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


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


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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