Contributor Jeffrey Augustine keeps a close eye on Scientology’s financial documents. And he has some new information today that backs up what we’ve been told anecdotally by our other sources — that Scientology’s flagship drug rehab center in Oklahoma, Narconon Arrowhead, is in serious trouble. Take it away, Jeffrey…
Here in the US, religious groups do not have to file tax returns. The only exception is if they have “unrelated business income.” If they do, thanks to a 2006 law change, religious groups must file an IRS form “990-T.” And even then, we don’t have much interest in the “unrelated” income that they report. The Church of Scientology, for example, owns a nine hole golf course at Gold Base that it rents out to local civic groups. The Flag Land Base in Clearwater and Celebrity Centre International in Hollywood each have ballrooms that they rent out. These tend to be trivial amounts and don’t tell us much about the real money they’re taking in for courses and donations.
However, the real value of the 990-T form is that it contains one really interesting question: It requires that the filer estimate the total “book value” of the organization. In other words, Scientology entities that submit these forms have to admit how much they’re worth.
And that’s forced several Scientology entities to admit to being worth a total of about $1.7 billion in assets. (And that’s only for the entities that report unrelated business income. Some of Scientology’s entities don’t submit 990-T forms, so we can only guess at their book value. But it would certainly mean that Scientology as a whole is worth billions more.)
Meanwhile, Scientology’s entities that can’t claim to be religious in nature — like the secular front groups, including the drug rehab companies under the Narconon umbrella — do submit annual tax returns (990 forms) if they have gross receipts of more than $200,000 or assets of $500,000 or more. There is typically a two year lag in getting 990s and 990-Ts. The forms Scientology submitted for the tax year 2014 are just now beginning to become available.
David Miscavige has always held out Narconon Arrowhead as the “flagship” of the drug rehab network. Located in Canadian, Oklahoma the facility has been rocked by a series of scandals and lawsuits – as have Narconon Georgia, Narconon in Canada, and several other Narconon centers.
The Underground Bunker has broken these stories to its international audience, and readers here have followed what seems to be the implosion of Narconon. Now, we can report that Narconon Arrowhead lost money in 2014 and has experienced a serious “stat crash.”
Narconon Arrowhead’s most recent 990 tax return, for 2014 (see below), paints a grim story.
Gross receipts that year were $4,117,845, a combination of gifts ($2,034,017) and sales of services ($2,044,407).
How did Narconon Arrowhead come up with $2 million in gifts? The answer is on another 990 tax form, the one submitted by Narconon’s Scientology umbrella organization, the Association for Better Living & Education (ABLE). In 2014, ABLE gave Arrowhead a “grant” of $1,879,286 for “general support.” Arrowhead’s remaining gift amount presumably came from other Scientology organizations. We can say that with some confidence based on precedent. In 2008, Scientology’s Social Betterment Properties International (SBPI) donated $180,000 to Narconon Arrowhead. Apparently, and for public relations reasons, David Miscavige cannot allow Narconon Arrowhead to become insolvent — it is, after all, the flagship of Narconon.
Arrowhead’s losses (revenues less expenses) for the year were $310,714. But that’s misleading. The real number, once you take away what was “gifted” to Arrowhead by ABLE to keep it afloat, is a real annual loss of at least $2,190,000. In other words, Scientology’s other groups had to prop up Narconon Arrowhead with $2 million in gifts so it would only show an annual loss of $310,714 in 2014. Of course, it is possible to work the numbers in different ways, but I am using very basic accounting. I welcome comments and analysis from the real numbers people here at the Bunker.
Even with Arrowhead’s lousy 2014 numbers, its losses in 2013 were even worse — a total of $3,713,907 in losses after subtracting operating costs from revenue. That might explain why Scientology found a couple of million to “gift” Arrowhead in 2014, which it didn’t do in 2013.
Meanwhile, ABLE wasn’t only propping up Arrowhead. It “gifted” plenty more to other Narconon entities that are struggling: Narconon International ($541,053), Narconon Fresh Start ($866,739), Narconon Pacific Coast ($15,561), Narconon Freedom Center ($34,047), International Academy of Detox Specialists ($30,762), and Narconon Georgia ($33,620).
For decades, Narconon was a reliable moneymaker for ABLE and the Church of Scientology. Now, after Narconon became a nightmare of lawsuits and scandals, Scientology is having to fork out serious money to keep it from collapsing.
Arrowhead’s decline is particularly stark. After its income rose to a peak of $12 million in 2012, it fell off a cliff after, that year, three patients died in a nine-month period:
As Tony reported recently, he’s heard from his sources that Arrowhead, which was designed to house more than 200 patients, is reportedly now down to ten staff and only three patients. If Miscavige is going to continue to prop up his flagship drug rehab, he’s going to have to keep giving it “gifts” in the millions.
— Jeffrey Augustine
Chris Shelton and ‘Scientology,’ Chapter 3
Chris continues to look at an academic treatise on the church.
A lefty magazine weighs in
Jacobin magazine yesterday published a refreshing summary of Scientology — its history, its controversies, and where it may be headed — and we found it to be really thorough and well researched.
If you read the Underground Bunker, or if you’ve seen Alex Gibney’s film Going Clear, you’ll recognize nearly everything in the concise roundup that writer Jon Anderson has given the subject, packing in an amazing amount of Scientology’s past in a very readable single chunk.
And we’re surprised by it mostly because of where it appeared. Jacobin is a quarterly that claims to be a “leading voice of the American left.” In the past, we’ve found that the political left — the real American left, not the tepid centrists represented by the Democratic party — have little patience for stories about Scientology.
Maybe it was Alexander Cockburn running interference for Scientology all those years at The Nation that convinced us that the political left was as uninterested in doing something about Scientology as the political right, which always seems queasy about complaints over something that calls itself a “church.”
Well, maybe a corner has been turned. If Jacobin can see that disconnection is toxic, and that Scientology’s lawless history deserves a serious look from today’s law enforcement, maybe other bastions of the left and the right will also start to give it a look as well.
(PS: Is “Jon Anderson” a pen name? Jacobin claims that Anderson is a freelancer who writes on the history of religions, but we don’t find that to be the case. If it is a pseudonym, we’d love to credit the person who actually wrote this excellent piece.)
E-mail tips and story ideas to tonyo94 AT gmail DOT com or follow us on Twitter. We post behind-the-scenes updates at our Facebook author page. After every new story we send out an alert to our e-mail list and our FB page.
Our book, The Unbreakable Miss Lovely: How the Church of Scientology tried to destroy Paulette Cooper, is on sale at Amazon in paperback and Kindle editions. We’ve posted photographs of Paulette and scenes from her life at a separate location. Reader Sookie put together a complete index. More information about the book, and our 2015 book tour, can also be found at the book’s dedicated page.
Learn about Scientology with our numerous series with experts…
BLOGGING DIANETICS: We read Scientology’s founding text cover to cover with the help of L.A. attorney and former church member Vance Woodward
UP THE BRIDGE: Claire Headley and Bruce Hines train us as Scientologists
GETTING OUR ETHICS IN: Jefferson Hawkins explains Scientology’s system of justice
SCIENTOLOGY MYTHBUSTING: Historian Jon Atack discusses key Scientology concepts
Other links: Shelly Miscavige, ten years gone | The Lisa McPherson story told in real time | The Cathriona White stories | The Leah Remini ‘Knowledge Reports’ | Hear audio of a Scientology excommunication | Scientology’s little day care of horrors | Whatever happened to Steve Fishman? | Felony charges for Scientology’s drug rehab scam | Why Scientology digs bomb-proof vaults in the desert | PZ Myers reads L. Ron Hubbard’s “A History of Man” | Scientology’s Master Spies | Scientology’s Private Dancer | The mystery of the richest Scientologist and his wayward sons | Scientology’s shocking mistreatment of the mentally ill | Scientology boasts about assistance from Google | The Underground Bunker’s Official Theme Song | The Underground Bunker FAQ
Our Guide to Alex Gibney’s film ‘Going Clear,’ and our pages about its principal figures…
Jason Beghe | Tom DeVocht | Sara Goldberg | Paul Haggis | Mark “Marty” Rathbun | Mike Rinder | Spanky Taylor | Hana Whitfield