Inside Scientology (27 page)

Finally, in the fall of 1993 the two sides reach a settlement, the details of which would not be fully known until the end of 1997. In a highly unusual move, the IRS had declared the agreement secret, not subject to release through the Freedom of Information Act or its own code of regulations.
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It was a sharp departure from how other religious organizations had been treated. As the
New York Times
later noted, both the Jimmy Swaggart Ministries and an affiliate of the Reverend Jerry Falwell's had been "required by the I.R.S. to disclose that they had paid back taxes in settling disputes in recent years."

The excuse given within the agency was that the Scientology fight had been tying up IRS resources for too long. But it was puzzling, the official noted, because the IRS staff involved in the agreement had also been fairly confident they'd ultimately win the war.

For twenty-five years, the IRS had steadfastly insisted that Scientology was a business, and it had prevailed in all of the substantive suits brought by the church. As late as June 1992, the U.S. Claims Court had upheld the IRS's denial of tax-exempt status to the Church of Scientology. The ruling strongly supported the agency's position that the church was a commercial organization, and again the judge reproved it for deliberately deceptive practices—this time in designing its financial structure. "The decision [to settle] came as an enormous shock to all of us," the official said.

In an editorial, the
St. Petersburg Times
wrote that the IRS had "surrendered" to the Scientologists. "Instead of tough tax law enforcement, taxpayers are seeing a Scientology sellout."
Privately, many people within the IRS agreed. Several agents who'd been assigned to process the church's formal application after the agreement was reached later confessed that they had been instructed to ignore substantive issues while processing the application. "If you ask me, Goldberg couldn't put up with the harassment like the rest of us did," said the former high-ranking IRS official, whose tenure with the agency dated back to the 1970s and Operation Snow White.

On the evening of October 8, 1993, more than ten thousand Scientologists, the largest meeting of Scientologists in history, gathered at the Los Angeles Sports Arena. The stage at one end of the arena was draped in blue banners, with gilded romanesque columns and torches. Miscavige stood at the podium in a black tuxedo, beaming.

"There will be no billion dollar tax bill [to the IRS] which we can't pay," Miscavige announced. "There will be no more discrimination. There will be no more twenty-five hundred cases against parishioners across the United States. The pipeline of IRS false reports [about Scientology's activities] won't keep flowing across the planet. There will be no more nothing—because"—Miscavige paused for dramatic effect—"the war is over!" The band launched into triumphant music and the audience rose to their feet, screaming and cheering as the words "
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Marty Rathbun has always insisted that the Church of Scientology won its exemption legitimately, through lawsuits and other above-board forms of pressure. Aside from the testimony of Michael Shomers, there has never been any evidence to prove that Scientologists brought into play some of the more underhanded tactics they had used, for example, in the prior assault on the IRS, Operation Snow White. But the sheer magnitude of the church's exemption was astounding. The deal granted tax exemption to all of Scientology's 150 U.S. entities, including Miscavige's RTC; the seat of its international management, the Church of Scientology International; the Flag Service Organization in Clearwater, Scientology's largest and most successful "church"; and its advanced organizations in Los Angeles. It also gave exemption to the church's various social betterment programs. These included Narconon, a franchised network of drug treatment and rehabilitation centers, whose directors often claim to have no direct association with the Church of Scientology; Applied Scholastics, an organization that licenses a special, Hubbard-endorsed educational method called "study technology" to Scientology-run schools as well as to secular public schools and tutoring programs; and the Citizens Commission for Human Rights, a lobbying organization that promotes Scientology's anti-psychiatry agenda in Washington and elsewhere. Also exempt were the two publishing houses that were the exclusive publishers of Hubbard's books, both the Scientology-related texts and his wholly secular, and profit-generating, fictional works.

Though it owed roughly $1 billion in back taxes, Scientology had been fined just $12.5 million. The IRS also canceled payroll taxes and penalties against seven top Scientology officials, including Miscavige, and dropped audits of thirteen Scientology organizations, including the Church of Scientology International. In exchange for all of this, Scientology agreed to drop the thousands of lawsuits it had brought against the IRS and its officials.

And not only that, Miscavige announced triumphantly, but all future Scientology churches would never have to go through the exhaustive paperwork the IRS requires to prove tax-exempt status: all they would have to do would be to meet specific qualifications laid out and enforced by Scientology's Mother Church, which would grant these new organizations exemption themselves and then pass along the pertinent data to the IRS for its records.

Every audit or tax action currently pending against Scientologists was canceled. "There are no more tax court cases, there are no more disallowed deductions," Miscavige said. The IRS had even agreed to send, at U.S. taxpayers' expense, a special church-written fact sheet, "Description of the Scientology Religion," to many foreign governments, with a letter explaining that after thorough review, the U.S. tax authorities found Scientology to be "organized and operated exclusively for religious or charitable purposes." It would be a significant step, church leaders hoped, in resolving some of Scientology's conflicts abroad—and, like everything else about the agreement, this was an unusual step.

While many other religious groups in America have been given sweeping exemptions, no organization with the contentious history of the Church of Scientology has ever been exempted in such an overarching manner. In 1994, one year after Scientology's tax exemption was announced, an Orthodox Jewish couple from Los Angeles, Michael and Marla Sklar, tested the fairness of this agreement by suing the IRS for the right to deduct their children's religious education from their taxes just as Scientologists were allowed to deduct the price of auditing.
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The Sklars lost and appealed, and ultimately took their case all the way to the Supreme Court. In October 2009, the justices refused to hear the case, without comment.
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"The power of our group is greater than you can imagine," Miscavige, in his victory speech, told his flock, who had met his announcement with almost ten minutes of uninterrupted applause. Scientology was now a religion, protected by the laws of the U.S. government. Those Scientologists who'd ever doubted the mission, or Miscavige, had long since departed. Those who remained were the truest of believers, and David Miscavige, the young disciple of L. Ron Hubbard, was unequivocally their leader. Scientologists would follow him anywhere, unquestioningly, from now on.

"What exactly does this [exemption] mean?" Miscavige said. "My answer is: everything. The magnitude of this is greater than you may imagine ... The future is ours."

Not a soul in the audience had reason to doubt him.

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Scientology, and even those who understand its basic concepts will inevitably come up with a multiplicity of descriptions: alternative to psychotherapy, social movement, transnational corporation, cult, religion. One of its essential characteristics is its aggressive response to challenges, whether they arise from within the movement or outside it. Some journalists have referred to Scientology as a hydra for this uncanny ability to restore itself despite numerous blows to the head. This power to reinvent itself lies at the heart of the church's business plan.

Scientology means different things to different people; simultaneously its essential qualities remain hidden from public view. This combination of flexibility and mystery has allowed church leaders to turn Scientology into whatever they want it to be, depending on time period and need. In the sixty-plus years since it was founded, Scientology has changed its image over and over through a savvy marketing strategy that has presented the church as forever new and improved and, in some cases, as transformed altogether. At no time was this more obvious, or necessary, than during the late 1970s and early 1980s when, fresh from the ignominy of Operation Snow White, Scientology needed to rebrand itself almost entirely.

The Scientology name had been tarnished by scandal. And the product, which had been continuously refreshed by Hubbard during his twenty-five years at the helm, was beginning to stagnate, thanks to the Founder's increasing isolation. But the packaging, church officials realized, could still be vibrant. Which is how it came to be that Scientology was suddenly reimagined as a self-help movement.

The 1970s, as the conservative journalist David Frum points out, have often been overlooked in favor of the far more colorful, and seemingly more influential, 1960s. But as he notes in his book
How We Got Here,
an engrossing analysis of the 1970s, it was those "strange feverish years" following the sixties, the years when the bottom seemed to drop out of America, and indeed, out of many parts of the world, that transformed U.S. society into the branded, self-obsessed, confessional, technologically efficient, widely overconfident yet deeply vulnerable place it is today. "They were a time of unease and despair, punctuated by disaster," according to Frum.

This was the culture the Church of Scientology found itself in after L. Ron Hubbard went into hiding and David Miscavige, having never experienced the "wog world" in any substantive way, began his ascent to power. Jeff Hawkins, who'd joined Scientology at the peak of its hippy-dippy era, was now charged, as head of strategic marketing, with selling the church to a new generation. With the approval of L. Ron Hubbard, and with the help of outside consultants, including a former creative executive from the ad agency Chiat/Day, Hawkins set about devising a strategy that would remove the word
Scientology
altogether from many promotions and replace it with what he and others saw as a safer substitute:
Dianetics.
This term, having died a quiet death in the 1950s, was unfamiliar to the population at large, making it the perfect name for a product that could be shaped to fit the current cultural moment and, Hawkins hoped, signify a new beginning for the movement.

To sell this new Dianetics, which was still Scientology, but with different packaging, Hawkins and his marketing team conducted national surveys. They discovered that what had worked in the 1960s and early 1970s—promoting Hubbard's ideas as a form of spiritual enlightenment, or alternatively, as rebellion against the status quo—would not work in the go-go 1980s. What might capture potential converts, they found, was promoting the philosophy as a form of self-improvement and, for those in need of it, "recovery" from the various indulgences of the past. This fit neatly with the entire premise of Dianetics, which had always been marketed as a set of techniques to increase physical and psychological health, self-confidence, and success.

The pitch Hawkins came up with, a promotion that would ultimately put the book
Dianetics
on the
New York Times Best-Seller List, was "Invest in Yourself." The campaign kicked off in 1982. Over the next five or six years, as leaders were purged and longtime members departed Scientology in disillusionment, tens of thousands of new people were drawn into it through books on Dianetics, self-improvement seminars, and one-on-one evangelism. One of these new converts was a smart, assertive, impressionable young woman named Lisa McPherson.

Lisa was the younger of two children raised by Jim McPherson, an insurance salesman, and his wife, Fannie, a homemaker. Born in Dallas, Texas, she grew up in a middle-class neighborhood on the northeastern side of the city, where she was a popular, diligent student and a member of the drill team. Lisa was also pretty, with wavy light brown hair, a curvaceous figure, and a vivacity that typically made her the center of attention. Acquaintances recalled her as "fearless" when it came to making friends, a person who could start a conversation with anybody.

Lisa's outward joie de vivre masked a host of insecurities, however. As the daughter of alcoholics, she had endured a rocky childhood. Her mother often took her first drink at ten in the morning and continued imbibing throughout the day: more than once, Lisa would come home from school to find her mother passed out, sometimes wearing only her underwear. "I hated her for always being a drunk," Lisa later wrote.
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But she rarely confronted her mother for fear of what she might do. Fannie was prone to drunken rages. "She let loose on me, not spanking but hitting," Lisa wrote.

This abuse also traumatized Lisa's older brother, Steve, who committed suicide when he was sixteen. Lisa, then fourteen, was devastated, and turned to sex and drugs to mask her anguish. Over the next several years, Lisa led an accomplished double life: maintaining a good-girl exterior while drinking, smoking pot, and, by her own admission, sleeping with virtually anyone who asked, including the husband in a family that employed her as a babysitter.

After high school, Lisa, who'd decided to skip college, went to work as a customer service representative at the Southwestern Bell phone company, where her natural effervescence made her a hit with both clients and co-workers. But she was still troubled and soon became involved with Don Boss, the owner of a Dallas sheet metal shop. They'd met in 1979, when Lisa was nineteen and Boss thirty-five. One month after they met, the couple eloped.