The first Scientologist with ‘Super Power’ gets super spanked by bankruptcy judge

Forbes has a wonderful article about a bankruptcy ruling involving a wealthy pair of jackasses who got their heads handed to them recently by a fed-up judge.

As writer Jay Adkisson explains, there’s a lesson for wealthy people who cry poverty so they can try to get out of paying a huge tax bill — if you’re going to do that, at least try to look penniless rather than spend money like Croesus, money that could easily pay your tax debt.

“The debtor who claims to be broke had better at least appear to be broke,” Adkisson writes. Instead, this couple, who had brought in $13 million in revenue since they got into trouble with their taxes but refused to make good on a $3.8 million tax debt, didn’t even attempt to cut down their spending as the case was going through court: “$722,000 was spent on personal travel (including $233,000 for a rental home in Aspen), a cool half-million on clothing, another $370,000 and change on groceries, (plus another $78,000 eating out) and a miserly $147,000 plus on entertainment…$360,000 on their children, including of course private education for their son. But more important than their children was the private chef, who cost more than $610,000 over eight years.”

What the Forbes article didn’t explain, however, was that this profligate couple, Matt and Kathy Feshbach, are considered Scientology royalty, and Matt was actually the first Scientologist in the world to go through “Super Power” processing because in the 1990s he had made a $1 million donation to the Super Power project, which eventually resulted in the “Flag Building” being opened in November 2013. And also, he redid Super Power more recently, which doesn’t say much for the permanence of that processing, does it? (What is Scientology “Super Power,” you ask? Here’s a look at how repetitive and underwhelming it actually is.)

Despite his superpowers, Matt and his huge spending couldn’t convince the bankruptcy court to discharge his tax debt.

And hey, we can sense a pretty pissed-off judge when we read one. From Florida federal bankruptcy Judge Catherine Peek McEwen’s ruling:

The Feshbachs made poor spending decisions, continually leading a life of excess in the face of serious, known financial obstacles. At all times, their primary concern should have been reducing their substantial tax debt. But as their immoderate spending choices show, they were far more focused on living in the lap of luxury. They would have been wise to heed the proverb which cautions that enough is better than too much. As it is, however, the Feshbachs’ misjudgment ultimately cost them complete relief. Having concluded that the Feshbachs willfully attempted to evade their tax debt within the meaning of 11 U.S.C. § 523(a)(1)(C), the Court rules that such debt is nondischargeable. Accordingly, the Court will enter a separate final judgment in favor of the United States in this proceeding.”

Ouch! In other words, the Feshbachs are still on the hook for that entire $3.8 million tax bill and primarily because they were such arrogant a-holes and spent money like crazy while they knew they were being investigated and watched by the federal government.

Longtime readers might understand it when we say this may be just about the most Scientological behavior we’ve seen spelled out in court documents in a long time.

But let’s remember who we’re talking about here — the Feshbach family is not exactly one that we’re not familiar with here in the Underground Bunker.

Bernie Feshbach, who we considered a friend, died earlier this year at the age of 93. He had four sons. The oldest, Dan, wasn’t a Scientologist. But Dan’s younger brothers Kurt and twins Matt and Joe were not only dedicated Scientologists and major church donors, they became famous as “short-sellers” who gambled on corporations taking nosedives. It was predatory and lucrative, and got them lots of press coverage back in the day as evil geniuses. Since then they had reportedly experienced some setbacks, but according to the documents in the bankruptcy, Matt and his wife Kathy are still doing pretty well as Matt handles other people’s money as an investor.

To understand how Matt got into such a public court fight over his taxes, we not only read Adkisson’s excellent and concise article, but we also consulted with a bankruptcy expert who has been following the Feshbach case for several years. We don’t pretend to begin to understand the kind of financial dealings that the Feshbachs were involved in, but Adkisson spells out pretty clearly that the strategy they had been following — betting on the same stock to both rise or fall at the same time, called “shorting against the box” — was in part a way to keep from having to pay taxes on large transactions. Eventually, however, a couple of different economic downturns and a change in the law exposed the Feshbachs to a rapidly increasing tax liability, and they decided to file for bankruptcy.

We asked our expert — since the judge found that the Feshbachs later made $13 million in income over a nine-year period, and an IRS investigation found that the Feshbachs had access to a total of $38 million in assets, what losses forced them to file for bankruptcy in 2011?

“They filed bankruptcy only to get rid of the taxes and for no other reason. The first petition they filed (in the wrong court) listed no debts but to the IRS,” the expert said. They added that the Feshbachs could have chosen to hash out a deal in an independent and private arbitration, but instead chose litigation, with their private financial matters becoming very public in court documents.

In the Forbes article, Adkisson lays out the ways the Feshbachs tried to low-ball or delay paying the IRS, which isn’t too surprising for wealthy people trying to avoid paying taxes. But what was surprising to the investigators and the judge was that during the same period that the Feshbachs knew they were being investigated by government agencies, they continued to spend at a prodigious rate, expecting, apparently, that the court would discharge their IRS debt.

Just a couple of examples that we found in IRS documents that were part of the bankruptcy court file: In 2011, IRS investigators found the Feshbachs’ claim to being “penniless” was “hardly credible” when they discovered that the couple was spending thousands of dollars a month to send their 14-year-old son to Scientology’s pricey “Delphi Academy” private school in Oregon. And among the largest credit card charges they found in that period was nearly $10,000 for “Scientology publications.”

As Mike Rinder has pointed out, the Feshbachs’ adventure in bankruptcy hasn’t prevented Scientology from trotting Matt out for seminars and the like. Here’s a recent version which reminds church members of Matt’s important place in Super Power history….

 
Just this week, the Feshbachs filed an appeal of Judge McEwen’s ruling, so this case will continue to wind its way through court. But it sure is refreshing to see this ruling, and to think that somewhere, someone told a couple of arrogant, narcissistic Scientologists where to get off.

Here’s the ruling…

US v. Feshbach Memo on Dischargeability by Tony Ortega on Scribd

 
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Joy Villa in the new Celebrity magazine

Our thanks to the tipster who sent us this, Scientology’s Celebrity magazine with Jim Meskimen on the cover…

 
And look who’s inside, on page 9 — it’s Princess Joy Villa, who recently has been playing down her Scientology involvement now that she’s considering running for Congress, with encouragement from the president. Would a rank beginner get such placement in so many Scientology publications?

 
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Nathan Rich and Tara Reile talk ‘Aftermath’

 
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Posted by Tony Ortega on November 1, 2017 at 07:00

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