Title: Zegel Tape #1 [1/3]

Date: Thu, 02 Oct 1997 03:53:49 GMT

Date: Sun, 14 Aug 1994 14:32:45 -0400
           ((Editors Comments in double parenthesis - Homer))
                            ZEGEL TAPE NO. 1
                               ZEGEL - 1
                              13 May 1994
                      Copyright (C) 1982 Jon Zegel
       Redistribution rights granted for non commercial purposes.
     ((This is the complete and unabridged, word for word transcript of
Jon Zegel's tape number 1.  Remember that Zegel recants the entirety of
his first 3 tapes, including this one, in the 4th tape.))
     To understand how we have come to this point, with the change in
Church Management, and the other things that have happened, we are going
to start about 10 years ago when the ship, the Flag Ship Apollo was
still at sea.  It's important to realize that the Flag Ship's management
was under the Church of Scientology of California Corporation, and that
during that period of time, in 73, the Church's taxes were being looked
into, especially their tax exempt status.
     And in order to handle a portion of that problem, which included
the excess amount of income that was coming into the Church beyond what
was being spent and problems that might have occurred as a result,
Herbie Parkhouse, a fairly well known person of Church history, decided
that it would be appropriate to set up a foreign corporation to handle
foreign money coming to the Flag Ship.  That is anybody coming to the
ship that was not a US citizen, their money, rather than traveling
through USA banks, would go directly from the ship to a foreign bank.
     A corporation was set up called the Religious Research Foundation,
or the RRF.  It apparently was founded in Luxembourg, and bank accounts
were established in Luxembourg to handle the Church's money, there.
     When a person would come to the Flag Ship who was not a US citizen
his income would be received, it would be invoiced to the RRF and that
money would be couriered from the ship directly to Luxembourg where it
would be deposited in the accounts there.
     The couriers that were active at the time, were two young men, Pat
Broeker was one of them, and Peter Gillham Jr. is another.
     In 1975 the ship stopped sailing around and the Flag Land Base was
established.  The ship landed in Florida, I believe in Dayton, and
projects were initiated to find suitable quarters to house the Flag Land
     The money that came into the country to purchase the Flag Land Base
came from the Luxembourg accounts of the RRF into the United States in
cash.  And it went through a corporation that was set up called the
United Churches, and it was United Churches who initially made the
purchase of the building ((Fort Harrison Hotel in Clearwater Florida.))
     Now that the Flag Land Base was landed, the RRF nonetheless was
continued, and so that money coming into the United States from those
people from overseas was again invoiced to the RRF and that money was
packeted up, sent to the Guardians Office, that was apparently then
responsible for couriering it out of the country, again to the accounts
in Luxembourg.
     We have talked to a couple of people who have been present while
these things have gone on, including a Flag Banking Officer who was at
Flag and WROTE the invoices, and people from other countries who came to
the Flag Land Base and received those invoices.
     Now Ron was in the area around Clearwater during the early years of
the establishment of the land base.  And he was known to travel in and
out of the buildings there occasionally, giving lectures to the C/Ses,
participating in directing research and so forth.  However during the
raids and just slightly there after, as the legal problems of the Church
began to multiply, it was considered that the Flag Land Base was
probably not the best location overall for Ron to be, particularly in
terms of his security.  Now there may have been other reasons for
considering a change of location, but those are the ones we can easily
     None the less, it was decided that a location in the western part
of the United States would be appropriate, and the area around Palm
Springs apparently was selected.  When I say around Palm Springs, I mean
approximately a 50 mile radius around Palm Springs.  Some teams of
individuals were sent out to locate property, some properties were
found, and a new headquarters for the international management was
established in the western part of the United States, again in the Palm
Springs area.
     The external communication lines of the Church were set up there,
telex lines and so forth, and the international management team
established its location there.
     Ron was also there, the Senior C/S international and other
individuals as well.
     During that period of time, we are now looking in the year 77, 78
and 79, that group began to grow, and among the responsibilities of the
individuals there, aside from international management overall, was that
Dave Mayo was working with Ron on NOTS, and specifically was auditing
Ron on his audited NOTS ((as opposed to Solo NOTS)).
     Dave Mayo however was also doing some traveling at that period of
time, doing some missions around the country, and was becoming well
known, almost a celebrity if you will, as the foremost tech terminal
aside from Ron himself.  That was considered to be potentially a
security problem.  Also the size of the staff that was there with Ron,
was also considered to be a possible security risk, and concurrently a
lawsuit in Oregon being run, was also considered to be a potential risk.
     The solution to that was going to be to find a new location for Ron
to live.  Ron's audited NOTS apparently was finished up, Ron's staff was
moved to the newly purchased Gilman Hot Springs.  That was purchased
about the middle of the year in 1979, that was a resort that was just
outside of a town called Hemit, again in the same 50 mile radius
approximately around Palm Springs, and was simultaneously the home of
Golden Era Studios.
     Ron selected two people from his staff to be his full time aids
essentially personal associates, and the two people who were selected
were Pat and Annie Broeker.
     Now one of the reasons for selecting Pat Broeker, although there
may be others, was that as a principle courier for the RRF, no new
courier would be needed to be told where Ron was living and he and his
wife Annie had been part of LRH's household staff or personal staff for
some time, and so they seemed apparently to be logical choices.
     The Broekers apparently participated in selecting the new quarters,
and when the new quarters were found they and Ron moved off to those new
quarters, along with a couple of people to be grounds keepers and
security folks.
     In 1980 Ron apparently began to become concerned about his eventual
death.  Evidence of that is that he sent letters to each of his children
indicating that he did not expect to live longer than 5 years, and that
they should begin to make whatever preparations would be appropriate for
his passing.  In addition several individuals of the Commodore's
Messenger Org staff received similar letters, and the activities were
put into operation to prepare for the establishment of trusts that would
allow Ron to drop the body, go off and pick up another body, return, and
pick up where he had left off.
     The legal activities apparently were quite extensive, trust funds
were established, trustees were appointed and it is around the
appointment of these trustees that things began to become..., the
intrigue begins to grow here.
     First was the settlement of some of Ron's personal affairs, and it
was considered that the Church owed Ron not an inconsiderable sum of
money for past use of trademarks, copyrights and so forth.
     And so Ron got together with several of his financial advisors,
personal staff and so forth, and during the year 1980 or perhaps early
1981, began to work out exactly how much money was owed.  Now according
to Time Magazine, the figure that was eventually arrived at was 85
million dollars, and a demand for that amount specifically or one close
to it was made of the Church.
     Now it wasn't "We have to have this money by Thursday at 2
o'clock", a little bit more time than that was allowed, but none the
less that's a big task to gather together that kind of money, and
according to reports we have people were told that the Church reserves
were not to be reduced in order to satisfy this particular request.
     ((The "by Thursday at 2 o'clock" is an inside joke, all Church
financial cycles were one week long and ended every Thursday at 2
o'clock.  So if stats were down on Wednesday night, they would hustle to
get money in by the next day at 2 o'clock often going to great and
ridiculous lengths to get this done.
     It would have been the ultimate irony and joke if the demand for
the 85 million HAD been by Thursday at 2!
     The significance of the order to not reduce Church reserves to get
the 85 million, is that the money had to be newly raised which lead to
some of what followed.))
     It was not going to be an inconsiderable problem as well to deal
with the tax consequences of that kind of income.  No body thought that
it would be a good idea for Ron to get 85 million dollars and then have
to turn around and give half of it to the federal government in terms of
taxes.  So a solution was needed for that problem as well.
     And the solution that was eventually arrived at among Ron and his
various advisors was to set up a non profit religious corporation
separate from the Church.  The solution continued in that the
trademarks, the trademarks we are all familiar with, the double triangle
and S, the name Scientology, the name Dianetics, the name L. Ron
Hubbard, the initials LRH, the signature L. Ron Hubbard, those
trademarks would be withdrawn from the Church, that is the Church
wouldn't be allowed to use them, and that those trademarks would be
donated ((by Ron)) to this new religious corporation.  That religious
corporation would then receive those trademarks as a donation and they
would value them, in terms of their actual cash value, in such a way as
to offset the tax liability.
     Let's just review this quickly because it's a little bit complex.
The Church would give Ron the cash money, 85 million dollars allegedly.
Ron would withdraw from the church the various trademarks.  The
trademarks would be donated ((by Ron)) to this new religious
corporation, and Ron would receive a tax benefit for having made that
donation, enough to offset the income taxes that he would have to pay on
this 85 million dollars of income.
     ((Having some experience in tax law and charitable donations, I am
not sure I follow this.  Assuming the deal was done under normal Federal
1040 rules, a person is allowed to deduct donations up to half of his
income to charitable purposes in any given year.  So if you made 10,000
in a year, but donated 20,000 say, you would only be allowed to deduct
5,000 in the year of the donation, so you would still have to pay taxes
on 5,000.  However the remaining undeducted 15,000 could still be
deducted against income in future years as a carry over, but again only
against half of each years income until all of the donation was
accounted for, or until 5 years had passed which ever came first.  The
laws may have been different in 1982.

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