CATS out of the bag
Anti-tax group had early links to the Church of Scientology
By Bob Davis

In the early fall of 1991 Atlanta businessman Ralph Regan 
participated in a local radio talk show dealing with abuses 
by the Internal Revenue Service and problems with the 
federal tax system. Shortly afterward, the 35-year old 
nurseryman received a call from Victor Krohn, the head of 
Citizens for an Alternative Tax System (CATS), who asked 
Mr. Regan to start up an Atlanta area CATS chapter.

A few months later Mr. Regan resigned his post after 
discovering that CATS had been formed by David Miscavige, 
the leader of the Church of Scientology. Mr. Regan is now 
engaged in a campaign to persuade other evangelical 
Christians to steer clear of the anti-IRS group he believes 
is a front group for Scientology. WORLD's editors were 
unaware of CATS's history when they published an article 
quoting a CATS activist ("Taxing America's patience," April 
12).

Scientology combines aspects of Eastern religion (such as 
reincarnation), tales of space aliens, mind control practices, 
and a penchant for earning hundreds of millions of dollars. 
In a court filing, one of its many entities, the Church of 
Spiritual Technology, listed over half a billion dollars in annual 
income.

Scientology's road to financial success began in 1950 with 
the publication of founder L. Ron Hubbard's Dianetics: The 
Modern Science of Mental Health. In the early 1970s the IRS 
demonstrated that Mr. Hubbard laundered millions of dollars 
through a dummy corporation in Panama and stashed the 
money in Swiss bank accounts.

From 1967 until 1993 the IRS refused to grant the Scien-
tologists a religious tax exemption. According to the U.S. Tax 
Court, the church was not tax exempt "because it was op-
erated for a substantial commercial purpose" that benefited 
Mr. Hubbard, his family, and a few Scientology insiders.

The denial of the tax exemption began what Scientologists 
call "the IRS war." In the early phases of the war, the IRS tax 
court cited Scientologists for falsifying records and burglar-
izing IRS offices. Mr. Hubbard's third wife, Mary Sue, and 10 
other top Scientologists went to prison in the early 1980s 
for infiltrating, burglarizing, and wiretapping more than 100 
private and government agencies.

One of the strategies used by Scientologists in the later 
phases of the IRS war was to capitalize on public dissatis-
faction with the IRS through the formation of two organi-
zations designed to target IRS abuses and to eliminate the 
agency altogether. The first of these was the National 
Coalition of IRS Whistleblowers-which successfully drew 
attention to IRS abuses around the country. CATS, which 
has as its goal the substitution of a national sales tax for 
the income tax (and the subsequent elimination of the IRS), 
was the second.

Both the Coalition and CATS were cited in a 1991 Better 
Business Bureau publication as "front groups for the church 
that is not a church." Plenty of evidence links Scientology 
with the early history of CATS:

# The formation of CATS was announced by David Miscavige 
in a cable TV program on Sept. 17, 1990. As Chairman of the 
Religious Technology Center, Mr. Miscavige was, and still is, L. 
Ron Hubbard's successor as the leader of the Church of 
Scientology.

# Guest editorials appearing in newspapers around the country 
identified Mr. Miscavige as a "founding member" of CATS.

# CATS's first address was the home of a Scientologist.

# CATS ran a promotional advertisement in USA Today that 
was paid for by the International Association of Scientologists.

# CATS received other logistical support, including preparation 
of pamphlets soliciting membership, from Scientology-linked 
groups such as Freedom Magazine.

# CATS's original leadership was composed of Mr. Krohn, 
executive director, Steven L. Hayes, president, and Brendan 
Haggerty, secretary-treasurer-all Scientologists.

Mr. Krohn does not deny that CATS originated from within the 
Church of Scientology, but he says, "We soon moved on. There
is no longer any tie with the church and there hasn't been any
bond or affiliation since the genesis of CATS in 1990."

According to Mr. Krohn, only four of the current 11-member 
CATS board of directors are Scientologists. Mr. Krohn says 
there are no data on the religious affiliations of the 15,000 
to 20,000 people who are active in CATS.

Despite the fact that non-Scientologists are apparently a 
majority on the CATS board, Mr. Regan states that the bond 
between Scientology and CATS is not really broken. He points 
out that the two key leadership roles, executive director and 
president, are held by Scientologists. "They still control the 
program, they control the dollars," said anti-CATS crusader Mr. 
Regan.