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How Scientology churchified itself to capitalize on its IRS tax exemption

[David Miscavige in 1993, and the War Is Over announcement that October]

We have a special treat for you today. A former Sea Org member who worked in Scientology’s management wanted to add some more detail to something Sunny Pereira wrote for us recently. Sunny had pointed out that after Lisa McPherson’s death in 1995, Scientology sent out a new contract that included language that enabled the church to declare someone unwell so that it could take over their care. This has been dubbed the “kidnap contract” by critics, and Sunny said that she and others at the Hollywood Celebrity Centre were relieved at the time that the contract would give them the power to take over control of Sea Org members who were causing problems. Sunny also suggested that this may have been the first set of contracts that contained an arbitration clause, or at least the first ones she remembers seeing.

Today’s contributor thinks that date should be pushed back a little further. It was after Scientology achieved tax exempt status in 1993 that they remember seeing new contracts with the arbitration clause for the first time. This was part of Scientology amping up its “religious” branding after the IRS granted it church status in the US. Our contributor today agrees with Sunny that another new contract emerged after McPherson’s death that contained the language of the kidnap contract, but the arbitration clause came a little earlier.

With Scientology making so much use of the arbitration clause today in order to derail lawsuits by former members, we consider this to be important Scientology history, and we hope you enjoy this glimpse of the view from from a former member who still has family in the church and so asked not to be identified.

After the IRS tax exemption happened in October ’93 we were all made to sign three or four contracts that were written to come across as religious as possible. If there was a religious word or even religious sounding word it was used rather than a standard English word. These contracts changed things such as: calling a payment for your next service a “donation” to the church. Scientology being referred to as a “religious order.” Public now being called “parishioners,” and so on.


These contracts also stated that you would not sue the organization or report them to a public official, and would use Scientology “arbitration” in the case of any dispute. I don’t remember all of the points but they were designed to protect the organization as much as possible from a legal standpoint. As Sea Org members, we were told that about the contracts when we were told to sign them. Anyone who appeared to have “bad-indicators” about this, or who disagreed, were to be seen in Ethics to find out if they had plans to sue, attack, or want to leave. On this first round we were told to make sure to go through them thoroughly, look up any words we didn’t know, etc. If I remember correctly we were even given spot checks on them.

The idea for us as Sea Org members was to protect the organization from us if we defected, but also to get us on the same page with the changes in verbiage so that we would be using it as well in communication to the orgs, public, in promotional material and so on. We needed to have a more religious appearance.

So while you’d still hear “public,” “org,” etc. you’d have “church,” “parishioner” and the like sprinkled in. And if you did a promotional piece, email, or something that had the possibility of being seen by the outside world you would use the religious words.

A gimmick that was used to get these contracts signed by all public was a church-wide amnesty for all to be forgiven and start fresh in honor of the hard work put in (and money donated for) becoming tax exempt. The public who dished out money, did crusades, and whatnot over the years got a pat on the back with this.

We (the Sea Org) were briefed that the on-lines public would come in to take the amnesty and sign the contracts as part of whatever course they were on. They would be informed this was part of our tax exemption if needed. For the public that had fallen by the way side (or were “off-lines” as they are called), they would have the amnesty used to get them to come back in, and them get regged (pressured by salespeople, known as registrars or “regges”) to do any course or service. Signing the contracts was part of signing up for service — so it was money made for the orgs and contracts signed.

It was also an excuse to get the 200-plus people on the RPF (the Rehabilitation Project Force, the Sea Org’s prison program) off so that they could be used for posting in the orgs. It had been mentioned many times that the RPF was a drain. They were being paid, given auditing and training, but not working to get public in, regged and serviced (how the money is made).

Another part of this whole tax exemption was legitimizing the organization by making it comparable to other churches. So, an all-new What is Scientology book was released in paperback in 1993 for massive distribution and thus massive dissemination. It was supposed to sort of compare to the bible, tells “all” about our beliefs and religion.


Scientologists were sold this in bulk to sell to others (you aren’t supposed to give out books for free per Ron). A whole sliding scale of discounts was created to get them to buy as many as possible. The public were hyped up to be disseminating machines at the event and bought the books to sell. Unfortunately, the whole public selling them thing wasn’t really happening so of course they wouldn’t “restock.” It then became OK for them to be able to give this book away as it was now being considered a dissemination item or informational piece. Still the sales dwindled. It was a pricey book to manufacture – expensive paper, lots of color photos, manufactured by other companies, etc.

There was an attempt to release it to the book trade at this same time as well (didn’t do well there) and was done on slightly less expensive paper, more black and white pictures, etc. to try to get it in the price range of other trade paperbacks on the market at the time but it was still a bit higher than the average. We got most of these returned after the allotted time on the shelves. It was a flop. Heads rolled.

This was followed by the release of the newly expanded Volunteer Ministers Handbook in 1994 with each chapter having a booklet for selling or handing out. Again a lot of this was to legitimize Scientology. We were trying to show the world that we had comparable books, material, handouts, etc. that other churches had.

A few years later, whether directly related to the Lisa McPherson situation or not, but definitely at the same time, new contracts were made but with addition of a clause for when you have a psychotic break or lose your mental facilities you agree for the “church” to take you into their own hands and administer care and processing without a family member or spouse approval. (The so-called “kidnap contract.”)


Some people asked if they were different and we were told just slightly but pretty much the same thing and to hurry up and sign them as we needed to get back to post. The HCOs and Quals (the divisions responsible for staff care, training, establishment) were briefed otherwise and told about the new clause so that we could take “care” of the person should they have a psychotic break. Things were said so that no one would fall into the hands of psychiatry (where they would have their minds destroyed for eternity).


Technology Cocktail

“Dianetics came before Scientology. It disposed of body illness and the difficulties a thetan was having with his body. This was a Present Time Problem to the thetan. In the presence of a PTP no case gain results (an old discovery). When a thetan has body discomfort or upset solved, he could then go on with what he really wanted which were the improvements to be found in Scientology. Mixing the two practices in any way produced and will produce no real case gain. Scientology grades will only occasionally get rid of body ills and Dianetics will not achieve real spiritual freedom. Used within their own areas they both each one separately achieves that for which it was intended. Dianetics can make a well body, Scientology can make a recovered thetan.” — L. Ron Hubbard, 1969


Now available: Bonus for our supporters

Episode 11 of the Underground Bunker podcast has been sent out to paid subscribers, and Michelle “Emma” Ryan charmed us with her stories of running ESMB, the forum that provided such a great landing place for people fleeing Scientology, 2007-2019. Meanwhile, we’ve made episodes 1 through 10 available to everyone, with such guests as Jefferson Hawkins, Patty Moher, Geoff Levin, Pete Griffiths, Sunny Pereira, Bruce Hines, Jeffrey Augustine, and Claire Headley. Go here to get the episodes!


Source Code

“Back about 1605, something like that, I was set up, I won’t go into the story in any great degree. But it took a warship and a company of marines and a broadside to kill one girl. She was protected by four redcoats and me. And of course, we caught it in the first three seconds of play. Don’t you see, that was the end of us. But it was such a terrific ferocity against this girl, who by the way, was blind. And her face was so disfigured through a bomb assassination attempt, when she was a child at seven, that she had to wear a mask. A whole man-of-war and a company of marines landing in boats and a full broadside to kill this one girl. She was the last of the family of Charles V. She was the granddaughter aspirant of the old Holy Roman Empire, and one of the innumerable French that lived down here about sixty miles had decided she was a great menace to the throne. Well, I was being audited one day. I found myself sitting around with a picture of a girl on a rock, apparently about 1870. Didn’t compare with any track I had. Nice exterior view. It just didn’t make sense. Here was a girl, sitting on a rock in exactly the same location, in exactly the same place, and I knew what happened to the girl and I knew all about it and so forth, but I hadn’t ever known the girl. Fascinating. Apparently I’d kept a spot of attention on this person as a thetan for the next couple of hundred years. It was very intriguing. Funny part of it is that this girl, picking up another body after that, had gone along for a very long time and had then happened accidentally to be taken by her parents to exactly the same rock that she was killed on in 1605. And she became very ill and she sickened and she died! Just keyed her in complete. You possibly know the place. It’s right across from Gibraltar, and the Hotel Reina Christina is on the Spanish coast side. And it’s one of those rocks right close to the Reina Christina Hotel. And of course, it’s a tourist resort and her parents had taken her back there. What a dirty trick. That must have been some vacation, man!” — L. Ron Hubbard, September 6, 1961



Avast, Ye Mateys

“ATTENTION, ATTENTION: For this afternoon at 1500 when the Newsreel cameraman will come board to film the ship, please be sure to not war the clear bracelet, otherwise it could be noticed in the film. Thank you!” — Love, Jone, PRO I/T, September 6, 1971


Overheard in the FreeZone

“That awkard moment when you do an OCA to somebody and discover she’s crazy.”


Past is Prologue

1995: Lawrence Wollersheim says he’s been the subject of more dirty tricks from Scientology. And from a disturbing report by the Denver TV station KUSA: “Outside the courthouse, Scientology Director Kurt Weyland held up a pair of handcuffs which he said symbolized what the church intended to do to Wollersheim. ‘Like I told you this morning, I brought these handcuffs here to show what it is that we are driving for, which is to bring this man to justice.’ Another issue has arisen. Some of the computer files the Scientologists seized from Wollersheim’s home are encrypted. Scientology has asked Judge Kane to hold Wollersheim in contempt. Wollersheim says the encrypted files are lists of people he says are victims of Scientology and he says he’ll go to jail before turning over his passwords, which unlock his secret files.”


Random Howdy


“The church that never forgives and never forgets. The Scientologists always pay their debts.”


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

Criminal prosecutions:
Danny Masterson charged for raping three women: Trial scheduled for October 11.
‘Lafayette Ronald Hubbard’ (a/k/a Justin Craig), aggravated assault, plus drug charges: Grand jury indictments include charges from an assault while in custody. Arraigned on August 29.
Jay and Jeff Spina, Medicare fraud: Jay sentenced to 9 years in prison. Jeff’s sentencing to be scheduled.
Rizza Islam, Medi-Cal fraud: Trial scheduled for October 24 in Los Angeles
David Gentile, GPB Capital, fraud: Next pretrial conference set for September 19.
Yanti Mike Greene, Scientology private eye accused of contempt of court: Found guilty of criminal and civil contempt.

Civil litigation:
Baxter, Baxter, and Paris v. Scientology, alleging labor trafficking: Complaint filed April 28 in Tampa federal court, Scientology moving to compel arbitration. Plaintiffs filed amended complaint on August 2.
Valerie Haney v. Scientology: Forced to ‘religious arbitration.’ Selection of arbitrators underway. Next court hearing: February 2, 2023.
Chrissie Bixler et al. v. Scientology and Danny Masterson: Appellate court removes requirement of arbitration on January 19, case remanded back to Superior Court. Stay in place, next status hearing October 25. Scientology petitioning US Supreme Court over appellate ruling.
Brian Statler Sr v. City of Inglewood: Third amended complaint filed, trial set for December 6.
Author Steve Cannane defamation trial: New trial ordered after appeals court overturned prior ruling.
Chiropractors Steve Peyroux and Brent Detelich, stem cell fraud: Lawsuit filed by the FTC and state of Georgia in August, now in discovery phase.



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.


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.


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.


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?


[ONE year ago] On this Labor Day, some insane stories of labor in Scientology’s ‘Sea Org’
[TWO years ago] New letter about Scientology by J. Edgar Hoover shows up in FBI records search
[THREE years ago] Elisabeth Moss snows another reporter about Scientology, but this one really hurts
[FOUR years ago] Finally, Captain David Miscavige’s faux-military Scientology ribbons, described and decoded!
[FIVE years ago] Scientology’s ultimate prize: For the first time online, the current ‘OT 8’ materials laid bare
[SIX years ago] As Louis Theroux’s Scientology movie hits theaters, its main subject accuses it of deception
[SEVEN years ago] VIDEO LEAK: Rare look at Captain David Miscavige giving shipboard Scientology briefing
[EIGHT years ago] Deputy ambassador of a small African nation? Scientology wants to buy you lunch!
[NINE years ago] VIDEO: Scientology Leader David Miscavige’s Weird Explanation for the IRS Victory
[TEN years ago] Scientology to Marc and Claire Headley: Spy For Us and We’ll Forget the $43K You Owe


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 2,779 days.
Katrina Reyes has not seen her mother Yelena in 3,284 days
Sylvia Wagner DeWall has not seen her brother Randy in 2,834 days.
Brian Sheen has not seen his grandson Leo in 1,824 days.
Geoff Levin has not seen his son Collin and daughter Savannah in 1,715 days.
Christie Collbran has not seen her mother Liz King in 5,020 days.
Clarissa Adams has not seen her parents Walter and Irmin Huber in 2,890 days.
Doug Kramer has not seen his parents Linda and Norm in 1,995 days.
Jamie Sorrentini Lugli has not seen her father Irving in 4,468 days.
Quailynn McDaniel has not seen her brother Sean in 3,784 days.
Dylan Gill has not seen his father Russell in 12,350 days.
Melissa Paris has not seen her father Jean-Francois in 8,269 days.
Valeska Paris has not seen her brother Raphael in 4,437 days.
Mirriam Francis has not seen her brother Ben in 4,017 days.
Claudio and Renata Lugli have not seen their son Flavio in 4,279 days.
Sara Goldberg has not seen her daughter Ashley in 3,315 days.
Lori Hodgson has not seen her son Jeremy and daughter Jessica in 3,030 days.
Marie Bilheimer has not seen her mother June in 2,555 days.
Julian Wain has not seen his brother Joseph or mother Susan in 910 days.
Charley Updegrove has not seen his son Toby in 2,085 days.
Joe Reaiche has not seen his daughter Alanna Masterson in 6,636 days
Derek Bloch has not seen his father Darren in 3,767 days.
Cindy Plahuta has not seen her daughter Kara in 4,105 days.
Roger Weller has not seen his daughter Alyssa in 8,960 days.
Claire Headley has not seen her mother Gen in 4,079 days.
Ramana Dienes-Browning has not seen her mother Jancis in 2,435 days.
Mike Rinder has not seen his son Benjamin and daughter Taryn in 6,738 days.
Brian Sheen has not seen his daughter Spring in 2,844 days.
Skip Young has not seen his daughters Megan and Alexis in 3,242 days.
Mary Kahn has not seen her son Sammy in 3,118 days.
Lois Reisdorf has not seen her son Craig in 2,701 days.
Phil and Willie Jones have not seen their son Mike and daughter Emily in 3,196 days.
Mary Jane Barry has not seen her daughter Samantha in 3,450 days.
Kate Bornstein has not seen her daughter Jessica in 14,559 days.


Posted by Tony Ortega on September 6, 2022 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, 1995-2021 Just starting out here? We’ve picked out the most important stories we’ve covered here at the Underground Bunker (2012-2021), 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


Tony Ortega at The Daily Beast


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