Scientology's Crushing Defeat

A previously unpublished saga of an $8 million check

The opinion by the appellate court remains one of the most damning in a long history of court denouncements of Scientology which have occurred worldwide.

“The Wollersheim case is among the most important decisions against Scientology in its history because it showed that the organization’s standard practices used against a member were harmful,” says Stephen Kent, a sociologist of religion at the University of Alberta who is one of the few academics who studies Scientology in depth.

Frank Oliver, a former Scientologist who once gathered information on perceived enemies as part of Scientology’s current intelligence wing, the Office of Special Affairs, explains why the decision was so repugnant to the organization, and why paying even a cent of it would be considered by Scientologists a horrendous defeat: “Scientology’s entire premise is that the Hubbard technology is infallible,” he says. “The underlying concept of the Wollersheim judgment is that the Hubbard tech is harmful. If they pay, they validate the argument that the tech is toxic.”

Scientology leader David Miscavige, in full Sea Org regalia. Miscavige's
status as "captain" of the Sea Org was central to a court case that resulted
in the largest court penalty in Scientology history.
Scientology leader David Miscavige, in full Sea Org regalia. Miscavige's status as "captain" of the Sea Org was central to a court case that resulted in the largest court penalty in Scientology history.

And for that reason, Oliver and other former Scientologists say, Scientology was willing to spend vast amounts of money in legal costs to avoid paying Wollersheim.

Even before the trial had started, Scientology had begun a long campaign of separate lawsuits, court motions and other tactics meant to derail the case.

In 1985, Scientologists filed a separate lawsuit based on federal anti-racketeering laws (a RICO action) in U.S. district court against Wollersheim, his attorneys, and his expert witnesses. The suit claimed that, in essence, Wollersheim’s attempts to wrestle documents out of Scientology for his trial was akin to a criminal enterprise.

The federal court threw out the lawsuit (dubbed Wollersheim 2), calling it frivolous and “bordering on malicious.”

While that suit was pending, Scientology filed another RICO action, claiming that the entire L.A. superior court was prejudiced against it. In an unprecedented move, the U.S. Ninth Circuit Court of Appeals not only denied the appeal when this lawsuit, Wollersheim 3, was rejected, but even had it stricken from the court’s record.

Meanwhile, the particular entity Wollersheim had sued, the Church of Scientology of California (CSC), was mysteriously shrinking.

In 1985, the year before Wollersheim’s trial, in a suit brought by another disgruntled former member in Oregon, an official for CSC claimed that it had assets of more than $350 million. But during Wollersheim’s proceedings just twelve months later, CSC officials testified that it was worth only $13 million. (And one of Wollersheim’s attorney’s, Dan Stein, used CSC’s own documents to show that even this amount was ephemeral. By the time Wollersheim won his verdict, CSC was essentially broke.)

Wollersheim and his attorneys suspected where the money had gone.

In 1981, a year after Wollersheim had originally filed his lawsuit, Scientology had gone through a major, and very complex, reorganization. CSC had been splintered into many separate entities, including a new “mother church,” the Church of Scientology International (CSI), and something called the Religious Technology Center (RTC), a sort of ecclesiastical clearinghouse which held all of the copyrights and trademarks of Hubbard’s religious writings and was charged with making sure other Scientology entities kept Hubbard’s “tech” pure.

It was RTC and CSI that had brought the Wollersheim 2 and Wollersheim 3 actions, the frivolous lawsuits that had been aimed at derailing Wollersheim’s original suit against CSC.

Wollersheim has long argued that to avoid paying him, Scientology effected its highly complex reorganization, gutted CSC, and moved its assets to other entities such as RTC and CSI, which in turn used their financial muscle to go after Wollersheim in other actions.

And in 1997, he got proof that his theory was correct. The supposedly dormant CSC had filed yet another lawsuit against Wollersheim (eventually dubbed Wollersheim 4), but after Wollersheim successfully defeated it with a “SLAPP” motion—a California legal strategy that defendants can use to have frivolous lawsuits thrown out of court and be awarded attorney’s fees—CSI admitted that it, not CSC, was really behind the action and paid Wollersheim’s lawyers nearly $500,000.

“My client believes that it doesn’t have a leg to stand on in terms of we are responsible for this amount of money owed and we are going to pay it,” CSI’s attorney Samuel Abelson said in court, an admission that the new organization, CSI, was really behind a lawsuit filed by the old one, CSC.

Wollersheim’s attorneys explain that it was nice to get the attorney’s fees they had coming in the SLAPP action. But more importantly, they say, the victory provided a blueprint for how Wollersheim should seek his original court judgment.

They spent the next five years—until this past May [2002]—trying to prove that the alphabet soup of CSI, RTC, and CSC was a sham, and that Scientology, under whatever name, should have to pay the $2.5 million plus interest that Wollersheim had won in his 1986 trial with CSC.

They gathered evidence to show that despite the confusing profusion of names and acronyms, Scientology was really a single enterprise, and its actions and litigation were directed by one man, Hubbard’s successor David Miscavige. Former high-ranking officials declared that they had witnessed Miscavige—who supposedly had no position or standing at the time with CSC, the corporation being sued—directing the litigation against Wollersheim and ordering the destruction of key evidence in the case. Special intelligence operations, they declared, were formed to target not only Wollersheim and his attorneys but even the judge, witnesses, and their family and friends. When the jury awarded Wollersheim $30 million, one former official testified, Miscavige vowed that it would never be paid, even if it cost more than $30 million to avoid it. CSC, meanwhile, was purposely ransacked of all assets to make sure that Wollersheim couldn’t reach it, two former officers declared.

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