Scientologists Are Sued For $127,000

Source: St. Petersburg Times
Date: January 1, 1991

Five companies are suing the Church of Scientology for more than $127,000, claiming that the organization has failed to pay its bills for construction work and equipment.

Besides those lawsuits, the Scientologists have settled five others within the past two years from companies that claimed they were owed more than $39,000 for items ranging from travel services to construction materials.

Scientology spokesman Richard A. Haworth did not respond when asked whether the organization was suffering from cash-flow problems or other financial difficulties.

However, he did prepare a three-paragraph written statement that pointed out that the organization is spending more than $1-million to renovate two Clearwater buildings it owns.

"With so much construction activity ongoing, it is inevitable that there will arise some questions between the owner and the contractors," Haworth said in the statement. "However, such matters are being speedily resolved."

The Church of Scientology operates an international religious retreat out of the former Fort Harrison Hotel downtown, maintains a staff of more than 600, and owns more than $21-million worth of property in the Clearwater area.

Scientology was founded by science fiction writer L. Ron Hubbard, the author of Dianetics: The Modern Science of Mental Health. Scientologists believe they can overcome negative experiences through counseling sessions called "auditing," which involve the use of an "E-meter," similar to a lie detector. The sessions can cost more than $600 per hour. Followers say Scientology is a religion, but critics call it a cult, or merely a money-making organization.

The Scientologists are a visible presence in Clearwater because their staff members generally wear blue and white nautical uniforms and often can be seen walking among the organization's downtown buildings, especially along Cleveland Street and Fort Harrison Avenue. The organization says thousands of visitors come to Clearwater every year for auditing and training.

In recent years, the organization has been renovating its downtown Clearwater buildings and some of the lawsuits stem from the renovation projects.

Haworth said in his statement that the Scientologists are spending more than $1.2-million on two projects: renovating the Sandcastle Motel and the Hacienda Gardens apartment complex.

The Sandcastle, at 200 N Osceola Ave., is a hotel for visiting Scientologists and eventually will be used for the teaching of high-level Scientology courses. Hacienda Gardens, a large apartment complex on Saturn Avenue, is home to many full-time Scientology staff members.

One of the companies suing the Scientologists is APG Electric Inc., which claims it is owed $35,391 plus interest for electrical work at the Sandcastle, and at the Coachman Building, a downtown property leased by the Scientologists.

Although the Scientologists did pay some of the money they owed to APG, much of the debt remains past due, said John Kavula, president of APG. The Scientologists offered to pay off the money a little at a time, he said, but when payments didn't materialize, he sued.

He said he got the impression that the organization was having some sort of cash-flow problem, rather than major financial difficulties.

Other companies suing the Scientologists include J.R Industrial Contractors, for construction bills; Twincraft Inc. for specialized toiletry items; Sun Services of America for laundry equipment; and Bill Byington & Associates for remodeling work in the Coachman Building. Byington also is suing other organizations in connection with the remodeling project.

Those companies either declined to comment for this article, or could not be reached.

The Scientologists rarely reveal information about their finances, but what information they do disclose paints a picture of an organization with sound finances.

Court records in one of the recent lawsuits showed a 1987 credit statement for the organization that listed "Estimated annual sales" of more than $90-million.

That is apparently the first time such information has become public. When the St. Petersburg Times asked the Church of Scientology earlier this year to disclose its total revenues, a spokesman did not respond.

The 1987 statement also listed estimated annual purchases of $13-million. The Scientologists previously have said in court filings that their annual operating expenses are about $26-million.

Each of those figures apply only to the main Clearwater-based Scientology group, called the Church of Scientology Flag Service Organization, not to the others based in California and abroad.