Chapter 63 - Mail Fraud
Sec. 1341 - Frauds and swindles
"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives there from, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than five years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both."
Count 1: The fraudulent representations about the use of funds for Scientology services, which had been promoted to public members through the U. S. Postal Service by the "Church of Scientology International," "Church of Scientology Western United States" and the "Church of Scientology Flag Service Organization, Inc."
As discussed in a prior chapter Scientology's "service organizations" are bound to pay license and ecclesiastical support fees to the "Church of Scientology International" (CSI), and so-called "advance tech licensing fees" to the "Religious Technology Center" (RTC). As also seen in a another prior chapter, these funds are explicitly used for "operating expenses," which include the activities of the "Office of Special Affairs International" and its intelligence operations.
In the Scientology-network the two corporations "Church of Scientology Flag Service Organization, Inc." (FSO) and "Church of Scientology Western United States" (CSWUS) are the biggest single income sources and concurrently the single most important financial contributors to CSI and RTC. A document written by CSI and submitted to the IRS in 1991, lists the annual income of the FSO for the year 1989 with $ 83,200,898 and its disbursements with $ 81,340,451 [Exh. No. 332, Excerpt]. CSWUS' declared income in 1989 was $ 32,005,807 and its disbursements $ 29,611,255.
By using the proportional figures concerning the financial support for CSI and RTC by the FSO and CSWUS in 1989 one can calculate the actual amount these two organizations had paid to their "mother churches" [Exh. No. 44, Excerpt]: In 1989 the FSO paid $ 17,081,495 to CSI and $ 3,253,618 to RTC, while CSWUS' contributed $ 2,665,013 to CSI and $ 888,337 to RTC during that year.
The payments made by the FSO represented 26.5 % of CSI's annual income, and 47.5 % of RTC's. At the same time CSWUS provided in 1989 4.1 % of CSI's income and 13.0 % of RTC's.
To promote and sell "auditing" and courses to public members, Scientology's service organizations rely heavily on sending out mass mailings. The three organizations, "Church of Scientology International" (CSI), "Church of Scientology Western United States" (CSWUS) and "Church of Scientology Flag Service Organization, Inc." (FSO), are no exception in this and various promotional pieces, leaflets and magazines have been sent out to their individual mailing lists of public members by them over the past 16 years.
Each organization publishes its own magazine, which is sent out several times a year and which promotes the services the organization has to offer.
CSI, as the "mother church," promotes equally the services of the "Class V Organizations," "Missions" and "Advanced Organizations" through its mailings. The principal magazine of CSI is "Scientology News [Exh. No. 333, Excerpt]." While the magazine advertises Scientology services, it also informs about major events in the Scientology-world. The copyright holder for the magazine is CSI itself.
CSWUS as a corporate entity is composed of three Scientology service organizations, the "Advanced Organizations Los Angeles" (AOLA), the "American Saint Hill Organization" (ASHO) and the Class V Organization Los Angeles. Each of these organizations publishes a separate magazine. AOLA's magazine is "Advance!" [Exh. No. 334, Excerpt], ASHO's is called "The Auditor" [Exh. No. 335, Excerpt]. The Class V Organization of Los Angeles publishes a standardized magazine, which is produced by CSI and identical with the magazines from other American Class V organizations. CSI is also the copyright holder for both, the "Advance!" and the "Auditor" magazine.
FSO's principal magazine is called "Source" [Exh. No. 336, Excerpt]. The copyright holder for the magazine was CSI in 1998 and 1999. In 2001 it was the FSO.
What follows are some examples how the three organizations has promoted different Scientology services using the U. S. Postal Service within the last three years:
- The promotional piece "Slay Your Dragons" was sent out to the mailing list of AOLA in 2001 and promoted the "OT levels" or "Advanced Levels [Exh. No. 337]."
- The leaflet "Do The Academy Levels!" was distributed by CSI in 1998 and advertised "auditor training [Exh. No. 338]."
- "Whatever Problem You Bring To Flag ... " is an advertisement from a "Scientology News"-issue from 2001 for so-called "Flag-only Resolution Rundowns [Exh. No. 339, Excerpt]."
- "Restore The Ability To Have Power" was included in an issue of "The Auditor"-magazine in 2001 and promotes "Power Processing [Exh. No. 340, Excerpt]."
- The promotional piece "And We Won't Take No For An Answer!" was sent out by AOLA to advertise "Solo-Auditing [Exh. No. 341]."
- "Gain Total Certainty That You Can Solo Audit" is an advertisement that was included in a 2001-issue of "Advance!" magazine and promoted "Solo-Auditing [Exh. No. 342, Excerpt]."
- The leaflet "The Best Service and 100 % Standard Tech Is Waiting For You At Ron's Org" was distributed by the FSO in 2001 [Exh. No. 343, Excerpt].
- "Get The Flag Case Check!" was included in an edition of "Source"-magazine during 2001 [Exh. No. 344, Excerpt]."
- "Join The Briefing Course Club" is a promotional piece that was sent to the mailing list of ASHO in 2001 [Exh. No. 345].
The prices for these services are regulated by CSI. In a declaration made to the IRS in its tax-exemption application, CSI stated about its pricing policy [Exh. No. 346, Excerpt]:
"CSI accomplishes this policy by requiring all pricing proposals to undergo extensive review by the executives of the ecclesiastical hierarchy who are involved in the production, dissemination or delivery of the publication, service or material involved. This extensive review is ecclesiastically mandated to ensure each proposal meets the following three criteria:
"First, the fixed donation amount must be affordable to a broad segment of the general public. ... "
A look at price lists that were inserted in editions of "Source" and "Advance!"-magazine during 2001, show, that the term "affordable" is at least misleading if not fraudulent, as AOLA and the FSO demand rather extortionate prices for their services.
From the FSO-pricelist [Exh. No. 347, Excerpt]:
"Flag Intensives and Case Cracking auditing $ 6,776.00
L Rundowns, per 12 ˝ hours $ 12,100.00
OT III – The Wall of Fire $ 8,712.00
New OT VI $ 13,600.00"
From the AOLA-pricelist [Exh. No. 348, Excerpt]:
"Hubbard® Solo Auditor Course Part One $ 4,257.00
OT Preps & Eligibility Auditing, per 12 ˝ hours $ 5,130.40
OT III $ 7,040.00
New OT V Audited NOTs®, per 12 ˝ hours $ 6,388.80"
How much money CSI and RTC were and are using from these funds for the planning and execution of intelligence operations is kept in the dark. While officially the Church of Scientology is using funds from the "war chest" of the "International Association of Scientologists" for the "defense of the religion [Exh. No. 349]," the organization has never made it public or known to its members how much money was spent for such operations. The average public member has in fact no knowledge that his/her church is spending, for example, hundreds of thousands of dollars per year for the employment of private investigators and that a significant portion of his contributions are in fact used for, what he would consider, unethical, immoral and sometimes illegal activities.
In 1992 CSI published the book "What is Scientology?," which should inform the public in detail about the belief system and the activities of the Church of Scientology. Under the question "Why do Scientologists make donations?," CSI used a very misleading description to explain the organization's use of the funds [Exh. No. 350, Excerpt]:
"Scientologists' donations keep the Church alive and functioning, fund its widespread social reform programs, make Scientology known to people who may otherwise never have the opportunity to avail themselves of it, and help create a pleasant and safe environment for everyone."