IRS

Informal transcript of Tampa Bay Times Interview with Mark Rathbun
Chapter “From renovation to IRS Rathbun rises through the ranks.”¹

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2:04

Rathbun: And then after that, in 1981, I went on to what was called the Special Project, which was a small group headed by David Miscavige. He was actually called “The Operator,” so he… You know, everybody from the unit answered to him and there was four other people in it. And our job was to find out ah, really investigate and get to the bottom of ah, why there was so many lawsuits naming L. Ron Hubbard, the founder of Scientology, and um, come up with a solution as to how to get rid of those lawsuits cuz he was getting on in years and um, he… the idea was he wanted to come back to um, what is now called the International Headquarters or the Int Base in… just outside of San Jacinto, California, um, where films…dissemination and um, educational are made.

And he wanted to get those, those films done, and get them done. So our job was to try to, the… get rid of all these lawsuits that were outstanding against him so that he could come back there, ah, harassment-free and live out his days working on what he wanted to work on.

Reporter: Okay. Okay, and how long were you in this position?

Rathbun: Well, I guess I was on it for the rest of my career in, in a way. I mean there was different permutations of it. It was first called the Special Project, and then it was called the Special Unit, and then it was called… then we, we established the Office of Special Affairs to, to, um, replace the Guardian’s Office. And then I was at Author Services which was L. Ron Hubbard’s ah, personal literary agency, that handled all his personal business. And I was the legal executive there.

But again I was, I was still working on clearing away anything that might embroil L. Ron Hubbard in legal matters or external-facing matters. All the way up… that’s all the way up through ’86 now, so this is a, you know, five year, five year period through there.

3:56

Reporter: Okay. And when you first started this post, this is when you first encountered David Miscavige?

Rathbun: 1981. June of 1981…Well I actually knew him earlier, casually, but not…First time I ever worked with him.

Reporter: I see. Okay. All right, ah, and so thereafter you– Tell us about… there’s some highlights of your career, ah, that we’ve talked about, ah, ah, where you did some major things for Scientology. Can you talk about that? Ah, I guess the early 1990’s, ah, when there were problems with the IRS?

Rathbun: Well, yes. The IRS, was um, really an extension of this “All Clear” concept of getting rid of all the legal matters or external-facing matters that are hindering Scientology. It was tied in with the lit-, with ah, about a couple of dozen lawsuits that were brought around the country naming L. Ron Hubbard. Um, some ground… grand juries that were outstanding from the old Guardian’s Office activity that were… there was one in Tampa, one in D.C., and I believe one in New York that were still trying to get indictments against ah, Mr. Hubbard. You know, even after the Guardian’s Office people had been indicted and convicted in Washington.

So all these things sort of tied together with one another. And um, it was always perceived that the IRS was the most important thing to handle because if you have tax exemption you have ah, religious… religious recognition, you’re treated differently in courts, you know, there’s, there’s a, you know, some, some level of almost immunity, First Amendment immunity, to a lot of the type of allegations that were being made.

5:36

So, the IRS was the big thing to handle. I mean, when, when I was involved in that in the late ’80s, we had calculated that they, the IRS, considered that the churches had upward of a billion dollars in liability.

And the total reserves of the church were a f… were a fraction of that. Maybe in the 200 million range. So, literally, they could have wiped Scientology out five times through.

So um, between having got rid of a lot of the civil suits in the mid ’80’s and ’93, when we ultimately got exemption, I mean the number one mission was to obtain ah, tax exemption from the IRS and…

Reporter: Hm-mm.

Rathbun: ..you know, that was the bulk of what my attention was on and what I worked on.

Reporter: And you were right at the center of that IRS effort, right? Ah, you, ah, worked with Mr. Miscavige. Can you tell us about that, with the IRS people?

Rathbun: Yeah, okay. Well, um, in the late ‘9… late ’80s, ah, and going into the early ’90s, ah, you know, I was tasked with the, with, with, um, implementing um, strategies to try to overwhelm the IRS like they were attempting to overwhelm us. [chuckles] And it was sort of like a “fight fire with fire” situation.

Um, we brought FY… Freedom of Information Act lawsuits, um, in numerous different jurisdictions. We had legal, ah, litigation strategies to um, counteract their strategies to deny certain churches exemption and that sort of thing. But it, it was, it was a huge battlefield. It was nation-wide. It was literally twenty-seven hundred suits at one point.

And I was very much involved in coordinating and coming up with strategies and then executing a lot of that between the late ’80s and the early ’90s.

7:23

And then in ah, late ’91, ah Dave Miscavige and myself were in Washington. And Miscavige kept bringing it up with the attorneys, you know, “Why don’t we just sit down with the Commissioner and get this thing straightened out?” because there’s so much, you know, there’s so, there’s so much insanity that goes on when you have this kind of institutional fight going on for so long. And you know you’re fighting over issues that are anachronistic in a lot of cases. They’re just, they’re, they’re not, they’re not even–. You know we’re, we’re fighting over– For example we were fighting over the years ’70 through ’72. That’s as far as the litigation had reached, and here we are twenty years later in ’90, ’91.

So he kept pressing that you know, “Why don’t we just go straight to the top and talk to the Commissioner.”

And we had a lot of expensive attorneys from D.C. and Washington who were, you know, attempting at different levels to start negotiations. And that went in fits and starts and one day we were in Washington, and finally ah, Dave said to one of the attorneys there, he said, you know, “We’re going to go…just go straight down there and go see Fred.” And he… and of course the attorney was laughing. And he turned to me and he said, “Right?” And I said, “Yeah!” And then you know…they all thought it was a joke. And we ah, right afterwards, we just got up from lunch, got in a cab and went straight down there and opened the door. You know, opened the door to, to, to get negotiations going. We didn’t get in a meeting, ah, as has been reported. We didn’t just walk in to the Commissioner’s office. We walked in and said, “We’d like to bury the hatchet.” Couple of assistants, assistants of the Commissioner came down and saw us, took all our information, said he would get…said they’d get back to us. And they did, I think it was even later that day, to set up a meeting with the Commissioner for the following week.

Reporter: This was Fred Goldberg?

9:10

Rathbun: Yeah, Fred Goldberg.

Reporter: Uh-hmm, okay. And that began a process, ah, after that?

Rathbun: That began a process. I mean, all Fred Goldberg did was open up the door to creating a f, a forum where we could make a case for exemption. Um, and what he did that was, that was ah, was so positive and unique was is he tried to bring somebody in who was fresh, who, who knew exempt organizations but didn’t have a long history with Scientology.

Reporter: Mm-mm.

9:40

Rathbun: Ah, cuz there was some real haters, some real Scientology haters within, that you know, had an attitude of, no matter what you said, they were going to, you know, they were going to deny the exemption.

And um, so all he did was put, give us the ability to, to, to meet with a team that didn’t really have a, a long track record on this, yet knew exempt organizations, knew what the requirements were. And said, “Okay, prove you’re exempt.”

10:08

And then that process went on for at least two years. I mean we were literally commuting to Washington D.C. almost every week. It was Monday, or Sunday out to D.C., see the IRS, present the answers to their, their set of questions, get another set of questions, go back to L.A., get the information together, get the, you know, some would entail audits of certain units, or this sort of thing, you know, you have to account for different things, [Scratching left ear] in, in operations, in finances, and that sort of thing. Boom! Next Sunday, back on a plane, back to D.C., another meeting with– That went on for two years.

10:43

Reporter: And this process is, is it, is it you and Mr. Miscavige primarily?

Rathbun: Primarily. Um, at one point attorneys came in, started coming with us. We were really starting to get into more technical audit issues. Ah, Mike Rinder ah, attended several of the meetings. Heber Jentzsch attended several of the meetings. And then we would sometimes bring in experts on different fields. Like Rick Moxon came in to one on FOIA.

Um, Bill Walsh was another FOIA attorney who came in and attended one or two meetings. But primarily, ah, the two constants through the, from the beginning to the end were ah, Dave and myself.

11:19

Notes