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When L. Ron Hubbard tried to convince the BBB that Scientology was raking it in


We’re getting yet closer to that big anniversary — 30 years since L. Ron Hubbard shuffled off this mortal coil to surf the galaxy in thetan form — and so we’re still looking back through our files to remember the Great Thetan in his time.

Once again, we have a fun document for you that researcher R.M. Seibert managed to pry out of the FDA as part of its 1960s investigation of Hubbard and Scientology. And this one gives us a nice peek at Hubbard’s days before he absconded from the US.

To put this in context, remember that Hubbard published Dianetics: The Modern Science of Mental Health in May, 1950, which set off a brief national craze, with Dianetics clubs setting up around the country. Hubbard cashed in by setting up “foundations” in places like New Jersey and California, but soon enough the craze subsided, and Hubbard’s nightmare year of 1951 had him mired in a nasty divorce with his second wife, Sara Northrup. With the help of a rich Kansas oilman, Hubbard regrouped and went to Phoenix to start over, coming up with something called “Scientology” because, for a short time, he couldn’t use the name “Dianetics.” By 1952, he was married to his third wife, Mary Sue Whipp, and he was still struggling to get Scientology hitting on all cylinders. When he did have success, it tended to attract the attention of the government, which was more vigilant then about people making outlandish health claims. So, in 1953 Hubbard proposed to his loyal follower Helen O’Brien that they try out “the religion angle” to throw the government off, and in December of that year Hubbard created the first “Church of Scientology” corporation in Camden, New Jersey. A second Church corporation followed a few months later in Los Angeles.

Then, in 1955, Hubbard opened his “Founding” Church of Scientology in Washington DC, and made it his headquarters. Things started to pick up, and the money was really starting to come in. But there were still problems. Hubbard and Scientology were always fending off complaints about the nature of what they were up to.


So, on November 16, 1957, Hubbard wrote an interesting letter. He addressed it to Leland S. McCarthy, the managing director of the local Better Business Bureau. It was Hubbard’s attempt to convince the BBB that Scientology was on the up and up — and that it was a thriving concern. Note how Hubbard lays it on thick about his association with Washington, where he had actually only spent time sporadically over the years.


L. Ron Hubbard

November 16, 1957
1812 19th Street, N. W.
Washington 9, D.C.

Better Business Bureau of Metropolitan Washington
507 Perpetual Building
Washington 4, D.C.

Attn: Mr. Leland S. McCarthy
Managing Director

Dear Mr. McCarthy:

Included are proper resumes of all organizations which I have managed or operated and financial statements to demonstrate their activity. I include the Distribution Center, Inc., although I do not manage it but since my wife is a member of its board.

None of these organizations has any debts of magnitude and have a good reputation for paying their bills when due.

I am married and have three small children. I am a member of the Explorer’s Club and Capital Yacht Club. Washington, D.C. has been my home since boyhood. I served as an officer in the Navy during the war and was honorably discharged. I attended high school at Woodward Prep here in D.C., and studied nuclear physics at George Washington University. After the war on the G.I. Bill I attended school in California and received a Ph.D. from Sequoia University, an adult education school of the City of Los Angeles. I am primarily a writer of science fiction and technical material on the mind and am a registered minister with the government.

While companies using my name and work have existed in many states and may have good or bad credit, I have had no business connection with them. They have often conceived it to be to their advantage to represent such connection and I have had to take severe action from time to time to deny that connection. I have found myself powerless to prevent the use of my name and work in many cases. I am not financially situated so as to bear the vast legal expenses necessary to such denial.

The policy of the Founding Church in business matters is to refund all donations or charges to anyone who believes he has chosen wrongly in joining the Church. This has no exceptions.

The principal business of the Church, beyond its services each Sunday and its Thursday night meeting, is the training of persons to handle people and congregations and to communicate better. The ministers of all allied state churches are trained by us. They are further trained and usually ordained by their state churches. We ordain locally only those we need in our work and only after a severe training program and thorough examination on St. John and other religious matters. We charge about $1.00 per hour for coaching and ordinarily contract for many hours at a time. The usual total fees charged persons for this training average out at less than $500 over long time periods. Counseling of private individuals is done by ministers for $10 per hour. All counseling is aimed at bettering their social responses.

Our goal as an organization is to increase Man’s socialness, to improved his awareness and better his social conduct.

As in any Church our beliefs are quite definite but unlike many, we force them on none.

I trust, Mr. McCarthy, that this will improve your understanding of our activities and business standing.

We spend $100,000 a year with local businessmen and any will tell you we are good credit and prompt pay.

It would be disturbing if the BBB of my own city, Washington, had only a vague notion of my activities after nearly half a century of good citizenship on my part.


L. Ron Hubbard

Hubbard was apparently so concerned about getting the BBB on his side, he turned over very detailed information about the financials of Scientology. And considering how secretive Scientology has been over its history, that makes this a pretty unusual document.

Hubbard disclosed that the Founding Church of Scientology in DC had, for the fiscal year 1956, taken in $101,254.35. That, Seibert reminds us, is worth about $883,500 today.

The Hubbard Association of Scientologists, International, meanwhile, was also bringing in a nice flow of cash. HASI was the original membership organization which has since been supplanted by the International Association of Scientologists (IAS).

Hubbard gives a couple of different amounts for HASI revenue in 1956, one for Arizona ($44,049.08) and the rest ($22,759.84) for what is about $580,000 today.

Here’s the document in full, which also includes an inquiry from the BBB in 1961…

L. Ron Hubbard 1957 letter to BBB of DC

The same year Hubbard sent this letter, Scientology was first granted tax exempt status by the government. But soon enough, there was trouble. The next year, in 1958, the FDA would begin its investigation of the Washington church, concerned about claims being made about the miraculous curing properties of the e-meter. The FDA raided the church in 1963, but by then Hubbard was long gone, having left the US for England in 1959. And then, in 1967, Scientology lost its tax exemption, and years of litigation ensued.

In 1969, the US Court of Claims found that the DC Church was not entitled to recover federal income taxes, and it specifically referred to the same 1956 income that Hubbard had outlined in his letter to the BBB, as well as revenue from 1958 and 1959.

The court found that the DC church didn’t deserve to be tax exempt simply because it was a business that benefited one man, L. Ron Hubbard.

According to the trial commissioner’s findings, L. Ron Hubbard received over $108,000 from plaintiff and related Scientology sources during the 4-year period June 1955 through June 1959. This figure represents $77,460 in fees, commissions, royalties, and compensation for services, plus $13,538 in payment for expenses incurred in connection with his services, as well as a total of $17,586 in reimbursement for expenditures made in plaintiff’s behalf, in repayment of loans made to plaintiff and the New York organization, and as a loan from plaintiff to Hubbard. As the commissioner found, and we agree, the precise nature of the loans and reimbursed expenditures does not appear in the record. Nor do we find any explanation for most of the expenses paid. The portion of the $77,460 actually paid by plaintiff amounted to approximately $6,000 in 1955-56, more than $11,550 in 1956-57, approximately $18,000 in 1957-58, and over $22,000 in 1958-59. Hubbard also had the use of an automobile at plaintiff’s expense. During plaintiff’s taxable years ending in 1958 and 1959, the organization provided and maintained a personal residence for Hubbard and his family. Moreover, in addition to all the foregoing, Hubbard received a percentage (usually 10 percent) of the gross income of affiliated Scientology organizations.

The IRS and the courts remained resolute in that conclusion for decades more, repeatedly fending off further attempts by Scientology to seek tax exempt status through the 1980s. Scientology, the government believed, was a business operated to benefit the person at the top. But then, in 1991, IRS commissioner Fred Goldberg threw in the towel and began the process that would lead to Scientology getting its tax exempt status in 1993.

Hubbard would have been thrilled, of course. But today, we can’t see church leader David Miscavige sucking up to the Better Business Bureau by opening up his books.


LA Weekly still wasting its opportunity to dig into Scientology


[Cool art, Art]

Back on January 4, when LA Weekly writer Art Tavana sent us an email saying that he wanted to go against the grain and report something positive about Scientology by looking for what other journalists had missed, we immediately responded by sending our phone number, hoping he’d call.

We were going to tell him that what he was proposing was just good journalism. Of course he should look at everything he could, including what Scientology has to say about itself.

Sadly, we didn’t hear from Tavana, and he went on to write a silly piece that we hope won’t be taken very seriously.

As a piece of performance art, Tavana’s article has its moments. But it only reminds us that once again, LA Weekly is squandering an opportunity to do something worthwhile on Scientology in the area with more Scientologists than anywhere else in the world.

The Los Angeles Times was once the most dominant investigative news organization when it came to Scientology, and its epic 1990 series by Joel Sappell and Robert Welkos is still talked about. But since then, it’s become embarrassingly bad on Scientology. There was a glimmer of hope with a great piece from Kim Christensen last April, but the paper went right back to totally ignoring anything to do with the story going on in its own backyard. So much so that one of the most important stories involving Scientology — and felony charges! — was broken by this website right under the nose of the LA Times. Shameful.

And speaking as someone who came from the alt-weeklies, a sleeping daily is exactly what the LA Weekly should take advantage of, rather than running interference for Tom Cruise.

What a waste of time.


Chris Shelton interviews Tim DeWall, part 3



3D-UnbreakablePosted by Tony Ortega on January 21, 2016 at 07:00

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


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