L. Ron Hubbard, one of the most bizarre entrepreneurs on record, proved cult religion can be big business. Now he's declared dead, and the question is, did he take $200 million with him? The prophet and profits of Scientology There is something that FORBES L. Ron Hubbard gone underground in New York City: 1973 still doesn't know, however. It is something no one may know outside a small, secretive band of Hubbard's followers: What is happening to all that money? Hubbard himself has not been seen publicly since 1980, when he went underground, disappearing even from the view of high "church" officials. That's in character: He was said by spokesmen to have retired from Scientology's management in 1966. In fact, for 20 years after, he maintained a grip so tight that sources say since his 1980 disappearance three appoint­ ed "messengers" have been able to gather tens of millions of dollars at will, harass and intimidate Scientol­ ogy members, and rule with an iron fist an international network that is still estimated to have tens of thou­ sands of adherents—all merely on his unseen authority. How could Hubbard do all this? As early as the 1950s, officials at the American Medical Association were By Richard Behar wife, went to jail for infiltrating, bur­ glarizing and wiretapping over 100 warning that Scientology, then NLY A FEW CAN BOAST the fi­ government agencies, including the known as Dianetics, was a cult. More nancial success of L. Ron Hub­ IRS, FBI and CIA. Hubbard could hold recently, in 1984, courts of law here bard, the science fiction story­ his own with any of his science fic­ and abroad labeled the organization O such things as "schizophrenic and teller and entrepreneur who reported­ tion novels. ly died and was cremated last January Amid all the melodrama, at least paranoid" and "corrupt, sinister and at the age of 74. $200 million in cash produced by his dangerous," while Hubbard himself For roughly three decades Hubbard strange creation was gathered in Hub­ was described as "a pathological liar" ran the notorious Church of Scientol­ bard's name, and there is believed to and "a charlatan and worse." ogy®, a "religion" he formed to be much more in organization assets: But the central fact is the money: "clear" mankind of misery. It came The Church of Scientology® has hundreds of millions of dollars last complete with finance dictators, proved to be one of the most lucrative seen in the form of cold cash or highly "gang-bang secfurity) checks," lie de­ businesses around. If FORBES had negotiable securities. "It's a perfect tectors, "committees of evidence" known as much as it knows now, story about greed and lust tor power," and detention camps. In 1977 the FBI after interviewing dozens of eyewit­ says William Franks, who was driven sent 134 agents, armed with warrants nesses and examining sworn testimo­ out of the organization in 1981, when and sledgehammers, storming into ny and court records in both criminal he was the church's chairman of the Scientology centers in Los Angeles and civil cases, Hubbard would have board and its executive director inter­ and Washington. Eleven top church been included high on the Forbes national, the post Hubbard officially officials, including Hubbard's third Four Hundred. relinquished 20 years ago. "If you un- 314 FORBES 400/OCTOBER 27, 1986 Scientology world Headqiiarters building in Los Angeles "Hubbard, told me at one time the biggest mistake we made was going religious." demand it on that basis, and stay the book that would ultimately make mental aberrations he called en- away from the 'religious' aspects, it him rich beyond the dreams of avarice, grams" caused by past traumatic makes perfect sense." Dianetics: The Modern Science of Mental events, and could be eliminated by A few facts about Hubbard's early Health. In 1951, during his second di­ identifying, recalling and reliving the life are known. Lafayette Ronald Hub­ vorce, Hubbard's wife claimed that he events. Eliminate your engrams, bard was bom in Tilden, Neb. on Mar. was "hopelessly insane" and that he eliminate your turmoil. A similar pro­ 13, 1911. After serving in World War tortured her. Three years later, his cess is routine to most conventional II, he wrote a 1947 letter to the Veter­ "church" was born. methods of psychotherapy, a fact ans Administration in which he com­ It did not act much like a church. Hubbard presumably was aware of. plained of his "seriously affected" Through the 1950s and much ot the On this unlikely base he built his mind and "suicidal inclinations" and 1960s, Hubbard emphasized the S400 million empire. pleaded for help. Hubbard was never­ "scientific" nature of a therapeutic Hubbard constructed a device he theless a moderately successful sci­ technique he invented. He called it called an E-meter, actually a simpli­ ence fiction writer. In 1949, addressing "auditing." He said it could cute ill­ fied lie detector, to measure electrical a writers' convention, he reportedly ness, restore sight to the blind and changes in the skin while subjects gc said, "If a man really wants to make $1 improve intelligence and appearance. over intimate details of their past. Au­ million, the best way would be to start Hubbard argued, in his bestselling ditors (later also called ministers! his own religion." In 1950 he published book, that inner turmoil sprang from would conduct sessions with this de- 315 vice and zero in on Hubbard's en- "scientific" claims were bogus and services—they get 10% to 15% of all grams. Psychiatrists say a successful that E-meter auditing would no long­ services rendered to the piece of meat session of going over long-suppressed er be labeled as a scientific treatment. they bring in. Others go into the busi­ traumas can produce a sense of per­ But Hubbard was resourceful. The ness side for a piece of the action. sonal relief and euphoria. That way around the ruling was to call the Since it is not uncommon for people brought the troubled subject back for meters and auditing strictly "reli­ to spend more than $100,000 over a more, money in hand. Lots of money. gious sacraments" and therefore be­ decade for their salvation, "The regis­ A large organization began to form, yond the FDA's reach. Hubbard's trars were making good bucks, buying with "franchises" around the coun­ Scientology counselors had already Porsches and Mercedes-Benzes," says try. There are a lot of troubled people begun calling themselves ministers. one defector, Bent Corydon, "and the out there. Now they took to wearing black and best counselors were paid on a perfor­ Side by side with his "scientific" clerical collars. Chapels were con­ mance scale." Corydon, who once ran treatments, Hubbard pitched a body structed in Scientology centers the biggest single Scientology mis­ of religious beliefs—reincarnation around the country. "Franchises" be­ sion, left in 1982 to start his own and the like (see box, p. 322)—and came "missions," "fees" became auditing religion. claimed tax-exempt status as a reli­ "fixed donations," and "theories" be­ For the less enterprising, another gion. It was not long before some of came "sacred scriptures." The money way to afford the religion is to sign a his auditing subjects were drawn into got even bigger. contract for up to a billion years (rein­ what became a fast-growing cult. The system works like this: Pros­ carnation, remember) and join church Some of them became fanatics who pects, normally spoken of as "raw staff. After signing a note obligating themselves to pay for all ser­ vices rendered in the event they break their employment contracts and waiving all right to sue, these members receive free auditing, room and board, a structured and controlled environment, and a small allowance—less than $25 per week in the early 1980s—in return for labor that can average as much as 15 hours per day. Ultimately subjects are "cleared"—that is, pro­ nounced cured of engrams. But Hubbard was no dummy. He added more and more steps, each usually more ex­ pensive than the last, for his cult followers. Already, in the early 1950s, Hubbard found that the prior lives of individ­ uals also required auditing by the hour. In the late 1960s, Hubbard and friends in 1974 (Pat Broeker, seated r.; eventual defector Armstrong, I.) Hubbard had another revela­ Life became very peculiar aboard the good, ship Apollo. tion: Humans are actually composed of clusters of spiri­ would do virtually anything at Hub­ meat," are offered a free 200-question tual beings, stemming back millions of bard's command. "personality test" to determine years. Now those spiritual beings had Unfortunately, the tax ploy and the whether counseling (which means au­ to be audited! Preposterous? Perhaps, big money drew the attention of the diting) is needed. ("Auditing is always but "eventually you lose the ability to IRS: A ruling stripped him of his tax- needed," says one former counselor.) even form a belief about these things,'' exempt status in 1967. Scientology services range from a says a former high-level Hubbard aide, Gerald Armstrong. "Hubbard says, But by then the money was so big communications workshop for S50 to 'Jump,' you say, 'How high?' Hubbard Hubbard was able to buy a 342-foot the more popular one-on-one auditing says, 'I have new technology,' you say, oceangoing ship, the Apollo. On it, he sessions that soon cost anywhere 'How wonderful.' " withdrew from his government perse­ from, get this, S200 to more than cutors and cruised safely in interna­ $1,000 an hour.