words in my mouth, telling me what I think, asserted truths, validations, praise, flattery, plays on status, "trust me's" -- anything to destroy my position, to close the sale, to get the stat, to get the check. On one occasion (personal experience) this went on day and night for three days. These words do not begin to describe it. ... A registrar told my wife, "What have you got to lose?" when they were discussing whether I might leave if she borrowed against our fledgling business to purchase Scientology services." Social Control in Scientology

Pignotti, Monica

 * "There was a least one occasion that I can recall that registrars from higher Scientology organizations came to our mission and used high pressure sales tactics to get us to sign up for more courses. One such tactic was called the "postulate check", where the person would be asked to write a check for an amount that they didn't have in the bank account. The theory behind this was that by writing such a check, the person would be given the incentive to create the money (Scientologists call creating something "mocking it up"). If a person really had a strong intention to get the money, he or she could mock it up. I wrote a postulate check for $1,000, even though I had less that $100 in my bank account. The next day, I went to my bank to try to get a loan for $1,000, but was turned down due to no credit history. My check bounced." Affidavit

Tilse, Michael Leonard
"Such registrars as Howard Becker and Michael Roberts even came to my house uninvited and verbally "double-teamed" me, playing on my "buttons" of my desire to help and support my religious philosophy for hours until I was emotionally beaten into giving them more money for the IAS [International Association of Scientologists]. I was made to feel guilty if I did not give them more money. I had to forcefully ask them to leave more than once. One time I had to flee my own house because they were putting so much manipulative emotional pressure on me." Affidavit

List of victims of Scientology