An Interesting Data Point on Sea Org Headcount and Revenue

Sea Org executives back in the good ol' (or at least more numerous) days

Sea Org executives back in the good ol’ (or at least more numerous) days. Why do their hats look just a bit too large for their heads, in yet another parallel to the North Korean military?

In a video posted Sunday on Tony Ortega’s site, recently escaped Sea Org member Jillian Schlesinger talked about her time in the cult.  Jillian related several data points that are of interest, including David Miscavige’s claim that RTC is reaping $75 million per year in revenue from Flag in Clearwater.

Here, we look at a few of the things Jillian said, and we look at what this might mean for the cult.  Throughout, I share some analytical techniques I’m using to evaluate some of the things Jillian said when they either confirm or contradict my current best guesses. These thoughts may help you to do a better job in your own analysis.

Perhaps the most interesting quote from Jillian’s video was something Scientology leader David Miscavige said to the assembled Sea Org troops in LA:

There was an analysis done some months ago, probably about six months ago now. And he [David Miscavige] had revealed that in Florida, there’s about 2,000 Sea Org members, and they send up $1.5 million a week to him. Then, looking in all of LA, there’s about 2,000 Sea Org members, and they were not sending up that much to him every week. So, he wanted a huge rearrangement of staff, and then to make a, in-house, out-of-Sea-Org-member, construction unit, so that we could save money doing it ourselves, even though we have no training in construction, and then we don’t have to hire anyone. And then I was doing that for about the last six months.

How Many Sea Org Are There, Really?

This quote from COB is interesting in two respects.  First, of course, Miscavige is saying that there are at least 4,000 Sea Org members in the US, approximately evenly distributed on both coasts.  And he’s claiming that he’s getting $75 million per year from Flag and a lesser amount from the Western US.  My estimates are that the real number from Flag is closer to $30 million per year these days, perhaps a bit less, and that they’re probably getting $10 million from the higher level orgs on the West Coast (it’s not an international destination for people coming in for advanced training like Flag is).  And based on some correspondence late last year with a couple Anons in the Clearwater area, it appears that some of the cult-owned apartment buildings used to house Flag workers are sitting empty.

So how does a careful analyst think about the disparity between previous estimates and the new data point?  This is one of the trickier analytical traps: it’s dangerous to discount new information when it doesn’t fit your biases, but it’s equally dangerous to believe implicitly that a newer data point means your prior thinking is wrong.  If the new information is correct, it would mean that my estimates of about $180 million in cult revenue in 2013 were low by an integer multiple — the cult could have been raking in $400 or $500 million a year; that’s a major error.  Intellectual honesty, essential for a good analyst, means we have to look at a surprising new data point with a willingness to consider honestly the possibility that we’re way off in our numbers.

The first thing to do in teasing apart this information is to consider the credibility of the source.  It’s probably reasonable to believe that someone emerging from the Sea Org only a couple weeks ago and re-adjusting to reality is not going to have the spare time to fabricate a story like this out of whole cloth. It is thus reasonable to believe she’s recounting accurately what she heard.  The question then becomes whether Miscavige’s numbers are credible.

First Cross-Check: Direct Observation

In looking at the claim of 4,000 Sea Org members, it’s important to cross-check this against other data that we have.  In evaluating the number of Sea Org members in LA, let’s start with easily observable data points.  One such is the level of foot traffic at L. Ron Hubbard Way in LA.  A recent afternoon stroll down the sacred street showed only two people (one a security guard), in front of the building, and two RPF girls on the back side on Catalina St.  No Sea Org was visible.  The parking lot, which holds approximately 200 cars (I counted from the aerial Google Maps view) was only slightly more than half full; even assuming that few Sea Org have cars, that’s a pretty light occupancy load.  These observations are enough to raise suspicions about Miscavige’s credibility, but they’re not conclusive: given the tight constraints on their work schedules, it’s reasonable to expect that one wouldn’t see too many of the Sea Org types out on the sidewalk during nose-to-the-grindstone hours.

Second Cross-Check: Independent Rules of Thumb

The next step is to cross check the claim against another independent metric, one that has nothing to do with the first set of observations.  In other words, you want to look at an independent measure.  It’s often useful to consider real estate square foot per staff member.  I would estimate that the 11 floors (+/-) of the original Big Blue building total about 125,000 square feet, and the rest of the complex is similar sized — call it 250,000 feet total.  While I haven’t done a complete count of the rest of the cult properties in the area, let’s assume another 100,000 square feet.  Let’s then assume that the hypothetical 2,000 Sea Org members are joined by about 1,000 other staff.

If you do the math, that implies there are about 120 square feet of facilities per person, slightly larger than a 10 by 10 foot office.  But that’s quite a bit lower than conventional estimates of office space per capita, which is currently typically about 250 square feet per employee. That’s including conference room facilities, restrooms, and all sorts of other stuff.  Incidentally, various commercial real estate trade groups suggest this number is shrinking rapidly due to “hoteling” (unassigned cubicles shared by multiple workers) due to the rise of telecommuting, a trend that the cult is unlikely to embrace.  I thus am sticking with the 250 square foot number for the foreseeable future even if the overall trend in real estate is expected to drop sharply.

It’s also worth noting that within the original Big Blue building, the floor plate of a 1930s edifice is substantially less efficient than a modern skyscraper, so the percentage of each floor plate devoted to “core” functions like elevators, plumbing, janitorial, restrooms, etc. is a much higher percentage of the space on a given floor in a building of that age than in something more modern. By the way, that explains why the Empire State Building in New York is a great landmark but a terrible office building — the ratio of rentable space on each floor is too low for it to compete against modern buildings.  So in the case of the Big Blue complex, the 250 square foot per person number could actually be low when you measure the gross square footage of the complex (that’s what you measure when you measure the outside dimensions of the building).

Note that in these estimates, we’re not subtracting out square footage for delivering services, places where employees wouldn’t normally be stationed. So we’re not deducting square footage for course rooms at AOLA, for the L. Ron Hubbard life exhibit, for the Psychiatry: Industry of Death exhibit, etc. Again, we’re being “conservative” (using assumptions that are least favorable to our argument).

Using the 250 square feet per employee and dividing that into total square feet, we get about 1,300 employees in Hollywood.  Adjusting for regular staff versus Sea Org, we get to about 600-800 Sea Org in Hollywood.  So Miscavige is lying by a factor of about 2.5x to 3.5x what we believe is observable.  That, too, is consistent (perhaps even on the low side) of the “Miscavige Reality Distortion Ratio” that we’ve often seen from the cult’s “fearless leader.”

And The Same General Principle Holds True in Clearwater…

To cross-check the 2,000 claimed Sea Org in Clearwater, we’ll use a similar process.  Those of you who are denizens of the greater Tampa Bay area and who have better visibility into the real estate holdings of the cult at Flag could help list and then nail down the use of the various buildings, to help me develop an understanding of how much space is customer-related (i.e., non-office), how much is office-related, and how much is guest accommodations.  Yes, that’s a pretty subtle, but definitely impassioned plea for any hard data points that you have.

The diversity of real estate holdings in Clearwater makes the process of getting credible staff counts a bit harder, though it is still ultimately possible to get accurate numbers.  Until we’re able to list all the properties and figure out how much square footage is in each, then categorize them as office, hotel or customer spaces, we’ll try to use metrics other than the total square footage of all the downtown Clearwater buildings.  

At this point, the most useful observation came from an e-mail conversation I had with a former member and current Anon in the area, who sent a preliminary listing of properties including apartments, and who pointed out that a number of the buildings are actually empty at this point.  While I can’t find the exact notes at the moment (ah, the joys of restarting a blog after a hiatus), I am going to guess that staff levels are substantially below peak levels, with perhaps less than half the cult-owned units occupied by staff. Incidentally, it’s entirely possible that the cult over-bought apartment space a few years back, above even staffing levels at the time, so it’s not wise to try to estimate current staffing based on the number of total units.

Perhaps the best check of staff size at Flag will now boil down to the capacity of the staff dining room in the basement of the Super Power building.  The total permitted floor space of the building is 377,000 on eight floors (including the basement), so we’ll assume a floor plate of 50,000 square feet. I have some feelers out for more data about the layout of the basement, but if you subtract out machinery spaces, storage, etc., then it is reasonably likely that no more than half of the basement floor plate will be devoted to the staff dining room. Typically, in a restaurant, about 40% to 50% of the square footage is devoted to the kitchen, and the rest to the dining room. One rule of thumb suggests allocating about 20 square feet per customer. If we thus assume that the total dining space is 25,000 square feet, then a dining room of 12,500 square feet will hold about 600 staff.  Then if we further assume that they have two meal services per meal (easily done given the staff’s regimented lives), then we could believe there are about 1,200 staff at Flag.  But I would not expect hotel staff to have to eat in the staff dining room, so we could add another 300 staff to that number and get about 1,500 total staff in Clearwater.  That cross-checks reasonably well with a quick back-of-the-envelope estimate of the capacity of the occupied apartments.  And again, assuming that at most 2/3 of staff in Clearwater are Sea Org, then we get to about 800 Sea Org at Flag.

The Other Guys are Sending Me $75 Million a Year; What’s Wrong With You Morons?

The second part of Miscavige’s assertion is that he’s pulling $75 million out of Flag per year.  The quote is worded to say that “they send $1.5 million a week up to him.” In other words, that’s the contribution to Int Management and thus to the Sea Org reserves.  Let’s assume that Flag is sending about 75% of their revenue uplines. That implies that the cult is pulling in $2 million a week in gross revenue, about $100 million per year.  How credible is this?

First Cross-Check: No Decline in Flag Revenues in Ten Years? Seriously?

There are a couple of ways to cross-check this.  First, there’s a common sense metric.  Mat Pesch once commented, either in an article on Mike Rinder’s blog, Marty Rathbun’s blog or on Tony Ortega’s site, that when he was in ten years ago, Flag was pulling in about $2 million a week.  Mat was a finance guy at Flag and has been credible in his description of life in the cult, so we’ll believe that the numbers he gave are accurate.  Miscavige is thus claiming that revenue has remained consistent with the decade-ago level. Given all that has happened in the cult, this is ludicrous on its face.  In other words, the bullshit alarm is ringing loudly.  But simply sounding the bullshit alarm isn’t sufficient; we need to look at a couple of other metrics to try and understand what’s really going on in order to demolish this claim convincingly.

Second Cross-Check: Flag Revenue Per Potential Customer

Second, an upper bound of Flag revenue could come from an estimate of per-capita spending from each active member.  My current estimate is that there are 20,000 active public Scientologists.  I believe about 4,000 of those are from countries with relatively low per capita income (Russia, Taiwan, etc.) where travel to Flag on any sort of regular basis is not likely to be affordable. As a result, I believe the total market for Flag services is about 16,000 active cult members.

But it’s important to realize that likely overstates the actual addressable market for Flag services.  An addressable market is one with proven potential, not just the theoretical upper maximum.  The total market for cars is everyone who currently owns a car, plus the number of people who will get a driver’s license, minus those who will be too old to drive further. But the real addressable market for cars are some percentage of those whose leased cars whose leases are up, the number of people whose cars will be totaled in accidents, plus other populations — a far cry from the total number of drivers.

In considering the addressable market of Flag customers, I’m intrigued by the recent interviews I’ve had with ex members.  Consistently, these folks said that they had done everything possible to avoid going to Flag, since they were quite clear that they would be hit up endlessly for donations, and that they would be trapped there for far longer than they intended to stay.  They all pointed out that the pressure to donate when one stayed at Flag had consistently grown worse in their often decades-long experience in the Church.  None had been to Flag in the last ten years before they walked away from the cult.  In other words, they had all managed to avoid the clutches of the FSO reg’s.

Additionally, I believe Europeans are less likely to jump on a plane to come to Flag, partly because of the cost and hassles of much longer flights, but also because of the declasse nature of Clearwater — why go there when you can get many services at a stately English manor home (Saint Hill)?

It’s probably also necessary to cut out second generation members in their early 20s who are on their own, who don’t have the economic firepower to afford two weeks at the Fort Harrison Hotel and all the services.

Finally, one must estimate one of the most productive markets for Flag services: the customers “on the level” (i.e., doing OT VII), who are required to come in for sec checks every six months.  At this point, there are probably less than 500 Scientologists actually on the level.

I thus believe that the actual addressable market for Flag services is no more than 7,000 people (excluding OT VII sec checkers). $100 million divided by 700 people gets you to about $15,000 per person per year, for every single person in the addressable market in every single year, whether or not all of those potential customers actually do come to Flag.  That seems extremely high, though it is not inconceivable.

Importantly, it may have been possible to get $15,000 per Flag visit out of the average Flag visitor in years past if they were doing multiple intensives with Class XII auditors at $1,000 per hour.  But that is probably more the exception than the rule these days: you have to take into effect the effects of the Golden Age of Tech Phase II (GAT 2) announcement.  Remember that GAT 2 is requiring many people to redo lower-level course work, and that the promise of GAT 2 is that you’ll get through all that low-level nonsense so much faster than ever before.  We’ll ignore the opportunity for assorted (and obvious) hilarity when contemplating the joy people will feel from screwing up their brains learning Study Tech in the “Student Hat” course for the fourth time.  What’s important is that the per-hour revenue for getting people to come to Flag to do these low-level course is likely to be significantly smaller than the per-hour revenue from Class XII auditing intensives in the past.  And that suggests strongly that the Flag business is off from levels a decade ago, where the cult had a much larger addressable market (perhaps 40,000 total public worldwide in 2000 versus the current 20,000, and almost all from high-GDP economies back then).  The mix shift away from high-margin services and thus much higher per-hour revenue to lower margin low-level services must inevitably mean that revenue is down.

It’s possible that total Flag revenue is as high as $50 million, a little higher than I had previously been estimating.  I had estimated that all services-related revenue including Flag was about $60 million, but the revenue from the Orgs may actually turn out, based on recent document dumps from Mike Rinder, to be less than the $20 million I had estimated.

Third Cross-Check: Revenue Per Employee at Flag

If we believe the overall cult revenue number of $180 million is reasonably close, and we believe that the cult has about 5,000 total staff, then we quickly compute an average revenue per employee of $36,000 per year.  If we assume that the cult has efficiently distributed staff across the organization (a laughable assumption, but bear with me), then if we take cult-wide revenue per employee of $36,000 and divide our estimated $50 million per year in Flag revenue by that figure, we get about 1,400 employees who should be involved in generating that much revenue.  That’s not terribly far off our estimate of about 1,600 total staff at Flag.

The point of this excercise is not that this calculation proves our estimates of either Flag revenue or of the number of staff at Flag.  It does, however, show that there aren’t obvious contradictions in our model.  If we had estimated 2,000 staff and $100 million in Flag revenue, that would imply revenue per employee of $50,000, substantially above the cult-wide estimate, and that’s particularly suspect in the case of Flag since many of those employees are in hotel and restaurant guest services, producing much lower-margin revenue than high per-hour revenue employees like auditors and reg’s.  In other words, our current model sanity checks reasonably well.

If They’re So Rich, How Come They Have to Do Their Own Construction?

The second interesting aspect of this is that, despite the claim of taking $75 million per year out of Flag in Clearwater, and a lesser amount on the West Coast, the cult is still so expense-starved that they have to turn some appreciable fraction of Sea Org into a construction brigade to save money on construction.  

There is no particular reason to disbelieve Jillian in this story, since there are plenty of accounts of waves of staff being demoted to the RPF when Big Blue needed renovations before, then mysteriously finding that they completed the RPF program soon after renovations were finished.

However, the fact that the cult is now using Sea Org staffers for construction duty suggests either low manpower utilization on useful tasks for the Sea Org, making it attractive to pull them to other tasks, or a cash crunch that would make deploying them on renovations important to avoid extra expenses.

Most businesses are somewhat rational in their decision-making process, deploying labor where it is best used either to generate revenue or to avoid costs (i.e., paying internal slave labor only a fraction of what outside experts would cost).  But it seems unwise to believe that the cult would be rational in deciding to deploy slave labor to avoid expenses, given that David Miscavige seems to make many decisions to enjoy arbitrary control over the lives of staff, rather than from economically valid principles.  The detail that Jillian was detailed along with another girl to remove Fiberglas insulation from ceiling crawl spaces in Las Vegas, rather than participating in a large-scale construction project at Big Blue suggests that the motivation for creating this construction brigade is unclear — a small project like might not necessarily have been undertaken for economic reasons, but just as a way for Miscavige to throw his organizational weight around.

When I started considering the apparent contradiction between Miscavige’s inflated claims of staff size and revenue at Flag versus the apparent need to save money on construction, I was hoping to be able to quantify this, but I’m not entirely certain about the financial aspects of this construction project. Anyone with any detailed perspective on recent construction efforts in Hollywood could help greatly in teasing out relevance, if any, of this detail.

The Russians Are Coming, The Russians Are Coming

The Russians Are Coming! The Russians Are Coming!
Poster for the 1966 comedy classic

Jillian’s assertion that 80% of Sea Org at Flag are Russians is quite interesting. There had been numerous reports that employees are increasingly non-native English speakers, and Eastern European origin for many of the staff was frequently mentioned, though Latin Americans are also a large part of the mix.  But the assertion that 80% of all Sea Org in Clearwater are Russians is a bit surprising.

Some discussions on WhyWeProtest suggest that these Russians are not all Russian nationals, but may be Moldovans and Russian speakers from Eastern European countries whose economies are in even worse shape than that of Mother Russia.  Interestingly, the economic situation in Russia is not all that good; I’ve read surveys that suggest that almost half of young Russian citizens want to emigrate to the West.  It’s not hard to believe that the situation is even worse in small satellite countries like Moldova or its breakaway Transdnistria region.  That certainly suggests that the cult has access to a pool of desperate recruits.

While it certainly cross-checks with already known facts that many Eastern Europeans are being sucked into the cult’s slave labor pool, it’s not clear that the number has reached 80%.  For that to have happened, there would have had to have been massive expansion of the size of the Sea Org.  There’s no evidence that there has been any such expansion, either in anecdotal checks in the activity levels at Pac Base or Flag, or in other stories from recent defectors.  Economically, given the low cost of Sea Org labor (I suggested the fully loaded cost of a Sea Org staffer is probably about $500 per month), the cult could potentially expand the size of the labor pool “just because” without wrecking finances. However, I am not sure the cult would do this just to feed Miscavige’s need to keep up appearances — adding 500 staff would cost at least $3 million per year, difficult to justify in a time where revenue is likely declining faster than the rate seen in previous years.

If massive expansion of the Sea Org was not the driver behind a sharp rise in the percentage of Russian-speakers in the mix, then the only other possible explanation is a significant wave of replacement of existing Sea Org members.  Again, there’s not any real evidence that this is taking place. 

I would thus treat the 80% number with some skepticism, as if it is a quick eyeball guess or a number relayed through a number of intermediaries before it got to Jillian.  It may be that 80% of new Sea Org recruits literally are Russian speakers, though the total number of Russian speakers in the Sea Org remains quite a bit lower.

If 80% of new Sea Org are Russian speakers, that would speak to the increasing difficulty of using the kids of existing members as Sea Org recruits. That, in turn, suggests that the potential to use the threat of disconnection from a kid in the Sea Org to keep doubting parents in line is losing its impact.  And remember, the parents of Sea Org members are presumably the more loyal of the older generation of Scientologists, and if a key retention tool to keep them enmeshed in the cult is losing its effectiveness, then further declines in membership in the short to medium term are inevitable.

Any further data points on the nationalities of arriving Sea Org members would be extremely helpful.

Emerging Trends to Watch

Eric Falkow joins staff... at age 79

Eric Falkow joins staff… at age 79!

Given the struggles the cult has in retaining staff, we’re always interested in looking at emerging trends in where they’re finding new employees.  This is why the influx of Russian speakers into Flag is important to monitor closely and to quantify more closely.

But in the last two weeks’ “Sunday Funnies” stories, Tony Ortega’s blog has featured older cult members going onto staff, the first time I can recall seeing something. Once is a curiosity, twice is a coincidence and three times might just be a trend worth considering.

Yesterday’s column featured the above ad, proudly announcing that Eric Falkow has joined the staff of the Pasadena Ideal Org.  According to one database I use, there is a 79-year old named Eric Falkow living in Pasadena; it’s reasonable to conclude that they’re the same person.

If we see any more older members joining staff, that could be evidence of yet another desperation strategy in trying to fill the rolls.  This and similar evidence of difficulty recruiting new staff leads to the scenario I’ll detail in a blog post later this week: can the cult continue to operate if the number of employees at local orgs shrinks beyond some minimal level?  

One Scenario for the End of Scientology

On a recent trip, I met with a number of ex-Scientologists as well as some familiar faces in our community.  One question in my discussions always came up:

What is the endgame for Scientology, where the cult closes its doors for good and becomes a minor footnote in the pages of history?  

One of the main goals on this blog, as outlined in the original post back in November, is to try to develop and maintain a full scenario for the collapse of the cult. A full scenario would have several different alternatives along with an assessment of the relative likelihood of each of those alternatives actually coming to pass. This is not that document.  Over time, I would hope to be able to assemble from different individual scenarios such as this one, the complete assessment of the likely futures that may befall the church, and a series of guideposts that would help us tell which one of those scenarios is coming true.

This is simply one potential scenario, and it is one that had been on my mind, so I shared it with the people I was speaking with.

I think it safe to say that there are so many things going wrong both inside and outside the cult that it is beyond saving.  But I also caution that it will be difficult to predict exactly how and when corporate Scientology is brought low.  It is important to understand that it will probably take far longer than most people expect for the end game to play out, even if we are confident that the organization is doomed.  Parallels to attempts to predict the end of the Soviet Union are telling; though nobody got the “time, place form and event” (in cult-speak) exactly right, the act of trying to predict the unknowable was in fact useful.

Common Assumptions

No matter which scenario you believe will come to pass, there are several common assumptions that I believe will be common to all scenarios:

  • The cult will fail utterly at attracting new members. The damage to the Scientology brand resulting from press coverage of the cult’s bad behavior is irreparable. The Internet has made too much bad news too easily available to those seeking information about Scientology, and virtually all those who come in contact with the cult will easily discover that information. As a result, the battle will be solely about retention of existing members and the pool of new recruits will be substantially restricted to children or grandchildren of existing members. And, of course, the rich donor pool is aging, increasingly broke, and starting to die off.
  • Miscavige’s replacement (if and when) will be (at best) no more competent than he is.  Because Miscavige has so ruthlessly declared and purged anyone who could possibly pose a threat to usurp his role, there is no bench of internal candidates who could step into his shoes if there were a vacancy at the top, for whatever reason. Companies with outstanding management like General Electric have a deep bench of management talent that is actively and constantly groomed for promotion to greater responsibility. And GE’s Board of Directors ensures that the CEO does not spend his time exterminating potential claimants to the throne, but instead continues to keep high-quality management within the company. Needless to say, the board structure to provide checks and balances on David Miscavige’s power does not exist, as he has purged all of the board members.
  • “Admin Tech” will continue to act as a destructive force on the organization.  Even if we posit the unlikely, that competent new management takes over and somehow manages to reverse the trend and attract new members, arbitrary decisions that Hubbard made a half-century ago will sabotage the organization and keep it from succeeding. Among many other seeds of disaster planted by Hubbard are the insane use of statistics, financial metrics that measure the wrong goals and inevitably lead to bad behavior, and so much pressure on the staff that it is impossible to build any long-term viability into the organization.

What the End of the Road Looks like

For Scientology to go bankrupt, three things would need to happen:

  • Lose money from current operations, so that a realistic assessment of forward prospects concludes that there is little chance that the company would be able to turn around its fortunes and resume profitability.
  • Have cash reserves depleted so that the cult is no longer able to cover operating losses. The cult could lose money for a long time because it has access to cash, whether that is in the form of profits accumulated in past years (“retained earnings” in accounting parlance) or in access to bank loans, that would enable it to withstand ongoing losses.
  • Lose the ability to conduct operations due to loss of corporate facilities. In other words, if the cult has no cash and also loses control of its real estate portfolio and has no place to conduct business, then it cannot continue to operate.

If the cult runs out of cash, it could sell real estate to raise cash to continue operations, even if those operations are losing money; that is where paying cash for buildings comes in handy because the lack of debt means they cannot be foreclosed, and credit would be available, even if it is a fraction of the purchase price of the building.And if something happened to seize the cult’s real estate operation while it still had significant cash, they could always replace the real estate fairly quickly by throwing cash around.

So it is important to understand that in this scenario, for the cult to go completely bankrupt, it must lose both the cash reserves and the real estate portfolio. It can survive the loss of only one of these two things.

This scenario, then, deals with the circumstances under which the cult could lose both the cash balance and the real estate portfolio and thus have the doors forcibly shuttered.

A History of Operating Losses

My best current estimate is that Scientology remains profitable. According to my best estimates, I believe the cult pulled in around $180 million in 2013 from all sources (services, IAS, Narconon, etc.), and reaped an operating profit of approximately $30 million, excluding one-time legal settlements or reserves to allow for legal settlements in the future.  I believe both revenue and profits are down from prior years.  But this is hardly a disaster: many businesses of that size would kill to have profit margins like Scientology.

Despite the seeming health of the organization based on one year’s financial results, all is not well. I believe that revenue has declined steadily in the last five years, and that profits have actually declined by an even greater amount.

If the cult sees the revenue decline accelerate due to defections in the wake of disappointment over GAT 2, a drop in IAS donations, the failure of new real estate scams, the shuttering of Narconon centers due to lawsuits and license revocations, or a host of other looming problems, the cult could swing to operating losses.  I believe that once it begins losing money, it will be difficult for the cult to restructure in a way that’s needed to return to profitability.

Fixed Cost Business Models Are Great Until They’re Not

Economically, at this point, Scientology resembles a software company rather than a manufacturing enterprise. Software companies are interesting because virtually all of their expenses are fixed in the short term. There are almost zero raw materials used in each unit of product shipped, especially in the Internet era where software formerly shipped on CDs with paper manuals has now been completely shifted to Internet downloads.

In a fixed cost-only organization, any incremental revenue above your forecast turns into nearly pure profit. Suppose Microsoft budgets to sell $15 billion worth of software in a given quarter and plans to spend $10 billion, leaving $5 billion in pre-tax profits.  But business is booming and they sell $16 billion instead. About 90% of the incremental $1 billion in sales will drop directly to the bottom line. A revenue surplus of just 6% bumps profits up by almost 20%, and a revenue surplus of 12% boosts profits by an astronomical 40%.  That’s a pretty amazing business model, and it is one that propels Microsoft to being one of the most valuable companies in the world, even though its sales are quite a bit smaller than other extremely valuable companies.

While this fixed cost model is a wonderful thing when sales come in ahead of plan, it is equally painful when things go wrong. Suppose now that Microsoft planned to make $15 billion in sales, spending $10 billion to generate sales. But now suppose that, due to a bad economy, sales come in at only $13 billion, 12% below forecast. There are no variable costs in the manufacture of its products, so the entire $2 billion shortfall in sales will drop through to the bottom line, and profits will be only $3 billion instead of the expected $5 billion. That is a deficit of 40%. If that happened, the stock would be demolished, and we in Global Capitalism HQ would be at the head of the pack of investors brandishing torches and pitchforks, demanding that management institute changes to ensure that that screw-up does not occur again.

Manufacturing companies, where the cost to produce each automobile, iPad or cheap plastic doodad are a substantial portion of sales, can manufacture fewer units if they feel sales slipping, and thus cut manufacturing costs quickly. Profits will still decline if sales slump, but the ability to control spending on raw materials and labor cushions the blow so that profits to not fall as far in difficult times as that of a fixed-cost enterprise like a software company.

Scientology Is a Fixed Cost Business

Scientology works exactly like a software company: costs are fixed in the short and medium term, and there is little opportunity to cut labor costs when business turns bad. Unlike a consulting firm, Scientology has benefited for years from the sleeve labor wages it pays its employees, allowing it great profits when it has been in expansion mode. As a result, the cult has no incentive to manage its labor force efficiently. Furthermore, many of the job positions in existence are decreed by “Scripture” as laid down by Hubbard a half-century ago. So even if they wanted to cut costs by laying off staff to gain efficiency, they are prohibited by “religious” requirements.

It is important to understand that staff costs are not zero, even if individual paychecks are close to it. Sea Org staff need to be fed, need to be housed, and need to be shuttled from their apartment prisons such as the Hacienda Gardens facility in Clearwater where Debbie Cook was imprisoned before she exited the cult.  I would estimate that total employee costs for the cult are approximately $6,000 per person per year. If my estimate of 5,000 worldwide staff is correct, then labor costs are actually significant, totalling $30 million per year, or about 15% of what I believe the cult’s current annual revenue is.

That 15% of revenue figure sounds pretty cheap, until you realize that a highly profitable software company like Microsoft or Oracle typically spends about 30% of sales on employee compensation and benefits. In other words, while the low staff salaries are a disgrace and are horribly abusive on an individual basis, in aggregate, they do not confer a dramatic cost advantage to the cult. The cost savings from low individual salaries are offset significantly by dramatically more employees that are necessary to generate a certain amount of revenue.  Microsoft, for example, did $77.85 billion in revenue in its June 2013 fiscal year with 99,000 employees, or approximately $786,400 per employee (an extremely high number even for the highly profitable software industry).  Oracle, another software titan, did about $310,000 per employee.  By comparison, using my numbers, Scientology does a paltry $36,000 per employee, disastrous for any regular business.

Equally importantly, the low labor costs lead management to avoid making many decisions about how to manage costs effectively.  There’s an enormous amount of inefficiency baked into Scientology’s management practices, and the longer the cult has been able to get away with insane inefficiencies, the harder it will be to fix them.

… So Further Sales Declines Can Quickly Lead to Recurring Operating Losses

While Scientology is probably profitable and generating cash today, results can quickly move from profits to losses.  Let’s suppose that the cult loses 15% of members in 2014 due to disappointment with GAT 2, disconnection, death, and a host of other causes, a modest acceleration of the 5% to 10% decline I think we have seen in the last few years.  And, as we would expect, the cult at best does not undertake any significant cost reduction efforts.

In that case, we’d see revenue dropping by 15%, from $180 million to about $150 million.  Without aggressive cost reductions, profit would go from $30 million to just above break even, perhaps $5 million.  The following year, assuming a return to a modest 5% decline in membership, the cult would go into the red for what I believe would be the first time in many years.

I believe that the downside risk in the next two years is actually greater than a proportional decline in revenue. There are unique pressures building on the cult’s revenue and expense lines including:

  • Death or defections among the whales.  A handful of top donors like Bob Duggan are probably contributing $10 million or more per year, a significant portion of current operating profit. Losing the income stream from of any of these individuals would have a rapid negative effect on profits.
  • Collapse of Narconon.  I believe Narconon contributes less than $10 million of profits. But that empire has come under immense pressure lately in the wake of multiple lawsuits, and suits are being filed at an accelerating rate.  I believe that there are multiple insurance fraud investigations under way in the wake of discovery that perhaps 20% of Narconon Georgia’s billings (if I recall correctly; don’t have time to check the numbers) were from fraudulent claims.
  • Aging of the Freewinds:  Some data points including GPS data of the ship’s location suggest that the Freewinds business has basically collapsed.  At the same time, the ship is nearly 50 years old, long past the normal lifetime of a commercial vessel.  Unexpected repair expenses to hull plating or to engine room equipment are likely to be expensive, driving this minimally profitable operation deeply into the red.

But while the risk of going into the red and staying there for a long time is increasing, the reserves presumably mean that David Miscavige is not at this point particularly concerned about the future viability of the organization.

Losing the Reserves

If the cult starts losing money, reserves can sustain it without requiring significant retreat from its current operating posture.  This naturally sparks the question as to how those reserves might be decreased and that cushion eliminated.

How Much Money, Exactly?

I believe that the total cash position of the cult is made up of three different figures:

  • Sea Org reserves: this figure represents the profit from operations for most of the cult, particularly courses delivered at Flag.  I recall an interview with Mat Pesch, a longtime staffer, where he said that the Sea Org reserves were essentially depleted in the early 1990s.  Given a reasonable estimate of profitability from delivering services over the last 20 years, I estimate that these reserves are about $400 million.
  • IAS “war chest:”  this amount represents the donations to unrestricted IAS funds over the last 15 to 20 years. Some of these donations were used to build the Superpower building and for some other projects, plus used for legal settlements, I believe that the net balance currently is about $250 million, a bit less than the aggregate donation amount that I estimate at around $400 million.
  • Deposits: this represents money paid in for services not yet rendered. In cult accounting jargon, these referred to as “advance payments” (AP). I will use the term “deposits” since “AP” has a specific meaning in finance in the rest of the world (“accounts payable”).  Recently, when I’ve been interviewing former members for background information, I have asked how much money they have on deposit with the cult. Anecdotally, the average seems to be about $20,000-$25,000, but my sample is not terribly broad, consisting mainly of people who were “in” for decades. I think it reasonable to believe that the average balance from people who put money on deposit and then walked away might be closer to $15,000, but over the last 20 years, I think it reasonable to believe that 40,000 members walked away from money that they should have been repaid rather than risk the wrath of the cult. Total balance here I believe to be approximately $600 million.

When you add that up, the total cash balance in the cult appears to be in the neighborhood of $1.25 billion. I don’t think some estimates that have ranged as high as $5 or $6 billion are credible because I don’t think there are that many members over the last 20-25 years with enough disposable income to support that kind of accumulated profits.

I believe that most of this money is immediately routed offshore into non-interest-bearing bank accounts. Hubbard was fearful that the government would step in and seize cult funds without warning, and Miscavage has certainly continued that sort of paranoia.  While the reserves may seem unassailable, beyond the long arm of Uncle Sam, things may not be as safe as they seem.

How Could the Cult Lose That Money?

A $1.25 billion fortune is hard to squander, even if the cult is losing money at an increasing rate. Suppose the cult swings from a $30 million per year profit to an ongoing series of losses a similar amount. Those reserves would allow the cult to sustain operations without making any significant changes for almost 40 years. Clearly, then, the cult is not going to go bankrupt from operating losses alone.

An unanticipated external force would need to come in and reduce those cash balances significantly. Only if the reserves were decimated due to an unforeseen event would ongoing operating losses imperil the cult’s ability to operate. So what could possibly put this enormous cash hoard at risk?

I believe the Garcia lawsuit is the beginning of a wave of lawsuits that could significantly deplete cash reserves as claims are settled. Of the suit is about fraud in fund raising for Super Power, the argument revolves around something that, if allowed to stand as precedent, will be a shining beacon to guide attorneys in similar suits in the future: that the repayment mechanism is unconscionable, because it is inherently rigged against anyone seeking a repayment of funds.

Tony Ortega’s coverage of the Garcia lawsuit has mentioned in several places that the Garcia’s attorney, Ted Babbitt, has also been recruiting other plaintiffs to pursue similar actions against the cult in the future. Interestingly, one of the details that arose in the failed motion on the part of the cult to disqualify attorney Babbitt as counsel was the revelation that he was using a former cult attorney, who worked for the cult many years ago, to help recruit future plaintiffs.

I therefore believe that there is a “cottage industry” waiting in the wings made up of a network of law firms coordinating their efforts who will sue the cult for either fraud in IAS donations or for repayments, once the arbitration scheme is exposed as a sham.  As I have said before on Tony’s blog, since Miscavage micro-manages all legal affairs, a wave of individual lawsuits on this front will overwhelm him and leave him unable to function in other capacities. This will likely lead to rapid settlements including punitive damages.

I believe that, if this prediction of an avalanche of individual lawsuits comes to pass, the next step would be a class-action suit for all persons who have monies on deposit with the cult. In many class-action suits, damages are estimated, and by the time attorneys fees are deducted from the settlement, class members see recovery of only a few pennies on the dollar of what they believed their damages to be. That is a function of the difficulty in calculating damages, and of the incentive for companies to settle the damages are difficult to prove. Price-fixing cases, such as charges of fraud and diamond pricing or other similar actions, are examples of this sort.

I have talked to many ex-members, virtually all of whom have walked away from deposits, some in the six figure range, who are not interested in the expense and potential risks involved in suing the cult individually, but every single person I have talked to would happily sign up for a class action suit.

Unlike most class actions, damages incurred by each class member suing Scientology for refund of advance payments are trivial to determine: people have statements showing the amount on deposit, and the church should have tons of relevant records that would easily be discoverable. In other words, it is reasonable to believe that a class-action suit, if successful, would recover 100% of damages, rather than pennies on the dollar. An appropriately aggressive class-action attorney would insist that legal fees be added on top of the damages recovered for class members rather than deducted from them. 

If my estimate of the deposit amount is correct, and if you add on legal fees at a typical 30% contingency rate, it is conceivable that a successful class-action lawsuit could deplete the majority of the cult’s reserves.  Once those reserves are depleted, then operating losses are increasingly dangerous. But since operations are prescribed by “scripture,” the cult has little flexibility to cut costs.

But Could Plaintiffs Collect?

The corporate restructuring in the early 1980s, as documented by Denise Brennan and others involved, was clearly intended to shield the organization from liability for bad behavior and from asset seizures, using an impenetrably intertwined maze of onshore corporations, offshore shells and mysterious trusts.

Plaintiffs in a suit for refund of deposits would have to convince a judge to pierce all of these corporate structures in order to lay hold of assets to recover something for the victims of this fraud. When that corporate structure was laid down a third of a century ago, it was extremely difficult for courts to order that complex corporate structures be collapsed to get at the money.

The world is very different today as a result of changes to the international financial system made in the wake of September 11 terrorist attacks. The PATRIOT act and extensive behind-the-scenes diplomacy on the part of the US government has dramatically reduced the ability of enterprises to hide money in complex international corporate structures, and has made it much easier for the government to collapse networks of shell corporations and to seize funds held in offshore accounts ostensibly beyond the reach of justice. It is still not easy to do this, but it is far easier than it ever has been.

At the very least, it is reasonable to believe that the government would be able to sequester those funds and prevent them from being imported back into the US for use in daily operations of the cult.  In other words, while it could not seize cult funds that remain outside the US, it could seize funds that are repatriated to fund operation.  That’s why the move to operating losses is critical: that’s the circumstance in which the cult would be forced to repatriate cash, where it then becomes vulnerable.  Losing money erases the benefit of the complex corporate shield.  

In other words, it does not matter whether the government is actually able to seize cult funds held overseas. Instead, if the government is merely able to freeze those funds to prevent the cult from being able to make use of them itself, then the cult is essentially denied the money to backstop its operating losses, and the effect on operations is essentially the same as if the reserves were seized for lawsuit settlements: the cult can no longer use them to continue to operate once it starts losing money.

From Ideal Orgs to the Auction Block

In addition to being unable to use the reserves to sustain losses, the cult needs to be denied the use of its facilities. No company selling to the public can exist without bricks and mortar buildings.

In the case of Scientology, since the cult does not finance real estate purchases, instead paying cash for everything, it would seem as if real estate portfolio is a bulwark of strength against the “wog” world wishing it harm. While that is certainly true on the surface, there are several circumstances under which the cult could actually lose control of the real estate portfolio.

Many people wonder whether the Ideal Org strategy is a secret investment vehicle for the cult. As I have said on many occasions, I do not believe this is the case. I believe it is a pure marketing vehicle to attract new members (though one that is doomed to fail) and an opportunity to scam parishioners out of savings by collecting more in donations in the cult actually spends on purchase and renovation of these properties.

Scenario 1: Real Estate Seized for Settlements if Cash Is Beyond Reach

Let’s presume that over the next 3 to 5 years, the cult is successfully sued on a broad scale for repayment of deposits and further malfeasance.  But it’s further assume that, despite the best efforts of attorneys to unlock the doors to the cash vaults, that the reserves are not available for use of settlements. Attorneys may then move for seizure of the buildings in lieu of offshore cash to satisfy judgments.

If I am correct in believing that the aggregate value of settlements for repayment of outstanding deposits is at least $500 million, I believe that that exceeds the market value of the cult’s real estate portfolio. 

The real estate portfolio divides naturally into three categories:

  • Headquarters facilities, like “Big Blue” in Hollywood, Superpower and Flag in Clearwater, and Int Base in Hemet. While the oldest of these facilities were purchased for nominal sums and are undoubtedly worth far more than the cult paid decades ago, they are not in particularly desirable locations and, more importantly, the custom designs and improvements that the cult has ordered are of little value to future tenant, depressing the market value of these properties significantly. Anyone who purchases the buildings out of an asset sale would have to make significant modifications to make it useful for almost any other purpose.  If we estimate that the cult has invested $300 million in new construction at Int Base, it would realize very little of that if it sold that facility.
  • Local orgs, including both older facilities and Ideal Orgs, are typically located in out-of-the-way areas without much potential for conversion to retail or high-quality office space. The cult does a good job picking older, historic buildings and doing quality renovations, but I do not believe that its strategy will maximize resale value. The odd locations and the extremely specialized renovations (small auditing rooms without windows, large “Chapel” rooms too big for most corporations to use as conference rooms) will depress resale prices. In most cases, as evidenced by resale of facilities that the cult purchased for Ideal Org use and later resold, including Portland and Budapest among many others, it is unlikely that the cult will recapture the initial purchase price of the building, much less the high cost to pay for renovations.
  • Specialized facilities, including some of the CST sites with the storage vaults, are even more over-improved relative to their locations than the other types of buildings. It is unlikely in the extreme that a buyer would pay a premium relative to surrounding ranch properties for the paved airstrip and the expensive vault buildings at the New Mexico CST facility, to cite just one example.

Scenario 2: Revocation of the IRS Exemption Leads to Real Estate Seizures

Some anti-Scientology activists believe that the IRS may take action to revoke the cult’s tax exemption in the near to medium term future. If the IRS does take action, it is entirely possible they may seek to seize the real estate in the event that the cult enters into a significant settlement for violation of the 1993 agreements. One of the key provisions of the 1993 agreement is prompt repayment of deposits and refunds for dissatisfied customers, something that the cult has clearly willfully ignored over the last 20 years.

Of particular interest in considering whether the IRS might begin to reconsider the cult’s tax-exempt status is the idea that the government may be able to prove that the 1993 agreement was entered into fraudulently by the cult. If the government were able to obtain evidence that the cult committed fraud in negotiating that agreement, then it would be able to pursue damages not only for civil enforcement actions over the last few years, but potentially going back much further, and even re-opening the cases that were pending in the late 80s and early 90s, where the amounts being litigated were substantial.

I have said repeatedly that it is unwise to presume that the government can move aggressively against the cult, even if it wants to. The arcane details of the federal budgeting process means that individual portions of the government are restricted in the funding they can bring to bear for enforcement actions against the cult. In other words, IRS enforcement attorneys have a limited budget, even if potential recoveries are substantial. It is possible that the government could decide not to pursue the cult in order to maximize its “bang for the buck” particularly in maximizing deterrent effect by chasing after a large number of smaller scale tax dodgers.

It is thus difficult to assess the probability that the IRS will begin enforcement action. But if it does, it is reasonable to suspect that the IRS may move to seize real estate since it is likely to be easier to grab than cash held offshore. If the IRS were to do so, and if through either litigation or through IRS action, the church is essentially denied use of reserves, then we get to scenario where bankruptcy could happen within a relatively short period of time. Note, however, that this “relatively short period of time” would begin only after the cash reserves are taken out of the equation through several years of litigation, and after the IRS places liens on or seizes facilities.  Thus, the clock on that prediction would only start running at least 3-5 years from now, and possibly longer. 

Conclusions

Again, I stress that this is not necessarily the scenario for the collapse of the cult. It is merely a possible scenario, one of several.  I’ll detail others in future blog posts, until we have a range of possible outcomes.

This scenario is not going to happen overnight. I believe that litigation for repayment of deposits would take a minimum of three years and more likely five years to wind its way through the courts, either to resolution or to a point where we can predict confidently that the cult will lose. The dénouement from there could take another couple of years. It is thus unwise to get one’s hopes up that the cult will collapse soon, even if the best case articulated here comes to pass.  I believe it will happen in our lifetimes, but I would advocate against holding out hope that it will be in the next year or two.

This scenario is one in which the cult’s ability to operate is extinguished due to external circumstances that bring about its end. Other scenarios would have the cult somehow able to operate as a shadow of its former self, which leaves the potential for it to continue to do evil in the world, diminished but not extinguished.  

Back in the Saddle

I’m back.  This post gives the story of what happened, what I have in the pipeline, and invites you to contribute to the return of my blog.

The Back Story

It’s time to restart this blog after about three months on an unplanned hiatus. I got hit by several factors in late December that basically conspired to take me offline.  No, I wasn’t stalked by OSA or anything like that. Here’s what happened:

Burnout: I thought that the Daily Digest would be an easy way to build a readership base and would buy me time as I started the deeper research projects that I had intended to be the main focus of the blog.  It quickly turned out that despite the help of some generous contributors (Aeger Primo stands out among many) who monitored the forum sites, I was spending 3-5 hours per night putting the piece together. In most cases, I was cranking out 1,500 to 3,500 words, which is considered pretty impressive by the standards of a full-time novelist, though I’m merely a part-time capitalist. Needless to say, doing this between four and seven nights per week took over an unsustainable chunk of my personal time.

I was thrilled by the comments I received on the late December draft piece suggesting some 2014 predictions.  I got enough comments to fill almost 70 pages in a Word document. Out of respect to the extremely thoughtful insights from you, the readers, I tried to integrate all the comments faithfully into a final predictions document.

This turned out to be far more challenging than I had expected, but I persevered as best I could, because I have believed that this blog is as much a community effort as it is a place to showcase my own thinking about Scientology.  As you can imagine, trying to integrate that much material into an already long and overly unwieldy piece added considerably to the feeling of burnout that I experienced.

Life happens: For a variety of reasons, several areas in the rest of my life became more demanding at the same time as I took on this overly ambitious project.  I got squeezed with even less time to work on the blog than I had had previously, just as the number of hours I needed to produce work up to my standards had increased. The details don’t really matter, but some were positive, some were stressful.  Nothing by itself was especially dramatic to be worth detailing.  It’s just life, but it hit all at once.

Seasonal depression:  Around mid-December, I found myself sleeping far more than usual, going to bed earlier and waking up later.  I also found myself uninterested in a lot of things that are integral parts of my life.  Only after the beginning of the year did I realize I was in the grip of a major seasonal depression.  Those of you who live in the upper Midwest or in the Northeast know that this winter has been one for the record books, and that many people have been suffering from symptoms similar to what I’ve experienced.

One of the key hallmarks of depression is the inability to initiate tasks. While I’ve been keeping up on reading Tony Ortega’s blog, Mike Rinder’s blog and other sources, the pace of my ideas has slowed, and my ability to sit down and instantly crank out a post (or even a comment on Tony’s site) was greatly impaired.

I must thank those of you who missed me on The Underground Bunker and contacted Tony in late January and early February asking about me, apparently in sufficient numbers that an annoyed Tony got in touch with me to make sure I was OK.

I finally started to feel better after various sorts of medical attention, including visits to the evil psychs, sun lamps, vitamin D supplements, and a whole host of other things.  A recent getaway to sunny climes with great friends also really helped (though alas, Supermodel #1 was unable to break away to join me).

For those of you who are recently out of the Church of Scientology, depression is real.  Scientists can hook people up to an fMRI machine and observe the different brain chemistry of people in a depressive episode versus healthy people while doing the same tasks.  I tend to make my occasional depressive episodes worse by thinking that I’m smart and have high energy and drive to succeed, meaning that I deny that I’m in trouble until I’m hopelessly mired in quicksand.  I’m also stubborn and failed to listen to those around me who were concerned that I was sliding into a funk.

The good news is that I am starting to feel more myself than I have in a couple months, and I’m finally ready to get back in the saddle.

What’s Next?

I would love to hear from you regarding how I can shape the reincarnation of this blog to give you what you would love to see as long as I can figure out a way to do it without burning out again.  Among the features on tap:

  • Predictions (at last): I will be putting out the final 2014 predictions, but in a one-at-a-time format, rather than in a single giant piece.  I think breaking up that unwieldy monster into manageable chunks spread out over a couple weeks ought to work.  The process of wrestling with this enormous post reminds me, by the way, of a great Spalding Gray monologue about his first attempt to write a novel, called “Monster in a Box.”
  • Interviews: On my recent vacation, I was fortunate enough to be introduced to numerous former Scientology members, who shared generously of their time to relate their experiences with the cult and with the tech.  I got wind of the Goldberg family’s disconnection story that ran in last weekend’s Tampa Bay Times, and I had a chance to interview other people about how they have managed to avoid a similar fate. It’s not easy, but it’s possible.  I’ve also talked at length with several old-time auditors who have left Scientology, and now have a much better perspective about why many of the old-time public got enough value to stick around in the cult until the organizational insanity became too much to bear.
  • Numbers: Mike Rinder has published a few interesting document leaks in the last few weeks including aggregate donation amounts for several OT Committees at a couple orgs. When I slice this up, it could give us a revealing look at current IAS donation levels and insights into other financials. My recent interviews have given me a sense that the cult’s membership decline is accelerating in the wake of GAT 2, and could accelerate further in the wake of the Goldberg story.

I need feedback from you on whether the Daily Digest should be revived, and if so, what you like most and what I might be able to eliminate to save time.

I am, of course, open to any other thoughts you may have about what I can do to make this blog great.

How You Can Help

This is a cooperative effort.  I welcome thoughts and constructive comments by e-mail at johnpcapitalist (at) gmail.com, and hope to continue to have a lively and high-quality discussion in the comments once again.

Daily Digest: Many of you have found this to be extremely valuable. Any thoughts on what’s most important here and on how I can pull this together in an hour instead of 3-4 hours per day would be most welcome.  Certainly, tips of stories I might have missed would be welcome.  And I’d love to have volunteers help with individual parts of this document.

Hiring help and investing in developing stories:  If there are a sufficient number of contributors who are willing to pay a modest amount per month via PayPal, I can hire a research assistant from one of the many schools in the area to come in and do some of the grunt work of putting stories together.  I could thus reasonably commit to having a story a day at the very least, and avoid the burnout that took me off line for the last couple months.

If I attract a big enough contributor base, I could incur some expenses that would let me expand breadth and depth of coverage greatly, such as allowing me to attend Ideal Org openings, travel to news events such as the Monique Rathbun trial, and to do in-person interviews so I can publish video in appropriate cases and do higher quality work.

If you find my work to be valuable enough to contribute $10 per month, please let me know, either via e-mail or in the comments below. If you think that a greater or lesser amount works best for you, I’d love to hear it.  I would like to get a sense of what percentage of the unique visitors would be willing to contribute in order to explore the possibilities that having an income from this blog would open up.

I would never go to to a subscription model behind a paywall, but a regular stream of contributions from the blog would allow me to hire consistent research assistance and would give me the ability to invest in stories.

If you have experience with Web business models (“freemium,” etc), I’d love to hear from you via e-mail on strategies to make something like this work.  

Work in Progress: Predictions for Scientology in 2014

This is a photo of a capitalist using rigorous analytical techniques to develop a highly likely future scenario for some investment-related event.

This is a photo of a capitalist using rigorous analytical techniques to develop a highly likely future scenario for an important investment-related event.

It’s getting close to the end of the year, a time that unleashes a flurry of “year in review” posts. But given our focus on research, which ultimately is about trying to predict some part of the future, it’s time to think about what might happen in the wacky world of Scientology in 2014.

In this post, I’m setting out a couple of key predictions for what I believe will happen to Scientology next year, and I’m asking for your help in coming up with a combined list of about ten things that we, collectively, believe will happen.  If we do this right, then I can publish an “official” predictions document that summarizes our thought process.  It’ll be fun to circle back a year hence to see how we did.

The Goal

Ultimately, we should be able to come up with about ten predictions for what will happen in the world of Scientology over the next year. Each prediction should be concrete enough that it’s easy to see if it came true a year from now. No fair couching a prediction in the vague generalities of an astrologer. As the Scientologists say when ridding themselves of body thetans hooked up to the e-meter on solo NOTs, “exact time, place, form and event.”

Predictions shouldn’t be too safe (i.e., predicting that David Miscavige will not be deposed by a cabal of disloyal underlings in 2014 is only fractionally more risky than predicting sunrise in the east every morning).  Predicting that the cult will gain no incremental new members via the Golden Age of Tech 2 release is approximately as safe.

At the same time, predictions shouldn’t be so over-the-top that they’re unlikely to happen.  Thus, I’m not predicting that a red-headed chain-smoking 26-year-old is going to walk into a Scientology facility and will be accepted as the reincarnation of L. Ron Hubbard.  

The ultimate "Deus ex machina" gimmick in Monty Python's Life of Brian.  Brian plummets from the tower, and seconds from certain death, he is rescued by an alien spaceship that just happens to be flying by.
The ultimate theatrical “Deus ex machina” gimmick takes place in Monty Python’s Life of Brian. Brian plummets from the tower, and seconds from certain death, he is rescued by an alien spaceship that just happens to be flying by.

Finally, predictions should be reasonable extrapolations from credibly anticipated events. There’s no need to try to guess what will happen from an unpredictable event.  In other words, we don’t need to worry about any deus ex machina scenarios.  Anything that depends on David Miscavige having a heart attack at his desk is not useful.

Importantly, predictions should be all about what we think will happen. Part of the challenge of the exercise is being able to distinguish what is likely to happen from what we wish would happen. So while I think 2014 will show an even greater rate of decline for the cult versus the increasingly evident decline seen in 2013, it is important to note that the cult will almost certainly be in business in something recognizably close to its current form, even though that’s not the outcome I desire.

The completed set of predictions should touch on each of the major operational aspects of the cult, which should include: finances, management, Ideal Org strategy, member retention, staff retention, celebrities, etc.  

If we look back in 365 days and we got all ten predictions exactly right, we were probably being too safe in what we expected. Similarly, if we only got two right, we were probably living a little too much in hope and desire and not enough in logic and reason.

My Current Best Guess

1.  The event business collapse will be complete in 2014.

Sometimes, the key to making a useful prediction is a certain degree of self-reflection.  Not a strong suit of Scientology management, however.

Sometimes, the key to making a useful prediction is a certain degree of self-reflection. Not a strong suit of Scientology management, however.

As you may recall, there were several big annual events cancelled in 2013. In the spring, the “Maiden Voyage” event, a briefing for big donors and higher-level OT’s aboard the Freewinds, was initially rescheduled for LA, but then dropped entirely. Though it wasn’t widely commented on at the time, this was clearly a harbinger of things to come, with the October event announced and then cancelled when the tent imported from the UK became a particularly rich vein of humor material to mine.  And of course, the ineptitude around the cult’s handling of the big November events in Clearwater (GAT2 unveiling and the IAS event) made it abundantly clear that there’s big trouble in the events business, an important and generally well-run part of the business previously.

In particular, I believe we’ll see the following all of the key details:

  • All big events, if not cancelled, will be below 1,000 people total (excluding seat-fillers from the Sea Org or even extras from outside, as may have happened at the Super Power dedication).
  • It is possible that by the end of 2014, the only event actually held will be the IAS gala.  Gone will be the Birthday Event, the New Year’s Eve event, Maiden Voyage and all the rest.
  • Due to the actions of all those loathsome SP’s spying on these ultra-ecclesiastical events, particularly Mike Rinder & Mike Bennitt with their “Apostate Air Force,” David Miscavige will never again hold another open-air event, including either major events or Ideal Org dedications.
  • The cult will not be able to make up revenue shortfalls from lower donations at these events and we will begin to see signs of financial pressure manifesting throughout the organization.  I don’t yet have a clear picture of exactly how these financial pressures will show up, and I don’t believe the cult will start digging into reserves, but the total revenue for 2014 will be the lowest in at least 20 years.

I’m going to go out on a limb here and say that this is the most significant development of 2013 and 2014. I think the events business is responsible for about 30% of cult revenue, or somewhere between $50 million and $75 million per year, and it’s the most profitable business around, generating about 80% gross margin.  If this business implodes suddenly, it’s going to push the cult close to operating losses for the first time in ages, and that, if it happens, is likely to unleash all sorts of craziness.

2.  The Ideal Org strategy will come to a grinding halt

Scientology's Ideal Org building in Gateshead, UK (in the Northeast, near the Scottish border).  The reality looks a little different from the photo they use for fundraising.  Thanks to Izhar at Idleorgs.com.

Scientology’s Ideal Org building in Gateshead, UK (in the Northeast, near the Scottish border). The reality looks a little different from the photo they use for fundraising. Thanks to Izhar at Idleorgs.com.

Clearly, the Ideal Org strategy visibly struggled in 2013 after working for a long time.  Working, of course, means that it was achieving its real goals of fleecing large chunks of money from large donors; it doesn’t appear to be about actually getting more people in the door, so I don’t count it a failure on that front because it was never really intended to succeed there.  I believe 2014 will reveal that the Ideal Org program is completely stalled.

And if the cult sells existing properties that it is unable to renovate, it will reveal a reality that is even worse: selling properties is a clear indication that the cult has started to operate in the red and is worried about starting to deplete reserves.

The original idea was fairly clever: get donors to contribute to buildings, with each campaign raising far more than the cost of the actual building. Miscavige pockets the difference and takes title to the building so the local donors have no real equity in what they just donated for (unlike churches in most Protestant denominations, for instance, where ownership of the building is retained locally).  The second phase of the scam is to exploit the local public’s “sunk cost bias,” getting them to dig even deeper into their pockets to fund renovations for the building that now sits empty and decaying.

  • Details will emerge of significant problems in keeping some of the key existing Ideal Org buildings open for business, making it harder than ever for Miscavige to try to show “straight up and vertical expansion.”
  • At most two Ideal Orgs will open in 2014, though the cult has published a target list of several dozen future locations that it claimed would open in 2012 and 2013, and it is woefully behind in the schedule.  The “under the radar” crowd will probably begin to notice the disparity between the promise and the results, while the Kool-Aid drinkers probably won’t.
  • The Valley Org (in the San Fernando Valley of LA) will be no closer to going Ideal than it is now, a major embarrassment given the richest concentration of Scientologists in the world living in its coverage area. We will begin to see evidence that this is a factor in the departure of several long-time LA Scientologists, and thus will conclude that it is going to help many “under the radar” LA public to decide to leave.
  • The cult will sell at least three buildings purchased for Ideal Orgs where it was unable to raise money for restorations.  Locations will probably be drawn from a list that includes New Haven, Chicago, Detroit, Philadelphia (DM’s hometown), Battle Creek, and a couple of UK locations.  If no new building campaigns for these locations are immediately announced, then we will be able to surmise for the first time that the cult is feeling pinched for cash and may actually be seeing losses from operations for the first time in decades, if ever. 
  • Several additional sites where renovations have not yet begun will be condemned or otherwise targeted by local governments seeking to rid their cities of the eyesores of decaying buildings.

3.  The retreat from the larger world will accelerate

I expect Scientology to move from shyness to a full-blown case of organizational agoraphobia in 2014.

I expect Scientology to move from shyness to a full-blown case of organizational agoraphobia in 2014.

We saw the beginning of what some might call “institutional agoraphobia” from the cult in 2013, as Miscavige moved the IAS event from Saint Hill to Clearwater.  There are two likely contributing factors driving this.

First, the European Scientology business is probably declining in the wake of institutional pressure such as that exerted by the German government and the effects of ridicule from the tabloid press, as the cult frequently endures in the UK.  There aren’t any particularly good numbers to show growth trends in Europe overall, so it’s hard to determine what’s actually happening here.  In this circumstance, poor business in Europe is driving the retreat from the continent.

Second, Miscavige’s obsession with security and with avoiding ridicule may have taken a body blow in 2012, when a tabloid reporter was easily able to gain access to the annual IAS event despite heavy security, and wrote a long feature story.  If European business was good, or even if it was merely flat, then moving the IAS event to increase security will probably cause the European business to decline at a faster rate, as European whales are probably less likely to want to journey to Flag for all their events.  In other words, in this scenario, Miscavige is preventably accelerating the decline of the European business to cater to his own fears.

Whatever the cause, the cult seems to implicitly acknowledge that the retreat from Europe is permanent, else they probably would not have paid to move the large semi-rigid tent used for IAS events at Saint Hill to Clearwater.  If the large event business in the UK were still intact, they would most likely have just gone ahead and purchased a second tent.  Otherwise, in a couple years, the cost of moving the tent back and forth across the Atlantic would quickly outweigh the cost of a second structure.

As if a major decline in the cult’s second biggest market wasn’t enough, smaller and more remote geographies appear to be breaking away from the cult. The defection en masse of the former mission in Haifa, Israel may be only the beginning.  In October, Miscavige declared 18 long-established Scientologists from South Africa, including some with decades of time in the cult and some who have donated millions of dollars for buildings and other campaigns.  This North Korea-style purge appears to have been about bringing management of the Johannesburg org under tighter control. However, it appears likely to backfire, given that the South Africans have been used to operating on a relatively long leash, and the increasingly important BackInComm blog suggests that a significant portion of the membership is rallying around those who have been declared, refusing to cooperate with the management team sent in from Flag.  The lesson here is that disconnection in small, remote locations is unlikely to have much sway since the relatively small numbers of public in smaller countries all know each other and can easily choose to stay together and defy the Mother Church.

In a thought-provoking article posted on ESMB about five years ago, J. Swift came up with an interesting scenario where Miscavige proactively fires the cult members with low donation potential and keeps only the high-end donors, moving to a “monastery Scientology,” where services are available only at Flag and one or two other global locations.  It’s an interesting scenario, but I don’t think the retreat from non-US locations is part of a proactive strategy; I think Miscavige is wholly reactive in how he deals with crises.

The cannibalization of business from orgs to Flag will only increase, affecting not only missions (which are on life support) but also Class V orgs (local Ideal Orgs) as well as advanced orgs (AOSH, AOLA, ASHO, etc). One side effect of the move to centralize higher-level services at Flag is the fact that many non-US public will find it very difficult or undesirable to travel to the US for services.  In particular, this is likely to affect areas that have previously been bright spots in the number of “bodies in shop,” like Eastern Europe, Russia, Taiwan and South America.  As a result, we can only conclude that centralization of services at Flag implicitly acknowledges that the cult is “done” outside North America.

  • The South African organization will “go indie.”  This doesn’t seem like a particularly bold prediction, given the visibility into the thought process of many of the prominent members of that community shown on their increasingly important “Back in Comm” blog.
  • We will get credible data showing that the staff at Saint Hill in the UK is down to only about 300 people, significantly below the level of even three or four years ago, and suggesting a near collapse of the higher level services business in Europe.  This collapse of the ability to serve high-end customers within Europe will further alienate public from the richer western European countries, reducing membership still further.
  • Russian Scientology will come under even greater pressure from an increasingly anti-Western Russian government.  During 2014, there will be increasing attention in the Russian press paid to this organization that, to the average Russian, has ties to the US intelligence community (an instance where Hubbard’s lies about his background in WWII military intelligence will actively hurt the cult).  This will likely lead to a damming of the flow of Russian Sea Org recruits, even though a high percentage of Russians want to emigrate to the West.
  • We will see Scientology abandon at least two countries due to lack of interest, including one in South America.  Ideal Org campaigns outside the US will get even less traction than domestic Ideal Org campaigns.

4.  “Under the radar” members are revealed to be the majority of US public

I believe we'll find out that most of the US membership is flying "under the radar," pretending to go along with the cult's directives while merely attempting to avoid disconnection's impact on their families, friends and businesses.

I believe we’ll find out that most of the US membership is flying “under the radar,” pretending to go along with the cult’s directives while merely attempting to avoid disconnection’s impact on their families, friends and businesses.

In the US, the percentage of “under the radar” members will be revealed to be significantly more than we had previously estimated.  Out of the perhaps 11,000 active “public” in the US, we will realize by the end of 2014 that substantially less than half are “true believers.” Most are just pretending to go along with the show to avoid disconnection.

I have spoken with a number of “under the radar” members who, as time goes on, are far less careful to hide their status from the cult.  Scientology seems to be more accepting of “under the radar” members than ever before, because it has basically no alternative other than to let them go and declare them. This acceptance of “under the radar” members may reflect optimism among top management that the recent Golden Age of Tech 2 release may be enough to cause people to come flooding back in the doors, but most under the radar public we’ve talked to are fairly skeptical of the changes in GAT2, and seem unlikely to get more involved.

5.  Disconnection loses its effectiveness

DisconnectionSpeaking of disconnection, I believe that 2014 will be the year where the membership shrinks enough that the threat of disconnection is much less important than before.

  • Defections of lower-ranks celebrities or rich whales will show that the power of disconnection to keep people in the cult is diminishing in its influence.  In other words, the ability of Leah Remini to boost her entire family out of the cult en masse will not be an isolated event.  Once there’s a track record of multiple people able to do this, disconnection will be done.
  • There are already informal “underground railroad” networks helping people to leave the cult and to get new jobs and to rebuild their lives. I predict that in 2014, these networks will become more formalized and better known to people still in the cult, making it much easier for staff at local orgs and at Pac Base and Flag to exit the cult.
  • Staff shortages will make it more difficult for the OSA to patrol the Internet, identifying disloyalty in Facebook posts and otherwise harassing those who speak up.  Similarly, social media will make it easy for the newly declared to get back in touch with those who had previously left, enabling them to get their new lives back on track much faster.

I believe this scenario to be true, but as a “never-in,” I don’t have the experience with the process of leaving the cult to be able to detail exactly how disconnection will diminish in its power.

6.  The legal losing streak will continue intact

The string of legal losses in 2012 and 2013 will continue, and I expect more suits with potentially serious economic consequences opening new battle fronts to be filed.

The string of legal losses in 2012 and 2013 will continue, and I expect more suits with potentially serious economic consequences opening new battle fronts to be filed.

Scientology will continue to lose every legal case it’s involved in.  And it seems likely that litigation will continue to build.  I expect that 2014 will bring more suits from rank-and-file public, perhaps to the exclusion of “flagship” suits like the Debbie Cook case or the Monique Rathbun case. While less fascinating to watch than the

  • Despite the possibility it may win individual battles (e.g., the “diversity jurisdiction” issue in the Garcia case), the cult will lose almost every case…
  • … but only after inflicting on itself the maximum possible damage. Given Miscavige’s penchant for micro-managing his attorneys, and given his inability to take the long view in working on his cases, DM will continue to be the cult’s biggest impediment to winning in the courtroom.  In particular, Miscavige seems to be unable to resist procedural maneuvers like moving for disqualification of opposing counsel that are normally only used in extraordinary circumstances; over time, as the cult’s reputation for this sort of theatrics becomes known, these tricks will work against them.
  • Look for a greater number of individual cases, particularly relating to refunds of monies on deposit, to be filed and to make significant progress through the courts.  I expect to see in late 2014 or early 2015, a wave of fraud suits similar to the Garcia case, where the cult is alleged to have made specific misrepresentation about the use of funds raised.
  • Particularly if the Garcias are able to establish that Scientology’s arbitration procedure is unconscionable, I expect to see a wave of refund lawsuits, many filed by networks of cooperating lawyers, much as coal industry black lung lawsuits were filed by an industry of lawyers working together.  I would expect to see a class action lawsuit filed in early 2015 for refunds of money on account.  If this is filed, I think it will be a watershed for the cult, because it puts a sizable chunk of reserves in play. Once the class action trial bar realizes just how much money has been paid on deposit, they’ll go nuts vying for a shot at suing the cult.

Where I need help

I can’t do a first-class list of predictions on my own.  I need your help to make this work.  I would appreciate your help on:

  • Looking for errors or omissions in the list above.  If I have forgotten to consider some factor in my analysis, please let me know.
  • If you think I have over-estimated or underestimated the importance of something that drives any of my scenarios, I would be grateful for a detailed discussion.
  • I need you to help fill this list out with scenarios or areas that I haven’t even considered.

Here are some particular areas where I am currently struggling, and I don’t have a clear answer.  Start here and add anything else you think is important.

What happens to Narconon?

On the one hand, there are record numbers of lawsuits outstanding against the bogus drug addiction treatment organization, and the cult will probably lose many of those.  Insurance fraud could well pop up at more Narconon operations than just at Narconon Georgia, as happened so spectacularly in 2013.  Another encouraging sign of the decline of Narconon is the increasing prominence of critical material at the top of Google searches.

However, it seems likely that the cult’s response to the increase in critical information will be to change the names of facilities and otherwise try to morph into something else, as we’ve already seen with Per Wickstrom’s operations in Michigan.  They may simply lie about the details of their programs so that they can’t be linked easily to Scientology by using the word “students” for patients, etc.  As a result, they’ll become a bit more difficult to attack, since there won’t be one single

What happens in Russia?

Russia is perhaps the biggest question mark in the attempt to measure overall Scientology membership.  The cult claims that there are over 20 missions and orgs throughout the country, but it’s entirely possible that these claims are bogus.  If true, it’s possible that there could be as many as 1,500 or 2,000 public in Russia, which makes the country able to supply many Sea Org recruits to work at Flag and other US locations.  Certainly to a bright kid trapped in a second-tier Russian city with poor job prospects, a ticket to the West, even for a job paying Sea Org wages could easily seem attractive.  And even though the per capita economic potential of each individual Russian cultie isn’t that high, a larger-than-expected number of cult members in Russia could affect the total number of members worldwide that we’re attempting to develop.

If there are any Russian speakers out there (DodoTheLaser, are you listening?) who could help monitor the Russian-language press for Scientology news, that would be very helpful.

Will staffing levels become an issue?

The cult seems to have survived for quite a while without any real ability to attract new members.  Obviously, that’s because of the cult’s well-established ability to keep hitting up existing members for donations.  So nearly twenty years after the massive “stat crash” in the early 1990s, when the stream of “fresh meat” dried up, the cult still limps along. (I believe revenue is down from the peak reached in that area, but there’s still enough money coming in for the cult to remain dangerous.)

It’s clear that a cult collapse scenario based mainly around the lack of new members probably won’t happen.  But relatively few comments in the two and a half years I’ve been following Scientology have attempted to grapple with the potential for the lack of staff to bring the cult down.

It’s long been known that many missions are struggling, open only a handful of hours per week at odd hours.  They’re struggling in part because of neglect from the top of the organization, but also from the competition from nearby Ideal Orgs cannibalizing members wherever possible.  It’s also quite apparent that some orgs are woefully understaffed.  A 40,000 foot office building would normally hold 150-250 employees depending on configuration.  But there are reports of visits to Ideal Orgs where only about a dozen staff are visible at any one time.

This leads me to believe that staff are dwindling, particularly in the outer orgs, though I believe the cult is also having trouble getting Sea Org staff as well, even with non-US recruitment efforts.

At what point does the staff shortage become a key defining issue in the decline of the cult?  If current members come into their local org during published business hours and there aren’t enough people to open the doors, that will certainly shake their reality on the “straight up and vertical” expansion theme.

Will the cult be able to explain the org stuff away by simply demanding that people come to Flag or AOLA or some other higher-level org for even the most basic services?

 

An Offer You Just Can’t Refuse

Columbus, OhioAn enterprising tipster passed on this e-mail invitation, which broke records in all sorts of ways for the lamest e-mail from the cult in a while. It even surpasses the single-question e-mail I highlighted a while ago that promised oodles of miracles in two short sentences, but this one does fall woefully short in the area of grandiose promises.

As short as the e-mail is, the analytical conclusion at the end suggests that something so brief can actually be quite revealing about how things are going inside the cult at the moment.

The Smoking Gun

Here is the e-mail received by my tipster, in its entirety.

From: "Stan Booth" <sbooth@asho.org>
Date: Dec 7, 2013 11:43 AM
Subject: Hi from Stan ASHO
To: <An enterprising tipster>

HI <Enterprising Tipster>,

Do you come by the Columbus org much? I am setting up a
Christmas banquet that you are invited to.

L, Stan ASHO
Citizens search desperately for parking so they can take courses at the Columbus org. Obviously, they are not fully in touch with their OT powers yet since they haven't "postulated" a parking space right in front.

Citizens search desperately for parking so they can take courses at the Columbus org. Obviously, they are not fully in touch with their OT powers yet since they haven’t “postulated” a parking space right in front.

It turns out that there are no non-stop flights from the city where my tipster lives to Columbus.  Of course, there aren’t a lot of direct flights from anywhere to Columbus other than a couple of major airline hub cities like Atlanta and Dallas.  Hell, there are only a couple of nonstops from New York City to Columbus on any given day.  It appears that the only reason for anyone to go to Columbus is because they have to go there, not because they want to. So for my tipster to answer quite truthfully that no, he doesn’t come by the Columbus org much, is kind of obvious.

Given the airline situation with no non-stop flights, my tipster figures that he would have to spend the better part of an entire day traveling to get to this mind-blowing gala holiday event and then most of another day getting back. Never mind about the regging that’s sure to be a big part of this festive event; spending top dollar to get last-minute airfare to spend two days attending an event where he’ll be served mediocre catered food and regged for everything he’s got just somehow doesn’t seem like a great idea at any time of year, much less so close to the holidays that the airways will be jammed with snot-nosed kids flying to see the grandparents, kicking the seat back constantly, whining about whether we’re there yet, and all the other stuff that makes me glad that we in Global Capitalism HQ don’t have to fly commercial any more.

Sea Org vessel "Thetan One" docks on the Ohio River prior to unloading its cargo of Sea Org missionaires sent in by David Miscavige to get the stats "straight up and vertical" before the advertised Christmas banquet.

Sea Org vessel “Thetan One” docks on the Scioto River prior to unloading its cargo of Sea Org missionaires sent in by David Miscavige to get the stats “straight up and vertical” before the advertised Christmas banquet.

The other really interesting thing about this is that the e-mail comes from a fairly senior official at ASHO (American Saint Hill Organization), an “elite” org that is supposed to be all about higher-level training.  But having an upper level org sending out fund-raisers to get people to come to cities far outside their usual orbit for a Christmas banquet, rather than having the local org staff themselves send out the invitations, just smacks of desperation.

I talked to a source who’s familiar with life in the Columbus org, and he pointed out that Columbus is struggling even more than the average Scientology org these days. The population of the Columbus combined metro statistical area is 2.35 million.  Assuming 15,000 Scientologists in a total US population of 310 million, you’d expect to see a grand total of 113 Scientologists in the greater Columbus area.  And if you assume 25 of those are staff, you get a grand total of 85 card-carrying public. According to my local expert, the only reason that Cincinnati (just 100 miles down the road) is doing better, with its own recently opened Ideal Org, is that the husband-and-wife team running the Cincinnati org had much better fundraising success due to their personal efforts. With a weaker management bench, the slightly larger Columbus area just isn’t moving the needle.

Analytical Conclusion

There is a point to all this that goes well beyond the quest for a couple mildly funny chuckles to be had at the cult’s expense.

The fact that higher-level orgs are working to produce events for local orgs and to get people from ludicrously inappropriate locations to come to them is a further leg down in the decay of the Class V org system.  As various commenters have noted before, it appears that, once again, Miscavige is sacrificing the periphery of the empire to protect what have previously been the more profitable parts of the business, most particularly, the courses and auditing offered at Flag, the “Mecca of technical perfection.”

But if Miscavige is willing to sacrifice the “outer” orgs to protect the “senior” orgs, why is he having senior staff at the “senior” orgs put on events (note that the e-mail said that author Stan Booth is “setting up” a banquet, not just inviting people to a banquet). In other words, it sounds like Stan at ASHO is in charge of the event, not just using his mailing list to get people to come.  Somebody who ordered him to do this must think producing an undistinguished local event in a second-tier market is the most profitable use of Stan’s time.  So that means that ASHO is hurting for business as well, probably because their business has been cannibalized by Flag.

The other relevant point is that if there’s no one in the Columbus org who can be trusted with responsibility to plan and execute a fairly simple event, then it is possible that the cult is hemorrhaging trained staff at a sufficiently rapid rate that they simply don’t have anyone locally who can put on an event.

And that, in turn, is a hint that at least some parts of the cult are coming close to the brink.  In my (as yet unpublished) “cult collapse scenario,” I note that the cult can (and it certainly has) continue operating for quite a long time without new recruits, and they can continue to operate for a long time with a diminishing pool of existing members. But one thing they cannot operate without is enough staff to keep the doors open.

One of the way the cult has been trying to keep the doors open after massive native staff defections is to hire people from outside the US and bring them in on a “religious worker” visa.  That works well enough for jobs at Flag, say, where they don’t need to have great English skills to wash dishes in the restaurant, etc.  But when you’re in a local org, at least some percentage of the staff needs to have enough English language skills to negotiate with vendors, to handle such things as setting up catering services, which could involve fairly complex menu choices.  That’s not the sort of thing you can expect someone fresh off the boat to master all that quickly.  So if the Columbus org is running out of native English speakers on staff, that suggests that the usefulness of the foreign staff project may be reaching its end.

But keep in mind: this is a single data point, and the analytical conclusions based on a single data point could very well be wrong.  So I’m treating this discussion as a hypothesis of what might be happening, rather than as definite assertion that this is happening.  It would be really helpful if we all keep our eyes out for data points that either confirm or reject any of the potential conclusions here.

Scientology Daily Digest: Thursday, December 12, 2013

Here’s the promised “science fiction double feature” since I couldn’t get a post out last night.

Most surprising news is that Devon Newman, former head of PR for Las Vegas Celebrity Centre, picked up in a bizarre plot with her roommate to kidnap and murder police, was allowed to cop a plea and walk out of court with a year probation.  See below for further details. This was entirely unexpected given the bail amounts involved and the statements of the police and the DA.  I still think her co-conspirator, a convicted pedophile with a long record, is not going to be so lucky.

Check out the rest of the “General Press” section as there are a number of interesting cult-related articles including an interview with PR powerhouse Pat Kingsley, who Tom Cruise fired in favor of his sister.

Tony Ortega’s Blog

Today, Tony reported that Judge Whittemore will allow the Garcia’s to conduct discovery to look for bogus behavior in the diversity jurisdiction issue before the court in the Garcia case, given that the cult hid the fact that the two trusts involved were California based until it started losing. Apparently, the scope of discovery is fairly limited.  When I read it, the tone of the order makes it sound like Whittemore is not all that optimistic that the Garcia’s will succeed, but he’s just crossing the t’s and dotting the i’s properly.

The post also talks a bit about the UK high court ruling permitting Scientology to conduct marriage ceremonies, which is attracting plenty of press.  There’s a particularly lame BBC interview, where a tame reporter says nothing, though Marc Headley gets in some pretty good comments.

Selected comments: 

Mike Rinder’s Blog

Today, Mike found a couple of amusing bits of FAIL on the main Scientology web site. Minor details like the page where they promise to open a bunch of Idle Morgues by the end of 2013 — three weeks hence — after only opening four this year (versus 11 last year).  They’re gamely struggling to believe that they have a chance of getting Ideal Orgs done in Battle Creek, MI and New Haven, CT.

I can’t imagine why Battle Creek would be home for an org, given its metro area population of less than 140,000.  Incidentally, if we believe that there are 15,000 Scientologists out of a total US population of 310 million, then that implies that there ought to be a total of 6.6 Scientologists in the Battle Creek metro area.  That’s an opportunity to go straight up and vertical, baby!  Perhaps the Battle Creek org is a stealth strategy to penetrate the burgeoning metropolis of Kalamazoo, just 25 miles west on I-94.  With a population approximately double that of Battle Creek, Kalamazoo might be home to approximately 13 more Scientologists.

Mike also points out just how inept the cult’s Volunteer Minister response to the recent Philippines typhoon has been.  Apparently, the site for what Miscavige claims is the most effective disaster relief force in the world still has the same picture of four people at a photo opp, not the thousands of volunteers they try to suggest they have.

Yesterday’s post contains an utterly illiterate marketing piece by Sharron Webber, who, last I heard, was the #2 on the Freewinds.  Unlike so many of the young recruits, Webber is a native English speaker.  Perhaps the nicotine in six packs of unfiltered Kools a day are causing excessive cerebral vasoconstriction?  The thought that someone with such a low level of literacy is in charge of a complex piece of aging machinery which can, if ineptly operated, kill hundreds of people, is rather sobering.

Forum Sites

General News

  • The Raw Story, another site in the burgeoning Tony Ortega media empire, ran a breaking news story that Devon Newman, the former head of PR at the Las Vegas Celebrity Centre, pled guilty in the bizarre Sovereign Citizen police kidnapping/conspiracy that hit headlines in August.  She gets a year probation in return, though her sociopath roommate will probably get a bit different outcome at trial in March.  It will be interesting to see what the cult makes of this for internal PR — talking about how Tone 40 intention beats “wog” justice every time, or something.
  • suicide by defenestration at an office tower holding a number of Scientology-related businesses remains a bit of a mystery as the Clearwater PD has not released the identity of the victim.  The building is or was home to various cult front groups and WISE businesses, including a Narconon office.  It’s unclear whether the Narconon office is still in the building.  Some of the businesses are connected to the Feshbachs and at least one is apparently connected to cult PI Dave Lubow, who’s a figure in the Monique Rathbun suit.  ESMB and OCMB threads will presumably keep up with status updates.
  • Missionary Kid scored a nice find with an academic journal article on the Haifa (Israel) mission going independent.  I don’t know the researcher or the prestige level of the journal, but it’s interesting to note that this unique (in recent history, at least) secession from the corporate church is attracting attention in academic circles.
  • Pat Kingsley, the legendary PR maven who Tom Cruise famously fired in favor of his unskilled sister right before the Oprah couch-jumping incident started to crumble his reputation, checks in from retirement.  Towards the end of the article, she talks about her relationship with Cruise; while mostly diplomatic, she talks about how he started to get crazy about the cult before they parted ways.  After reading the whole profile, I’m impressed by Pat.
  • RadarOnline ran a story about forced labor in cult facilities, harvesting juicy bits from the declarations filed earlier this week in the Monique Rathbun case and putting them together, with yet another epic cult denial at the end.
  • The lead story in the latest issue of “Freedom” magazine begins “The excitement rolled across more than 10,000 Scientologists gathered in multiple large venues at the religion’s Flag Land Base in Clearwater on November 15, 2013…” This is one of the documents presented by the defendant’s attorneys as argument for not deposing Miscavige. It’s a cult-operated site so you should know that they’ll harvest your IP address.

Scientology Daily Digest: Wednesday, December 11, 2013

Due to scheduling issues, there will be no Scientology Daily Digest for Tuesday, December 11.  Stay tuned for a double feature tomorrow.

Although Hubbard was a science fiction writer of a particular sort, and although this blog is focused on that which Hubbard spawned, I can’t promise that tomorrow’s post will qualify as a Science Fiction Double Feature. To which I say, “Damn it, Janet!”

Although Hubbard was a science fiction writer, I can't promise that tomorrow's post will qualify as a Science Fiction Double Feature.  To which I say, "Damn it, Janet!"

Scientology Daily Digest: Tuesday, December 10, 2013

Perhaps the biggest news today is the Tampa Bay times story that some Clearwater businesses have seen sales plummet in the wake of the Super Power opening, as staff apparently don’t wander between buildings as much, and as the cafeteria in the basement is capturing money that used to go to them.  Way to relate to the community, Scientology! 

Also, Tony’s blog had more insights on how people react to the OT III level, Marty Rathbun posts a particularly provocative long quote from Hubbard on conducting intelligence operations against enemies, Mike Rinder mocks Mark VIII e-meter marketing, and the general press unloads on the cult.

Today’s post is worth a close read as there are some pretty funny discoveries of videos and news stories from around the world.

Thanks to a large number of tipsters and commenters who brought stories to my attention today!

Tony Ortega’s Blog

Tony’s regular Tuesday feature delves a little deeper into the “mysteries” of the OT III level as seen through the eyes of former staff Claire Headley and Bruce Hines; it also features a fun video from Karen de la Carriere and J. Swift on the Ideal Org scam.

My take: What’s really interesting is that both Bruce Hines and Claire Headley said that their first reaction was “what a load of crap!” but their training instantly took over and their devotion to Scientology didn’t waver much.  They both figured it was something they didn’t understand, and vowed to come back later and try and overcome their shortcomings that made them unable to comprehend the brilliance.  Here are two fairly intelligent people who were so indoctrinated by the cult that they were unable to pull free when the alarm bells were ringing loudly.  That’s a pretty powerful warning to others who think they’re somehow immune.

Also horrifying is Claire’s recollection of an accident on the base that left her with a badly broken foot and a broken shoulder, which nearly killed her. The cult wasn’t allowed to call 911 when Miscavige was actually on the base, perhaps because of his paranoia about his personal security.  Just appalling.

From a purely literary standpoint, Hubbard’s description of “Incident One” is probably the lamest bit of handwritten nonsense I’ve seen him pen.  When you read about the Big Bang, even dry physics texts make it sound pretty damned awe-inspiring. But here, Hubbard manages to take any element of wonder and mystery, the key elements of any origin story, out of it and make it sound like a back-of-the-napkin reminder of how to write something so pathetic by comparison that it would get laughed out of town.

Selected comments:

Mike Rinder’s Blog

Mike posts about the craziness of the sales campaigns to get the new Mark VIII super-duper new e-meter in people’s hands immediately.

Apparently, one new and unique feature of the high-pressure marketing campaign is awards for the staff.  The org that sells the most meters will apparently get a gift-wrapped swag basket of some indeterminate contents at some point in the future.  For reference, Harry and David, the long-time gourmet gift basket retailer, offers a $200 gift basket as its most expensive.  Split 30 ways (assuming 30 staff per org) would mean about $6 per employee, or a bonus of the better part of a week’s pay.  This stands as a monument to cult cheapness, a paltry reward to whoever brings in hundreds of thousands in profits.  Of course, such cheapness goes back to “Source,” as Hubbard offered a small plaque as a way of thanking anyone who brought in any of the biggest celebrities then alive in the cult’s first celebrity recruitment campaign.

Mike does the math and thinks this means that the cult really expects to have 7,500 members doing courses actively, assuming a production run of 20,000 units (they were made when he was “in” and have been sitting in a warehouse since then, so he may have a reasonably good idea of exactly how many there are), less 5,000 for orgs and field auditors, divided by two because of the requirement that everyone have two in case one fails.

Marty Rathbun’s Blog

Marty has posted a particularly telling Hubbard quote about intelligence operations and sliming enemies.  It’s a lot deeper than the oft-quoted one-liner justifying “Fair Game.”  To get the full effect of Hubbard’s paranoid viciousness in action, this is worth a read.  Secondarily, this might also serve as a quiet reminder to some of his readers that there is plenty of evidence to counter the view that “Hubbard always good, Miscavige always bad” that some Independent Scientologists espouse.  Incidentally, the full “Manual of Justice” that this quote is taken from appears at http://www.xenu.net/archive/go/man_just.htm.

In fact, the comments are worth reading on this one as they show a fairly diverse range of opinions on Hubbard’s pronouncements here.  The comments are definitely different from what I’d expect on this site or on Tony’s but there is not the lockstep agreement that some might expect.

Forum Sites (ESMB, OCMB, WWP)

Thanks yet again for Aeger Primo for her work monitoring the forum sites.

General News

  • The Tampa Bay Times reported this afternoon that some downtown Clearwater businesses are struggling now that staff are moving into the new Super Power building, and apparently have less time to get out to buy coffee or otherwise spend their meager salaries.  On the other hand, some hope that having all those culties out of the way will clean up downtown Clearwater’s image quicker and ultimately help business get back on track.  Apparently, some of the tourists find the Sea Org uniforms a bit intimidating.
  • The Tampa Bay Times also notes that the mayor of Clearwater sent a note congratulating Miscavige on the Super Power opening, though the article also mentions Mark Bunker’s excellent video about exactly why this is a bad thing for the city to do.
  • Sheriff Lee Baca may not have much time for gladhanding Scientologists, given the arrests of 18 officers and managers in the LA County jail system for a particularly heinous series of crimes.
  • “Enty,” the entertainment lawyer who posts at gossip site “Crazy Days and Nights,” thinks the Bauer Media attorneys could very well question Katie Holmes about whether Tom is Suri’s biological father, and if such questioning comes up, he speculates that Cruise could settle the Bauer suit quickly.  It looks like the Bauer folks have the momentum in the trial since Bert Fields’ clumsy attempt to tie Bauer’s German parent to some sort of Nazi behavior not only fell flat but earned him sanctions.
  • Apparently, “A Very Merry Unauthorized Children’s Scientology Christmas Pageant” is coming to a community theater in the San Diego area.  Since there are apparently almost zero Scientologists in the San Diego area (out of 3.2 million population), the cult will have to bus people down from LA to protest, sadly.

Scientology Daily Digest: Monday, December 9, 2013

David Miscavige and his advisors experiencing the disconnect between their view of how a psychiatric exam feels versus how most of us feel when we talk to a psychiatrist.  Fetch... the COMFY CHAIR!  And if that doesn't work, the CUSHIONS!

David Miscavige and his advisors experiencing the disconnect between their view of how a psychiatric exam feels versus how most of us feel when we talk to a psychiatrist. Fetch… the COMFY CHAIR! And if that doesn’t work, the CUSHIONS!

Two major news items today. First, both sides filed their trial schedule in the Laura DiCrescenzo case.  Of course, Laura’s side has a fairly straightforward schedule, but the cult has a byzantine process involving multiple mini-trials, with two weeks spent in the first such just arguing about First Amendment issues.  And of course, while Miscavige’s fingerprints are mostly absent from this document, he still managed to get into the text a demand that Laura be forced to undergo a psychiatric exam as part of the case.  It’s straight out of Monty Python.

The second major news item is the SP declaration of long-time staff member Ryan Hogarth from the South African branch of the cult, causing the African Scientology blog to speculate that the entire South African community could easily secede from the cult as the Haifa, Israel mission did.

Tony Ortega’s Blog

Tony published the two vastly different proposed trial schedules from plaintiffs and defendants in the Laura DiCrescenzo case.  Laura’s attorneys propose a straight six week trial, while the cult proposes an avalanche of hearings, mini-trials, duplicative effort and other showboating that could easily approach four months in the courtroom, raising a pretty significant cost barrier to Laura.

My take: Usually, when you look through the cult’s legal filings, you don’t have to be a lawyer to spot the craziness that Miscavige has injected into the filing — inflammatory language, etc.  A relatively quick skim of the defendants’ filing shows a relative lack of crazy, which is worth thinking about.  Is Miscavige on vacation after the stress of the IAS event?  Is he distracted? Or is it just a relatively simple filing and not worth his putting his unique “imprimatur” on it?  About the only thing going on here that has any crazy is the proposal that Laura be ordered to undergo a psych evaluation, which to anyone who doesn’t believe in the cult, is kind of a joke.  Apparently, Miscavige is so isolated in his little bubble that he has no idea what an actual psych eval is like.  

Most telling is the proposal for a ten-day hearing on First Amendment issues. Recall that Judge Sohigian was completely upheld on the issue of “priest/penitent confession” laws in the first First Amendment issue raised by the cult.  As one of Tony’s legal team points out, the cult is essentially trying to argue that the “Church” can do whatever it wants to religious workers when it tries to claim that the Court can’t get in the middle of a religious dispute.  Of course, the logical extension of this is the belief that churches can sanction murder, rape, arson, fraud and all sorts of other violations when they come from sincerely held religious beliefs.  But there are plenty of crooked pastors (Jim Bakker, and many many more) who have done jail time for their crimes.

Selected comments: 

Mike Rinder’s Blog

  • Mike’s post today reflected the South African Scientology blog post of how Ryan Hogarth, decades-long Scientologist and former Scientology South Africa President, got declared as the goon squad from Headquarters continues to bang heads together, apparently randomly. Mike observes that Ryan Hogarth was the first local staff person to be allowed to introduce His Imperial Amazingness at an event, instead of using the game show host-like tones of Jeff Pomerantz in a pre-recorded blurb, so great is Hogarth’s credibility among the locals.  Hogarth is a third-generation Scientologist (first one I’ve heard of) who was on staff, mostly in South Africa, for 25 years.  He headed DSA (the local equivalent of OSA) for much of that time, and served for a time as President, which he equates to a figurehead. There’s some great details on the fiasco of acquiring and renovating the Ideal Org building, and more on life in the cult in a far-flung outpost.  The post from Ryan Hogarth himself is relatively long but useful to read, as it details how the Internet brought him to his senses, when he discovered Marty Rathbun’s then-new blog. 
  • Mike’s post yesterday covers the craziness of Super Power marketing, giving yet another example from source documents of how the disconnect between the hype and the reality will accelerate the meltdown of the cult, with more people blowing.

Forum Sites (WWP, ESMB, OCMB)

General Press

  • RadarOnline is picking up the Tom Cruise slave labor story all over again via the declarations of Jon Brousseau, Marc Headley and others that were filed last week in the Mosey Rathbun case.  While Tony reported Brousseau’s story in mid-2012, I’d suspect we’ll see other sites picking up and re-broadcasting the RadarOnline story over the next couple days.

 

Scientology Daily Digest: Saturday, December 7, 2013

Probably the biggest news today is the Lori Hodgson interview on Inside Edition, a US news magazine show, where she traveled to her son’s workplace in Austin, Texas and paid him a surprise visit which was recorded.

But the best performance clearly goes to Mark Bunker’s three-minute appearance in front of the Clearwater City Council on the anniversary of Lisa McPherson’s death, where he eloquently pointed out the absurdity of trying to make peace with the cult given how they’ve treated the citizens of the Clearwater area for the last forty years.

Tony Ortega’s Blog

Tony covers the Inside Edition segment on ex-Scientologist Lori Hodgson paying another surprise visit to her son, who disconnected from her, at his work place in Austin, Texas.  Tony has written several times before on the heartbreaking treatment that Lori Hodgson has received at the hands of the cult and the painful way her kids have chosen Scientology over their relationship with her.

Also, there’s a video of Mark (“Wise Beard Man”) Bunker speaking to the city council in his new home town of Clearwater about the death of Lisa McPherson on the anniversary of her death.  Money quote: “I understand that the city is thinking about finding a better way to work with Scientology, sitting down and mending fences with David Miscavige.  I’d ask you to remember that when Scientology was criminally charged in Lisa’s case, Scientology didn’t bat an eye before destroying key evidence in the case and whisking people out of the country before they could be questioned by the police.”  He then goes on to talk about the harassment of Marty Rathbun, about disconnection, about forced disconnection.  Perhaps he can add an Emmy for performance in front of the camera for this video to the Emmy he received for his work behind the camera a few years ago.

Selected comments:

Mike Rinder’s Blog

  • Today’s post spotlights a couple who used to be field auditors, but who now go for the big bucks traveling around and “regging” people.  He points out the lulz in some of their statements gushing about the Super Power rundown and a few other choice topics.
  • Yesterday’s post contains Mike’s thoughts on the “Cause Resurgence Rundown” (a.k.a., the “running program”), which is now held on an entire floor of the new Sooper Powerz building.  Mike recalls being forced to do it at Int Base back when it was a staff punishment.  He thinks it might be an even bigger bust for $2,500 than Super Power.

Forum Sites (ESMB, WWP, OCMB)

General Press

  • The celebrity press is all over the “chick fight” where Kirstie Alley has taken her usual high road in responding to Leah Remini’s recent comments about disconnection and other problems with the cult.  There are lots of articles in different media including some pretty repulsive fawning from Perez Hilton.  TV Guide weighs in, as does Huffington Post. Leah stays classy and positive throughout, but Kirstie stays true to form, living proof that the cult makes the able more able, and the asshole more asshole.
  • The National Enquirer is reporting that Leah Remini is trying to get back in the good graces of Katie Holmes in order to get Katie to become involved with Leah’s anti-Scientology book project.  The Enquirer claims that Leah could command an advance as high as $5 million but the story claims that publishers want to get Katie Holmes involved as well to ensure the book’s popularity.  I’ve only seen this in the Enquirer, so I don’t know how conjectural the piece is, though the Enquirer is relatively careful with stories to avoid getting sued. After all, Bert Fields never followed up with that threatened suit against the Enquirer over the TomKat divorce.