Some countries force Scientology to open the books: Here’s one report on how bad business is

Once again, the Netherlands gives us a rare opportunity to see inside the financial health of a Scientology entity, in this case the Narconon Holland drug rehab center. The Netherlands is one of only a few countries that force Scientology to open their books, and once again we have numbers man John P. Capitalist giving us his analysis of what those figures mean. We asked him to look at the most recent report from the drug center for its 2017 financial year. (See John P.’s previous reports from the 2015 annual report and from 2016.)

 
The overall impression of the 2017 financial statement is that it was thrown together hastily without regard to whether anyone will take the information on it seriously. The 2015 document appeared to have been created by an accountant, and it had all sorts of helpful notes for understanding the details of what’s going on. It was consistent with what anyone thinking of investing money or donating to a non-profit would want to see in order to feel that the information is presented fairly and accurately. The 2016 document was probably not prepared by an accountant, but it had some useful notes as to what was going on during the year.

The 2017 statement is a shoddily thrown together spreadsheet and with no explanation of any of the issues or concerns a reader of the financial statement would have. If I were a government official overseeing this organization, I would note that this almost certainly doesn’t meet minimum standards of financial reporting, and I’d put them on the list of companies meriting further investigation, especially in the wake of one line item on the financial statements.

Revenue: As far as the numbers themselves, revenue limped along once again. They did €34,786 in program revenue (i.e., “treating” people), versus €19,117 in 2016. So that probably means that they had two “students” over the course of the year instead of one. The number of students is so small that the doubling from one to two patients is hardly indicative of improving momentum. Of course, Scientology is just the sort of organization that would trumpet “the number of Narconon students doubled in one year!” in the next fund-raising presentation by head honcho David Miscavige. The rest of us wouldn’t believe it.

Donations far outpaced actual revenue from programs. In 2016, they received €65,107 in donations, and in 2017, they got €51,979. The donations enabled Narconon to lose only €5,482 in 2016 and €7,492 in 2017; it would have been a complete wipeout in either year had mysterious donors not saved the day.

It’s not clear whether the source of the donations was members or money coming from HQ to bail them out. The 2016 footnotes said that many small donors contributed to that year’s number, but the lack of footnotes for 2017 means they could be downplaying a single large donation in 2017.

Expenses: On the expense side, there were several oddities. Rent expense in 2017 was €19,200 versus €27,220 the year before. Normally, you wouldn’t expect rent for a commercial facility to fluctuate significantly year-to-year, unless the building is owned by a related party (in this case, an employee or Scientologist). It is possible that Narconon cut a deal with an arm’s length landlord because of their financial desperation (“hey, we’ll pay you X, which is better than getting nothing and fighting us for a year to evict us”), but it seems equally possible that the numbers are just completely made up. Most of the other minor expense categories bounced around near where they were last year, but it’s difficult to assess the significance of a change in electricity usage, so we won’t try.

Interestingly, the consumpties, kantine (consumables, food) was about the same from year to year, at €25,330 in 2017 versus €27,856 in 2016. To figure this out, it’s necessary to know how much of that line item is consumables versus food. If consumables is something like Scientology books and course packs, then this line item is obviously a significant way to send cash “uplines” to HQ. As we’ve seen with other Scientology organizations, Headquarters gets its cut off the top, and it would reduce its take if NN NL was in danger of going out of business, but would still try to pull in as much as possible by sending out materials that will never be used.

Balance Sheet: The balance sheet records assets like cash, equipment and money due to be collected in the future, and liabilities like loans payable, money owed to suppliers and the like. NN keeps only a few Euros in the bank at any one time, because they send it all uplines as soon as it’s received. That keeps the money close to David Miscavige’s heart and keeps the business unit in fear of bill collectors, a key means for controlling staff. NN NL don’t have enough cash to pay a months’ worth of bills, showing (to the surprise of no one reading this) that HQ runs this org, like all the others, right on the edge of insolvency.

The balance sheet for 2017 doesn’t provide any detail of who Narconon NL owes money to. The only significant change there is that short-term liabilities went from €147,970 in 2016 to €16,823 in 2017. The 2016 notes to the financial report said that €84,293 of the €147,970 was owed to suppliers, perhaps including food vendors, contractors and other outside resources. There was also a provision of €55,000 for taxes owed but not paid.

So essentially, it appears that the cult paid these balances off completely in a single move. But how? They didn’t have enough cash coming in or revenue generated during the year to wipe out €131,147 in debt. So what happened? Did the Dutch government reverse the tax bill so Scientology no longer owes it? And what about the €84,293 owed to suppliers? Did all of them simply walk away from money they were owed? It’s extremely unlikely that everyone owed money by NN NL did this in a short period of time.

The other possible explanation is that HQ came in with a wad of cash and paid everyone off. Dutch commenter Trevor Horn, an Anon who has done a lot of work on Scientology both in the Netherlands and globally, suggests that the push to clean up these liabilities could have come from Dutch bankruptcy law. If one or more creditors took NN NL to bankruptcy court, the judge could give Narconon a chance to pay everyone off before pushing them into involuntary bankruptcy, when a full court case is filed. That may have been enough of a wake-up call for them to get money from HQ to avoid being shut down by the government, a major embarrassment.

There’s an odd notation on the bottom of the balance sheet that translates to “extraordinary result €140,341” (which probably renders in US accounting-speak as “extraordinary gain”), and another notation that seems to translate to “to verify connection difference,” which doesn’t spark any similar concept in US accounting. There should be an offsetting entry somewhere in the financials, such as a loan to HQ or a donation of sufficient size to offset this or to tie in to it. You can’t just make your liabilities go “poof” and disappear without offsetting entries that show what happened – either debt to replace it or revenue such as a large donation. This is a red flag that makes the credibility of the numbers highly suspect. And the lack of footnotes doesn’t help hide the problem, but highlights the possibility that there’s a problem… and this one was glaring and easy to find.

Conclusion: Narconon NL is in desperate shape, and it looks like they’re not even trying to keep up the façade that this is a viable operation. The thrown-together financials, the possibility of significant omissions and misstatements on the books, and the oddities with several expense items suggest that they don’t care what people think. When you add this to the “We’re not bankrupt, we’re getting ready to come back better than ever” on the web site, the odds are reasonable that it’s time to stick a fork in Narconon NL. They could surprise us, but you can almost smell the resignation and despair when you look at the numbers.

 
— John P. Capitalist

 
Here’s the document…

Narconon Holland Annual Report 2017 by Tony Ortega on Scribd

 
——————–

Jenna Elfman parties like it’s 1999 on People TV

 
Jenna Elfman was lofted a softball on People TV yesterday and dutifully responded as if nothing had transpired in the last 20 years or so regarding the public’s greater awareness of Scientology. Asked to respond to criticism of the church coming from Alex Gibney’s HBO documentary Going Clear and Leah Remini’s A&E series Scientology and the Aftermath, Elfman spewed the most scripted “it’s been a great part of my life” spiel you will ever see a Scientology celeb vomit forth. Seriously, this is textbook stuff. As soon as we can get an embeddable version of it, we’ll add it here.

Here’s the transcript…

Well I’ve been a Scientologist for 28 years and that’s a huge part of what helps us keep our communication going in our relationship. You know, we’ve never cheated on each other, like we’ve never broken up, like, we hang in there. Raising children. Maintaining my sanity in a crazy world — like, our world is crazy. It’s getting crazier, and Hollywood is like the ne plus ultra of crazy. And I use, you know in Scientology there’s tools on communication. You could do a course, it’s a communication course, on how to communicate and understand people, how to improve relationships with others, that’s another course in Scientology. It has one of the most successful drug rehabilitation programs in the world. It’s got a criminal reform program that uses Hubbard’s methodology. I think for people who do the Criminon program for inmates it’s got a 98 percent success rate, like, no recidivism. And right now, our recidivism rate is like 85 percent in California alone? So I think anything that works tends to get attacked. I think that…

What do you think is the biggest misconception about Scientology and why does it get picked on so much?

I don’t know. I just, it’s like, it’s been so workable for me. I don’t even… Yeah, like why… I use it every single day of my life, and it keeps me energized and vivacious and happy and, I like literally have so much going on why am I going to you know, let me go put some negativity in my life. Let me go see who’s being a bigot. Why would I search for bigotry in this world when it’s the one thing that’s been this huge help in my life to keep me sane and to raise great kids. And, I just think people should check it out for themselves and not just believe everything that they may happen to just hear or read on the Internet. You know, and you go to Scientology.org and find out for yourself. How about that? That’s a novel idea.

 
——————–

Compton insurance fraud case postponed

The Underground Bunker is grateful to Jeffrey Augustine for showing up in court yesterday in Los Angeles to witness what we expected to be the first day of an important criminal preliminary hearing. Hanan Islam and three of her children were charged in 2015 with running an elaborate scheme to defraud the state’s Medi-Cal insurance program with the use of a Scientology drug rehab. The scheme also ensnared two high school principals and a prominent high school football coach, who all lost their jobs. It’s taken three years for the case to come to a preliminary hearing, but now it turns out we’re going to have to wait a little longer.

Jeffrey tells us that the case has been delayed a month because the lawyer for one of the defendants, Hanan Islam’s son Rizza, died last week. The court assigned Rizza a new lawyer, and will reconvene the hearing on September 18.

 
——————–

MEANWHILE, AT FACEBOOK…

 
Please join us at the Underground Bunker’s Facebook discussion group for more frivolity.

 
——————–

——————–

Posted by Tony Ortega on August 29, 2018 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, Kindle, and audiobook versions. We’ve posted photographs of Paulette and scenes from her life at a separate location. Reader Sookie put together a complete index. More information can also be found at the book’s dedicated page.

The Best of the Underground Bunker, 1995-2017 Just starting out here? We’ve picked out the most important stories we’ve covered here at the Undergound Bunker (2012-2017), The Village Voice (2008-2012), New Times Los Angeles (1999-2002) and the Phoenix New Times (1995-1999)

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 | The mystery of the richest Scientologist and his wayward sons | Scientology’s shocking mistreatment of the mentally ill | The Underground Bunker’s Official Theme Song | The Underground Bunker FAQ

Our non-Scientology stories: Robert Burnham Jr., the man who inscribed the universe | Notorious alt-right inspiration Kevin MacDonald and his theories about Jewish DNA | The selling of the “Phoenix Lights” | Astronomer Harlow Shapley‘s FBI file | Sex, spies, and local TV news