A California couple has filed a lawsuit against the Church of Scientology alleging fraud, deception and the mishandling of hundreds of thousands -- possibly millions -- of dollars in donations secured by the controversial organization.Luis and Rocio Garcia of Irvine, Calif., filed the 35-page complaint on Wednesday in a Tampa, Fla., federal court. The couple named five church entities in the suit, which seeks compensatory and punitive damages.The Garcias allege that, over the years, the church redirected hundreds of thousands of dollars in donations the couple had earmarked specifically for the construction of a massive "Super Power" building in downtown Clearwater, Fla. The building is still under construction, though the church broke ground on the project 14 years ago, reports the Tampa Bay Times.West Palm Beach attorney Theodore Babbitt, the lawyer for the Garcias, said that his clients "seek to highlight the secular commercial nature of the fraudulent activities and inappropriate business dealings which give rise to this complaint," according to the Tampa Tribune.Babbitt said that when the couple asked the church for their money back, they were excommunicated.Tony Ortega, former Village Voice editor and blogger for The Huffington Post, notes that while the church may have tax-exempt status (granted by the IRS in 1993), the organization is still required to give refunds to members who ask for them.The lawsuit brought by Luis and Rocio Garcia suggests that the church is not abiding by its obligation to refund members.The lawsuit also claim that the church has been using the Super Power building as a cash cow. "It's a money-making machine for the church," Luis Garcia told The Tribune.The Village Voice got its hands on renderings of the "Super Power" building earlier in January and described the purpose for its construction thus:Scientology founder L. Ron Hubbard devised the "Super Power Rundown" in 1978. He envisioned it as a series of counseling routines, some of which would be used to enhance the human senses with the use of elaborate and futuristic platforms and machines.
The Tampa lawsuit alleges that David Miscavige, the mysterious leader of Scientology, lies about where the church's money is going, refuses to give out refunds and may also be profiting through the organization's massive fundraising arm, according to the Tampa Bay Times.The OC Weekly reported in 2011 that Luis and Rocio Garcia gave more than $1 million to Scientology between 1982 and 2010, when the couple left the church.Church of Scientology Flag Service Organiztion spokesperson Pat Harney told Clearwater Patch that the church had no comment on the lawsuit. "However, we understand from media inquiries this has something to do with fundraising and we can unequivocally state all funds solicited are used for the charitable and religious purposes for which they were donated," Harney said in an email statement.Babbitt and his co-counsel, Ronald P. Weil of Miami, said the Garcia complaint is just the first in what they anticipate will be a long line of similar lawsuits, according to The Tribune.The lawsuit and ensuing press conference certainly come at an inopportune time for the Church of Scientology, still reeling from the fallout over Lawrence Wright's tell-all book, "Going Clear: Scientology, Hollywood, & the Prison of Belief," praised last weekend in the New York Times Sunday Book Review.CORRECTION: A previous version of this post misidentified HuffPost blogger Tony Ortega.
Couple's lawsuit accuses Church of Scientology of fraud, deception
TAMPA — A federal lawsuit filed Wednesday accuses the Church of Scientology of using fraudulent, deceptive and high-pressure practices to coax millions of dollars from its members.
Attorneys for the California couple who filed the 35-page complaint in Tampa said they have talked to dozens of former church members and several more similar lawsuits are coming.
Plaintiffs Luis and Rocio Garcia of Irvine, Calif., name five Scientology corporations as defendants, including the church's main entity in Clearwater. The former church members say they gave Scientology more than $420,000 for a Clearwater building project that was never opened and church services they never received.
The lawsuit focuses on Scientology leader David Miscavige, saying he exerts control over an "interdependent network of entities" that extracts as much money as it can from parishioners and denies promised refunds. It alleges Miscavige has been personally enriched by such practices.
Also singled out is the church's massive "Super Power" building in downtown Clearwater, which stands unfinished after more than 14 years of construction. The lawsuit alleges that the church entity responsible for raising funds for the project has kept the building incomplete "to use it as a shill to induce further payments from members, just as they did the plaintiffs."
The Times is seeking church response to the lawsuit.
At a news conference Wednesday in Tampa, the Garcias' attorney, Theodore Babbitt of West Palm Beach, declared Miscavige would be the first person deposed. Miscavige is rarely seen in public and has long avoided any personal entanglement in the many lawsuits involving the church. Babbitt also said he expected the lawsuit would force the church to disclose financial records.
For years, the church has defended itself from such claims by asserting that the First Amendment prevented courts from prying into operations deemed religious in nature. But Babbitt said those arguments would not stand up in this instance.
The Garcias were among dozens of Scientology parishioners featured in a 2011 Tampa Bay Times investigative series, "The Money Machine," which reported that church workers drove up contributions using tactics described as intrusive, heavy handed, coercive and relentless.
All told, the Garcias say they donated about $1.3 million to various Scientology causes during their 28 years in the church. They left in 2010, weary of the church's money demands and convinced its spiritual practices had been "corrupted.''
The Garcias, both immigrants, met in their early 20s while working as laborers in Los Angeles. Four years later, they invested all they had — $300 — in a business services start-up they initially ran out of their kitchen. Over the next 18 years, they built it into a commercial printing operation with more than 100 employees and annual revenues topping $14 million.
Throughout that period, they were devout Scientologists. They joined the church in 1982 after Luis Garcia acted on the advice of a stranger and read Dianetics: The Modern Science of Mental Health, by Scientology founder L. Ron Hubbard. He found it absorbing.
The Garcias traveled several times to Scientology's worldwide spiritual center in Clearwater to take courses and receive church counseling called auditing. Luis Garcia progressed to "Operating Thetan VIII," a spiritual level at the top of Scientology's "Bridge to Total Freedom." His wife reached the level known as OT VI. The couple spent $300,000 on Scientology services, Garcia has said.
They also contributed $340,000 to the "Super Power" building and gave $510,000 to build a new community church — an "Ideal Org'' — near their home in Orange County.
In addition, the couple spent $50,000 on memberships to the International Association of Scientologists, which supports efforts to expand the religion. Their lawsuit details more than $40,000 in donations to IAS projects that they contend the church misled them into giving.
"In fact, these projects did not actually exist or only a small fraction of the money has been spent to create the appearance of extensive humanitarian activities to support the false statements by he IAS," the lawsuit states.
Seven stories tall and sitting on a full city block in downtown Clearwater, the Super Power building has been under construction since November 1998. Five years into the project, the building was finished on the outside but the church halted work, offering no explanation.
Six years passed. Annoyed an abandoned construction site was attracting weeds and trash, the city imposed a $250-a-day fine for code violations. That bill swelled quickly but church officials expressed no concern.
After resuming work in 2009, the building was largely finished in 2011 and the church paid the city $413,500 in fines. Still, the building has not opened.
City permitting records indicate that work inside the building has continued in recent months.
Inside are space-age machines the church says are key to delivering what it calls Scientology's "super power rundown,'' a lengthy series of drills and study sessions purporting to bestow super human capabilities.
Church spokeswoman Karin Pouw told the Times in late 2011 that the building would open soon to Scientology parishioners. But that hasn't happened.
Millions of dollars rolled in for the project. A Times' analysis in late 2011 showed the church raised at least $145 million for the project — well above the $100 million price tag the church had cited through the many years of construction and delays.
and of course the dude that scooped the whole story: Tony Ortega
SCIENTOLOGY SUED FOR FRAUD OVER REFUND SCHEME, MORE PLAINTIFFS TO COME
Luis Garcia, seen in a recent video by Tiziano Lugli
UPDATE: See attorney Scott Pilutik’s thoughts on the lawsuit, below.
In 1993, the Internal Revenue Service granted Scientology tax exempt status, but the church was still beholden to an earlier Supreme Court decision that required it, as in a business, to give members refunds when they requested them.
Now that Scientology is in the grips of crisis and more and more longtime members like the Garcias are walking away from the church, an increasing number of them have asked for refunds — and the church isn’t giving them.
We’ve written about this state of affairs numerous times. Now, the Garcias have filed a lawsuit that accuses church leader David Miscavige of turning Scientology into little more than a fraudulent money-making scam.
“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 complaint says.
A year ago, when Debbie Cook sent out her explosive e-mail to fellow church members, she accused Scientology leader David Miscavige of turning Scientology away from its original goals and instead put all the recent emphasis on his pet projects, including the “Super Power” Building in Clearwater, Florida and the church’s defense fund, the International Association of Scientologists. But even though church members are under intense pressure to donate to these projects, they are never told how the money is used. Cook accused Miscavige of using the donations to amass a billion-dollar slush fund for his personal use. The Garcias make a similar complaint, saying that they gave about $420,000 in donations for the Super Power Building project, the IAS, and for services at the “Flag Land Base” in Clearwater. They were repeatedly assured that the money would be used for specific reasons that they now say were all lies.
(The Super Power Building first broke ground in 1998, and its exterior appears finished. But its wild interiors are apparently still being remodeled, and the facility has never been opened. When it does open, it’s supposed to deliver “super power” processes to wealthy high-level church members. The cost to build the structure have ranged as high $100 million, but the church has raised about $145 million, reports the Tampa Bay Times.)
The Garcias and their attorneys are about to hold a press conference, and we’ll be listening in telephonically and taking notes. We’ve had time only to read through the complaint once, and we’ll be adding to this story as we learn more.
– Luis Garcia, in the press conference: “Every time I was asked for a donation for the [Super Power] Building, I was told it would open within a year. I was lied to.”
– Ted Babbitt, Luis’s attorney, says that the lawsuit is not about Luis wanting the Super Power building open, but about the lies. “We can’t wait to see the finances” that will come out in discovery, he says. Oh, we can imagine he is looking forward to that.
– Babbitt: “I’ve sued the biggest companies in the United States…I’m not afraid of taking on the Church of Scientology.”– Babbitt: The complaint alleges that these donations have provided David Miscavige’s “high lifestyle.”
– Babbitt: Says he knows of hundreds of other former Scientologists who are just waiting for a lawsuit like this. He thinks he will end up representing many of them. They expect to end up representing HUNDREDS of people, but they do NOT plan to turn it into a class action.
(That’s really a good thing. Although we see our readers often extoll the idea of a class action lawsuit, the reality is that class action lawsuits totally blow, and they only end up enriching attorneys.)
– Luis Garcia: “They stay on you for hours, sometimes for days, until you cave in and give a donation….They have no mercy at all. Money has to be extracted at all costs…It’s unbelievable how much pressure you’re put under.”
– I’m told that five local TV crews are covering the press conference, as are Joe Childs and Tom Tobin of theTampa Bay Times.
– Babbitt says he’s looked at every lawsuit against Scientology in Florida. This suit, however, he believes involves NO First Amendment issues, which the church usually appeals to in order to get out of lawsuits.
– Babbitt: “If we are correct that the [Super Power] building is not being opened so it can be used to amass more donations” — even though much more than necessary has already been raised to finish it, then that’s fraud, and they win their case.
– The lawsuit alleges five counts of fraud, two counts of unfair and deceptive trade practices and two counts of breach of contract.
– The lawsuit names five Scientology entities as defendants: The Church of Scientology Religious Trust; the Church of Scientology Flag Service Organization (FSO), which runs Scientology’s spiritual mecca in Clearater; the Church of Scientology Flag Ship Service Organization, which operates Scientology’s private cruise ship, theFreewinds; the IAS Administrations (IASA), which runs the IAS, and the United States IAS Members Trust.
– The lawsuit has been assigned to federal judge James D. Whittemore.
– The Garcias are from Orange County, California, where Luis was also hit up for donations for the church’s “Ideal Org” there. He posted an amazing account of the way that process worked at Marty Rathbun’s blog.
– In the press conference, Babbitt talked about the way church members are told they have to go through Byzantine procedures to request a refund, which is the church’s way of getting them to give up. We reported a similar case recently, involving a Scientologist in South Africa. He said he asked for his money on account after he was “declared a suppressive person” — excommunicated, in other words. He said the church told him he could only request a refund if he filled out a form he could only obtain inside a Scientology “org” or church. But he was then told that because he was declared, he couldn’t go in the org to get the form. Amazing. That’s the kind of thing this lawsuit is aiming at.
UPDATE 1:15 PM We asked our legal department, also known as Manhattan attorney Scott Pilutik, to give us some thoughts on this lawsuit. Here’s what he sent us…
I like how the complaint immediately distinguishes the religion/not-a-religion question because this is always the overriding concern for any judge in a lawsuit against a religion. The judge wants to know that this case can be decided on neutral principles of law and doesn’t require doctrinal inquiry and paragraph 4 of the complaint makes that assurance, that instead this case is about contract, fraud, misrepresentation, and unfair business practices.The fraud claim pits Scientology’s excuses to its members that the Super Power Building was incomplete because of lack of funds against its assurances to the city of Clearwater that delays were due to non-monetary considerations (i.e., building codes, bureaucratic complexity). These competing assertions are both well-documented and require little in the way of testimony, and will be difficult for Scientology to reconcile. Discovery involving testimony of Clearwater officials necessary? Monetarily, this is the biggest and therefore most important claim here, so it’s good news that (in my opinion anyway), it’s the strongest of the claims.With regard to the Freewinds/FLAG refund, we’ve been down this road before but I love how this claim focuses on the quid pro quo donations legal fiction Scientology has skated by on for decades now. If the judge wanted to, he could possibly go down the road last traveled by the Sklars and direct that examination of the IRS-Scientology secret agreement is necessary to deciding this claim. Which would be awesome (but I’m not holding out too much hope).Garcia’s claim that the IAS donations were fraudulently induced is certainly valid but perhaps problematic. Scientology will likely argue that (a) no such donations-for-project-X assurances were given; (b) donations given to IAS aren’t earmarked for specific projects but rather go into larger pot, and that IAS involves itself in many projects; and (most importantly) (c) any inquiry into IAS’s fundraising activity and the application of its donations would unconstitutionally entangle the court in church governance matters. I’m also unclear as to why the complaint doesn’t offer an explanation of how, in each instance of inducement, it was discovered that the donated funds were not being used for their stated purpose.By and large though, this is really good stuff, and as Babbitt suggests, Garcia’s claims are fairly universal — so many members were shaken down in the same manner and could wind up joining this or filing similar suits. Consequently, Scientology will less motivated to settle because of the reasonable fear that others will soon line up behind Garcia. Only by getting the suit dismissed outright will they send the message they want and need to send. And that may be a difficult task here.
UPDATE 1:30 PM Just got off the phone with Ted Babbitt after asking just a couple of follow up questions.
We asked what he expects to be the next development in the case, and he said the church will likely move to dismiss the case on First Amendment grounds. “And there will be a bushel basket of papers filed by their attorneys,” he says.
When should we expect that? “They have to answer within 20 days from the time they are served. And they are being served as we speak.”
Is deposing David Miscavige high on the list of priorities?
“That will be our first deposition,” he says, but he cautions that every judge makes different decisions about the pace of discovery as motions are being filed. Timing on depositions are hard to predict at this point.
Babbitt says that although he expects to end up representing “hundreds” of Scientologists who, like the Garcias, are angry about their refund requests being denied, he and his fellow attorneys will be extremely selective and may only file an additional four or five lawsuits on their behalf.
and of course - the best comment forum on the web
0 comments:
Post a Comment