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Saturday, 22 December 2012
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The Covert War
Whistle-Blowers And 'Vulnerabilities'

But interviews and an examination of court files across the country show that after the criminal conspiracy was broken up, the church's battle against the I.R.S. continued on other fronts. When Mr. Hubbard died in January 1986, his opposition to taxes lived on among the new generation of leaders, including Mr. Miscavige, a second-generation Scientologist.

Part of the battle was public. A leading role was played by the National Coalition of I.R.S. Whistle-blowers, which Scientology created and financed for nearly a decade.

On the surface, the coalition was like many independent groups that provide support for insiders who want to go public with stories of corruption. But Stacy B. Young, a senior Scientology staff member until she defected in 1989, said she had helped plan the coalition as part of Scientology's battle against the I.R.S. in late 1984 while she was managing editor of the church's Freedom Magazine.

''The I.R.S. was not giving Scientology its tax exemption, so they were considered to be a pretty major enemy,'' Ms. Young said. ''What you do with an enemy is you go after them and harass them and intimidate them and try to expose their crimes until they decide to play ball with you. The whole idea was to create a coalition that was at arm's length from Scientology so that it had more credibility.''

Ms. Young said she had recruited Paul J. DesFosses, a former I.R.S. agent who had spoken out against the agency, to serve as the group's president. Mr. DesFosses acknowledged that Scientology had provided substantial financing, but he denied that the church had created or run the coalition. ''We got support from lots of church groups, including the Church of Scientology,'' Mr. DesFosses said in a recent interview.
The coalition's biggest success came in 1989 when it helped spark Congressional hearings into accusations of wrongdoing by I.R.S. officials. Using public records and leaked I.R.S. documents, the coalition showed that a supervisor in Los Angeles and some colleagues had bought property from a company being audited by the agency. Soon after the purchase, the audit was dropped and the company paid no money.

Kendrick L. Moxon, a longtime church lawyer, acknowledged that the coalition had been founded by Freedom Magazine. He said its work was well known and part of a campaign by Scientology and others to reform the I.R.S.

The church's war had a covert side, too, and its soldiers were private investigators. While there have been previous articles about the church's use of private investigators, the full extent of its effort against the I.R.S. is only now coming to light through interviews and records provided to The Times.

Octavio Pena, a private investigator in Fort Lee, N.J., achieved a measure of renown in the late 1980's when he helped expose problems within the I.R.S. while working on a case for Jordache Enterprises, the jeans manufacturer.

In the summer of 1989, Mr. Pena disclosed in an interview, a man who identified himself as Ben Shaw came to his office. Mr. Shaw, who said he was a Scientologist, explained that the church was concerned about I.R.S. corruption and would pay $1 million for Mr. Pena to investigate I.R.S. officials, Mr. Pena said.

''I had had an early experience with the Scientologists, and I told him that I didn't feel comfortable with him, even though he was willing to pay me $1 million,'' Mr. Pena said.

Scientology officials acknowledged that Mr. Shaw had worked for the church at the time, but they scoffed at the notion that he had tried to hire Mr. Pena. ''The Martians were offered $2 million; that's our answer,'' said Mr. Moxon, whose firm often hired private investigators for the church.
Michael L. Shomers, another private investigator, said he had shared none of Mr. Pena's qualms, at least initially.

Describing his work on behalf of Scientology in a series of interviews, Mr. Shomers said that he and his boss, Thomas J. Krywucki, worked for the church for at least 18 months in 1990 and 1991.

Working from his Maryland office, he said, he set up a phony operation, the Washington News Bureau, so he could pose as a reporter and gather information about church critics. He also said he had infiltrated I.R.S. conferences to gather information about officials who might be skipping meetings, drinking too much or having affairs.

''I was looking for vulnerabilities,'' Mr. Shomers said.

Mr. Shomers said he had turned over information to his Scientology contact about officials who seemed to drink too much. He also said he had once spent several hours wooing a female I.R.S. official in a bar, then had provided her name and personal information about her to Scientology.
In one instance, information that Mr. Shomers said he had gathered at an I.R.S. conference in the Poconos was turned over to an associate of Jack Anderson, the columnist, and appeared in one of Mr. Anderson's columns criticizing top I.R.S. managers for high living at taxpayers' expense.

Mr. Shomers said he had received his instructions in meetings with a man who identified himself as Jake Thorn and said he was connected with the church. Mr. Shomers said he believed the name was a pseudonym.

Mr. Shomers said he had looked into several apartment buildings in Pennsylvania owned by three I.R.S. officials. He obtained public files to determine whether the buildings had violated housing codes, he said, and interviewed residents looking for complaints, but found none.

In July 1991, Mr. Shomers said, he posed as a member of the I.R.S. whistle-blowers coalition and worked with a producer and cameraman from NBC-TV to get information about a conference for senior I.R.S. officials in Walnut Creek, Calif. The producer said that she recalled Mr. Shomers as a representative of the whistle-blowers but had known nothing of his connection to Scientology. The segment never ran.

At one point, Mr. Shomers said, he slipped into a meeting room at the Embassy Suites, where the conference was held, and took a stack of internal I.R.S. documents. He said he had mailed the material to an address provided by his church contact.

Mr. Krywucki acknowledged that he had worked for Scientology's lawyers in 1990 and 1991, though he declined to discuss what he had done. He said he would ask the lawyers for permission to speak about the inquiry, but he failed to return telephone calls after that conversation.
It is impossible to verify all of Mr. Shomers's statements or determine whether his actions were based on specific instructions from church representatives. He said he had often been paid in cash and sometimes by checks from Bowles & Moxon, a Los Angeles law firm that served as the church's lead counsel. He said he had not retained any of the paychecks.

Mr. Shomers provided The Times with copies of records that he said he had obtained for the church as well as copies of hotel receipts showing that he had stayed at hotels where the I.R.S. held three conferences, in Pennsylvania, West Virginia and California. He also provided copies of business cards, with fake names, that he said had been created for the phony news bureau in Washington and copies of photographs taken as part of his surveillance work.

One of the I.R.S. officials investigated by Mr. Shomers recalled that a private investigator had been snooping around properties he managed on behalf of himself and two other midlevel agency officials.

The official, Arthur C. Scholz, who has since left the I.R.S., said he had been alerted by tenants that a man who identified himself as a private investigator had questioned tenants about him and the other landlords. He said the tenants had not recalled the man's name but had noted that he was driving a car with Maryland license plates.

''He went to the courthouse and found the properties and then went out banging on doors of these tenants and made a number of allegations dealing with things that were totally bull,'' said Mr. Scholz, who had no involvement with the I.R.S. review of Scientology and was at a loss to explain why the church would have been interested in him. ''I notified the local police about it.''

Mr. Shomers, who has since left the private-investigation business, said he was willing to describe his work for the church because he had come to distrust Scientology and because of a financial dispute with Mr. Krywucki.

Mr. Moxon, the Scientology lawyer, said the I.R.S. had been well aware of the church's use of private investigators to expose agency abuses when it granted the exemptions. Mr. Moxon did not deny hiring Mr. Shomers, but he said the activities described by Mr. Shomers to The Times had been legal and proper.

Mr. Moxon and other church lawyers said the church needed to use private investigators to counter lies spread by rogue Government agents.
''The I.R.S. uses investigators, too,'' said a church lawyer, Gerald A. Feffer, a former deputy assistant attorney general now with Williams & Connolly, one of Washington's most influential law firms. ''They're called C.I.D. agents'' -- for Criminal Investigation Division -- ''and the C.I.D. agents put this church under intense scrutiny for years with a mission to destroy the church.''

A blunt assessment of Scientology's victorious strategy against the I.R.S. was contained in a lengthy 1994 article in International Scientology News, an internally distributed magazine. The article said:

''This public exposure of criminals within the I.R.S. had the desired effect. The Church of Scientology became known across the country as the only group willing to take on the I.R.S.''

''And the I.R.S. knew it,'' the article continued. ''It became obvious to them that we weren't about to fold up or fade away. Our attack was impinging on their resources in a major way and our exposes of their crimes were beginning to have serious political reverberations. It was becoming a costly war of attrition, with no clear-cut winner in sight.''

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