L. RON HUBBARD, ONE OF THE MOST BIZARRE ENTREPRENEURS ON RECORD,
PROVED CULT RELIGION CAN BE BIG BUSINESS. NOW HE'S DECLARED DEAD, AND
THE QUESTION IS, DID HE TAKE $200 MILLION WITH HIM?
The prophet and profits of Scientology
Only a few can boast the financial success of L. Ron Hubbard, the
science fiction storyteller and entrepreneur who reportedly died and
was cremated last January (1986) at the age of 74.
For roughly three decades Hubbard ran the notorious Church of
Scientology, a "religion" he formed to "clear" mankind of misery. It
came complete with finance dictators, "gang-bang sec[urity] checks,"
lie detectors, "committees of evidence" and detention camps. In 1977
the FBI sent 134 agents, armed with warrants and sledgehammers,
storming into Scientology centers in Los Angeles and
Washington. Eleven top church officials, including Hubbard's third
wife, went to jail for infiltrating, burglarizing and wiretapping over
100 government agencies, including the IRS, FBI, and CIA. Hubbard
could hold his own with any of his science fiction novels.
Amid all the melodrama, at least $200 million in cash produced by
his strange creation was gathered in Hubbard's name, and there is
believed to be much more in organization assets: The Church of
Scientology has proved to be one of the most lucrative businesses
around. If Forbes had known as much as it knows now, after
interviewing dozens of eyewitnesses and examining sworn testimony and
court records in both criminal and civil cases, Hubbard would have been
included high on The Forbes Four Hundred.
There is something that Forbes still doesn't know, however. It is
something no one may ever know outside a small, secretive band of
Hubbard's followers: What is happening to all that money?
Hubbard himself has not been seen publicly since 1980, when he went
underground, disappearing even from the view of high "church" officials.
That's in character: He was said by spokesmen to have retired from
Scientology's management in 1966. In fact, for 20 years after, he
maintained a grip so tight that sources say since his 1980
disappearance three appointed "messengers" have been able
to gather tens of millions of dollars at will, harass and intimidate
Scientology members, and rule with an iron fist an international
network that is still estimated to have tens of thousands of
adherents--all merely on his unseen authority.
How could Hubbard do all this? As early as the 1950's. officials
at the American Medical Association were warning that Scientology, then
known as Dianetics, was a cult. More recently, in 1984, courts of law
here and abroad labeled the organization such things as "schizophrenic
and paranoid" and "corrupt, sinister and dangerous," while Hubbard
himself was described as "a pathological liar" and "a charlatan and
worse."
But the central fact is the money: hundreds of millions of dollars
last seen in the form of cold cash or highly negotiable securities.
"It's a perfect story about greed and lust for power, " says William
Franks, who was driven out of the organization in 1981, when he was the
church's chairman of the board and its executive director
international, the post Hubbard officially relinquished 20 years ago.
"If you understand it on that basis, and stay away from the
"religious" aspects, it makes perfect sense."
A few facts about Hubbard's early life are known. Lafayette Ronald
Hubbard was born in Tilden, Neb. on Mar. 13, 1911. After serving in
World War II, he wrote a 1947 letter to the Veterans Administration
in which he complained of his "seriously affected" mind and "suicidal
inclinations" and pleaded for help. Hubbard was nevertheless a
moderately successful science fiction writer. In 1949, addressing a
writers convention, he reportedly said, "If a man really wants to make
$1 million, the best way would be to start his own religion." In 1950
he published the book that would ultimately make him rich beyond the
dreams of avarice, Dianetics: The Modern Science of Mental Health. In
1951, during his second divorce, Hubbard's wife claimed that he was
"hopelessly insane" and that he tortured her. Three years later, his
"church" was born.
It did not act much like a church. Throughout the 1950's and much
of the 1096's, Hubbard emphasized the "scientific" nature of a
therapeutic technique he invented. He called it "auditing." He said it
could cure illness, restore sight to the blind and improve intelligence
and appearance. Hubbard argued, in his best-selling book, that inner
turmoil sprang from mental aberrations he called "engrams" caused by
past traumatic events, and could be eliminated by identifying,
recalling and reliving the events. Eliminate your engrams, eliminate
your turmoil. A similar process is routine to most conventional methods
of psychotherapy, a fact Hubbard presumably was aware of. On this
unlikely base he built his $400 million empire.
Hubbard constructed a device he called an E-meter, actually a
simplified lie detector, to measure electrical changes in the skin
while subjects go over intimate details of their past. Auditors
(later called ministers) would conduct sessions with this device and
zero in on Hubbard's engrams. Psychiatrist say a successful session of
going over long- suppressed traumas can produce a sense of personal
relief and euphoria. That brought the troubled subjects back for more,
money in hand. Lost of money. A large organization began to form,
with "franchises" around the country. There are a lot of troubled
people out there.
Side by side with his "scientific" treatments, Hubbard pitched a
body of religious beliefs-reincarnation and the like and claimed
tax-exempt status as a religion. It was not long before some of his
auditing subjects were drawn into what became a fast-growing cult.
Some of them became fanatics who would do virtually anything at
Hubbard's command.
Unfortunately, the tax ploy and the big money drew the attention of
the IRS: A ruling stripped him of his tax-exempt status in 1967.
By then the money was so big Hubbard was able to buy a 342-foot
oceangoing ship, the Apollo. On it, he withdrew from his government
persecutors and cruised safely in international waters with an adoring
retinue of followers. The IRS was later able to prove in court that he
was meanwhile skimming money, at least $3 million in 1972 alone, and
laundering it through schemes involving phony billings, a dummy
corporation in Panama and a secret Swiss bank accounts.
In 1971 a U.S. federal court finally upheld an FDA ruling that
Hubbard's "scientific" claims were bogus and that E-meter auditing
would no longer be labeled as a scientific treatment. But Hubbard
was resourceful. The way around the ruling was to call the meters and
auditing strictly "religious sacraments" and therefor beyond the FDA's
reach. Hubbard's Scientology counselors had already begun calling
themselves ministers. Now they took to wearing black and clerical
collars. Chapels were constructed in Scientology centers around the
country. "Franchises" became "missions, " "fees"became "fixed
donations, " and "theories" became "sacred scriptures." The money got
even bigger.
The system works like this: Prospects, normally spoken of as "raw
meat, " are offered a free 200-question "personality test" to determine
whether counseling (which means auditing) is needed. ("Auditing is
always needed, " says one former counselor.) Scientology services
range from a communication workshop for $50 to the more popular
one-on-one auditing sessions that soon cost anywhere from, get this,
$200 to more than $1,000 an hour. Special training courses go for $12,
000 and up.
How can anyone, except the very rich, afford to spend $200 to $1,000
an hour on counseling? Plus pay for the books and other materials in
which Hubbard did a lively side business? Some newcomers are
encouraged to recruit new raw meat on the streets for
commissions to pay for their own services-they get 10% to 15% of all
services rendered to the piece of meat they bring in. Others go into
the business side for a piece of the action. Since it is not uncommon
for people to spend more than $100, 000 over a decade for their
salvation. "The registrars were making good bucks, buying Porsches
and Mercedes-Benzes." says one defector, Brent Corydon, "and the best
counselors were paid on a performance scale." Corydon, who once ran the
biggest single Scientology mission, left in 1982 to start his own
auditing religion.
For the less enterprising, another way to afford the religion is to
sign a contract for up to a billion years (reincarnation, remember) and
join the church staff. After signing a note obligating themselves to
pay for all services rendered in the event they break their employment
contracts and waiving all rights to sue, these members receive free
auditing, room and board, a structured and controlled environment, and
a small allowance-less than $25 per week in the early 1980's-in return
for labor that can average as much as 15 hours per day. Ultimately
subjects are "cleared"-that is, pronounced cured of engrams. But
Hubbard was no dummy. He added more and more steps, each usually more
expensive than the last, for his cult followers. Already, in the early
1950's, Hubbard found that prior lives of individuals also required
auditing by the hour. In the late 1960's, Hubbard had another
revelation: Humans are actually composed of clusters of spiritual
beings, stemming back millions of years. Now those spiritual beings
had to be audited! Preposterous? Perhaps, but "eventually you lose
the ability to even form a belief about these things, " says a former
high-level Hubbard aide, Gerald Armstrong. "Hubbard says, 'Jump,' you
say, 'How high?' Hubbard says, 'I have new technology,' you say 'How
wonderful.'"
The "meat" would have successive, increasingly strange levels of
"clearing" revealed to them only gradually, of course, and only as they
seemed ready to "flow up the bridge, " in the peculiar jargon that
developed within the organization. In 1981 yet more new
revelations were issued, but only after income from existing levels had
dropped off. "If you don't have the money, you're a slave," sums up
Howard Rower, a successful New York real estate developer who ran a
Mahattan "mission" until 1983. "And if you have money, you're fawned
all over until you don't have any money."
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