Massive Corporate Fraud by the Church of Scientology in the UK

By Roland Rashleigh-Berry
13 December 1997

Source: http://members.cox.net/batchild1/fraud.htm

[Copyright (C) Roland Rashleigh-Berry, 13th December 1999. Permission is granted to anyone and everyone to copy this document in any format for both commercial and non-commercial use]

This document will prove the the Church of Scientology in the UK, operating under the company "Church of Scientology Religious Education Colleges Incorporated" (C.O.S.R.E.C.I.), received money to the value of nearly $100,000,000 from another Scientology organisation and that this money then disappeared without trace. This information has been passed on the the police and the UK taxation authorities (called the Inland Revenue over here in the UK) who are taking an interest in the matter since it is both corporate fraud and tax evasion of great magnitude.

This information came to light when a "search" was done at Companies House, the registry of all company accounts in the UK. You can "search" on all the loans or mortgages that a company has. It resulted in 8 pages of very revealing information.

page1, page2, page3, page4, page5, page6, page7, page8.

What it reveals is that some very large sums of money were loaned to COSRECI in the UK But these are not "loans" in the common sense. When a "Trust" loans money it intends for the money to be put to charitable purposes. It "loans" it initially and as a secured loan so that if the company it lends it to runs into financial trouble then it can get back the money it gave. But when the money it loaned is all put to the charitable use intended then it writes off the loan. It is effectively a gift with strings attached on how the money can be spent.

Loan 1

The first loan listed is an "outstanding" one because it hasn't been paid back or the money spent in the way intended but it is from the "International Scientology Religious Trust" since a couple of the names are those of the Trustees listed in a later entry. We do not know how much money was involved.

Loans 2, 3 and 4

This is where it starts getting interesting. These are from the "Church of Scientology of California" to COSRECI and it is in three loans of £1,550,000 for St. Hill Manor and the Stables, £320,000 for 68 Tottenham Court Road and £165,000 for a freehold property in West Hoathly. These loans were made on 30/12/1981 which is odd because this "Church of Scientology of California" ceased to exist the following day owing millions of dollars in compensation to one Lawrence Wollersheim. The charge was satisfied (written off) on 03/01/1996. This date is odd in two respects. Firstly, since the "Church of Scientology of California" no longer existed in 1996 so there was nobody there who could have decided to write off this loan and secondly because it is the same date that most of the other loans were written off.

Loan 5

This is the first of a large number of very large loans made by "The International Scientology Religious Trust" that were loaned on 29/01/1987 and satisfied (written off) on 03/01/1996, the same date that the loans from the "Church of Scientology of California" were written off. This was for the amazingly large amount of $54,645,000 secured against 68 Tottenham Court Road which is probably only worth $1,500,000 at today's prices. But this property was already secured by the "Church of Scientology of California" so this is just like mortgaging your property to two different banks.

Loans 6, 7, 8, 9, 10, 11and 12

Like Loan 5, these were all from "The International Scientology Religious Trust" created 29/01/1987 and satisfied (written off) on 03/01/1996. They are all for the same amount of $4,645,000 and again, hugely more in value then the properties or land they are secured against. These loans created 20/01/1987 add up to the huge amount of $87,160,000. Any accountant or auditor would question this and also report such an irregularity to the authorities since it would be an obvious candidate for possible money laundering, but we shall see that this figure appears nowhere on the accounts covering the period.

Loan 13

This is another one for $4,645,000 but created the following year on 18/01/1988 and satisfied earlier to the others on 03/01/1989.

Loan 14

This is a normal loan made by a bank created on 05/09/1999 that is still outstanding.

Why were so many loans "satisfied" on 03/01/1996 ?

Most of these loans were written off on 03/01/1996 and so the property returned to the full ownership of COSRECI. Why all at the same time and at this date? The answer most likely lies in the creation of a new charity in the UK called "The Church of Scientology (England & Wales)" which they hoped would get charitable status in the UK. It would then be a simple matter to transfer all the assets of COSRECI across to this new charity which would help cover their tracks. This charity was created in July 1996 and applied for charitable status with the Charities Commission in December 1996. But after three years deliberation the Charities Commission rejected their application.

The company accounts

The accounts of COSRECI do not have these figures in them and yet they are obviously important. They are not accounted for in any of the following years either. The $87,160,000 for loans 5 to 12 have just vanished without trace. This is a clear case of massive corporate fraud. COSRECI is a charity that is registered in South Australia. However, being a charity does not spare you from the tax man. Charities have to keep honest and accurate accounts and they only enjoy tax-exempt status if their money is used for charitable ends. This $87,160,000 just disappeared though and so the tax man will assume it was corporate profit and that it benefitted people materially and so income tax will be due. Also, because this money was deliberately hidden and also through a "charity" then a 100% penalty will apply. On top of this there is interest accumulating over the period since 29/01/1987. In total, the tax bill could be approaching $200,000,000 with the other disappearing "loans" taken into account.

The accounts can be viewed here: page1, page2, page3, page4, page5, page6, page7, page8, page9

The end is nigh

When the Inland Revenue finally come to collect, they will take all the property of COSRECI and the directors and trustees of COSRECI and "The International Scientology Religious Trust" will be serving long sentences for fraud and tax-evasion and conspiracy to commit fraud. There will be nothing left of Scientology in the UK and it will most likely get banned, maybe sometime in the year 2000 and could be gone from Europe the following year. Investigations into this fraud will finally sink the whole organisation in the US as well when all its shell companies are recognised as acting in this conspiracy. Its leaders will be sent to jail for a long time. Again, they will owe the relevant tax authorities more back tax then they have assets or reserves to cover and it will be the end of the Church of Scientology worldwide.