A personal experience - was Re: Lisa McPherson in Newsweek this week
[22 Jul 1997]

Scientology turns a blind eye to the crimes of its members.

From: Warrior <warrior@electrotex.com>
Newsgroups: alt.religion.scientology
Subject: A personal experience - was Re: Lisa McPherson in Newsweek this week
Date: 22 Jul 1997 00:09:36 -0700
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leny@skat.usc.edu (leny) wrote:
> In article <19970716134300.JAA21898@ladder01.news.aol.com>,
> DeoMorto <deomorto@aol.com> wrote:
> >1) In order to "launder" money you have to have lots of "unaccountable
> >for" cash and use the scheme for turning it into legitimate money.
> >2) Employing other scientologists with the agreement that large parts of
> >their salary will be used to pay for services may be somewhat tacky but
> >most scientologists who are on lines would definitely go for it if they
> >were going to get their services out of it.
> This would eventually get tripped up though. One of the many security
> check questions is "Do you have any financial irregularities?". As
> well as "Have you committed any crimes for which you can be arrested?"
> Any kind of money laundering would indeed be covered in both of those
> questions. If the person is found to be in violation he/she would
> need to get handled in ethics before receiving any service.
> Additionaly the person would have to repair any damage done and handle
> any illegalities before getting auditing, even if it meant "facing the
> music".
> One purpose of extensive security checking is for flushing out any
> unethical/illegal behavior because it has been found that those who
> engage in criminal behavior do not do well in Scientology and
> leave...complaing all the way.

Well, "Leny", there is a whole lot I have to say on the above
subject. What you state as fact, with regards to a person getting
"tripped up" by Scientology's "Ethics" and "Sec checking" is merely
lip service, a fallacy not true at all. In theory what you state
sounds nice, but I can cite examples that run 180 degrees counter to
what you have stated above.

Before I resigned from Scientology, I worked for an OTV. I did his
accounting for his corporation. This person (who I will call 'B') had
operated a business corporation a few years prior to the time I began
working for him. This earlier business went bankrupt for two reasons:
he had no knowledge of the organizational skills necessary to make a
business successful, and he bled his corporation dry (of all the money),
while living a lavish lifestyle, complete with a brand new Lincoln
Mark VI for himself and a new Jeep Cherokee van for his wife, a huge
home off of Mulholland Drive (in the mountains between LA and the
Valley, not far from where Mary Sue Hubbard lives, by the way), with
a house-keeping maid and a 'schlepping' service to take his kids to
their music, dance, karate, etc. lessons. Of course, he had a nanny as
well. He would buy $2000 dresses for his wife, take frequent trips to
Chicago, Las Vegas, New York, etc. and order me to write the expenses
(for personal items - NOT business related -- as 'T&E', or travel
and entertainment expenses. I refused to do this saying that IRS
regulations REQUIRE contemporaneous documentation such as a mileage
logs, the purpose of the 'business' trip, the client(s) entertained,
the nature and result of the 'business' discussions, etc.

After his first company went bankrupt, he simply started another one
with a different name of course, and he made his wife President of the
new corporation. The odd thing I soon discovered was that his new
corporation had never been properly registered with the California
State Comptroller's Office because he started a new corporation, yet
failed to maintain proper board minutes AND he used a California sales
tax permit and account (and paid sales taxes on it) for an OLD, defunct
business that was in no way related to his new corporation. In other
words, he had 'out LEGAL rudiments' (Scientology term for outnesses in
legal requirements) for his corporation, to the extent that he was
committing tax fraud by virtue of the fact that his corporation was NOT
properly registered with the state of California!

For an almost three year time period (from early 1983 through late
1985) he had NO accountant. He did have a woman named 'L' who was
supposed to have been doing his books, but she somehow never made the
time to actually get the financials done, preferring instead to work
in the showroom where she could earn more money (via commissions) and
have more fun since she had contact with the customers.

By the time I was hired at the end of 1985, 'B's' books had
backlogged for almost three years. Bounced checks were an *everyday*
occurrance (literally), since 'B' had no bank account reconciliations
being done. His accounts receivables were in a shambles with customers
screaming because *no one* was giving them accurate account statements.
Accounts credits for defective and returned products were not always done.

Staff payroll checks were often returned as insufficient funds existed.
The owner had no clue as to what his accounts payable were, let alone
what the aging on his payables was. Some accounts had even been
overpaid by thousands of dollars due to having paid on the same
invoices twice. Some bounced checks had been made good twice by either
'L' or 'B' without actually realizing they had done so, since no
accounts payable statements existed, and the suppliers had certainly
not brought the duplicate payments to the owner's attention.

In other words, his business was a total mess with regards to any
kind of financial records. He had no profit and loss statement, no
balance sheets, and was 3 years behind in filing his corporation's
Federal Income Tax return, as well as the California Income Tax Return.
He had *NO CLUE*. Hell, he didn't even have any idea as to what his
inventory was valued at. Nor did he have any real estimate (or reserve)
for his tax liabilities.

This corporation was staffed by *ALL* Scientologists, with the
exception of 4 or 5 production workers who were specialist trained to
varying degrees. (And I do not mean Scientology specialist training).
The corporation was run by a Scientologist and his wife, 'A'.
The Vice President ('D') was a Scientologist who took services at
CCLA (now called Celebrity Center International). The VP for Sales
('S') was a Scientologist who at one time was a very successful
Scientology Mission holder until his Mission was taken away after
the shake-up by David Miscavige (at the time of the infamous Mission
Holder's conference) and subsequent control grabbed by the International
Finance Police. (This is another story.) The Production Secretary ('K')
was a second generation Scientologist. The Sales Manager ('L'), who
was actually had been hired to do the books, was a Scientology staff
member at an organization nearby, working her day job for 'B', and
working evenings and weekends (as a Foundation staff member). All the
key management and executive positions were held by Scientologists.

I had left the Sea Org in 1983, whereupon I went to work for a very
large corporation, taking a job in middle management in the accounting
department. After 2 years I felt I wanted to earn more money and have
a change in what type of industry I worked in. In October 1985 I was
referred to the corporation that was to become my new employer by a
friend who is a CPA. I had known this friend from my Sea Org days from
years before when I worked on staff with him on Scientology's "Defensible
Records Project". (Another story here that will be *quite* good, since
this project dealt with getting Scientology's corporate financial
records in order for the upcoming IRS audit! I will say here that this
project involved financial records of the Sea Organization going all
the way back to when L Ron Hubbard was on the ship personally, in this
case, beginning in 1970 and going forward.)

At any rate, I had been told that 'B' really needed a Controller
since he needed to file tax returns soon, and his records were...
ahh.. shall we say? ... 'incomplete'! (I am being generous here.)

Boy, oh boy! Did *THAT* ever turn out to be an understatement!!!

As I was to learn later, 'B's' CPA firm (a very well-known
Scientologist-owned tax and accountancy firm in LA where my CPA
friend worked at that time), *COULD NOT* prepare any balance sheets,
financial statements, bank reconciliations or tax returns because
there were many, many missing records! And what records did exist
were *TOTALLY* unorganized!

Now understand I was referred to the job working for 'B's'
corporation because I had an excellent reputation as a Finance
Specialist in the Sea Org. I have personal recognition from L Ron
Hubbard. I had consistent 'upstats'. I have commendations spanning
years where I consistently worked to GET THE JOB DONE, "balls to the
walls" -- as Bill Brugger used to say! My division won the LRH
Birthday Game as *THE* most 'upstat' Treasury Division in the world.
I have commendations from Int management for consistently getting
the audits done 100% accurately and on time, and an L Ron Hubbard
Finance Aide who once performed a surprise (unannounced) inspection
of my area said my finance records and files "were impeccable". She
(Fran Livingston) could find NOTHING 'off-policy', nor ANY 'outnesses'
during her inspection.

The week I took the job working for 'B' I had also received TWO
other job offers (to be Controller) in the same day. I chose to work
for 'B', not knowing what I was getting into.

I decided to dig in and get to work whipping the corporate
financial records in order. First I decided to get a current bank
account statement reconciliation done, so the boss could (hopefully)
stop writing *bad* checks. This was no easy task since almost all
of the boss' cancelled checks *AND* bank account statements were
non-existent. I had to request records from his bank's microfiche
department in order to accomplish this. I found checks that had
originally bounced at the bank and had subsequently been debited
*twice* from the boss' corporation's bank account! I promptly
brought this to the attention of my boss AND the bank, who
immediately corrected the errors. I even had to go straighten out
the boss' garage which was totally cluttered with boxes, toys,
clothes, books, etc. until I located some of the bank records in
his 'enMEST' (Scientology tern for 'enturbutated MEST' = a pile of
totally disarrayed clutter!)

Next, I dug into the accounts receivables and audited them,
starting from scratch, arranging all the invoices (paid or not)
in date order and compiling accounts statements for each. In the
process of doing this I found invoices that had never been paid.
I worked up an accounts receivables aging by cross-checking with
cancelled checks. This also familiarized me with all of the people
and businesses who owed money to the corporation, and for the first
time in two - three years, accurate monthly statements were being
sent out.

Then I went to work on the accounts payables, putting order into
the mess there too. I had to obtain copies of hundreds of cancelled
checks spanning a two-year time period just to be able to determine
which invoices had been paid and which had not. It was in this process
I found several invoices that had been paid twice, some for as much
as $4500.

After this I supervised the *first* physical inventory that the
corporation had ever done in it's three-year history.

I did all of this while managing day-to-day financial affairs of
the corporation. I hired a junior to work accounts receivable, sine
I had learned in the Sea Org that "THE FIRST FINANCIAL POLICY IS
another junior ('LM') who we hired to do monthly MLM charts, reports
and to figure the amounts of the salespersons' commission checks. I
liaised with the bank on a daily basis to try to correct the NSF
check problems that were continually being created (still) by the
boss' insistence that NSF checks should be written anyway (over my

I implemented financial planning policies within the corporation
with the intention of getting some control (I was Controller, after
all) on the massive overspending that was occurring. This was met
with LOTS of opposition from the Vice President, much to my surprise,
because he was a Scientologist! And I was attempting to 'put in'
Scientology finance policies with regard to financial management,
planning, a purchase order system, etc. *THAT* is WHY I had been
hired in the first place!! (Sorry, 'D', if you are reading this, but
I thought YOU probably were opposed to controls because they make it
easier to catch thieves! But THAT is another story as well.)

Finally, after several months of working diligently, I was able
to produce the first balance sheet and financial statement. It was

The truth of the matter was that the corporation had a combined
federal and state income tax liability for the *first year* alone
of $95,000. I remember this day well. At that point in time, the
reconciled bank balance for the business was *-$55,000*. This was
due to the fact that the boss ('B') absolutely REFUSED to get
straight and STOP writing bad checks ('postulate' checks, as they
call them in Scientology). This was done against my protests, over
and over for the two years I worked there. The owner and his wife
had simply gotten too used to a lifestyle that their corporation
couldn't support, ethically, reasonably and legally.

In fact, the corporation had such SEVERE cash flow problems (due to
the owner's greed and callous and blatant disregard for the law, in my
opinion) that employees' payroll checks often bounced! And guess who had
to always deal with their outrage...that's right... me!

The boss' first order of business each day was in the form of a
standing order to call the bank and find out which checks were 'on
reject' that day (which ones had bounced). Then I was to call the
boss at home (usually he was still in bed at a little past 9AM or
perhaps he was 'in the shower'). Once I got ahold of the boss I
then gave him a list of bad checks by number, amount and whom
they were payable to. Then I was to tell the boss what the previous
day's income was (to be deposited that day), so he could determine
which checks I was to get the bank to re-submit for payment and
which were to be rejected as NSF. Every NSF check carried a $10
fee, and it was usual for the boss to waste an average of $70 - $100
per *day* just on NSF charges alone! And as if that wasn't insane
enough, he used a courier to drive *90* miles practically every day
of the week to hand-deliver his deposit to his corporate bank in
Dana Point, south of LA. This service cost him $45 every time he used
it! I tried to reason with him that he should open an account locally
and use it for routine operating expenses and payroll, but he would
NOT hear of this since he was good buddies with the VP of the bank
and had let this VP ('C') take the account wherever 'C' went when he
changed jobs. In other words, the corporate account went wherever 'C'
went. When 'B' didn't use the courier service to make the delivery
of his deposit, he used Federal Express which 'only' cost $14 each
time to get the deposit to the bank. This was crazy to me (heh, what
do *I* know) since there was a branch of Security Pacific National
Bank only two blocks away, and anyone could have WALKED the deposit
over there.

I was also the guy who was given the thankless task of informing
suppliers that their checks had bounced and that they should just
re-deposit it when it came back to them stamped 'NSF'. I continually
was trying to please everybody -- upset employees, the bank, the
suppliers AND the boss. It was N-U-T-S!!! A very 'enturbulative'
(upsetting) position to be in.

Things started coming to a boiling point between me and my boss,
because of the criminality I was seeing and because I was asked to
do something very illegal! You see, I had prepared the corporate
property tax return, properly listing ALL fixed assets and inventory
which is necessary under LA County tax law. And I determined the actual
LEGAL and CORRECT property tax amount owed.

Well guess what!?!? You probably guessed correctly. The boss said
"It's too much! Change this and this and that..." (while arbitrarily
crossing out numbers and writing amounts on the return that were
roughly half of the correct figures). He didn't want to pay his actual
property tax owed, since it was 'too much', so he just 're-did' the
tax return and told me "File it like this, and pay this amount instead"
(as he had altered the return and penciled in vastly lower and false

I FLAT-OUT REFUSED, and I told him so! I said "'B' -- I won't do
it! It's wrong and that is asking me to commit tax fraud!" I was
amazed since this was a Scientologist AND 'OTV' and I was 'only'
Clear! I thought 'OTs' were supposed to be MORE ethical!!

I never did file the property tax return. I let him sign his version
of the return, and I let him sign the check to pay the tax bill, which
was roughly one-half of the correct amount! Then I filed a true and
correct copy of the return in the property tax file in my office as I
had originally prepared it, attaching a note to the return I prepared
stating that *THIS* is the correct return as prepared by me, and that
the other return was fraudulently prepared and submitted by the boss,
and that I had refused any part of it!!!

Around this time things were getting pretty hairy around the
business! One of my juniors ('B'), who had been in the Sea Org for
years was pretty upset and getting ready to quit over the gross
out-ethics that the boss was involved in. Actually, things had been
pretty crazy for quite some time. Employees were 'nattering' (Scieno
talk for getting upset and voicing it) amongst themselves with good
reason -- their paychecks were bouncing. Many of them were also being
asked to lie to independent contractors who were salespeople for the
corporation. One of the most common lies was that the owner would tell
his sales people that their commission check "is in the mail", when
in fact it hadn't been sent.

Around the period of May or June 1987, the boss went to Flag for
his Ls and other services. The owner's wife approached me the day
he left and asked me to write a "KNOWLEDGE REPORT" (a Scientology
'ethics' report on a member who is doing wrong things, whether it
be the commission of a crime or for simply not following Scientology
policy). She asked me to rush the report to Flag so her husband
could get handled on his 'out-ethics'. I did write a report, as did
other employees (at the request of the wife of the boss). The reports
were all sent by overnight Federal Express to the Flag MAA.

In addition. the boss' wife got the Public MAA (Master at Arms, or
Ethics Officer) Flag *on the phone* and asked me to speak with him
about the illegalities and irregularities her husband was involved in.
I did speak to the Public MAA, and I gave him an in-depth explanation
of what I had hurriedly written in my report. The reports and the
telephone conversation had been an attempt by 'A' to get her husband's
'ethics' handled. She was VERY concerned since SHE was the one who
was listed in the corporate papers as the *President* of the
corporation! I am quite sure, from conversations I had with her, that
'A' didn't want anything illegal to continue to occur, since she was
responsible. Her husband, 'B' had put HER on the corporate papers as
President in an attempt to shift responsibility away from himself,
in my very humble opinion.

The result of the reports to Flag and conversation with the Public
MAA, was that the reports would NOT be addressed during that time
while 'B' was at Flag!!! After hearing that, I spoke with the NOTS
C/S at Flag in an attempt to get 'B' "handled". NO LUCK THERE EITHER!!
So I say that it is CRAP with regards to any kind of system designed
to 'trip up' and catch a person who has "overts" (crimes). I was
extremely disappointed because Flag is SUPPOSED to be the "Mecca of
Standard Tech". B*LL SH*T!!! is what I say!!!

The boss returned from Flag with NO handling done on his financial
crimes. AND, soon after that there was ANOTHER couple of heavy
confrontations I had. But not before he fired 'L' (the Sales Manager)
and 'D' (the Vice President) who were both very dedicated employees
and Scientologists.

Next, the boss hired an outside "Field Auditor" who was trained to
do "third party investigations" for the purpose of finding out WHO
was "spreading discontent and bad-mouthing the boss"!! I was still
left after this because I had only discussed the problems and crimes
with the correct "terminals" (Scienospeak for persons), so I had not
been found as a "WHO" (suppressive) "causing" the company's problems.

Around that time the boss had also been wanting to make his
corporation into a publicly traded one, and I had been working hard
to prepare an accurate financial statement. And the deadline was
approaching when the corporate income taxes had to be paid.

In California, at that time (1987), corporations in the high income
bracket his was in, had to pay 9% of their NET (pre-tax) income in
California income tax. And the Federal Income Tax bracket he was in
taxed at the rate of 46% of every dollar over a NET income (again,
pre-tax) of $100,000. As I stated above, 'B' owed $95,000 in combined
Federal and State income taxes for his first year in business with
his new corporation.

And he DIDN'T HAVE THE MONEY to pay the taxes. In fact, on the day
I informed him what his actual tax obligation was, his business was
$55,000 overdrawn on his two bank accounts! Talk about DEEP DOO DOO!!!
I had offered a plan previously to liquidate his inventory by having a
big sale. I had worked long and hard to try to get his to adjust his
personal spending habits and economize. I had tried to implement a
budget and financial planning. I had been very successful at this EVEN
before becoming involved in Scientology.

But all the finance training in the world didn't make one iota of
difference because the owner was NOT about to pay his taxes! His idea
was to "re-do the return so as to get the tax bill down to a realistic
amount". And he even told me that I had to "get CREATIVE" on his tax
return because he didn't have the money to pay $95,000 in taxes!

I told him at that point that I could NOT and would NOT falsify a
tax return for anyone -- even myself! I even pointed out to him (as if
it would make any difference, but WTF) that COMMITTING TAX FRAUD is
punishable by up to a $50,000 fine and/or 5 years in prison!!

His reply... "Well then, I will find somebody who WILL [prepare a
phony return]!!" It was at that point that I told him I would work
for him until the end of the month (July 1987) so he could find
someone else to replace me.

The next day when I came to work he "fired" me!

So much for Scientology and the "ethics level" of THAT particular
"New OTV".


"Leny" -- It is my personal observation that a Scientologist "would
have to repair any damage done and handle any illegalities before
getting auditing, even if it meant 'facing the music'" ONLY if the
damage is to Scientology and/or Scientologists.

In fact, I have known for a long time that Scientology (based upon
the sooper-dooper not-so-sekrit skripchures of Lying ElRon) considers
the IRS and other "tax cruds" (to quote a term by Hubbard) to be
"SUPPRESSIVE" groups. And Scientology's policy of Fair Game permits a
Scientologist to cheat and lie to a "SP".

Now I want to hear what justification you are going to tell me
for the reason why my former boss was not "handled" by Scientology's
"ethics" when he was at Flag, the Mecca of STANDARD TEK.

Do you suppose that Flag would rather have had my former boss pay
the IRS his due taxes, instead of paying it to Flag?!?! And why did
the "Mecca of standard tech" NOT insist he get his 'PTPs' handled?!?
How about 'overts' and 'withholds' prior to session?!?! You DO know
about "flying ruds" before a session, do you NOT?!?! Can you say GREED?
Can you say MONEY MOTIVATION? Can you say 'GI'?!? Can you say SQUIRREL?

Hail Xenu!

Warrior - Sunshine disinfects