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Russia’s latest strategy to curb Scientology: Shut down the money pipeline

[A WISE conference in Russia in 2015]

Scientology faces new restrictions in Russia following an announcement by the Office of the Prosecutor General (GPRF). In a Telegram post on 24 September, the GPRF stated:

A decision was made to recognize the activities of two foreign non-governmental organizations as undesirable on the territory of the Russian Federation. According to the results of studying the materials received on September 24, 2021, the General Prosecutor’s Office of the Russian Federation decided to recognize the activities of the following foreign non-governmental organizations as undesirable in the territory of the Russian Federation: WORLD INSTITUTE OF SCIENTOLOGY ENTERPRISES INTERNATIONAL (USA); CHURCH OF SPIRITUAL TECHNOLOGY (Also known as “L. Ron Hubbard Library,” USA).

This is clearly bad news for Scientology. But how bad is it?

The decision to declare WISE and CST ‘undesirable’ was made under a controversial law of 19 May 2015, known informally as the ‘NGO Law.’ As the nickname suggests, the law was passed to target non-governmental organizations in Russia. Its passage came against the background of an ongoing – and still intensifying – crackdown by the Putin administration on civil society in Russia.

The law enables the Prosecutor General to recognize as undesirable the activities of a foreign or international non-governmental organization in Russia if they are deemed to “threaten the foundation of the constitutional order of the Russian Federation, the country’s defense capability, or the security of the state.”

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The Russian government has used the law against a wide variety of targets, including opposition groups, evangelical organizations and foreign think-tanks. Not surprisingly, it has been interpreted by many as a way of criminalizing dissent in Russia. The decision on recognizing a group as undesirable is entirely in the hands of the Prosecutor General, with no input from the courts.

Its use against Scientology is clearly related to the ongoing criminal case in St Petersburg over Scientology’s alleged “illegal entrepreneurship.” Five Russian Scientologists were arrested in August 2020 (see the Bunker’s earlier story, “The current crackdown”). The leader of the St Petersburg org, Ivan Matsitsky, was recalled to pre-trial detention in March this year after a court reversed a November 2019 decision to release him.

State prosecutors charge that the St Petersburg org illegally transferred large amounts of money to the United States. Allegedly, at least 3 to 4 million rubles ($45,000-61,000) was being transferred weekly, amounting to potentially as much as 3 billion rubles ($46 million) in recent years. A significant amount of this money would have gone to CST, which licenses L. Ron Hubbard’s religious works to Scientology orgs around the world.

The targeting of WISE is likely related to the repeated scandals that have embroiled the Scientology front group. From the early 1990s onwards, WISE established deep roots in the Russian business world as it exploited surging demand for training in administration. Numerous Russian companies hired WISE affiliates to train their staff in Hubbard’s administrative methods, while others, often led by Scientologist businesspeople, became members of WISE – licensing Hubbard’s ‘management technology’ for their own use. (See the Bunker’s report on Scientology and WISE’s expansion in Russia in the 1990s.)

WISE is reported to have created highly lucrative commercial networks in more than 60 Russian regions. However, Russia’s profoundly corrupt corporate environment led to WISE affiliates being implicated in a series of scandals (see the Bunker’s report on “The Putin years”. Several of these have involved public money, or firms working on government contracts. One WISE affiliate, a machine tools company in Lipetsk, was accused of embezzling over 200 million rubles ($2.7 million) from a defense procurement order and transferring the stolen funds to Scientology.

In perhaps the most spectacular WISE-linked case, Ekaterina Zaborskikh, the head of the Olimp group of housing and construction companies, was jailed for eight and a half years. She had reportedly embezzled around 800 million rubles ($12.3 million) of investors’ money, some of which was said to have been funneled to Scientology’s St Petersburg org. The case led to police raids and criminal charges against the money’s alleged recipients.

According to Russian law enforcement sources, WISE and CST have both illicitly transferred billions of rubles out of Russia in recent years. They are said to have “concealed their real legal status and acted in circumvention” of laws regulating foreign religious organisations. Over 1 billion rubles is said to have been transferred through WISE and CST through their own bank accounts in Russia between 2012 and 2020, with several billion more being credited directly to American organisations. WISE reportedly portrayed itself falsely as a non-profit non-religious organisation, while CST is said to have concealed its religious status by doing business under the name of its alter ego, the “L. Ron Hubbard Library.”

CST and WISE have both also been linked with money laundering at a Russian bank, PIR Bank LLC, which is said to have been founded to finance Scientology’s operations in Russia. An archived 2012 organization chart shows that the bank was clearly being run using Hubbard’s organizing principles.

In 2016, a police raid uncovered CST literature and “caches of unaccounted cash” in the office of its chairman Vitaly Pascal, who was reportedly a member of the Sea Org. The bank’s deputy chair, Irina Belyaeva, was a leading figure in WISE – as of 2011, she was the Chairman of the Moscow WISE Charter Committee. (She still promotes WISE from Riga, Latvia.) Investigators found 16 million rubles concealed in the ceiling of Pascal’s office and discovered a 3.2 billion ruble ‘black hole’ in the bank’s finances. The Russian Central Bank revoked PIR Bank’s license in 2018 for violations of the law against money laundering.

WISE’s presence in Russia has shrunk significantly in recent years as companies have become increasingly wary of being associated with Scientology. However, it continues to hold annual conferences and still seeks new members and licensees.

The decision to recognise WISE and CST as ‘undesirable’ could have major consequences for Scientology’s money pipeline in Russia. It enables the government to shutter branches of both organizations, ban their public communications, close their bank accounts, and fine or imprison their members. In principle, this could prevent WISE operating in Russia and block CST taking license fees from Russian Scientology orgs. However, it remains to be seen whether this will happen in practice.

Scientology has decades of experience in evading and deflecting hostile actions by governments (see “Scientology’s 60-year plan to protect itself from the law”). When courts closed Scientology orgs in Athens and Moscow for legal violations, the orgs simply reconstituted themselves under new corporate identities – literally overnight – and continued as before.

The Prosecutor General’s decision is unappealable, but past experience suggests that Scientology will try to evade it through creative corporate maneuvers. Most likely, this will not represent the permanent demise of WISE and CST in Russia but will be just another stage in the 20-year-long cat-and-mouse game between Scientology and the Russian government.

— Chris Owen

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More great stories by Chris Owen here at the Underground Bunker:

Oct 30, 2017: Scientology founder L. Ron Hubbard as a cop in Los Angeles: What’s the real truth?
Dec 6, 2017: Why is it so hard for governments to crack down on the Church of Scientology?
Jan 2, 2018: Scientology’s original case of ‘disconnection’ — L. Ron Hubbard and his doting mom and dad
Jan 24, 2018: Battle of Portland: How Scientology turned a nightmare court verdict into a major victory
Jan 25, 2018: Battle of Portland, part 2: Pressuring a court by surrounding it with Scientologists & celebs
Feb 6, 2018: Scientology spies coming forward, then and now: A key example from the past
Feb 20, 2018: How L. Ron Hubbard tried to hoax the FBI, and ‘brainwashed’ politicians of the far right
Feb 21, 2018: The ‘Brainwashing Manual’ — how a Scientology hoax became a far-right touchstone
Apr 3, 2018: Newly released documents: Scientology leader L. Ron Hubbard tried to ‘buy’ an African nation
May 30, 2018: Bad boys of the Sea Org: guns, drugs, murder and Scientology
May 31, 2018: Bad boys, part two: Scientology’s involvement with drug smugglers had a long legacy
Jun 6, 2018: EXCLUSIVE: The rise and fall of the ‘Pope of Scientology’ — in his own words

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Jun 7, 2018: Testimony by the World’s First Real Clear, part two: ‘Scientology is designed to entrap people’
Mar 19, 2019: Cops, soft porn, and psychiatry: The curious origin of Scientology’s Snow White Program
May 9, 2019: Death in the Timor Sea: The darkest war secret of Scientology’s founder, L. Ron Hubbard
May 25, 2019: Behind enemy li(n)es: Scientology founder L. Ron Hubbard’s secret mission that never was
Jun 6, 2019: ‘Scientology is Security for South Africa’: How L. Ron Hubbard sought to prop up apartheid
Jun 21, 2019: Scientology founder L. Ron Hubbard, ‘Provost Marshal’: Another apologist claim debunked
May 25, 2020: Scientology founder L. Ron Hubbard’s ‘stolen valor’: His bogus war injuries
Jan 25, 2021: Scientology in Russia: Historian Chris Owen does the deep dive we’ve been waiting for
Jan 28, 2021: Scientology in Russia, a series by historian Chris Owen, part 2: The Putin years
Jan 30, 2021: Scientology in Russia, a series by historian Chris Owen, part 3: The current crackdown
May 16, 2021: Inside a PR mutiny: How Scientology’s war on Prozac backfired in spectacular fashion

 
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Bonus items from our tipsters

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Detroit is on fire!

 

 
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Sign up for a daily email when we post a new story on Scientology.

Did you know you can get an email every morning when we post our daily Scientology story? We know some of the folks who come to the Underground Bunker aren’t here to talk about the politics of the day, and that’s why we created a daily politics feature over at our other blog, The Lowdown, and we ask readers to take their political discussions over there. And if you drop us a line at tonyo94 AT gmail, we’ll put you on the list so you get a morning reminder that a new Scientology story has been posted — and only for our Scientology stories.

 
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Source Code

“You could teach people quite a bit about just any one of these Security Checks, you see. Like the children’s check. Teaching them how to use a children’s check. That’s quite interesting. You, of course, mustn’t ask a question which the child can’t understand because you will have an immediate ARC break. He thinks he’s being accused of something; he doesn’t know what you’re talking about. So you have to rephrase all of the questions in the child’s Security Check, you see, so as to reach the comprehension level of a child.” — L. Ron Hubbard, September 26, 1961

 
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Avast, Ye Mateys

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“PARTY: That was a great party. The actors in the skits were marvelous. Bill’s Apollo Elastic Band was surprisingly competent. Didn’t know we had that many real musicians and Bill has been hiding a very low and dirty clarinet.” — The Commodore, September 26, 1970

 
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Overheard in the FreeZone

“In case it’s not clear to everyone, Scientologists have a clear advantage over non-Scientologists in almost every way. Let me be even more bold about that. Scientologists are superior to non-Scientologists with regard to a huge number of issues. This is simply a fact.”

 
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Past is Prologue

2000: The Pasadena Star-News reported that a Scientologist will participate in a 1,500 mile run in France to protest alleged discrimination. “Spurred by his beliefs as a Scientologist, John Radich of Monrovia will lace up his running shoes in September to participate in a roughly 1,500-mile marathon in France to spotlight what he calls religious intolerance. ‘France has blacklisted (about) 170 religions, including Scientology. They want to monitor all these religions, and it’s just not OK,’ said Radich, a track coach at Delphi Academy. The private school in La Canada Flintridge, serving kindergarten through 12th grade, is operated using study techniques developed by the late L. Ron Hubbard, a science fiction writer who founded the Church of Scientology.”

 
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Random Howdy

“Vallarrr use to blather on about how if someone had an irrational fear of spiders and they did some auditing and that fear was gone that was proof of auditing working.”

 

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Full Court Press: What we’re watching at the Underground Bunker

Criminal prosecutions:
Danny Masterson charged for raping three women: Next hearing set for November 10. Trial tentatively scheduled for February.
Jay and Jeff Spina, Medicare fraud: Jay sentenced to 9 years in prison. Jeff’s sentencing to be scheduled.
Hanan and Rizza Islam and other family members, Medi-Cal fraud: Pretrial conference October 7 in Los Angeles
David Gentile, GPB Capital, fraud: Next pretrial conference set for November 19.
Joseph ‘Ben’ Barton, Medicare fraud: Pleaded guilty, awaiting sentencing.

Civil litigation:
Luis and Rocio Garcia v. Scientology: Oral arguments were heard on July 30, 2020 at the Eleventh Circuit
Valerie Haney v. Scientology: Forced to ‘religious arbitration.’ Petition to US Supreme Court submitted on May 26. Scientology responded on June 25.
Chrissie Bixler et al. v. Scientology and Danny Masterson: California Supreme Court granted review on May 26 and asked the Second Appellate Division to direct Judge Steven Kleifield to show cause why he granted Scientology’s motion for arbitration. Oral arguments scheduled for Oct 5.
Matt and Kathy Feschbach tax debt: Eleventh Circuit ruled on Sept 9 that Feshbachs can’t discharge IRS debt in bankruptcy. Dec 17: Feshbachs sign court judgment obliging them to pay entire $3.674 million tax debt, plus interest from Nov 19.
Brian Statler Sr v. City of Inglewood: Third amended complaint filed, trial set for June 28, 2022.
Author Steve Cannane defamation trial: Trial concluded, Cannane victorious, awarded court costs. Case appealed on Dec 23. Appeal hearing held Aug 23-27. Awaiting a ruling.

Concluded litigation:
Dennis Nobbe, Medicare fraud, PPP loan fraud: Charged July 29. Bond revoked Sep 14. Nobbe dead, Sep 14.
Jane Doe v. Scientology (in Miami): Jane Doe dismissed the lawsuit on May 15 after the Clearwater Police dropped their criminal investigation of her allegations.

 
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THE PROSECUTION OF DANNY MASTERSON

We first broke the news of the LAPD’s investigation of Scientology celebrity Danny Masterson on rape allegations in 2017, and we’ve been covering the story every step of the way since then. At this page we’ve collected our most important links, including our four days in Los Angeles covering the preliminary hearing and its ruling, which has Danny facing trial and the potential sentence of 45 years to life in prison.

SCIENTOLOGY: FAIR GAME

After the success of their double-Emmy-winning, three-season A&E series ‘Scientology and the Aftermath,’ Leah Remini and Mike Rinder continue the conversation on their podcast, ‘Scientology: Fair Game.’ We’ve created a landing page where you can hear all of the episodes so far.

LEAH REMINI: SCIENTOLOGY AND THE AFTERMATH

An episode-by-episode guide to Leah Remini’s three-season, double-Emmy winning series that changed everything for Scientology watching. Originally aired from 2016 to 2019 on the A&E network, and now on Netflix.

SCIENTOLOGY’S CELEBRITIES, from A to Z

Find your favorite Hubbardite celeb at this index page — or suggest someone to add to the list!

 
Other links: SCIENTOLOGY BLACK OPS: Tom Cruise and dirty tricks. Scientology’s Ideal Orgs, from one end of the planet to the other. Scientology’s sneaky front groups, spreading the good news about L. Ron Hubbard while pretending to benefit society. Scientology Lit: Books reviewed or excerpted in a weekly series. How many have you read?

 
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THE WHOLE TRACK

[ONE year ago] Scientology ex-Sea Orger with ties to dark secrets running for city council in Oregon
[TWO years ago] City councilman demonstrates why Scientology puts so much effort into its front groups
[THREE years ago] A conversation with Nathan Rich about the unique Scientology hellscape he survived
[FOUR years ago] To help you through withdrawals tonight, take our poll on Leah Remini’s Season Two so far
[FIVE years ago] SCIENTOLOGY’S TOP 20 CELEBRITIES — in order of those most likely to defect
[SIX years ago] ‘Darth Xander’ files motion challenging Scientology’s anti-protesting injunction
[SEVEN years ago] Scientology prepares for its big party in England, Maureen Bolstad on the Purification Rundown
[EIGHT years ago] Did Scientology Pay $3 Million To Foil an “Independent Scientology Org” in Clearwater?
[TEN years ago] The Top 25 People Crippling Scientology, No. 3: Marty Rathbun

 
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Scientology disconnection, a reminder

Bernie Headley (1952-2019) did not see his daughter Stephanie in his final 5,667 days.
Valerie Haney has not seen her mother Lynne in 2,435 days.
Katrina Reyes has not seen her mother Yelena in 2,940 days
Sylvia Wagner DeWall has not seen her brother Randy in 2,460 days.
Brian Sheen has not seen his grandson Leo in 1,480 days.
Geoff Levin has not seen his son Collin and daughter Savannah in 1,371 days.
Christie Collbran has not seen her mother Liz King in 4,678 days.
Clarissa Adams has not seen her parents Walter and Irmin Huber in 2,546 days.
Carol Nyburg has not seen her daughter Nancy in 3,320 days.
Doug Kramer has not seen his parents Linda and Norm in 1,650 days.
Jamie Sorrentini Lugli has not seen her father Irving in 4,124 days.
Quailynn McDaniel has not seen her brother Sean in 3,440 days.
Dylan Gill has not seen his father Russell in 12,006 days.
Melissa Paris has not seen her father Jean-Francois in 7,925 days.
Valeska Paris has not seen her brother Raphael in 4,093 days.
Mirriam Francis has not seen her brother Ben in 3,674 days.
Claudio and Renata Lugli have not seen their son Flavio in 3,935 days.
Sara Goldberg has not seen her daughter Ashley in 2,972 days.
Lori Hodgson has not seen her son Jeremy and daughter Jessica in 2,686 days.
Marie Bilheimer has not seen her mother June in 2,211 days.
Julian Wain has not seen his brother Joseph or mother Susan in 566 days.
Charley Updegrove has not seen his son Toby in 1,741 days.
Joe Reaiche has not seen his daughter Alanna Masterson in 6,292 days
Derek Bloch has not seen his father Darren in 3,441 days.
Cindy Plahuta has not seen her daughter Kara in 3,761 days.
Roger Weller has not seen his daughter Alyssa in 8,616 days.
Claire Headley has not seen her mother Gen in 3,735 days.
Ramana Dienes-Browning has not seen her mother Jancis in 2,091 days.
Mike Rinder has not seen his son Benjamin and daughter Taryn in 6,394 days.
Brian Sheen has not seen his daughter Spring in 2,500 days.
Skip Young has not seen his daughters Megan and Alexis in 2,898 days.
Mary Kahn has not seen her son Sammy in 2,774 days.
Lois Reisdorf has not seen her son Craig in 2,357 days.
Phil and Willie Jones have not seen their son Mike and daughter Emily in 2,852 days.
Mary Jane Barry has not seen her daughter Samantha in 3,106 days.
Kate Bornstein has not seen her daughter Jessica in 14,215 days.

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Posted by Tony Ortega on September 26, 2021 at 07:00

E-mail tips to tonyo94 AT gmail DOT com or follow us on Twitter. We also post 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 new book with Paulette Cooper, Battlefield Scientology: Exposing L. Ron Hubbard’s dangerous ‘religion’ is now on sale at Amazon in paperback and Kindle formats. Our book about Paulette, 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, 1995-2020 Just starting out here? We’ve picked out the most important stories we’ve covered here at the Underground Bunker (2012-2020), The Village Voice (2008-2012), New Times Los Angeles (1999-2002) and the Phoenix New Times (1995-1999)

Other links: BLOGGING DIANETICS: Reading Scientology’s founding text cover to cover | 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 | Shelly Miscavige, 15 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

Watch our short videos that explain Scientology’s controversies in three minutes or less…

Check your whale level at our dedicated page for status updates, or join us at the Underground Bunker’s Facebook discussion group for more frivolity.

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 | Battling Babe-Hounds: Ross Jeffries v. R. Don Steele

 

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