(Image: Police cordon in place outside the Church of Scientology Budapest – 24.hu)
The Church of Scientology is facing seizure of its assets in Hungary after prosecutors charged eleven executives and finance personnel with fraud in a $1.7 million tax evasion scandal.
Following a lengthy investigation into Scientology’s activities by Hungary’s National Tax and Customs Administration, critic Peter Bonayi revealed on The Underground Bunker that the Chief Prosecutor’s Office filed charges against Scientology yesterday, alleging a cover-up scheme to avoid paying tax on the sale of books and courses over the years 2012-2017.
According to 24.hu, Hungary’s largest online media outlet, the Attorney General’s Office claims Scientology’s “primary goal was to obtain as much income as possible” and staff “were aware of the tax evasion, foresaw its consequence and did not intend to declare the tax” owed on its earnings.
During a police raid in 2017, government officials seized over 2,000 documents from dozens of properties across the country and calculated 600 million HUF ($1.7 million USD / £1.3 million GBP) was due in unpaid taxes. Prosecutors allege that Scientology fraudulently reported income generated from the sale of books and courses as “charitable donations” rather than commercial sales in a deliberate attempt to conceal its earnings and avoid paying tax.
The files seized were also used to impose a 40 million HUF ($112,000 USD / £90,000 GBP) fine on the Church after it was found guilty of illegal data processing and failing to comply with Hungary’s strict data protection laws. In the 2017 ruling, the President of the National Data Protection and Freedom of Information Authority (NAIH) raised concerns about Scientology’s record keeping, stating “really serious abuses” were found in the data held on its parishioners.
Under L. Ron Hubbard policy, files are held on its parishioners known as ‘Pre-Clear’ or ‘PC’ folders that record intimate details of a person’s sex life, relatives and personal associations. Strict rules govern how personal information is handled in Europe and when a former member’s request to delete his file was denied by the Church, they were found guilty of misusing personal data, fined and banned from further illegal data processing.
Searches were conducted at thirty locations in 2017 and the documents seized have been used in a string of legal action filed against Scientology by the Hungarian authorities. In yesterday’s filing, prosecutors asked for senior executives to serve jail time and recommended further fines to be imposed on the organisation. They also asked for the Church’s accountant to be banned from practicing and filed a motion for the confiscation of assets, citing the substantial size of the alleged fraud.
Journalist Tony Ortega, who broke the news on his Substack The Underground Bunker said “This is the kind of case that used to happen here in the US, where the government could see that Scientology was a moneymaking business first and foremost. After all, Scientology literally has price lists for its courses and auditing. And in Hungary, they want to know why such a business isn’t charging sales tax. That should raise some really interesting questions about the nature of Scientology as a business, and I hope other countries pay attention.”
The indictments are likely to result in lengthy legal proceedings and appeals, however the evidence presented may offer a rare opportunity for us to see some of the intricate details of how Scientology moves money around its European branches. Jeffrey Augustine, who reports on fraud and lawsuits filed against the Church on his blog Scientology Money Project told us “this was completely predictable and not surprising in the slightest. Scientology try to get away with financial fraud in any country they can, the premier example being COSRECI in the UK.”
We will continue to bring you updates as this story unfolds.