Is Latest Scientology Lawsuit The Beginning Of The End For David Miscavige And The Church Of Tom Cruise?

On Tuesday, former prominent Scientologists Luis and Rocio Garcia filed a federal lawsuit against the Church of Scientology, charging fraud over the use of donations given to the church toward what the plaintiffs believed were charitable causes and accusing the church of unlawfully refusing to grant refunds to members who paid for services that were not rendered.

Some familiar with the inner workings of the church believe the lawsuit has the power to start a chain reaction that could ultimately unravel the deeply controversial and mysterious religion -- or at least deal a devastating blow to Scientology’s core leadership, headed by David Miscavige.

The Garcias were among a group of Scientologists who donated a total in excess of $200 million toward the construction of the so-called Superpower Building in Clearwater, Fla., which has not yet opened more than 14 years after its groundbreaking ceremony. According to the lawsuit, the Church of Scientology Religious Trust -- Scientology’s fundraising arm -- reported to the IRS in 1993 its intention to raise $40 million for the construction of the building, raising the question of where the balance has been directed.

The lawsuit takes direct aim at the controversial Miscavige, who has been accused of all manner of impropriety since becoming the face of Scientology -- from beating church staff to embezzlement to being somehow involved in the presumed disappearance of his wife, who has not been seen in public since 2006, though the church maintains she is alive and well.

Through it all, Miscavige has remained a close friend and confidant to Scientology’s most famous member, Tom Cruise. He served as best man in Cruise’s wedding to Katie Holmes and was implicated as playing a central role in the alleged “girlfriend auditions” for Cruise that supposedly led to that now-dissolved union.

“The Church, under the leadership of David Miscavige, has strayed from its founding principles and morphed into a secular enterprise whose primary purpose is taking people’s money,” the lawsuit claims.

The Garcias are not the first ex-Scientologists to file a complaint against the controversial church, which has largely avoided serious legal penalties by invoking the First Amendment’s freedom of religion protection. Most recently, in July 2012, the Ninth U.S. Circuit Court of Appeals rejected Claire and Marc Headley’s claims that they were forced into unpaid labor while longtime members of the Church of Scientology. The three-judge panel ruled that the Headleys were submitting voluntarily to the rules set forth by the Sea Organization, or Sea Org, which is a division of the church.

The Garcias’ lawyer, Theodore Babbitt, says that won’t happen this time. “If you defraud somebody, it’s not a First Amendment issue,” Babbitt said. Indeed, the lawsuit appears to be worded in such a way as to preempt any attempts by the church to have it dismissed on the grounds of religious freedom -- at one point explicitly stating that the “plaintiffs are not taking a position one way or another on the validity of Scientology as a religion. Rather, Plaintiffs seek to highlight the secular commercial nature of the fraudulent activities and inappropriate business dealings.”

Babbitt said he expects the Garcias’ lawsuit to be the first in a wave of similar suits he hopes will lead to an injunction against the church. “I have been contacted by approximately 20 people who have very similar stories who want to bring litigation,” he said. “If injunction is granted, it will be a game changer.”

Though Babbitt did not get into the specifics of the forthcoming lawsuits, it is more than likely that some of those plaintiffs will be seeking damages related to monetary deposits made for the purposes of “auditing,” a process of evaluation -- or interrogation, depending on whom you ask. These deposits can amount to tens of thousands of dollars and are a requirement for every member of the church who wishes to advance in rank toward the highest goal of Scientology, which is to be literally endowed with superhuman abilities and immortality.

According to multiple sources, the church strongly encourages members to pay for their auditing hours in advance and offers a bulk discount as incentive for members to add funds to their auditing accounts. If a Scientologist leaves or is expelled from the church, it can be difficult for him to reclaim the money he has put up. But the Garcias’ complaint insists that the church is required by its own Doctrine of Exchange to provide refunds to parishioners who request them.

Tony Ortega, the former Village Voice editor-in-chief who left his post to write a book and focus on his Scientology blog, "The Underground Bunker," said the church puts “enormous pressure” on members to increase their status, which he says is tantamount to donating more money. He also explained that as a Scientologist rises in the ranks, the auditing becomes not only more costly but greatly protracted. A Scientologist may pay thousands of dollars for a certain amount of auditing hours believed to be the requirement for advancement only to later find that her auditors are unconvinced she is ready to ascend. The auditors, or “counselors,” then keep her in a holding pattern, requiring more time, more auditing and, of course, more money. “They tend to get stuck in OT7 [the second-highest level] for years,” Ortega said.

Jason Beghe, an actor ("Californication," "Chicago Fire") and former Scientologist who has been embroiled in legal battles with the church since his departure, concurs that auditing gets more expensive as a Scientologist ascends but said he was able to get a refund for the funds he had on account, which he estimated to be somewhere between $5,000 and $6,000. “Not a lot,” he said. But not without a fight.

Beghe said the church initially demanded he sign extensive legal documentation preventing him from ever filing a future claim, which he refused. Instead, he stated his intent to take the case to small claims court -- something he said the church was dead-set against. Almost immediately, the church agreed to give Beghe the refund with his own conditions in place. But he said that when he met with a church representative to finalize the transaction, she initially gave him the original, unamended document -- the one he had refused -- to sign. When he pointed this out, she claimed it was a clerical error before providing the updated agreement.

In its internal communications, the church defends the hefty and graduated auditing charges on the expense of hiring exceptionally trained auditors. The higher a Scientologist’s ranking, the more experienced and, by extension, more pricey the auditor must be. But it is unclear where this money -- approximately $1,000 per hour for a highly trained auditor -- goes, as Beghe insists the auditors are given a meager salary of roughly $50 per week, along with room and board. (Beghe’s claims correspond with outside reports of church staff salaries.)

Asked why active Scientologists do not question this discrepancy, Beghe insisted that the church indoctrinates members from the beginning not to question the intentions or practices of Scientology. To that end, Scientologists are enthusiastically discouraged from reading newspapers or spending too much time on the Internet and are told unequivocally to dismiss any allegations of impropriety. Scientologists are conditioned to believe that any criticism of the church “is all lies” and that accusers “are angry bitter apostates,” Beghe said. But what about someone like Cruise, who surely cannot ignore the massive amounts of negative press about his relationship with the Church of Scientology?

“Tom Cruise doesn’t want to know,” Beghe said. “The embarrassment, the shame, the wasted life and money -- it’s too hard to look at.”

Perhaps even more effective than this alleged mind control in protecting the church from punishment for financial abuses is the Church of Scientology’s tax-exempt status, hard-won in 1993 after a 25-year battle with the IRS, believed by critics to be a well-orchestrated campaign involving stalking and harassment of individual IRS agents and multiple, frivolous lawsuits against the IRS itself.

According to the prevailing narrative, the turning point in this battle was an impromptu 1991 meeting among Miscavige, Marty Rathbun (who has since become an outspoken “apostate”) and then-IRS commissioner Fred T. Goldberg Jr. According to a New York Times investigation and Rathbun's account as told to Ortega, Miscavige told Goldberg the church would halt all legal action against the IRS in exchange for tax exemptions. In response, Goldberg reportedly ordered a special committee to review the Church of Scientology's application, which two years later resulted in every division of the church being granted tax-exempt status, reversing the IRS's two-and-a-half decade insistence that the Church of Scientology was a commercial enterprise and not entitled to tax benefits reserved for nonprofit organizations.

It was an enormous victory for Scientology and one that has allowed the church to control, with meager documentation, the lion's share of the purportedly millions of dollar in fees and donations it solicits from its members.

Goldberg, who left the IRS in 1992 for a career in the private sector, did not respond to a request for comment. A representative for the IRS declined to answer any specific or general questions about how the IRS grants tax-exempt status to churches and under what conditions such exemptions might be revoked, stating, "federal law prohibits the IRS from discussing or commenting on specific taxpayers or situations."

Neither Babbitt nor Ortega believe the lawsuit filed by the Garcias this week will have any direct impact on the church's status in the IRS, and Babbitt said the lawsuit was not at all concerned with the tax exemptions, but rather the alleged fraud. Ortega offered a gentle defense of the IRS's dramatic reversal 20 years ago, insisting that the tactics of the Church of Scientology are so egregious that anyone would eventually become defeated or exhausted by them.

As for any future plans for the IRS to revoke Scientology's protections, Ortega said it is likely that the IRS is confident the church will undo itself without any help from the government. "I have a feeling that people in the government in a position to do something might be convinced that Scientology is going to collapse on its own," he said, adding that Lawrence Wright, the Pulitzer Prize-winning author of "Going Clear" and the definitive New Yorker article about Paul Haggis and Scientology, said this week at a New York City speaking engagement that Scientology was "headed for a reckoning," something Ortega firmly believes is true.

For his part, Beghe was less certain this was the beginning of the end for Scientology itself but did seem to feel that its leader's days were numbered.

"You have to remember these people are so convinced in their rightness," he said, adding that Miscavige is "off his rocker. And he can now be counted on to continually make decisions that lead toward the destructive. It would not be surprising to me if the era of Miscavige comes to an end. How that happens I don’t know -- will he end up in the slammer or run off to Venezuela?"

Beghe said he can guarantee that Miscavige has "all the money he needs set up somewhere. And a place to go where he’s untouchable."

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