Original subtitles

- Neither law enforcement nor the law

is designed to effectively deal with a cult

or a heavily mind-controlling organization.

- We are hitting dead ends with the police.

We're hitting dead ends with the IRS.

Scientology has gotten away with what it does

with their tax-exempt status.

People were trying to do the right thing,

and the authorities aren't listening.

It's maddening.

There's a lack of education on part

of the government agencies.

They need to know what they're dealing with here.

- I am the writer of the textbooks of Scientology.

The aim and goal is to put man in a mental condition,

uh, where he him... Can solve his own problems.

- Without any Scientology organization,

things are not gonna change on this planet.

- After years of slowly questioning Scientology...

- Leah Remini and her very public break

with Scientology...

- Scientology, what they do...

Trying to destroy people,

trying to destroy their families when they leave,

they create a lot of people

who are willing to fight against them.

- Scientology takes tax-free dollars

and ruins people's lives.

- This is not the life that I want to live.

I wanted to end my life.

- Some people, it takes a year;

some people, it takes ten years of just peeling that onion

of how you were manipulated and made to think.

- This season, we really needed to focus

on the reason why Scientology is able

to do the things that they do

is because they have tax-exempt status.

- The people who have

bravely come on and told their stories

have not told those stories in vain.

They are having an impact.

- We're presenting our case to the world,

to the FBI, to the IRS.

- The most important thing that has to be done

is the persistent telling of the truth,

and that's what you're doing.

- You have to continue to fight.

You have to continue to fight for what's right.

In past seasons, we have shown you

stories of abuse, um,

and the abuse of policies of Scientology,

and we are constantly asked,

"How does the Church of Scientology

continue to get away with it?"

Tonight, we're gonna try to answer that question,

because it really is about their tax-exempt status.

- I feel safe in stating that if you were to take

all our previous external wins,

those over the last four decades,

and combine them all into one,

they wouldn't even approach the magnitude

of what I'll announce tonight.

Tonight, what we're going to talk about

is the war to end all wars.

- Today, we're talking to Professor Jay Wexler,

from Boston University, who is, uh,

an expert in church-state law.

He's written a couple of books about it

and has graciously agreed to help us and the audience

understand some of these issues vis-a-vis Scientology

and its tax-exempt status.

- A lot of our viewers say, "I don't understand

"how they continue to have tax-exempt status,

how they continue to get away with the abuses,"

the amount of money that they're amassing

through what we're claiming is fraud.

- Quite remarkable, uh, story.

For decades, the IRS treated Scientology as not tax-exempt.

You know, I think it's important

for everybody to understand that

being a religion or being a church is necessary

to get tax-exempt status, but it's not sufficient.

What my understanding is that the IRS thought

the profits of the Church of Scientology

went to a private individual,

which is not allowed under the tax code.

- That was specifically L. Ron Hubbard,

and in the mind of Scientology,

once L. Ron Hubbard died, "Oh, well, great.

We'll be able to pull this off."

L. Ron Hubbard's will decreed

that his estate had to be distributed

to a tax-exempt organization of Scientology.

The Church of Spiritual Technology

was created for that purpose.

I was a part of the team that restructured

the entire corporate hierarchy of Scientology,

including the creation of CST in the early 1980s.

In 1986, when L. Ron Hubbard died,

CST still did not have tax-exempt status.

His estate was held in limbo

because it could not be distributed.

That started a very, very intense campaign

from Scientology, lead by David Miscavige,

to gain exemption from the IRS.

The IRS was engaged in a criminal investigation.

They were issuing levies

and massive tax assessments against Scientology,

so Scientology did what Hubbard says to do.

- Attack. - Attack. Fight back.

They sued the IRS.

They started putting private investigators

on individual IRS agents.

- Now a lot of lawyers hire private eyes

to dig up dirt on people.

I mean, now we are even hearing...

- I don't know.

I know... I've heard that people do that,

and I know that the media does that,

but I don't know that a lot of lawyers do that.

I don't do that.

- L. Ron Hubbard said, "Don't go after organizations.

"Go after individuals.

Make it painful for the individual."

This is not something

that the IRS confronts normally.

I don't think that they've ever had to deal

with something like this before, ever.

- We began exposing the actual who's.

That's right. Naming names.

First, we filed a suit for $128 million on the IRS

and the individual IRS agents committing these criminal acts.

Now, we were able to piece together their crimes

from the bits of documents we had received,

and then the International Association of Scientologists

sponsored more ads in "USA Today."

You have no idea how much the IRS hates publicity,

but to see their own faces...

It was more than they could handle.

- We have obtained a previously undisclosed memo

from the IRS at this time that this is going on,

and it reads,

"We have recently received reports of harassment.

"This harassment has been in the form

"of photographing employees and their family members,

"surveillance of residences, and annoying telephone calls.

"These events have taken place

"in the National Office in the Los Angeles area.

"We have traced one incident to a private investigator

associated with the Church of Scientology."

This went on for ten years.

Could you imagine you work at the IRS and you're doing...

Just, you're simply your job, and then all of a sudden,

you have PI's following you?

- It became frantic in 1992.

It became an obsession

and a no-holds-barred assault

on whatever it took

to attain tax-exempt status for Scientology.

So David Miscavige and Marty Rathbun

literally walked down to 1111 Constitution Avenue,

walked into the IRS building, and said,

"Hi, I want to meet with the IRS commissioner."

It's reported that David Miscavige

asked, "If we turn off the faucet of all of this..."

"Freedom Magazine's" investigating, exposing,

ads in "USA Today"...

Like, it was a major campaign.

"Can you resolve our issues?"

and Fred Goldberg said, "Yes,"

and ultimately, the deal was done.

- So this guy didn't want to continue the fight,

because if they... you know, there's documents that say,

"We do not find this organization to be fitting

the criteria for tax-exempt status,"

and then all of a sudden, the guy signs off on it.

- Yeah.

- What is so insane is that Scientology

used their abusive policies to gain tax-exempt status.

The way that Scientology achieved tax-exempt status

is the reason why they shouldn't have

tax-exempt status. It's... it's actually insane.

You know, out of the dozen or so, um, IRS agents

who were individually targeted by Scientology,

we have spoken to two of them.

One of them was unwilling to appear on camera,

and we asked him why, and he said, "You know",

"after all this time,

"do you know that I still make several right turns

"when I'm traveling anywhere?

"Like, that caused me emotional, like, trauma

"that I still haven't gotten over

"and I'm here talking to you guys off-camera

"to try to help you

"because I believe in what you guys are doing,

"and I think it's outrageous

that this organization received its tax-exempt status,"

which he didn't believe they should receive,

but he wanted to help,

but he just didn't want to appear on camera.

- Yeah, that's... That's a terrible story, yeah.

- The IRS is well aware of the tactics of Scientology,

that they should be doing something about it.

- There will be no billion-dollar tax bill

which we can't pay.

There will be no more discrimination.

There will be no more 2,500 cases

against parishioners across the U.S.

The pipeline of IRS false reports

won't keep flowing across the planet.

There will be no more nothing,

because on October 1, 1993,

at 8:37 p.m. Eastern Standard Time,

the IRS issued letters recognizing Scientology

and every one of its organizations

as fully tax-exempt.

The war is over.

- The IRS acquiesced on everything

and basically granted

all Scientology organizations and entities

religious tax-exempt status,

and all donations, all payments to Scientology

from Scientologists, as being deductible,

in October of 1993.

- That part is extraordinary from my perspective.

There's a Supreme Court case that specifically said

that payment for auditing services

is not deductible

to the person who makes the payment,

because it's basically

a quid pro quo business transaction,

and the Supreme Court upheld that

and said, "That's right."

The Supreme Court held that,

and then in this settlement,

the commissioner of the IRS basically said,

"Forget that, and from now on, you can deduct."

- How do they continue to get away with

"this is freedom of religion,

this is our First Amendment rights?"

This is the stuff that I don't understand,

that given the tax-exempt status,

it's kind of freed the path for Scientology...

Continue to do this.

- The best place to start might be just to back up

and think about, you know, "What is the point

"of having a tax-exempt program in the first place," right.

- Sure. - Everybody pays taxes.

Individuals pay taxes, institutions pay taxes,

corporations pay taxes, and that tax money

goes to fund all of our public benefits.

We, through Congress, we the people have decided,

you know, there are certain categories of organizations.

If you are in one of those categories

and you meet all of the other requirements,

those groups, because they provide a benefit

that the government might not provide

as much as we would like, they get to be tax-exempt,

but we also have to realize that there's a cost,

because that's less money going to the public,

which either means that everybody else

has to pay more taxes right out of their pocket,

or it means we have less services,

we have less defense, we have less education,

we have less infrastructure, right, our bridges fall apart.

That's why the agencies and the IRS,

the Department of Treasury,

have an obligation to make sure that if somebody is...

If an institution is granted a tax-exempt status,

that there's a good reason for it.

- When I say, "You, American taxpayer,

are subsidizing the activities of Scientology,"

this is exactly what I mean.

This is your tax dollars are a substitute

for the tax dollars from the Church of Scientology.

I would like to just go through these guidelines

that the IRS uses to determine what is or isn't a religion

in order to qualify

under that part of the exempt code.

- The first one is that the organization

has to be organized formally as one of the listed types.

Like, it has to be formally organized

as a religious organization.

I don't think that's the particularly difficult thing

for any institution or organization...

to get over that hurdle. - Right.

- The second one is... - The second one,

which gets much more complicated

and interesting, I think, is that you...

That the organization has to be operated

for the purpose that it's organized for,

so if you say you're a literary organization,

then you have to, in fact,

operate as a literary organization.

To go a little further in this operational test,

is it acting as a commercial entity?

If you're making tons of money, maybe you're a business,

and so that's something that the agency has to look at.

It's not an either-or thing.

You can be a church,

you can be a religious organization,

but also be more commercial than a church,

and therefore not deserve tax-exempt status.

For example, an institution that says,

"Our purpose is to protect against cruelty to animals,"

which happens to be one of the listed things,

and you do some animal cruelty prevention,

but you're also selling

lots and lots of books about animals.

- Okay. - Right?

And so you're making lots and lots of money,

and that money maybe is even going to the person

who runs the organization, right?

In a sense, you are still an animal rescue organization,

but you're all of these other things too,

and so even though you are an animal-helping organization,

you don't get tax-exempt status.

- If your religious organization's

primary activity

is accumulating funds and buying empty real estate,

that is not primarily the activity of a religion,

and it's not providing a public benefit.

- Well, let me ask you this,

because people say this all the time,

what's the difference between that and real churches?

You know, real churches have just as much money,

if not more than, Scientology.

- Well, for the most part,

it's the method in which they collect it,

it's the amount of money

that they have accumulated over centuries.

Like, the assets of the Catholic Church

and the buildings they have,

or the Baptist Church, or whatever,

have been accumulated over h... A long, long period of time.

Scientology arrived on the scene in the 1950s

and suddenly has $3 billion,

and massive real estate holdings

around the world,

and doesn't have a population of people

commensurate with that.

- This is very different,

and Scientology is run as a business.

- You walk into a Church of Scientology

and you are required to pay, and you may not participate

in the main services of Scientology...

Yes, there's a few that they throw in

that are free to sort of be able to say

that we have free stuff,

but the truth of the matter is

everything you do in Scientology,

you are required to pay for in advance,

with discounts for the more in advance,

and discounts

for the bigger amount that you give them,

and that has been determined

to not be a commercial transaction,

and that is mind-boggling.

- A tax-exempt organization can have money,

it can have profits, it can have bank accounts,

but there has to be some sort of rela... um,

reasonable relationship, proportional relationship,

between the money it has and the benefits its providing.

You know, the audience should understand

that there's a lot of things that are clear in the law

and there are a lot of things that are... that's mushy.

- Let me tell you, Scientology isn't mushy on this stuff.

- Exactly, even if you didn't have Scientology

on that point because it's vague, right,

you still have Scientology on the other points.

It's a great business model, right,

because there's tons and tons of "buy now,"

and "you have to get this now, and you have to get... "

and you have to buy in advance,

and "50% off"... you know, it's like a...

You know, I'm sure they're gonna be running ads

on their Scientology channel.

For... for a "Memorial Day sale on your eternity."

Like, I'm waiting for that, but, you know,

they actually have printed sales pitches

that they send out all the time.

- And if I understand it right, you know,

that's a big part of the reason why

the IRS treated them as not tax-exempt.

- Exactly. - And they were

absolutely correct.

- So there's al... there's an additional restriction

on... if you get non-profit status,

an organization should not be considered

a non-profit organization if its activities

are either in further of an illegal purpose

or a purpose that is contrary to public policy.

- What is public policy?

- Well, that's like the $100,000 million question.

The Supreme Court applied it

in a case called Bob Jones University,

which was an investigation of whether the university

could discriminate on the basis of race in its admission.

It didn't let in anybody but white people.

It said,

"To warrant an exemption, an institution..."

And any agency that's looking to see

if something is a violation of public policy star...

Should start with that definition.

- Look, when the IRS granted exemption to Scientology,

there was a five-year trial period

that was built into the settlement,

five years Scientology had to keep showing

that they were in compliance with the IRS regulations,

and there are a lot of things

in what was presented to the IRS at that time

that have changed subsequent to 1998,

when any overview of Scientology ended,

and that to me is what the IRS

should be going back and looking at

and saying, "Wait a minute, you told us this",

but that didn't turn out to be true."

- I also want to read you something

that was sent to the IRS

in the course of seeking exemption.

This is what they said,

and this is a public record document

that was submitted to the IRS, saying,

"You should be giving us tax-exempt status."

This, to me, encapsulates

the real story of this exemption.

This is the arrogance,

the assertion of "We will destroy you",

we will attack you."

Why would anybody put that in there?

- Conflating the IRS trying to make sure

that a non-profit organization's in fact

providing a public benefit

with the Holocaust and with Nazis

is just... is just disgusting.

- Not only was the application itself weird,

the granting of exemption came subsequent to court rulings,

including from the United States Supreme Court,

that said that the IRS was absolutely correct

in denying Scientology exempt status

and denying the deductibility of donations to Scientology.

"The court does not question

"the sincerity of the belief

of those who practice Scientology."

"Nor does the court hold..."

"Plainly it is. But..."

Okay, one more that I just want to mention to you.

There was a decision that also went

to the United States Supreme Court

concerning these tapes

called the "Mission Corporate Category Sort Out."

These tapes were recordings of Scientology's lawyers

planning to construct a scheme to avoid IRS taxation.

The way that these tapes were described was...

"...the United States government."

Now, those tapes were turned over

based on this decision,

which was 1991,

again, two years before the exemption,

and the IRS had those tapes,

again ignored,

and effectively, that was all thrown out

and IRS just folded its tent and said,

"Okay, we'll give you exemption

in spite of the fact that we have these."

- I can't imagine what the conversations were like,

because all the stuff was in the...

Was in the public record

and the IRS had a history of denying

the tax-exempt status for so long.

The IRS comes before the Supreme Court and says,

"Here's... here are the facts,"

and they're... you know, they're what you read,

and then to just ignore that is, uh, is just...

It's bewildering.

- It is doing a disservice and injustice

to A, every taxpayer in the United States,

but more importantly to the people

who suffer the abuse at the hands of Scientology,

and this is another point that the IRS exemption brings:

the lack of government oversight.

So Scientology never has to answer up about

how much money has it spent on private investigators,

how much money has gone to lawyers to send letters

to people who appear on our show.

- Religions get some autonomy to believe different things,

but religions don't get the authority

to go outside of themselves

and impose harms,

and burdens, and harassment

on people who are just going about their business.

- Or building a mansion for L. Ron Hubbard

after he's dead.

A house. No, five houses.

He's got five houses constructed for him

around the world in these CST properties.

- Do you want to know why?

- He's coming back? - Correct.

- That's the kind of thing that... that the...

The tax-exempt status analysis

is about, right?

And it's just a matter of convincing

the people who are in charge of enforcing that

to at least take another look.

- You've answered a question for me,

which is very simple,

which is it's not that it's...

We're going after calling them a church, not a church,

that's our opinion, but that's fine,

we're just saying "You don't deserve tax-exempt status,"

and I think that's very simple,

and I think that should be achievable by the IRS,

and I think they should...

It's time for them to do something about it.

- From everything I've heard and everything you've said,

I agree absolutely.

- You're absolutely right,

you believe you are a church and you are entitled

to believe what you want to believe.

You can believe in dogs, you can believe in pineapples.

I mean, if you want to pray to a pineapple,

you have every right to do it.

Being a religion does not guarantee

that you should receive tax-exempt status.

- Look, I understand that there are

some obstacles to what the authorities can do,

but there has to be something more you can do.

There has to be more education.

You have to look and want to look.

You can't say you don't know what's going on.

You have to know what's going on.

This is what you do.

This is what you do for a living,

to protect and to serve.

- I am Yulanda Williams,

and I am employed as a lieutenant currently with

the San Francisco Police Department.

I've been a police officer for 28 years.

- We have requested

to talk to any person from law enforcement,

and all have declined.

- I just want to say everything that I say today

is my personal opinion, based upon my experiences.

Right.

- Which is very important. You have experience.

Most people, uh, who go into law enforcement

don't have this experience.

Not only do they not have the personal experience,

but it seems... and you can correct me if I'm wrong...

They don't want to know about it,

because when I have tried to, and Mike has tried to go in,

something happens, Yulanda,

like, where they just stop listening to us.

Why can't we penetrate to teach?

- Unfortunately, the cult situation

is something that I don't think

that there's any real law enforcement training

to really know how to deal with those types of situations

or those types of religious organizations

that move in the direction of cult-like treatment

and handling of their members.

Law enforcement responding to these types of compounds

and religious organizations need to recognize

people have been living on these premises

for an extended period of time.

They're potentially brainwashed.

And even with me going into law enforcement,

it took me 15 years to finally tell them

who I really was

and that I was a survivor from a cult,

and then when they found out, they couldn't believe it.

- Right. Right.

- And so it's that ideology

that creates some of the problems

with how law enforcement is able to best come in

and be equipped to deal with a cult

or something that's cult-like.

- I want to talk to you about that.

I want to talk to you about why.

Why did it take you so long to tell them

that you're a survivor?

- It was fear. - - Yeah.

- Fear of the fact that

when people speak of those

who have been involved in cults,

they think that there's something wrong with you.

They automatically assume that it's your fault.

It's like the battered wife syndrome.

It's... you know, it's always the victim's fault.

They feel like if you were a fool enough

to go into a cult and you got stuck there,

that's your fault, that's your problem,

and it's that undertone

that makes someone who comes from out of a cult

be fearful to go public and say,

"Look, I've been there. I know what it's like.

I've got first-hand experience about it."

- So I want to talk to you about the LAPD.

I filed a missing persons report

on the leader's wife

who hadn't been seen in public for the time of ten years.

And I was writing letters to her,

not receiving responses, I wouldn't...

Couldn't get an answer. Anyway, filed a police report.

Filed a police report with my friend

who was a detective at the LAPD.

He asked his captain if he could take it himself.

The captain said,

"Send it to missing persons and stay out of it."

Within, what, two days,

LAPD releases a statement that my report was unfounded.

Then as it starts coming out in the press,

I guess they got a little, like,

"Oh, we should say something to this girl,"

so then they said, "Well, we did make contact,

"and she is fine and doesn't want

to be spoken to, doesn't want to be found."

Then I said, "Well, under what circumstances

"did you see this person, supposedly?

"Was she alone?

"Did you see her physically with your own eyes?

"Did you tell her that people are trying to help her,

that she has a way out? Did you tell her... "

"We don't have to do any of that," they said.

It was never clear that they saw her,

and even if they saw her, did you see her alone?

Was she with her handlers? Was she under...

None of that information could I receive.

- You have to think about it.

Police officers who've never been exposed to that...

They can't even fathom the idea

that someone would allow someone to have

that type of control and to that extent.

Most cults do not really consider

law enforcement to be their friends.

Most cults consider law enforcement

and anything that's associated with the state

that's trying to conduct oversight

to be an archenemy.

- Everything outside of the world of the cult

is evil, bad... - True.

- You know, everybody's got different words for it,

but that includes government agencies,

that includes Child Protective Services,

that includes everybody, because they're outsiders.

- Did they give you a copy of your missing persons report

that you filed? - No.

I called Lieutenant Dawson,

who was supposedly in charge of this case,

even though he's not even listed on the police report,

and he said he couldn't give me any information.

- Safe-pointing is a concept that Hubbard came up with

of how you protect the organization

from outside trouble,

and it entails finding the people in the community

who are the...

What he called "opinion leaders."

Like, you don't want the police,

or law enforcement, or anybody else...

The fire department or whatever...

Having a bad impression of you,

because they have influence over your activities,

so you locate the people

within your community

that you need to have be your friends,

and you do whatever it takes

to make them friendly towards you,

and each person that is in that community

that is a friendly person towards you

is a "safe point,"

and the more safe points

you have around your organization,

the less likely it is that your operations

will suffer or be impeded by the outside world

somehow making its way inside the Scientology bubble.

- I'm thinking about from the measure of accountability,

transparency, and everything else

that when you tie yourselves and align yourselves so much

with one organization, it makes it very hard for you

to have a clear view of what may be occurring,

and you might miss some very important points.

- Every time I talk to someone who was involved

in another organization similar to Scientology,

you go, "Oh, my God, this is... Like, it's all the same stuff."

- Here's what's so crazy to me.

How do the government agencies and the police departments

not know that this is what's going on?

- Again, my suggestion after talking about this

at the length we have

is the police officer's standards and training

to communicate with them directly

and urge them to start putting together

some type of training on cults.

How do you deal with them?

What are the underlying red flags

of a cult,

or that someone that might be going through something

where they're being forced to do something

that they, under normal circumstances,

would not do? - Right.

- And I think it's incumbent upon us

to come up with those warning signs,

put the pen to paper on what they are.

- Agreed. - Totally agreed.

Educating law enforcement and government agencies,

and having people within them

that actually understand what they are dealing with.

Any government agency, like Child Protective Services...

Another great example...

If someone does come forward

and says, "Look, I was assaulted.

I was sexually molested, I was whatever,"

as soon as law enforcement

informs Scientology that there is a complainer,

there are 50 people who write affidavits

signed on the penalty of perjury saying,

"This never happened." - Absolutely.

- "It's impossible. It couldn't ever happen."

- And then law enforcement goes, "Okay, case closed."

- And you go, "But, wait a minute,

do you know that those people are lying?"

"Well, they are signed under penalty of perjury."

It means nothing.

- Because Scientology has a term

called The Greatest Good. - Yes, the... that's right.

- The Greatest Good is to lie... - For the cause.

- For the cause. - Yes.

- Anything that brings outside agencies

inside the Scientology world to check

to make sure that Scientology is doing the right thing

is seen as an attack,

so something as innocuous as a welfare check

is seen as an attempt to bring down Scientology.

- If you're really doing your thorough investigation,

why not have an investigator

just periodically spot check the location?

Call a social worker and say,

"We would like for you

"as a mandated reporter of the state

"and a social worker to go with us.

We need to collaborate."

And again, training,

so that then, the officer who's put in the situation

to have to take that hard stand that,

"No, I think something's going on here

and I need to come in and see for myself,"

knows that they the backings of the state, training,

that what they're doing is what they're supposed to do.

- Right. - We're leaving others behind

while we just keep walking around and saying,

"Oh, yeah, that's a Scientology building.

"Nah, I'm not going in there. Whoever's in there,

well, that's their problem. I'm not dealing with it."

We got to stop that. - Right.

Thank you.

- Thank you.

- You're an amazing human being.

- Had Scientology not obtained tax-exempt status,

it wouldn't exist.

It could not have paid

that billion dollars in assessments from the IRS.

It would have had to be liquidated.

The fact that it got tax-exempt status

has now allowed Scientology in the subsequent 20-plus years

to accumulate enormous amounts of money

that it can use to do what it wishes.

- The reason why an organization is tax-exempt

is because they are supposedly providing

a service to the public.

That's why they have tax-exempt money,

'cause they're like, "Oh, okay, we feed the poor,

"so that's why we need our money.

We're doing good things. We're servicing the community."

What Scientology is doing and has been doing

and will continue to do

is just use their tax-exempt money

to bully people into silence.

The authorities really need to go after

their tax-exempt status, 'cause that is really the thing

that will stop these abuses.

It will stop the pain. It will stop the hurt.

It will stop the bullying, the harassing,

the private eyes from going after people

who are simply speaking their truth.