"Temper, Temper, Temper Award - To the Church of Scientology, which spent $30 million on an ad campaign designed to discredit a Time Magazine story that labeled Scientology a "Cult of Greed," and then harassed Readers Digest when it attempted to run the article in abbreviated form," Magazine Week - Dec 30, 1991
 The Thriving Cult of Greed and Power
Ruined lives. Lost fortunes.
Federal crimes. Scientology poses as a religion but really is a ruthless global scam --
and aiming for the mainstream.
by Richard Behar -- Time Magazine
May 6, 1991 - Cover Story
By all appearances, Noah Lottick of Kingston, Pa., had been a normal, happy 24-year-old
who was looking for his place in the world. On the day last June when his parents drove to
New York City to obtain his body, they were nearly catatonic with grief.
This young Russian-studies scholar had jumped from a 10th-floor window of the Milford
Plaza Hotel and bounced off the hood of a stretch limousine. When the police arrived, his
fingers were still clutching $171 in cash, virtually the only money he hadn't turned over
to the Church of Scientology, the self-help "philosophy" group he had discovered
just seven months earlier.
His death inspired his father Edward, a physician, to start his own investigation of
the church. "We thought Scientology was something like Dale Carnegie," Lottick
says. "I now believe it's a school for psychopaths." Their so-called therapies
are manipulations. They take the best and the brightest people and destroy them." The
Lotticks want to sue the church for contributing to their son's death, but the prospect
has them frightened. For nearly 40 years, the big business of Scientology has shielded
itself exquisitely behind the First Amendment as well as a battery of high-priced criminal
lawyers and shady private detectives.
The Church of Scientology, started by science-fiction writer L. Ron Hubbard to
"clear" people of unhappiness, portrays itself as a religion. In reality the
church is a hugely profitable global racket that survives by intimidating members and
critics in a Mafia-like manner. At times during the past decade, prosecutions against
Scientology seemed to be curbing its menace. Eleven top Scientologists, including
Hubbard's wife, were sent to prison in the early 1980s for infiltrating, burglarizing and
wiretapping more than 100 private and government agencies in attempts to block their
investigations. In recent years hundreds of longtime Scientology adherents -- many
charging that they were mentally of physically abused -- have quit the church and
criticized it at their own risk. Some have sued the church and won; others have settled
for amounts in excess of $500,000. In various cases judges have labeled the church
"schizophrenic and paranoid" and "corrupt, sinister and dangerous."
Yet the outrage and litigation have failed to squelch Scientology. The group, which
boasts 700 centers in 65 countries, threatens to become more insidious and pervasive than
ever. Scientology is trying to go mainstream, a strategy that has sparked a renewed law-
enforcement campaign against the church. Many of the group's followers have been accused
of committing financial scams, while the church is busy attracting the unwary through a
wide array of front groups in such businesses as publishing, consulting, health care and
even remedial education.
In Hollywood, Scientology has assembled a star-studded roster of followers by
aggressively recruiting and regally pampering them at the church's "Celebrity
Centers," a chain of clubhouses that offer expensive counseling and career guidance.
Adherents include screen idols Tom Cruise and John Travolta, actresses Kirstie Alley, Mimi
Rogers, and Anne Archer, Palm Springs mayor and performer Sonny Bono, jazzman Chick Corea
and even Nancy Cartwright, the voice of cartoon star Bart Simpson. Rank-and-file members,
however, are dealt a less glamorous Scientology.
According to the Cult Awareness Network, whose 23 chapters monitor more than 200
"mind control" cults, no group prompts more telephone pleas for help than does
Scientology. Says Cynthia Kisser, the network's Chicago-based executive director:
"Scientology is quite likely the most ruthless, the most classically terroristic, the
most litigious and the most lucrative cult the country has ever seen. No cult extracts
more money from its members." Agrees Vicki Aznaran, who was one of Scientology's six
key leaders until she bolted from the church in 1987: "This is a criminal
organization, day in and day out. It makes Jim and Tammy [Bakker] look like
kindergarten." To explore Scientology's reach, TIME conducted more than 150
interviews and reviewed hundreds of court records and internal Scientology documents.
Church officials refused to be interviewed. The investigation paints a picture of a
depraved yet thriving enterprise. Most cults fail to outlast their founder, but
Scientology has prospered since Hubbard's death in 1986. In a court filing, one of the
cult's many entities -- the Church of Spiritual Technology -- listed $503 million in
income just for 1987. High-level defectors say the parent organization has squirreled away
an estimated $400 million in bank accounts in Liechtenstein, Switzerland and Cyprus.
Scientology probably has about 50,000 active members, far fewer than the 8 million the
group claims. But in one sense, that inflated figure rings true: millions of people have
been affected in one way or another by Hubbard's bizarre creation.  David Miscavige, 31, a high school dropout and
second-generation church member. Defectors describe him as cunning, ruthless and so
paranoid about perceived enemies that he kept plastic wrap over his glass of water. His
obsession is to obtain credibility for Scientology in the 1990s. Among other tactics, the
group:
- Retains public relation powerhouse Hill and
Knowlton to help shed the church's fringe-group image.
- Joined such household names as Sony and Pepsi
as a main sponsor of Ted Turner's Goodwill Games.
- Buys massive quantities of its own books from
retail stores to propel the titles onto best-seller lists.
- Runs full-page ads in such publications as
Newsweek and Business Week that call Scientology a "philosophy," along
with a plethora of TV ads touting the group's books.
- Recruits wealthy and respectable professionals through a web of consulting groups that
typically hide their ties to Scientology.
The founder of this enterprise was part storyteller, part flimflam man. Born In
Nebraska in 1911, Hubbard served in the Navy during World War II and soon afterward
complained to the Veterans Administration about his "suicidal inclinations" and
his "seriously affected" mind. Nevertheless, Hubbard was a moderately successful
writer of pulp science fiction. Years later, church brochures described him falsely as an
"extensively decorated" World War II hero who was crippled and blinded in
action, twice pronounced dead and miraculously cured through Scientology. Hubbard's
"doctorate" from "Sequoia University" was a fake mall-order degree. In
a I984 case in which the church sued a Hubbard biographical researcher, a California judge
concluded that its founder was "a pathological liar."
Hubbard wrote one of Scientology's sacred texts, Dianetics: The Modern Science of
Mental Health, in 1950. In it he introduced a crude psychotherapeutic technique he called
"auditing." He also created a simplified lie detector (called an
"E-meter") that was designed to measure electrical changes In the skin while
subjects discussed intimate details of their past. Hubbard argued that unhappiness sprang
from mental aberrations (or "engrams") caused by early traumas. Counseling
sessions with the E-meter, he claimed, could knock out the engrams, cure blindness and
even improve a person's intelligence and appearance.
Hubbard kept adding steps, each more costly, for his followers to climb. In the 1960s
the guru decreed that humans are made of clusters of spirits (or "thetans") who
were banished to earth some 75 million years ago by a cruel galactic ruler named Xenu.
Naturally, those thetans had to be audited.
An Internal Revenue Service ruling in 1967 stripped Scientology's mother church of its
tax-exempt status. A federal court ruled in 1971 that Hubbard's medical claims were bogus
and that E-meter auditing could no longer be called a scientific treatment. Hubbard
responded by going fully religious, seeking First Amendment protection for Scien- tology's
strange rites. His counselors started sporting clerical collars. Chapels were built,
franchises became "missions," fees became "fixed donations," and
Hubbard's comic-book cosmology became "sacred scriptures.'
During the early 1970s, the IRS conducted its own auditing sessions and proved that
Hubbard was skimming millions of dollars from the church, laundering the money through
dummy corporations in Panama and stashing it in Swiss bank accounts. Moreover, church
members stole IRS documents, filed false tax returns and harassed the agency's employees.
By late 1985, with high-level defectors accusing Hubbard of having stolen as much as S200
million from the church, the IRS was seeking an indictment of Hubbard for tax fraud.
Scientology members "worked day and night" shredding documents the IRS sought,
according to defector Aznaran, who took part in the scheme. Hubbard, who had been in
hiding for five years, died before the criminal case could be prosecuted.
Today the church invents costly new services with all the zeal of its founder.
Scientology doctrine warns that even adherents who are "cleared" of engrams face
grave spiritual dangers unless they are pushed to higher and more expensive levels.
According to the church's latest price list, recruits -- "raw meat," as Hubbard
called them -- take auditing sessions that cost as much as $1,000 an hour, or $12,500 for
a 12 1/2-hour "intensive."
Psychiatrists say these sessions can produce a drugged-like, mind-controlled euphoria
that keeps customers coming back for more. To pay their fees, newcomers can earn
commissions by recruiting new mem- bers, become auditors themselves (Miscavige did so at
age 12), or join the church staff and receive free counseling in exchange for what their
written contracts describe as a "billion years" of labor. "Make sure that
lots of bodies move through the shop," implored Hubbard in one of his bulletins to
officials. "Make money. Make more money. Make others produce so as to make money . .
. However you get them in or why, just do it." 
Harriet Baker learned the hard way about Scientology's business of selling religion.
When Baker, 73, lost her husband to cancer, a Scientologist turned up at her Los Angeles
home peddling a $1,300 auditing package to cure her grief. Some $15,000 later, the
Scientologists discovered that her house was debt free. They arranged a $45,000 mortgage,
which they pressured her to tap for more auditing until Baker's children helped their
mother snap out of her daze. Last June, Baker demanded a $27,000 refund for unused
services, prompting two cult members to show up at her door unannounced with an E-meter to
interrogate her. Baker never got the money and, financially strapped, was forced to sell
her house in September.
Before Noah Lottick killed himself, he had paid more than $5,000 for church counseling.
His behavior had also become strange. He once remarked to his parents that his Scientology
mentors could actually read minds. When his father suffered a major heart attack, Noah
insisted that it was purely psychosomatic. Five days before he jumped, Noah burst into his
parents' home and demanded to know why they were spreading "false rumors" about
him -- a delusion that finally prompted his father to call a psychiatrist.
It was too late. "From Noah's friends at Dianetics" read the card that
accompanied a bouquet of flowers at Lottick's funeral. Yet no Scientology staff members
bothered to show up. A week earlier, local church officials had given Lottick's parents a
red-carpet tour of their center. A cult leader told Noah's parents that their son had been
at the church just hours before he disappeared -- but the church denied this story as soon
as the body was identified. True to form, the cult even haggled with the Lotticks over
$3,000 their son had paid for services he never used, insisting that Noah had intended it
as a "donation."
The church has invented hundreds of goods and services for which members are urged to
give "donations." Are you having trouble "moving swiftly up the
Bridge" -- that is, advancing up the stepladder of en- lightenment? Then you can have
your case reviewed for a mere $1,250 "donation." Want to know "why a thetan
hangs on to the physical universe?" Try 52 of Hubbard's tape-recorded speeches from
1952, titled "Ron's Philadelphia Doctorate Course Lectures," for $2,525. Next:
nine other series of the same sort. For the collector, gold-and-leather-bound editions of
22 of Hubbard's books (and bookends) on subjects ranging from Scientology ethics to
radiation can be had for just $1,900.
To gain influence and lure richer, more sophisticated followers, Scientology has lately
resorted to a wide array of front groups and financial scams. Among them:
- CONSULTING. Sterling Management Systems, formed in 1983, has been ranked in recent years
by Inc. magazine as one of America's fastest-growing private companies (estimated 1988
revenues: $20 mil- lion). Sterling regularly mails a free newsletter to more than 300,000
health-care professionals, mostly dentists, promising to increase their incomes
dramatically. The firm offers seminars and courses that typically cost $10,OOO. But
Sterling's true aim is to hook customers for Scientology. "The church has a rotten
product, so they package it as something else," says Peter Georgiades, a Pittsburgh
attorney who represents Sterling victims. "It's a kind of bait and switch."
Sterling's founder, dentist Gregory Hughes is now under investigation by California's
Board of Dental Examiners for incompetence. Nine lawsuits are pending against him for
malpractice (seven others have been settled), mostly for orthodontic work on children.
Many dentists who have unwittingly been drawn into the cult are filing or threatening
lawsuits as well. Dentist Robert Geary of Medina, Ohio, who entered a Sterling seminar in
1988, endured "the most extreme high-pressure sales tactics I have ever faced."
Sterling officials told Geary, 45, that their firm was not linked to Scientology, he says.
but Geary claims they eventually convinced him that he and his wife Dorothy had personal
problems that required auditing. 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." At one point, the Gearys claim, Scientologists held Dorothy hostage
for two weeks in a mountain cabin, after which she was hospitalized for a nervous
breakdown. Last October, Sterling broke some bad news to another dentist, Glover Rowe
of Gadsden, Ala., and his wife Dee. Tests showed that unless they signed up for auditing
Glover's practice would fail, and Dee would someday abuse their child. The next month the
Rowes flew to Glendale, Calif., where they shuttled daily from a local hotel to a
Dianetics center. "We thought they were brilliant people because they seemed to know
so much about us," recalls Dee. "Then we realized our hotel room must have been
bugged." After bolting from the center, $23,000 poorer, the Rowes say, they were
chased repeatedly by Scientologists on foot and in cars. Dentists aren't the only once at
risk. Scientology also makes pitches to chiropractors, podiatrists and veterinarians. http://www.lermanet.com/images/rowe-family.jpg - PUBLIC INFLUENCE. One front, the Way to Happiness Foundation, has distributed to
children in thousands of the nation's public schools more than 3.5 million copies of a
booklet Hubbard wrote on morality. The church calls the scheme "the largest
dissemination project in Scientology history." Applied Scholastics is the name of
still another front, which is attempting to install a Hubbard tutorial program in public
schools, primarily those populated by minorities. The group also plans a 1,000 acre
campus, where it will train educators to teach various Hubbard methods. The disingenuously
named Citizens Commission on Human Rights is a Scientology group at war with psychiatry,
its primary competitor. The commission typically issues reports aimed at discrediting
particular psychiatrists and the field in general. The CCHR is also behind an all-out war
against Eli Lilly, the maker of Prozac, the nation's top-selling antidepression drug.
Despite scant evidence, the group's members -- who call themselves
"psychbusters" -- claim that Prozac drives people to murder or suicide. Through
mass mailings, appearances on talk shows and heavy lobbying, CCHR has hurt drug sales and
helped spark dozens of lawsuits against Lilly.
Another Scientology linked group, the Concerned Businessmen's Association of America,
holds antidrug contests and awards $5,000 grants to schools as a way to recruit students
and curry favor with education officials. West Virginia Senator John D. Rockefeller IV
unwittingly commended the CBAA in 1987 on the Senate floor. Last August author Alex Haley
was the keynote speaker at its annual awards banquet in Los Angeles. Says Haley: "I
didn't know much about that group going in. I'm a Methodist." Ignorance about
Scientology can be embarrassing: two months ago, Illinois Governor Jim Edgar, noting that
Scientology's founder "has solved the aberrations of the human mind," proclaimed
March 13 "L. Ron Hubbard Day." He rescinded the proclamation in late March, once
he Iearned who Hubbard really was.
- HEALTH CARE. HealthMed, a chain of clinics run by Scientologists, promotes a grueling
and excessive system of saunas, exercise and vitamins designed by Hubbard to purify the
body. Experts denounce the regime as quackery and potentially harmful, yet HealthMed
solicits unions and public agencies for contracts. The chain is plugged heavily in a new
book, Diet for a Poisoned Planet, by journalist David Steinman, who concludes that scores
of common foods (among them: peanuts, bluefish, peaches and cottage cheese) are dangerous.
Former Surgeon General C. Everett
Koop labeled the book "trash," and the Food and Drug Administration issued a
paper in October that claims Steinman distorts his facts. "HealthMed is a gateway to
Scientology, and Steinman's book is a sorting mechanism," says physician William
Jarvis, who is head of the National Council Against Health Fraud. Steinman, who describes
Hubbard favorably as a "researcher," denies any ties to the church and contends,
"HealthMed has no affiliation that I know of with Scientology."
- DRUG TREATMENT. Hubbard's purification
treatments are the mainstay of Narconon, a Scientology-run chain of 33
alcohol and drug rehabilitation centers -- some in prisons under the
name "Criminon" -- in 12 countries. Narconon, a classic vehicle for
drawing addicts into the cult, now plans to open what it calls the
world's largest treatment center, a 1,400-bed facility on an Indian
reservation near Newkirk, Okla. (pop. 2,400. At a 1989 ceremony in
Newkirk, the As- sociation for Better Living and Education presented
Narconon a check for $200,000 and a study praising its work. The
association turned out to be part of Scientology itself. Today the town
is battling to keep out the cult, which has fought back through such
tactics as sending private detectives to snoop on the mayor and the
local newspaper publisher.
- FINANCIAL SCAMS. Three Florida Scientologists, including Ronald Bernstein, a big
contributor to the church's international "war chest," pleaded guilty in March
to using their rare-coin dealership as a money laundry. Other notorious activities by
Scientologists include making the shady Vancouver stock exchange even shadier (see box)
and plotting to plant operatives in the World Bank, International Monetary Fund and
Export-Import Bank of the U.S. The alleged purpose of this scheme: to gain inside
information on which countries are going to be denied credit so that Scientology-linked
traders can make illicit profits by taking "short" positions in those countries'
currencies.
In the stock market the
practice of "shorting" involves borrowing shares of publicly traded companies in
the hope that the price will go down before the stocks must be bought on the market and
returned to the lender. The Feshbach brothers of Palo Alto, Calif. -- Kurt, Joseph and
Matthew - have become the leading short sellers in the U.S., with more than $500 million
under management. The Feshbachs command a staff of about 60 employees and claim to have
earned better returns than the Dow Jones industrial average for most of the 1980s. And,
they say, they owe it all to the teachings of Scientology, whose "war chest" has
received more than $1 million from the family.
The Feshbachs also embrace the church's tactics; the brothers are the terrors of the
stock exchanges. In congressional hearings in 1989, the heads of several companies claimed
that Feshbach operatives have spread false information to government agencies and posed in
various guises -- such as a Securities and Exchange Commission official -- in an effort to
discredit their companies and drive the stocks down. Michael Russell, who ran a chain of
business journals, testified that a Feshbach employee called his bankers and interfered
with his loans. Sometimes the Feshbachs send private detectives to dig up dirt on firms,
which is then shared with business reporters, brokers and fund managers.
The Feshbachs, who wear jackets bearing the slogan "stock busters," insist
they run a clean shop. But as part of a current probe into possible insider stock trading,
federal officials are reportedly investigating whether the Feshbachs received confidential
information from FDA employees. The brothers seem aligned with Scientology's war on
psychiatry and medicine: many of their targets are health and bio- technology firms.
""Legitimate short selling performs a public service by deflating hyped
stocks," says Robert Flaherty, the editor of Equities magazine and a harsh critic of
the brothers. "But the Feshbachs have damaged scores of good start-ups."
Occasionally a Scientologist's business antics land him in jail. Last August a former
devotee named Steven Fishman began serving a five-year prison term in Florida. His crime:
stealing blank stock-confirmation slips from his employer, a major brokerage house, to use
as proof that he owned stock entitling him to join dozens of successful class-action
lawsuits. Fishman made roughly $1 million this way from 1983 to 1988 and spent as much as
30% of the loot on Scientology books and tapes.
Scientology denies any tie to the Fishman scam, a claim strongly disputed by both
Fishman and his longtime psychiatrist, Uwe Geertz, a prominent Florida hypnotist. Both men
claim that when arrested, Fishman was ordered by the church to kill Geertz and then do an
"EOC," or end of cycle, which is church jargon for suicide.
- BOOK PUBLISHING. Scientology mischief making has even moved to the book industry. Since
1985 at least a dozen Hubbard books, printed by a church company, have made best-seller
lists. They range from a 5,000-page sci-fi decology (Black Genesis, The Enemy Within, An
Alien Affair) to the 40-year-old Dianetics. In 1988 the trade publication Publishers
Weekly awarded the dead author a plaque commemorating the appearance of Dianetics on its
best-seller list for 100 consecutive weeks.
Critics pan most of Hubbard's books as
unreadable, while defectors claim that church insiders are sometimes the real authors.
Even so, Scientology has sent out armies of its followers to buy the group's books at such
major chains as B. Dalton's and Waldenbooks to sustain the illusion of a best-selling
author. A former Dalton's manager says that some books arrived in his store with the
chain's price stickers already on them, suggesting that copies are being recycled.
Scientology claims that sales of Hubbard books now top 90 million worldwide. The scheme,
set up to gain converts and credibility, is coupled with a radio and TV advertising
campaign virtually un- paralleled in the book industry.
Scientology devotes vast resources to squelching its critics. Since 1986 Hubbard and
his church have been the subject of four unfriendly books, all released by small yet
courageous publishers. In each case, the writers have been badgered and heavily sued. One
of Hubbard's policies was that all perceived enemies are "fair game" and subject
to being "tricked, sued or lied to or destroyed." Those who criticize the church
journalists, doctors, lawyers and even judges often find themselves engulfed in
litigation, stalked by private eyes, framed for fictional crimes, beaten up or threatened
with death. Psychologist Margaret Singer, 69, an outspoken Scientology critic and
professor at the University of California, Berkeley, now travels regularly under an
assumed name to avoid harassment.
After the Los Angeles Times published a negative series on the church last summer,
Scientologists spent an estimated $1 million to plaster the reporters' names on hundreds
of billboards and bus placards across the city. Above their names were quotations taken
out of context to portray the church in a positive light.
The church's most fearsome advocates are its lawyers. Hubbard warned his followers in
writing to "beware of attorneys who tell you not to sue . . . the purpose of the suit
is to harass and discourage rather than to win." Result: Scientology has brought
hundreds of suits against its perceived enemies and today pays an estimated $20 million
annually to more than 100 lawyers.
One legal goal of Scientology is to bankrupt the opposition or bury it under paper. The
church has 71 active lawsuits against the IRS alone. One of them, Miscavige vs. IRS, has
required the U.S. to pro- duce an index of 52,000 pages of documents. Boston attorney
Michael Flynn, who helped Scientology victims from 1979 to 1987, personally endured 14
frivolous lawsuits, all of them dismissed. Another lawyer, Joseph Yanny, believes the
church "has so subverted justice and the judicial system that it should be barred
from seeking equity in any court." He should know: Yanny represented the cult until
1987, when, he says, he was asked to help church officials steal medical records to
blackmail an opposing attorney (who was allegedly beaten up instead). Since Yanny quit
representing the church, he has been the target of death threats, burglaries, lawsuits and
other harassment.
Scientology's critics contend that the U.S. needs to crack down on the church in a
major, organized way. "I want to know, Where is our government?" demands Toby
Plevin, a Los Angeles attorney who handles victims. "It shouldn't be left to private
litigators, because God knows most of us are afraid to get involved." But
law-enforcement agents are also wary. "Every investigator is very cautious, walking
on eggshells when it comes to the church," says a Florida police detective who has
tracked the cult since 1988. "It will take a federal effort with lots of money and
manpower."
So far the agency giving Scientology the most grief is the IRS, whose officials have
implied that Hubbard's successors may be looting the church's coffers. Since 1988, when
the U.S. Supreme Court upheld the revocation of the cult's tax-exempt status, a massive
IRS probe of church centers across the country has been under way. An IRS agent, Marcus
Owens, has estimated that thousands of IRS employees have been involved. Another agent, in
an internal IRS memorandum, spoke hopefully of the "ultimate disintegration" of
the church. A small but helpful beacon shone last June when a federal appeals court ruled
that two cassette tapes featuring conversations between church officials and their lawyers
are evidence of a plan to commit "future frauds" against the IRS.
The IRS and FBI have been debriefing Scientology defectors for the past three years, in
part to gain evidence for a major racketeering case that appears to have stalled last
summer. Federal agents complain that the Justice Department is unwilling to spend the
money needed to endure a drawn-out war with Scientology or to fend off the cult's
notorious jihads against individual agents. "In my opinion the church has one of the
most effective intelligence operations in the U.S., rivaling even that of the FBI,"
says Ted Gunderson, a former head of the FBI's Los Angeles office.
Foreign governments have been moving even more vigorously against the organization. In
Canada the church and nine of its members will be tried in June on charges of stealing
government documents (many of them retrieved in an enormous police raid of the church's
Toronto headquarters). Scientology proposed to give $1 million to the needy if the case
was dropped, but Canada spurned the offer. Since 1986 authorities in France, Spain and
Italy have raided more than 50 Scien- tology centers. Pending charges against more than
100 of its overseas church members include fraud, extortion, capital flight, coercion,
illegally practicing medicine and taking advantage of mentally incapacitated people. In
Germany last month, leading politicians accused the cult of trying to infiltrate a major
party as well as launching an immense recruitment drive in the east.
Sometimes even the church's biggest zealots can use a little protection. Screen star
Travolta, 37, has long served as an unofficial Scientology spokesman, even though he told
a magazine in 1983 that he was opposed to the church's management. High-level defectors
claim that Travolta has long feared that if he defected, details of his sexual life would
be made public. "He felt pretty intimidated about this getting out and told me
so," recalls William Franks, the church's former chairman of the board. "There
were no outright threats made, but it was implicit. If you leave, they immediately start
digging up everything." Franks was driven out in 1981 after attempting to reform the
church.
The church's former head of security, Richard Aznaran, recalls Scientology ringleader
Miscavige repeatedly joking to staffers about Travolta's allegedly promiscuous homosexual
behavior. At this point any threat to expose Travolta seems superfluous: last May a male
porn star collected $100,000 from a tabloid for an account of his alleged two-year liaison
with the celebrity. Travolta refuses to comment, and in December his lawyer dismissed
questions about the subject as "bizarre." Two weeks later, Travolta announced
that he was getting married to actress Kelly Preston, a fellow Scientologist.
Shortly after Hubbard's death the church retained Trout & Ries, a respected,
Connecticut-based firm of marketing consultants, to help boost its public image. "We
were brutally honest," says Jack Trout. "We advised them to clean up their act,
stop with the controversy and even to stop being a church. They didn't want to hear
that." Instead, Scientology hired one of the country's largest p.r. outfits, Hill and
Knowlton, whose executives refuse to discuss the lucrative relationship. "Hill and
Knowlton must feel that these guys are not totally off the wall," says Trout.
"Unless it's just for the money." One of Scientology's main strategies is to
keep advancing the tired argument that the church is being "persecuted" by
antireligionists. It is supported in that position by the American Civil Liberties Union
and the National Council of Churches. But in the end, money is what Scientology is all
about. As long as the organization's opponents and victims are successfully squelched,
Scientology's managers and lawyers will keep pocketing millions of dollars by helping it
achieve its ends.
Mining Money in
Vancouver
[Sidebar; page 54]
One source of funds for the Los Angeles-based church is the notorious, self-regulated
stock exchange in Vancouver, British Columbia, often called the scam capital of the world.
The exchange's 2,300 penny-stock listings account for $4 billion in annual trading. Local
journalists and insiders claim the vast majority range from total washouts to outright
frauds.
Two Scientologists who operate there are Kenneth Gerbino and Michael Baybak, 20-year
church veterans from Beverly Hills who are major donors to the cult. Gerbino, 45, is a
money manager, marketmaker and publisher of a national financial newsletter. He has
boasted in Scientology journals that he owes all his stock-picking success to L. Ron
Hubbard. That's not saying much: Gerbino's newsletter picks since 1985 have cumulatively
returned 24%, while the Dow Jones industrial average has more than doubled. Nevertheless
Gerbino's short-term gains can be stupendous. A survey last October found Gerbino to be
the only manager who made money in the third quarter of 1990, thanks to gold and other
resource stocks. For the first quarter of 1991, Gerbino was dead last. Baybak, 49, who
runs a public relations company staffed with Scientologists, apparently has no ethics
problem with engineering a hostile takeover of a firm he is hired to promote.
Neither man agreed to be interviewed for this story, yet both threatened legal action
through attorneys. "What these guys do is take over companies, hype the stock, sell
their shares, and then there's nothing left," says John Campbell, a former securities
lawyer who was a director of mining company Athena Gold until Baybak and Gerbino took it
over.
The pattern has become familiar. The pair promoted a mining venture called Skylark
Resources, whose stock traded at nearly $4 a share in 1987. The outfit soon crashed, and
the stock is around 2 cents. NETI Technologies, a software company, was trumpeted in the
press as "the next Xerox" and in 1984 rose to a market value of $120 million
with Baybak's help. The company, which later collapsed, was delisted two months ago by the
Vancouver exchange.
Baybak appeared in 1989 at the helm of Wall Street Ventures, a start-up that announced
it owned 35 tons of rare Middle Eastern postage stamps -- worth $100 million -- and was
buying the world's largest collection of southern Arabian stamps (worth $350 million).
Steven C. Rockefeller Jr. of the oil family and former hockey star Denis Potvin joined the
company in top posts, but both say they quit when they realized the stamps were virtually
worthless. "The stamps were created by sand-dune nations to exploit collectors,"
says Michael Laurence, editor of Linn's Stamp News, America's largest stamp journal. After
the stock topped $6, it began a steady descent, with Baybak unloading his shares along the
way. Today it trades at 18 cents.
Athena Gold, the current object of Baybak's and Gerbino's attentions, was founded by
entrepreneur William Jordan. He turned to an established Vancouver broker in 1987 to help
finance the company, a 4,500-acre mining property near Reno. The broker promised to raise
more than $3 million and soon brought Baybak and Gerbino into the deal. Jordan never got
most of the money, but the cult members ended up with a good deal of cheap stock and
options. Next they elected directors who were friendly to them and set in motion a series
of complex maneuvers to block Jordan from voting stock he controlled and to run him out of
the company. "I've been an honest policeman all my life and I've seen the worst kinds
of crimes, and this ranks high," says former Athena shareholder Thomas Clark, a
20-year veteran of Reno's police force who has teamed up with Jordan to try to get the
gold mine back. "They stole this man's property."
With Baybak as chairman, the two Scientologists and their staffs are promoting Athena,
not always accurately. A letter to shareholders with the 1990 annual report claims Placer
Dome, one of America's largest gold-mining firms, has committed at least $25.5 million to
develop the mine. That's news to Placer Dome. "There is no pre-commitment," says
Placer executive Cole McFarland. "We're not going to spend that money unless survey
results justify the expenditure."
Baybak's firm represented Western Resource Technologies, a Houston oil-and-gas company,
but got the boot in October. Laughs Steven McGuire, president of Western Resource:
"His is a p.r. firm in need of a p.r. firm." But McGuire cannot laugh too
freely. Baybak and other Scientologists, including the estate of L. Ron Hubbard, still
control huge blocks of his company's stock.
[ Caption: ATHENA GOLD'S WILLIAM JORDAN. Cult members got cheap stock, then ran
him out of the company ]
[The following part was only in the international version of TIME]
Pushing Beyond
the U.S.:
Scientology makes its presence
felt in Europe and Canada
By Richard Behar
In the 1960s and '70s, L. Ron Hubbard used to periodically fill a converted ferry ship
with adoring acolytes and sail off to spread the word. One by one, countries -- Britain,
Greece, Spain, Portugal, and Venezuela -- closed their ports, usually because of a public
outcry. At one point, a court in Australia revoked the church's status as a religion; at
another, a French court convicted Hubbard of fraud in absentia.
Today Hubbard's minions continue to wreak global havoc, costing governments
considerable effort and money to try to stop them. In Italy a two-year trial of 76
Scientologists, among them the former leader of the church's Italian operations, is
nearing completion in Milan. Two weeks ago, prosecutor Pietro Forno requested jail terms
for all the defendants who are accused of extortion, cheating "mentally
incapacitated" people and evading as much as $50 million in taxes. "All of the
trial's victims went to Scientology in search of a cure or a better life," said
Forno, "But the Scientologists were amateur psychiatrists who practiced psychological
terrorism". For some victims, he added, "the intervention of the Scientologists
was devastating."
The Milan case was triggered by parents complaining to officials that Scientology had a
financial stranglehold on their children, who had joined the church or entered Narconon,
its drug rehabilitation unit. In 1986 Treasury and paramilitary police conducted raids in
20 cities across Italy shutting down 27 Scientology centers and seizing 100,000 documents.
To defend itself in the trial, the cult has retained some of Italy's most famous lawyers.
In Canada, Scientology is using a legal team that includes Clayton Ruby, one of the
country's foremost civil rights lawyers, to defend itself and nine of its members who are
to stand trial in June in Toronto. The charges: stealing documents concerning Scientology
from the Ministry of the Attorney General, the Canadian Mental Health Association, two
police forces and other institutions. The case stems from a 1983 surprise raid of the
church's Toronto headquarters by more than 100 policemen, who had arrived in three
chartered buses; some 2 million pages of documents were seized over a two-day period.
Ruby, whose legal maneuvers delayed the case for years, is trying to get it dismissed
because of "unreasonable delay."
Spain's Justice Ministry has twice denied Scientology status as a religion, but that
has not slowed the church' s expansion. In 1989 the Ministry of Health issued a report
calling the sect "totalitarian" and "pure and simple charlatanism."
The year before, the authorities had raided 26 church centers, with the result that 11
Scientologists stand accused of falsification of records, coercion and capital flight.
"The real god of this organization is money," said Madrid examining magistrate
Jose Maria Vasquez Honrnbia, before referring the case to a higher court because it was
too complex for his jurisdiction. Eugene Ingram, a private investigator working for
Scientology claims he helped get Honrubia removed from the case for leaking nonpublic
documents to the press.
In France it took a death to spur the government into action: 16 Scientologists were
indicted last year for fraud and "complicity in the practice of illegal
medicine" following the suicide of an industrial designer in Lyon. In the victim's
house investigators found medication allegeally provided to him by the church without
doctor's prescription. Among those charged in the case is the president of Scientology's
French operations and the head of the Paris-based Celebrity Centre, which caters to famous
members.
Outside the U.S., Scientology appears to be most active in Germany where the attorney
general of the state of Bavaria has branded the cult "distinctly totalitarian"
and aimed at "the economic exploitation of customers who are in bondage to it."
In 1984 nearly 100 police raided the church in Munich. At the time, city officials were
reportedly collaborating with U.S. tax inspectors and trying to prove that the cult was
actually a profitmaking business. More recently, Hamburg state authorities moved to
rescind Scientology's tax reduced status, while members of parliament are seeking criminal
proceedings. In another domain, church linked management consulting firms have infiltrated
small and middle sized companies throughout Germany, according to an expose published this
month in the newsmagazine DER SPIEGEL; the consultants, who typically hide their ties to
Scientology, indoctrinate employees by using Hubbard's methods. A German anticult
organization estimates that Scientology has at least 60 fronts or splinter groups
operating in the country. German politics appears as well to attract Hubbard's zealots. In
March the Free Democrats, partners in Chancellor Helmut Kohl' s ruling coalition in Bonn,
accused Scientology of trying to infiltrate their Hamburg branch. Meanwhile the main
opposition party, the Social Democrats, has been warning its members in the formerly com-
munist eastern part of the country against exploitation by the church. Even federal
officials are being used by the church: one Scientology front group sent copies of a
Hubbard written pamphlet on moral values to members of the Bundestag. The Office of
Foreign Minister Hans-Dietrich Genscher unwittingly endorsed the Scientologists' message:
"Indeed, the world would be a more beautiful place if the principles formulated in
the pamphlet, a life characterized by reason and responsibility, would find wider
attention."
[end of Internationl Edition-only section]
The
Scientologists and Me
[Sidebar, page 57]
Strange things seem to happen to people who write about Scientology. Journalist Paulette
Cooper wrote a critical book on the cult in 1971. This led to a Scientology plot (called
Operation Freak-Out) whose goal, according to church documents, was "to get P.C.
incarcerated in a mental institution or jail." It almost worked: by impersonating
Cooper, Scientologists got her indicted in 1973 for threatening to bomb the church.
Cooper, who also endured 19 lawsuits by the church, was finally exonerated in 1977 after
FBI raids on the church offices in Los Angeles and Washington uncovered documents from the
bomb scheme. No Scientologists were ever tried in the matter.
For the TIME story, at least 10 attorneys and six private detectives were unleashed by
Scientology and its followers in an effort to threaten, harass and discredit me. Last Oct.
12, not long after I began this assignment, I planned to lunch with Eugene Ingram, the
church's leading private eye and a former cop. Ingram, who was tossed off the Los Angeles
police force In 1981 for alleged ties to prostitutes and drug dealers, had told me that he
might be able to arrange a meeting with church boss David Miscavige. Just hours before the
lunch, the church's "national trial counsel," Earle Cooley, called to inform me
that I would be eating alone.
 Alone, perhaps, but not forgotten. By day's end, I later learned, a copy of my personal
credit report -- with detailed information about my bank accounts, home mortgage,
credit-card payments, home address and Social Security number -- had been illegally
retrieved from a national credit bureau called Trans Union. The sham company that received
it, "Educational Funding Services" of Los Angeles, gave as its address a mail
drop a few blocks from Scientology's headquarters. The owner of the mail drop is a private
eye named Fred Wolfson, who admits that an Ingram associate retained him to retrieve
credit reports on several individuals. Wolfson says he was told that Scientology's
attorneys "had judgments against these people and were trying to collect on
them." He says now, "These are vicious people. These are vipers." Ingram,
through a lawyer, denies any involvement in the scam.
During the past five months, private investigators have been contacting acquaintances
of mine, ranging from neighbors to a former colleague, to inquire about subjects such as
my health (like my credit rating, it's excellent) and whether I've ever had trouble with
the IRS (unlike Scientology, I haven't). One neighbor was greeted at dawn outside my
Manhattan apartment building by two men who wanted to know whether I lived there. I
finally called Cooley to demand that Scientology stop the nonsense. He promised to look
into it.
After that, however, an attorney subpoenaed me, while another falsely suggested that I
might own shares in a company I was reporting about that had been taken over by
Scientologists (he also threatened to contact the Securities and Exchange Commission). A
close friend in Los Angeles received a disturbing telephone call from a Scientology staff
member seeking data about me -- an indication that the cult may have illegally obtained my
personal phone records. Two detectives contacted me, posing as a friend and a relative of
a so-called cult victim, to elicit negative statements from me about Scientology. Some of
my conversations with them were taped, transcribed and presented by the church in
affidavits to TIME's lawyers as "proof" of my bias against Scientology.
Among the comments I made to one of the detectives, who represented himself as
"Harry Baxter," a friend of the victim's family, was that "the church
trains people to lie." Baxter and his colleagues are hardly in a position to dispute
that observation. His real name is Barry Silvers, and he is a former investigator for the
Justice Department's Organized Crime Strike Force. (RB)
END
End notes by Arnie Lerma:>See the author of this article's own Website - Richard Behar HERE
Judge Leisure Opinion - Time Magazine Wins case!
Scientology loses last appeal of it's Libel Lawsuit for TIME Magazine's Cover
Story: The Thriving Cult of Greed and Power
[ Link to the Article ]- has been
DENIED by the United States
Supreme Court [link to docket entry ] after being DISMISSED by the 2nd Circuit
Court of Appeals : from the 2nd Circuit's Dismissal:
"To the extent that the Behar Article uses the term "Scientology," Chief
Judge Walker is of the view that the term as used denotes a belief system,
or, as the Article puts it, a "cult," [page 8] |
