The Scientology Swindle
How did Scientology, widely viewed as a cult either comical or criminal, brand itself as a Church and secure recognition as a religion in the eyes of the law? Follow the money.
By the late 1930s, Lafayette Ron Hubbard was just one among many pulp fiction writers in New York City who were churning out cheap thrills for a hungry readership. But the future father of Scientology had already acquired notoriety as a talented storyteller. If Hubbard had stayed in pulp, his visionary schlock would have been limited to ragged paperbacks in second-hand bookstores, shelved under “Adventure”, “Science Fiction” and “Bargain Bin.” Millions of dollars wouldn’t have been spent trying to exorcise traumatized alien “thetans” (spirits). And Janet Reitman would never have bothered to set down Hubbard’s true life story and legacy: Inside Scientology: The Story of America’s Most Secretive Religion. Instead, today Hubbard’s tomes have a proud place in the personal libraries of the powerful around the globe. Reitman’s well crafted narrative is worth a spot on your bedside table if you want to learn how an organization built on snake-oil and flapdoodle ended up funding elections and wagging the dog.
In the 1950s, Americans were exhausted by war and poverty, veteran hospitals were overflowing with the psychologically scarred, and homes were riven with discontent. The American people were ready to pave roads and build bridges. by the late 1960s, they were ready for revolution. Hubbard’s messaging fed the appetite for healing and progress; he purveyed just the type of salve and ointment that would sell.
Hubbard’s brand of psychology mashed with science fiction, Reitman writes, served as a means of purging memory engrams lingering from the great depression and war. His product, Dianetics, “offered concrete answers” to what globalism and war had turned into a complex world where people were turning away from prayer and toward “the application of a set of basic scientific technique.” Dianetics didn’t settle neatly in the realm of science, however, because Hubbard didn’t play by the new rules of increasing standardization. He brought his methods into the homes of his patients and used them to sell expensive treatments to willing consumers. In the process, he made enemies of the American Psychology Association, which attacked Dianetics as a sham. With his psychology product tarnished for lacking the vetting increasingly demanded by the scientific community, Hubbard turned to friendlier turf in the 1960s: spiritualism and ersatz religion. In the 1980s, flush with cash and promoting a pull-up-your-socks self-help mentality, Scientology morphed into a spiritual regime.
A prophet is a kind of magician who can make the greatest sell of all and has a keen sense of timing: Hubbard had both. For Hubbard’s many devotees, “Scientology” was not just useful, but transcendent. Ever the chameleon, Hubbard crafted a brand that could arrest attention, and once he had secured followers, he deftly matched his mantra to their needs.
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Whereas Dianetics had attempted to remain somewhat along the lines of a traditional psychological treatment, Scientology was more science fiction than science fact. The concept was built on the idea that every person has an inner self, or thetan, that travels through the temporary shells of human kind and becomes trapped, losing original powers and self-awareness through forgetfulness. (According to Scientology scripture, these traumatized thetans are the victims of genocide by Xenu, an evil dictator from another planet.) Ultimately, thetans adopt their earthly shadows as true selves—which is where Scientology comes in. Scientology’s goal is to free thetans through auditing, a lengthy and prescribed process during which a certified auditor performs therapy using devices such as E-Meters—originally embraced as a means of therapy by the likes of Carl Jung. Originally, the Scientologist’s goal was simply to become “Clear,” but as the franchise developed further, different levels of Operating Thetans (OTs) were created. Like endless sequels, the new levels of revelation kept customers coming back to buy more treatments and auditing sessions, which cost hundreds of dollars and ran into tens of thousands of dollars to fully reach the various levels of being.
By the 1960s, with its own newspeak, marketing strategy, and costly buy-in and product line of pseudo-spiritual healing packages, Scientology was reaching across the nation, around the globe. And, in the grain of every page printed with lists of new devotees, there were dollar signs with proliferating zeros after them. By 1967, profits surpassed $1 million, and that was just the beginning. But, in the same year that Scientology became a million-dollar operation, the IRS got wise and revoked the organization’s status as a tax-exempt religious charity. It would take aggressive lobbying and years of litigation for the Church of Scientology to reclaim its get-out-of-taxes-free card.
Religious status in the eyes of the law is a matter of money, not morals. In 1987, the Ninth Circuit Court never reached the question of whether the Church of Scientology was a religious institution that served the public good, because the Court found that the Church failed the first part of the test—it was putting money in the pockets of private individuals. In other words, the problem was that Scientology had “business” stamped all over it. The solution? Lobbying and financial restructuring.
By 1993, Scientologists had filed literally thousands of cases against the IRS, pounded the marble stairs and hallways of the labyrinthine Capitol Hill network, and established a complex maze of holding companies and subsidiaries that could shield leadership from the appearance of personal profiteering. Finally, Scientology was reestablished as a religion in the eyes of the American legal system and, more importantly, in the eyes of the IRS. What it looked like in the eyes of many, however, was that the IRS had been browbeaten into labeling Scientology a religion in exchange for a cease-fire.
The case file explaining why the IRS chose to pursue a closing agreement with the Church of Scientology remained vague even after it was recovered via a Freedom of Information Act filing. The settlement was not so much a clear finding by the IRS that the Church was a religious organization as it was evidence that the IRS had negotiated a deal. This, in itself, was not unprecedented—the IRS routinely negotiates closing agreements with charitable organizations, and the vast majority of litigated cases are resolved outside the courtroom and behind closed doors.
On the other hand, the IRS did choose to act in direct contradiction to the U.S. tax court’s 1984 denial of the Church’s appeal of the IRS’s original ruling, which found that Scientology “made a business out of selling religion” and noted that “criminal manipulation of the IRS to maintain its tax exemption . . . was a crucial and purposeful element of [Scientology’s] financial planning.” The IRS was also acting contrary to the Ninth Circuit Court decision a few years prior, as well as the decision by the U.S. Supreme Court against finding merit to the case that the Church of Scientology qualified as a religious organization.
A church is a church is a church, as Gertrude Stein might say. But as I write on this Sunday morning, listening to the bells echoing their call to alms, I have to wonder what lemonade stand will pop up next offering the latest brand of pseudo-spiritual healing. Or, why isn’t a visit to a psychologist just as tax-free as an audit with a card-carrying registrar of the Church of Scientology? After all, isn’t my mental well-being, no matter how I seek it, good for the greater good?
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After the tax debacle of the 1980s and 90s, even more lurid headlines appeared worthy of the pulp that Hubbard started his career on: the medieval-style imprisonment by fellow Scientologists of Marianne Coenan in 1989 and the abuse and gruesome death of Lisa McPherson in 1995. Yet Scientology has developed into a mature and well-adjusted grown-up institution. Practice in the courts and in the public eye dealing with scandal taught Scientology’s leadership to cover tracks and tie up loose ends. Canny marketing by celebrity advocates and even some lobbying on the part of U.S. presidents in favor of the Church became the Church’s modus operandi, and the dark underbelly was cemented over in million-dollar, state-of-the-art training compounds—complete with tennis courts and shooting ranges.
Since peaking with the recruitment of Tom Cruise, Scientology has experienced its share of dips and troughs, but membership has become multigenerational and, for better or worse, it’s here to stay. Certainly, the Church of Scientology seems more than a bit nuts as Reitman tells it, and the testimonies of those who have escaped—or escaped only to be sucked back into Scientology’s clutches—make it seem criminal. But, after all, are Bridges to Complete Freedom that much crazier than bridges to nowhere? It’s okay, you don’t need to answer those questions. The beauty of religion is that it can pose questions with no answers and give answers that can’t be questioned. And, when you come right down to it, that’s what makes Scientology a religion more than anything else. It’s a crazy mixed up world, my friend, but luckily, for Scientologists anyway, there are many lives to figure it all out—and Reitman’s history of Scientology is a good place for us wogs to get a running start.
Hannah Dean received her M.S. from the University of Massachusetts, Boston, in Environmental Policy and Law with a focus on ecosystem regime-building and jurisdictional boundaries in the Gulf of Maine. She received her JD from Boston University and is a member of the Bar in Massachusetts. She is currently a fellow in a Congressional Office, seeking ways that federal policy can work for small businesses and industry so that we can grow ocean and coastal economies around the nation.