VII - Violations Of U. S. Title 18
Chapter 15 - Claims and services in matters affecting government Sec. 286 - Conspiracy to defraud the Government with respect to claims
"Whoever enters into any agreement, combination, or conspiracy to defraud the United States, or any department or agency thereof, by obtaining or aiding to obtain the payment or allowance of any false, fictitious or fraudulent claim, shall be fined under this title or imprisoned not more than ten years, or both."
Sec. 287 - False, fictitious or fraudulent claims
"Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine in the amount provided in this title."
Count 1: The violation of Form 906, Closing Agreement with the Internal Revenue Service from October 1st, 1993 through the "Church Tax Compliance Committee" by false representations and the intention not to honor its terms.
On October 1st, several corporate officers of several Scientology corporations (Religious Technology Center, Church of Scientology International, Church of Spiritual Technology, Church of Scientology Flag Service Organization, Inc., Church of Scientology Western United States, Building Management Services, Church of Scientology Religious Trust), namely David Miscavige, Norman Starkey, Mark Rathbun, Heber Jentzsch, Marc Yager, Jonathan Epstein, Nigel Oakes and four other individuals, signed a closing agreement with the Commissioner of the IRS that included the granting of tax-exempt status under 501 (c) (3) of certain Scientology organizations [Exh. No. 146]. The above corporate officers assumed under the agreement the function of a "Church Tax Compliance Committee," which would be held responsible to fulfill the obligations of the various entities of Scientology towards the IRS. The agreement contained the following provision:
"H. Finality.
"This Agreement is final and conclusive except:
"1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of material fact;
"2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including any stated exception for Code section 7122) notwithstanding any other law or rule of law; and
"3. If it related to a tax period ending after the date of this Agreement, it is subject to any law, enacted after the Agreement date, that applied to that tax period."
The agreement also contained the following certifications:
"D. Certifications.
"1. In general. by executing this Agreement, the Church signatories in their trust or corporate capacities, and their subscribing officers or trustees individually, certify under penalty of perjury the following to the best of their knowledge, information and belief:
"a. that all Scientology-related entities are in compliance with the Code, Treasury regulations and other Service pronouncements of general guidance and applicability;
"b. that the Church signatories and CTCC will use their best efforts to educate Scientology parishioners as to the nondeductibility of donations to foreign organizations and the provisions of section VII. paragraph B.;
"c. that no Scientology-related entity or Scientology-related individual (in his or her capacity as such) has, after 1986, knowingly committed any act of fraud or criminal conduct that might constitute a violation of public policy endangering the tax-exempt status of any Scientology-related entity (assuming for the limited purpose of this paragraph that all Scientology-related entities are otherwise described in Code section 501(c)(3)); and
"d. that all Qualified Written Material submitted in connection with this Agreement was correct and truthful as of the date submitted through the date of signature of this Agreement, as supplemented by the Forms 1023 filed in August and September 1993.
"2. Section 501(c)(3). The Annual Report shall include a certification to the Service from CTCC members, in their Corporate, At-large, or Individual status, that Scientology related entities recognized as described in Code section 501(c)(3) under section III, paragraphs B. or C. will operate in conformity with Code section 501(c)(3) and the regulations there under and that other Scientology-related entities will operate in a manner that does not jeopardize the tax-exempt status of any Scientology-related entity so recognized. Specifically, but not by way of limitation, such certification shall include the following Scientology-related entities: Church of Scientology Religious Education College Inc., Church of Scientology Advanced Organization Saint Hill Europe and Africa, Church of Scientology, Inc. (Advanced Organization Saint Hill Australia, New Zealand and Oceania), RTC Australia, San Donato Properties Corporation, Transcorp Services, S.A., MCL Services, N.V., Media Storage, Inc, Mile High, Inc., Galaxy Productions, Inc., Mastertech, Inc., Nesta Investments, Ltd., and FSO Oklahoma Investments Corporation.
"3. Continuing certifications. The CTCC must certify in the Annual Report that the certifications described in this paragraph D. continue to be correct, to the best of their knowledge and belief. Such certification shall be substantially in the form of Exhibit IV-3 hereto. In addition, the CTCC must certify as part of the Annual Report that nothing has occurred that would significantly impair (directly or indirectly) the efficacy of the guaranty contained in section IV. paragraph A.3.d."
Under the agreement, a Scientology related entity was defined as follows:
"5. Any entities subject to the ecclesiastical direction or general guidance of Church of Scientology International or Religious Technology Center, directly or indirectly, including but not limited to any trusts, that hold assets (including but not limited to intellectual property and mortgages) for any other Scientology-related entity or for the advancement or protection of the Scientology religion whether or not those entities were discussed at pages 1-43 through 1-56 of the June submission are Scientology-related entities. This definition does not include the trust or estate of any parishioner who has made an intervivos or testamentary transfer of assets to the Church. This definition does not include financial institutions that are not owned (directly or indirectly) in whole or in part by any entity that otherwise meets the definition of Scientology-related entity under another subparagraph of this paragraph VIII. C. This definition does not include (i) any fiduciary that is not a Scientology-related entity or a Scientology-related individual (ii) the employee of any such fiduciary, (iii) any escrow agent holding assets of a Scientology-related entity under and escrow arrangement of a strictly temporary nature, (iv) any trustee under a deed of trust upon real property to secure the debt of a Scientology-related entity (v) any person acting under the power of attorney to Scientology-related entity, provided that any such fiduciary described in (i) through (v) above, and is nor otherwise a Scientology-related entity under paragraph of this section VIII, paragraph C. Pages 1-43 through 1-56 are attached as Exhibit VIII-3 to this Agreement."
With respect to the above regulations the signatories David Miscavige, Norman Starkey, Mark Rathbun, Heber Jentzsch, Marc Yager, Jonathan Epstein and Nigel Oakes, in their capacity as corporate officers and ecclesiastical heads of their respective Scientology entities and as members of the CTCC, have violated the terms of the closing agreement from October 1st, 1993 by having known and/or having been in the position to know and/or having supervised and controlled various criminal/non-charitable activities of U. S. based and foreign "Scientology related entities" between 1986 and 2001. As these activities have been conducted in accordance with Scientology's basic and fundamental ecclesiastical policies and scriptures, formulated either by founder L. Ron Hubbard or others, the above mentioned individuals had never had the intention to honor the terms of the closing agreement, thereby had engaged in a conspiracy against the U. S. government from the outset of the settlement discussions.
Count 2: Covert intelligence operations executed by the "Office of Special Affairs International" against British writer Russell Miller during the years 1987 – 1988, which included the attempt of false incrimination.
The British writer Russell Miller published in 1987 the book "Bare-Faced Messiah: The True Story of L. Ron Hubbard," a controversial biography about the life of Scientology founder Hubbard. Prior to the publication, Miller had gone to the United States to conduct research in relation to the book and to interview people who had personally known Hubbard. At the end of his research trip, Miller was followed by private investigators, presumably working for the Church of Scientology [Exh. No. 159].
When Russell Miller had returned to London, and the book on Hubbard was about to be published, the Church of Scientology stepped up its efforts and started a harassment campaign against Miller to stop the publication of Millers book. At least five investigators were employed by the Scientologists to achieve this.
First, several friends and business associates of Miller were investigated, who received visits from private detectives. Then, during the months of October, the "Sunday Times" which had planned to do a serialization of the book during November, received threatening phone calls by Scientologists. The first private investigator who appeared then on the scene was Eugene Ingram from Los Angeles. Together with another investigator from England Ingram gained access to the offices of the "Sunday Times" with the use of false credentials and tried there to discredit Miller and his sources with a senior executive of the "Sunday Times."
During the following week, the second investigator from the United States arrived. Peter Comras claimed to represent the family of late Dean Reed, an American singer who had defected the East-Germany and had died under unclear circumstances in East-Berlin in Summer of 1987 [Exh. No. 160]. Comras started a so-called "noisy investigation" on Miller, by trying to link Reed's death with a visit of Miller in East-Berlin. When the family denied that it had hired Comras, the private investigator claimed not to know his client and referred to the Washington lawyer Keith Adkinson, who had hired him originally. Miller himself believed that Comras worked on behalf of the Church of Scientology.
In November the "Sunday Times" learned that another private investigator was surveilling Miller [Exh. No. 161]. Jarl Cynewolf revealed to journalists that he worked on behalf of a third American private investigator, Virginia Snyder from Florida, who had been hired by the Scientologists. Cynewolf also stated that "Miller's phone calls and mail were being intercepted and his house in Buckinghamshire was under close surveillance.
Scientology also tried to stop the publication of Miller's book through the courts. The Scientology publishing company New Era Publications International ApS tried to enjoin the publication of the book in England, Canada and the United States by claiming the book violated the company's copyrights on the works of L. Ron Hubbard. All of these attempts to stop the critical book on Hubbard failed. In the U.S. the Federal Appeals Court in New York affirmed on April 19th, 1989 the decision of the lower District Court who found that the reproduction of certain citations of Hubbard's writings by Miller was well within "fair use." The permanent injunction Scientology had seeked was not granted ("New Era Publications International ApS vs. Henry Holt & Co., Inc." No. CV 88-7707, CV 88-7795).
Count 3: Covert intelligence operations against Danish protestant priest Johannes Aargaard during the years 1987 and 1988 that were supervised by the "Office of Special Affairs Europe" and included committing burglary at Aargaard's "Dialog Center."
Johannes Aargaard, a professor for theological studies, is the President of the "Dialog-Center International" in Århus, Denmark. The Dialog-Center issues a periodic magazine, which reports about new religious movements and cults. As a vocal critic of Scientology's activities in Denmark for the past 25 years, he had been a target not only for negative articles by Scientology's Danish version of Freedom-Magazine [Exh. No. 162, Excerpt] but also for various intelligence operations run by the "Guardian's Office" and later by the Office of Special Affairs. When I met Mr. Aargaard in the summer of 1999 he told me that the Dialog-Center had been infiltrated on several occasions by at least nine agents, working on behalf of Scientology. All those people had claimed to be either cult victims or that they would want to work as volunteers in the Dialog-Center, but had in fact tried to gain information about the Center and report such intelligence back to Scientology. In one case, the detection of such an agent led to the disclosure of an illegal conspiracy that ended with a conviction by the court.
On November 29th, 1990 at a criminal proceeding before the Copenhagen City Court two Danish private investigators, Jan Kristiansen and Erik Clefert, were found guilty of having conducted a conspiracy to copy computer discs and obtain information from Aargaard's Dialog Center between August 1987 and July 1988 [Exh. No. 163]. The two investigators worked on behalf of a Jan Hansen who had been a cut-out of the Office of Special Affairs in Copenhagen. To gain access of the Dialog-Center's internal files, Kristiansen and Clefert then hired an additional agent, Lars Jørgensen, who obtained employment at the Center and delivered them later 16 floppy discs with inside information about the Dialog-Center. The two detectives then delivered the material to Jan Hansen. The connection between the private investigators and the Church of Scientology had already been established by the Danish newspaper "B. T." in August 1988, when the whole affair was discovered and made public [Exh. No. 164]. The article stated that the Church of Scientology had paid 200,000 Danish Crowns towards the detective agency to come up with inside material on Aargaard.
In a second related case, around the same time, the newspaper revealed that a 33-year old Danish fire fighter had been found to have worked as a paid agent for the Church of Scientology [Exh. No. 165]. For 1,100 Danish Crowns he was told to infiltrate a psychiatric hospital and gather information for the Scientologists. The Copenhagen Fire Department suspended him later from his job, after the matter had become public.
Count 4: Covert intelligence operations against the "Aktion Bildungsinformation, e.V.," a German non-profit association, and against other Scientology critics in Southwestern Germany that were conducted during the early 1990s under the supervision of the "Office of Special Affairs Europe."
Internal documents of the "Office of Special Affairs" of the Scientology organization in Stuttgart reveal that during the early 1990s OSA-operatives were systematically investigating individuals and organizations in order to gain information on private and sensible matters.
The first document is a memorandum on how to do a "dust bin collection," written by an OSA-operative of the German Scientology-organization "Dianetik Stuttgart e. V." [Exh. No. 166]. As it is written in English it was obviously designated to be sent to the OSA-headquarters in Copenhagen or Los Angeles. The target organization, mentioned in the document, is the private consumer information center "ABI e. V.," which has been providing information about Scientology's activities since 1975 and which had been involved in numerous lawsuits against several Scientology-organizations.
Evidently the "Office of Special Affairs" tried to get a hold of any internal ABI-documents by going through its trash in order to use it against ABI at a later date.
Infiltrating a consumer association had been done by Scientology before. The FBI-raids in 1977 revealed that the "Guardian's Office" had placed an informant inside the "Better Business Bureau" in Washington, DC in order to obtain internal documents [Exh. No. 167].
The second document, dated June 18th, 1990, is a program written by an OSA executive for a newly appointed Investigations Officer of the OSA-office in the Scientology organization of Stuttgart [Exh. No. 168]. The persons and institutions mentioned in the document had been critical of Scientology in the past. As a counter intelligence operation, the Office of Special Affairs started to investigate these critics and included in its program even the surveillance of the child of one target person:
"Invest Off Stuttgart
"... Production Cycles
"1. Make yourself a list of all institutions that might have important information for us or distribute. (i. e. associations like ABI, EBIS, the [State] Ministry for Cultural Affairs, religious associations like catholic or protestant academies, EZW, publishing houses, newspapers, etc)
"2. Start to order publications from them or [use] Scientologists, who receive them already to review them for you using the following criterions:
"a) Psychiatry scandals
"b) Events with the topic ‘cults', etc.
"c) Newly published books
"d) Everything concerning scandals at the Ministry for Cultural Affairs
"e) Everything connected to ABI, EBIS, [Name of person, withheld upon request], [Name of person], Scientology, cult opponents
"f) Changes of law that have to do with psychiatry and religion
"g) Scandals at associations or clubs ...
"4. Start immediately with the résumé of [name of person] and [name of person] and find out what they have done and published in the past.
"5. Give me an up-date from time to time about your progress of the above mentioned target areas. ... "
The second page of the document reveals the program targets, which include the surveillance actions of the persons mentioned in the first part of the document:
"... 2) Search the Adresso of the org for names of Scientologists who live in the Kirchheim/Teck area. Then ask only real dedicated Scientologists for teachers and students of [Name of the school withheld].
"3) Visit Mr. [Name withheld] again and question him together with [Name withheld]; [Name withheld] pretends to be a former student of [Name withheld] and mentions [Name withheld] relationship to other students.
"4) Who was a member in the protestant youth group in [Name of town withheld]? Get a list of names.
"5) [Name of person withheld] enrolls [as a student] at the University of Tübingen. The product is a student identity card.
"6) Which school does the son of [name of person withheld] attend?
"7) What is he doing during the afternoons – who is looking after him? Is he at home or elsewhere?
"8) Where is [Name of person withheld] living? ...
"9) DBC [dust bin collection], Tuesday morning 5 am. ... "