"In a government of law, existence 
of the government will be imperiled 
if it fails to observe the law scrupulously."

- Justice Louis Brandeis

2. The "Backdoor" Approach

WHEN we review the justice Department's all-agency conspiracy against the  Church of Scientology, one feature of the plot almost immediately captures our  attention:

In their efforts to subvert the rights and immunities of the church, which  they found restrictive upon their aims, the lawyers at Justice acted with  specific knowledge and deliberate design to circumvent those constitutional  protections.

Their modus operandi was to encourage other instrumentalities of the federal  government to do the dirty work, grossly abusing the police powers vested in  them. When some of these agencies moved slowly and cautiously, complaining of

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"the religious obstacle," and citing the Supreme Court decision in  the Ballard case, the U.S. attorneys decided, upon their own authority to  declare the Church of Scientology a nonreligion.

By thus ostensibly placing the church outside the protective high wall of the  First Amendment, the Government could brand the organization a criminal activity  and seek to justify their persecution of the sect as a fight against crime.  This, despite the fact that in all the years of intensive investigation  conducted by the combined forces of federal, state and local law enforcement,  not one prosecutable offense came to light. Report after report by undercover  agents sent to spy upon the church contain statements absolving the  Scientologists of the offenses for which they were supposedly being  investigated. Yet, being thus aware from their own probes that the monstrous  charges against the church were false, the justice Department prosecutors  continued to press for development of a criminal case.

In a memo dated November 13, 1962, Nathan E. Kossack of the Department of  justice's Fraud Section wrote:

"The entire operation appears to be a complex hoax, involving a possible  harmful device, and many persons have apparently been defrauded into subjecting  themselves to the treatments. State authorities have apparently been  unsuccessful in their attempts to deal with the problem.

(Deletion in FOI copy)

"We have referred all information to the postal inspectors, but due to  the religious guise employed they are moving cautiously in view of the Ballard  case...

"We have asked FDA to expedite its handling of the matter; they, too,  have been moving slowly until now...

"We are also maintaining close contact with the Tax Division. The  'church' is presently involved in a U.S. Court of Claims proceeding in which its  tax exempt status is in issue. A successful tax case would greatly enhance our  chances for criminal prosecution."

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In the Internal Revenue Service, the Justice Department found an especially  useful confederate, since, of all federal bureaucracies, the tax agency had  exercised the broadest and most arbitrary police power, unrestrained by either  the courts or the Congress. Time after time during what the late Senator Edward  V. Long called "the Revenue Service's lengthy and tarnished record,"  IRS agents have routinely and with impunity, violated both federal and state  laws.

Moreover, the revenue collectors, who claimed the authority to determine the  bona fides of religious bodies for tax exemption (an act of grace, according to  them) would resort to their usual "backdoor" investigative practices -  electronic surveillance, infiltration of the church by undercover agents, the  building of raw-data files, burglary, wiretapping, and dissemination of false  reports.

The Church of Scientology case was of particular interest to the IRS for  several reasons, one of the most important being that the Service was even then  trying to establish legal precedents which would support its later and  incredible "religious purposes test," which would fully breach the  wall of separation between church and state with an official definition of  religious faith.

The IRS had mounted several covert operations which were useful in  penetrating not only church affairs, but other constitutionally protected  activities of the citizenry as well. One of these was known as the "Case  Development Unit," a pilot project aimed at gathering intelligence with  which to build criminal cases against targeted individuals and groups. The  programme was initially carried out in Los Angeles and later merged with the  nationwide "Intelligence Gathering and Retrieval System" (IGRS).

The latter was a vast system of espionage in the classic police-state mould.  It employed paid informants and secret agents to gather raw data relating to  both individuals and organizations, whether they were suspected of law violation  or not.

A Senate committee which later studied the operation,

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noted: "It was not intended that a specific allegation would precede  intelligence gathering; rather, it would follow."

The true purpose of the IGRS was to compile computerised dossiers on people  and organizations which the Government did not like, and to use this information  - much of it false to degrade or destroy them. A large part of the material  collected by the IRS spies had nothing whatever to do with tax. It was, rather,  concerned with such personal data as the subject's drinking and sexual habits;  political learnings, close associates, and so on. Elsa Suarez, an IRS undercover  operative who took part in the sordid Operation Leprechaun in Florida, said:  "It was like a small CIA operation."

When IRS officials were questioned under oath by Congressional committees,  they revealed that the IGRS files contained 465, 442 names. Although the  operation - as IGRS was discontinued in 1975, there is evidence that it has  continued under other guises. For example, the Tax Resister Project is still in  full swing.

In any case, it was a regular practice of the IGRS to disseminate the raw  date to other government agencies, who in turn transmitted it to foreign  authorities and organizations. It became a global gossip circuit.

The IRS had other programmes in progress in addition to the IGRS, all of them  inquisitorial. One of these was the Special Service Staff (SSS) reorganized  under the Nixon administration, but which had been operating since 1969 under  the designation, Activist Organization Committee on Government Operations. The  avowed purpose of this spy squad was to investigate 22 organizations in the U.S.  classified as extremist, militant, or subversive. However, the list was rapidly  expanded to include many other groups, including the Church of Scientology.

Some idea of the programme's broad scope may be seen in an internal  memorandum which declared:

"One of our first problems is to define or to determine what kind of  organization we are interested in. We have a general idea, but we have no fixed  limits. " (Emphasis added.)

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Later, another staff memorandum further clarified the project's over-all  objective: "What we are doing is trying to assemble all information  available from within the Internal Revenue Service, from the Federal Bureau of  Investigation, from the Department of Defense, from any other federal  agency."

In consolidating and substantially expanding their massive intelligence  files, the IRS was not particular about the way in which their information was  acquired.

By devious means, some as yet unknown, a large number of documents - internal  memoranda, private correspondence, banking records, etc. - stolen from the  Church of Scientology, turned up in the IRS archives.

Perhaps a memorandum from Donald F. Durkin, then chief of the Revenue  Service's Foreign Operations Division explains part of the mystery. Writing to  the head of the Audit Division in Los Angeles, Durkin said the IRS London  representative, who was in possession of some of the church's cancelled checks,  would like more of the same.

"It must be remembered that we are attempting to prove Mr. Hubbard's  income. He is not cooperating with us. Therefore, the 'backdoor' approach is  being used. However, by the use of this method, complete and detailed  verification is needed."

When Durkin complained of Mr. Hubbard's lack of "cooperation, "  what he meant was that the church founder would not assist his avowed enemies in  their efforts to build a criminal case against him.

It is still not known how many covert operatives the IRS has had in the  Church of Scientology over the twenty-odd years it has monitored, investigated  and re-investigated the sect. Church officials suspect that some of the  disaffected members who secretly fed the federal agency information and stolen  documents from church files were, in fact, infiltrators from the beginning of  their association with the church.

One of these was Lauren Gene Allard, who became affiliated with the church in  Arlington, Texas in March 1969.

Allard, who was then 28 years of age and the divorced

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father of three children, went to California almost im mediately after he  became involved in Scientology. He joined the church's Sea Organization and was  assigned to receive training on a ship in San Diego. His superior was Jerry  McDonald who, it was later discovered, was a justice Department informant who  had joined the church the preceed ing year. At the time he enrolled in the  church, McDonald was in possession of a boat, The Blue Fin, which had been used  previously in narcotics smuggling. Two years later he was arrested along with a  narcotics ring aboard another ship, the Makaira, but was given immunity from  prosecution as an informant.

After a very brief period of indoctrination under McDonald, Allard was given  a job with the Advanced Organization in Los Angeles. His new position was  director of disbursements in the finance section of that group. His work  consisted in paying bills, and purchasing supplies for the staff.

By curious coincidence, a month after Allard entered the service of the  church, the IRS reported in an internal memorandum that the agency had received  confidential information concerning the church flagship, Apollo. The same memo  also contained data regarding the ship Blue Fin and its operation.

Sometime around May 1, 1969, the Church of Scientology appointed Allard Flag  Banking Officer. In this position, he was responsible for receiving the tuition  fees paid to the Advanced Organization, and for the deposit of funds in the bank  and disbursements.

Again, by odd synchronism, soon after Allard assumed his duties as banking  officer, IRS mysteriously came into possession of cancelled checks and other  bank documents detailing financial transactions of the church.

As a security move, during Allard's period of employment, his superior, Allen  Boughton, had him change the combination to the church safe so that it would be  known only by the two of them.

After less than two months in his job, Allard decided to

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leave the church, offering several different reasons for doing so. He voiced  dissatisfaction with his room and salary, his food and clothing. He also  complained that he had been ordered by Boughton to falsify tax records, although  under cross-examination in court later, he admitted that his boss' request may  have been to correct errors in the records, not to falsify them.

According to church executives, one day in early June, Allard allegedly  opened the church safe and took from it a number of confidential documents,  $23,000 in Swiss francs; $800 in American Express travelers checks; $2400 in  Australian travelers checks; and $50 in cash. He then collected his personal  belongings, both from his office and his residence, borrowed a friend's car and  drove to the Los Angeles International Airport. There he boarded a plane to  Kansas City, where he was to meet his girl friend, Judy Koch.

It was not until the following day that church officials learned that Allard  and the contents of the safe were missing. After consulting with their  attorneys, they filed a complaint with the Los Angeles police, alleging that  Allard had stolen the church's money and disappeared.

Meanwhile, in Kansas City, the absconding staffer contacted the IRS district  office. After he had identified himself by name, two IRS special agents were  immediately dispatched to meet him in the Country Club Plaza, where he was  interviewed in the agents' car. There he turned over to them the documents he  had stolen from the church safe.

Two days later, Allard left Kansas City and traveled to Florida. During a  sworn deposition taken by church attorneys, he was asked where he got the money  to leave. He replied, "I always have money in my pockets." He also  said that he had a safe deposit box in Kansas City. The following colloquy then  took place between him and the Scientologist counsel:

"What was contained in the safety deposit box?"

"Cash and various personal records and things that were important to me."

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"How much cash was in the safety deposit box?"
"I don't recall the exact amount."
"Your best estimate."
"In the neighborhood of a thousand dollars or more."
"Do you recall the name of the bank?"
"No, I don't."
"Do you remember its location in Kansas City?"
"I could take you there, but I don't know the street name."  "Why did you keep cash in a safety deposit box?"
"Just always did."
"Where did this cash come from?"
"My earnings."
"As what?"
"As a student."
"What was your declared income for your years as a student?"
"I have no recollection."

Allard's deposition was riddled with similar instances of memory blackout.

A warrant for Allard's arrest, based upon the church's complaint, was issued  in Los Angeles. He was, at the time, in hiding in Florida, apparently under IRS  protection. In a sworn statement, Allard's father said that his son told him  that the IRS "instructed my son to keep on the move and to stay low  regarding an outstanding warrant for his arrest issued against him for an  alleged theft from the Church of Scientology Advanced Organization in Los  Angeles."

Allard was eventually arrested, however, and returned to Los Angeles to stand  trial. While he was in jail, he was visited by IRS agent John Daley; a member of  the State Attorney General's staff; and a special agent of the FBI. All of them  recorded interviews with the defector.

Allard never had to stand trial for his admitted theft of church documents  and his alleged theft of church funds.

The case was dismissed on the recommendation of the Deputy District Attorney  who conceded that Allard had stolen the documents, but not the money as alleged.  He argued

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that the defendant's contention "that he did not take any money from  Scientology and that accusations made against him by Scientology were made to  discredit him appears to be well founded, or at least sufficient to raise a  reasonable doubt as to the defendant's guilt."

This opinion flew in the face of a preliminary hearing, in which Judge Glenn  A. Wymore found probable cause to hold Allard for trial.

As for Allard's larceny of the church records, the Government held out the  novel, but legally untenable theory, that it is quite all right to steal other  people's property, provided you turn the loot over to the IRS.

Once freed on the charges against him, and apparently with the encouragement  of the IRS, which had made good the promise of two Kansas City agents that the  Service would "pull him out of it one way or another," Allard now sued  the Church of Scientology for malicious prosecution: his complaint asked for  $150,000 general damages and $150,000 exemplary damages.

For the main thrust of his argument, Allard's attorney cited a church policy  known as Fair Game, which had been officially cancelled by L. Ron Hubbard before  Allard had any contact with Scientology. The practice of Fair Game, which, the  church maintains, was never understood by the general public, was formulated in  response to heavy attacks by Scientology's enemies in the early 60's. It stated  that a Suppressive Person or group (i.e., those seeking to destroy the church)  "may be deprived of property or injured by any means by any Scientologist  without any discipline of the Scientologists. May be tricked, sued, lied to or  destroyed."

While such extreme tactics against a mortal enemy are perfectly acceptable in  wartime and, indeed, have been used by warring nations throughout history, they  are viewed with abhorrence when practiced openly in peacetime - at least in  Western societies, where appearances of good sportsmanship must be maintained.

Perhaps L. Ron Hubbard took the measure of the enemies

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who surrounded him on all sides, their daggers drawn - so to speak - for the  kill. The Scientologists had been tricked, sued, lied to, and made an avowed  target for annihilation. Would not turnabout be fair play (or fair game) under  such circumstances?

Be that as it may, by the skillful use of this recinded church policy, and  other inflammatory assertions concerning Scientology, Allard's lawyer played  upon the emotions of the jury. In high dudgeon, the twelve good men and true  awarded Allard $50,000 in compensatory damages and a whopping $250,000 in  punitive damages.

The appeals court later found that the disparity between the compensary  damages and the punitive damages suggested that "animosity was the deciding  factor" in the jury's determination of the awards.

Nevertheless, the court let stand the jury's verdict and merely reduced the  amount of punitive damages to $50,000.

The church took their case to the California State Supreme Court and later to  the U.S. Supreme Court; but review was denied in both appeals.

Thus, as a result of his apostasy and theft, Allard was awarded $100,000.

According to internal memoranda of the IRS, some of the documents stolen by  Allard from the church were "communications between persons using first  names only, and appear to be the basis for an international arrangement to  transmit orders to buy and sell European currencies." There was nothing  illegal, of course, about trading in foreign exchange. Bankers at the time were  doing it on a grand scale. If, on the other hand, IRS could show that the church  was moving money out of the country through illegal or surreptitious channels,  they could make a strong case against allowing tax exemption to the Church of  Scientology.

That is where an IRS undercover agent known as QO-41, who had Mafia  connections, proposed that he help the church establish a system of transporting  money out of the country. The idea was to involve church officials in tax  avoidance or

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currency law violations. His offer was made through his Mafia contact, who  introduced him to Attorney Thomas Cellin then representing the church in the  Allard case. Celli apparently had, in the past, represented the mafioso as a  legal client in his 14W practice.

The efforts of IRS slyboots QO-41 were frustrated, however, when Attorney  Celli learned that the Mafia go-between was connected with the drug traffic, and  immediately severed all relations with him.

QO-41 took his instructions from and reported to IRS Agent David Forsythe, of  the Service's "Case Development Unit."

Such a programme, of course, set the American system of justice upon its  head. It completely subverted the established principle of Anglo-Saxon law under  which an offender is punished for unlawful acts, if the offender is found guilty  by a court of competent jurisdiction. It substituted an inquisitional spy-system  of social control in which the Government turns loose a body of secret agents to  exercise a pervasive surveillance over the citizenry, with the object of  punishing those the authorities in power conceive to pose a threat to their  autocracy. That is why the IRS delators and undercover operatives gathered  intelligence against ideological and political groups, as well as those who  challenged the inequities and unlawful enforcement of the lax laws. It is why  the Church of Scientology was placed upon the "Subversives" list even  though there had never been a single report worthy of credence that the church  had ever been involved in political subversion.

The church had mounted an effective, nationwide campaign against abuses in  government, including an operation based on the theme, "Audit the  IRS". During the latter coastto-coast exposé, the Scientology activists  published materials obtained under the Freedom of Information Act, which  disclosed policies and practices in the IRS that the Service found embarrassing.

Documents from the files of the IRS Intelligence Division reveal that the  agency suspected one of its former agents of aiding the Scientologists in an  anti-IRS campaign on college

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campuses. The IRS internal report covering this activity states that "we  may have to respond to the propaganda by one or all of the following  methods."

It would be edifying to know the kind of response the agency planned; but the  "methods" 'which the special agents were to employ were deleted from  the document before it was released under the FOI Act. The IRS has resolutely  refused to disclose what they were.

In the all-agency complot against the Church of Scientology, the Justice  Department assigned Assistant Attorney General Mitchell Rogovin to assist the  IRS in its surveillance and intelligence gathering.

At his instigation, Tax Division Attorney Michael Sanders asked the FBI to  infiltrate the church "to verify unsupported allegations that the cult is  experimenting with harmful drugs, encouraging immoral sexual practices and using  derived form subjects' individual's [sic] personnel files for blackmail and/or  extortion purposes." (Emphasis added.)

The Case-Development Unit of the IRS in 1968 was receiving sensitive data  concerning the church from another undercover operative identified as IC-29 in  the agency's files. He was, in fact, a private investigator, who was acting as a  kind of double agent. He hired himself out to the church to conduct confidential  investigations aimed at protecting the security and sanctity of the sect. To  enable him to carry out his assignments, the church entrusted him with  information of a personal nature regarding parishoners, past and present. These  data, together with copies of his reports, paid for by the church, were turned  over to IRS Special Agent David Forsythe.

By the early 70's, the IRS, together with other cooperating federal agencies,  had an imposing number of informers and hawkshaws with their hands and noses in  what the Service called Mr. Hubbard's "grab bag of philosophical  voodooism."

The trouble was that the "pseudo- scientific religious sect" defied  all efforts to pin something illegal on it - something that would stand up in  court. At one point, frustrated and

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impatient to build a criminal case against the church, the federal  conspirators decided to frame the Scientologists. An FBI undercover operative,  assigned to work with the FDA, was instructed to plant drugs in the church's  Chicago mission. When he refused, and told his superiors that he no longer  wanted to work in that kind of intelligence, he was informed that he was being  put on inactive status, and was asked to sign a form letter that he was not  critical of the FBI or its Director.

During an interview, the spy-informer related the sordid details of his  assignment:

"He [his agency contact] told me that I was going to be shifted in the  pool, because a new face was needed and it needed to be a young face. And the  Justice Department wanted it done immediately. This was even over the Director's  head. The Justice Department was his boss. So, they are shifting me, and I know  I'm going to be working for a different Department.

"They told me to go into a franchise office, which is part of the Church  of Scientology in Chicago. He indicated to me that he was very interested in  finding something illegal. I went into the center that Saturday night, looked  over the place. I do admit that there were all kinds of people there; however,  that wasn't my interest. My interest was to see if there was anything out - like  drugs or anything, or any claims that were illegal to make, and so on.

"I found nothing illegal, and personally enjoyed the lecture. . . . They  were interested in hearing that there was something illegal, and they wanted to  hear it now. So they indicated to me that I should drop some drugs in the place.  This one fellow, after leaving the office and telling me that this case has to  be handled, said this is what we're going to do ... and he had the drugs with  him. (This was in the car.) He said, 'I want you to go back there, and I want  you to drop the stuff.'

"I sent a letter to where my payroll checks were coming out of, which  was the FBI, indicating that I no longer want to work in this capacity for them.  And they called me in and said,

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'Look, you're still a special employee. This is merely putting you in an  inactive capacity and we want you to sign this form letter stating everyone is  happy and you're not mad at the Director, and everything is fine.' "

Seven years later, the covert operative was still serving the Bureau from  what is evidently a fair-sized federal fink corps, known euphemistically as a  "special employee pool."

In their mounting desperation, the officials who were directing the offensive  against Scientology grasped at any straw that promised a case against the  church. After the circulation among federal agencies of a slanderous report by  Charlotte Murphy, an attorney in the tax agency, falsely alleging "specific  evidence of firearms violations by Scientologists," the Bureau of Alcohol,  Tobacco and Firearms began to take an interest in the sect.

Agents of the BATF (at that time a unit within the IRS) were investigating an  explosion which occurred at the Explosive Corporation of America in Issaguah,  Washington, when they learned that Steven Heard, a Scientologist, was an  employee of the firm.

In a telex memorandum to the BATF headquarters in Washington, D.C., the  Seattle branch reported that Heard's alibi "for the time before, during,  and after the explosion is his presence around the Church of Scientology."  Then, the special agent added:

"Our investigation will lead us into the church and break his alibi, at  which time we feel there may be some repercussion. Heard is reported to be such  a radical on explosives that the only way he can get satisfaction in his  mannerliness [sic] is to set off an explosive. He is reported to have a supply  of explosives in his home which we understand he has conversed [converted] some  to bombs ...
"We are endeavoring at this time to secure enough probable cause to  obtain a search warrant for Heard's home. This may take a week, more or  less."

The report went on to reiterate another completely untrue "fact"  about the church:

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"We understand the church of Scientology is on the subversive list in  England and would probably be classed as a militant organization..."

The agency later admitted -in a letter to Heard, replying to his inquiry  under the Freedom Information Act, that the allegations about him contained in  the telex report were false, and promised to remove the data from their files.  The derogatory publicity generated by the BATF, however, remained in media files  uncorrected.

Undeterred by the failure of their incursion into the church through the  Steven Heard incident, BATF agents had another go at the Scientologists in 1973.  Acting upon some unknown person's unsubstantiated allegations that  Scientologists in Omaha, Nebraska had been stockpiling firearms and ammunition  as part of a plot to overthrow the Government, BATF Special Agent Robert  Stumpenhaus was assigned to infiltrate the church to conduct an undercover  investigation.

After covertly monitoring the church's activities for a month, Special Agent  Stumpenhaus reported that "at no time during this investigation was  anything turned Up to indicate that the Scientology Mission or Don Hill [mission  director] himself were involved in any militant activity or that they had any  militant activity planned."

Despite this clean bill of health by his own investigator, however,  Stumpenhaus' superior, Special Agent Thomas J. Sledge notes in his memorandum  that FBI Special Agent Gary Lasotta "has been contacted regarding the  overthrow of the Government, and has been advised that the ATF is closing its  investigation."

Sledge also reports that he interviewed the relative of a couple who were  members of the church in Los Angeles. He quotes the woman's biased opinion that  "Mr. Don Hill and this church are swindling the people." He further  includes in his memorandum her version of Scientology's religious beliefs.

While wholly unrelated to the avowed purpose of the BATF investigation, such  statements were nevertheless fed into the

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official files to be disseminated to other agencies, thereby expanding the  already massive compilation of false or misleading data concerning the church  and its adherents.

In short, it is black propaganda, deliberately planted in the record by the  BATF agent.

During its long years of unsuccessful assault on the Church of Scientology,  the IRS has felt the inadequacy of its own spy apparatus. Responding to the  acute need for auxiliary forces, the IRS Commissioner ordered District Directors  throughout the U.S. to obtain information (including unsubstantiated raw data)  from "local police departments, welfare agencies, licensing boards, medical  societies, psychiatric professional associations. "

In effect, the order was for a kind of general exploratory search, in  violation of the Fourth Amendment.

Even with this elaborate and pervasive intrusion into a constitutionally  protected area, the IRS has not been able, in 20 years, to achieve a final  victory - that is, to put an end, once and for all, to the Church of  Scientology.

The prolonged campaign does not trouble IRS minions, who are as resolved as  ever to continue their intensive investigation of the church and its members.

In one instance, at least, a court did not share the Government's contempt  for reasonableness in their dealings with the church. In 1975, when ruling on a  tax exemption claim by two church members, the Ninth Circuit Court took judicial  notice of the situation in these words:

"We are disturbed by the length of time that the issue of the tax status  of Scientology churches and ministers has been in controversy. We presume that  the Commissioner will bring this protracted controversy to a close with all due  haste. Certainly any continued and unwarranted delay on the part of the  Government in reaching and resolving the merits of this class of tax suits may  suggest bad faith on its part and the

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prospect of awards for attorneys' fees and damages under the First Amendment.  We are concerned, too, over the prospect of needless litigation and appeals which have become a burden to this  court,"

There is no evidence, however, that this reprimand from the bench had any  more impact on the IRS than previous censure by Congressional committees and the  courts.

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