From: Keith Henson <hkhenson@netcom.com>
Subject: Suit filed against IRS
Date: 1999/01/01
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[ Article reposted from alt.religion.scientology ]
[ Author was Keith Henson <hkhenson@netcom.com> ]
[ Posted on Fri, 1 Jan 1999 02:17:36 GMT ]
Well, here it is folks.
I ran so close to the deadline I decided to take the chance and file it in
San Jose rather than San Francisco. Fortunately (for both of us) I did
not get Judge Whyte. The case number is CV-98-21290 JW/PVT.
I could not serve it after filing because the US Attorney's office did not
seem to have anyone in the office that late on New Year's eve.
Thus I can fix it and give them a first amended early next week, so all
those suggestions about spelling, grammer, legal and facts will be welcome
(if any of you find it in the forgery storm).
Those of you with an eye for such things can tell it was patched
together from a number of sources. I especially appreciate Alison
Elliot's fine paper (sorry I have never managed to get a message to
you) and Graham Berry's exhaustive filing in the Pattingson case.
I want to thank a number of people who provided the inspiration for me
to get this filed on the last day of 1998.
To Sam Rosen for his latest efforts. I am not going to detail what
Mr. Rosen has been doing but they are certainly an inspiration, and
perhaps a violation of the Canon of Ethics.
To Helena Kobrin for her tricks no notice and getting all the checks my
wife and daughter have written since before I first read a.r.s. Alan
Cartwright, her smarmy boss rates a notice as well.
To the forgery team. Even if you are not working for scientology, you
were a *big* inspiration.
Special thanks to the guy assigned to "handle" me at the San Jose Org,
I am not sure I would have got it done except for your remarks about
my wife.
To Everybody! A Happy NEW YEAR!
Keith Henson
**********
H. Keith Henson
P.O. Box 60012
Palo Alto, CA 94306
(650) 423-4040
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
) Case No. C-98-
H. KEITH HENSON, an individual, )
Plaintiff, ) VERIFIED COMPLAINT FOR
) INJUNCTIVE RELIEF AND
V. ) REWARD OR DAMAGES (TO BE
) PAID OUT OF RECOVERED
) TAXES)
INTERNAL REVENUE SERVICE, )
Does 1-36, )
Defendants. )
)
)
Plaintiff H. Keith Henson alleges as follows:
INTRODUCTORY AVERMENTS
1. Plaintiff brings to this court evidence that
defendant Internal Revenue Service engaged in a conspiracy with
Scientology corporations (or was coerced by them) to illegally
overrule the Supreme Court and defraud the United States of in
excess of one billion dollars. Plaintiff believes IRS acted in
violation of the Establishment clause of the Constitution of the
United States and of Section 170 of the Internal Revenue Code as
interpreted by the Supreme Court in Hernandez (1989). One
purpose of this suit is to make the court aware of certain
abuses and to provide the court with an opportunity for a
judicial review of IRS Revenue Ruling 93-73.
JURISDICTION AND VENUE
2. Jurisdiction is proper as this is a matter
involving a Federal agency.
According to Scientology's head David Miscavige (page
20, line 6, October 8, 1993 speech, Exhibit 1) the amount in
controversy exceeds One Billion Dollars ($1,000,000,000),
exclusive of penalties, interest, and costs. Plaintiff is
seeking the standard 10% award or such award as is deemed just
and proper by the courts in the spirit of que tam.
3. Venue is proper in this District (or any other)
in that the federal agency in question is omnipresent and in
that events or omissions giving rise to the claims occurred or
partly occurred in this district.
THE PARTIES
4. Plaintiff Henson is a citizen and resident of
the City of Palo Alto, County of Santa Clara, State of
California. Plaintiff's has standing to bring this suit in that
various branches of Scientology have use sums of tax exempt
income in excess of one million dollars to harass plaintiff
through no fewer than 6 lawsuits (some declared baseless) and
have paid private investigators with tax exempt funds to attack
plaintiff's reputation by using private investigators to
"interview" neighbors and have employed a private investigator
to physically attack plaintiff while plaintiff was engaged in a
constitutionally protected activity (picketing).
In addition, Plaintiff has standing as a Federal
taxpayer to bring this suit under Flast v. Cohen through the
establishment clause of the Constitution.
5. Defendant IRS is an agency of the United States
Government.
GENERAL AVERMENTS
On or about October 1, 1993 defendant IRS granted
501(c)(3) tax exempt status to a large number of interconnected
Scientology corporations. There were irregularities in granting
the tax exempt status some of which have been disclosed in
deposition. "The exemption applications filed by the Church of
Scientology and its affiliates were not processed pursuant to
the IRS' standard procedures." (Exhibit 2, UNDISPUTED FACTS . .
., Tax Analysts v.IRS 94-CV-00220 (TFH) USDC, District of
Columbia, page 3 paragraph 21.)
The IRS (in spite of a summary judgement in the
reference case requiring disclosure) has never released the text
of its secret closing agreement with Scientology. However, this
document, or perhaps a late draft of it was leaked to the Wall
Street Journal in December of 1997. (Exhibit 3) There are a
number of startling features contained in this document,
including the use of Scientology's agents as an extension of the
IRS enforcement arm, and limitations on the IRS granting similar
status to competing churches. This filing only lightly touches
upon the complex intertwinings of "Church" and state found in
that Exhibit 3.
Independent of the irregularities, the IRS granted
charitable contribution status to payments made to Scientology
for "auditing" and training by interpreting Section 170 of the
Internal Revenue Code to include payments made to Scientology
branches for auditing and training.
The interpretation the IRS put on Section 170 is in
direct opposition to the decision the Supreme Court made in
Hernandez (1989) where the Court held that payments for auditing
and courses were payments for service and were not deductible as
charitable contributions.
(Most of the following section is lifted from Exhibit 4, an
article by Alison Elliot titled "Can The IRS Overrule the
Supreme Court." Brackets [] below refer to the included
reference list at the end of Exhibit 4.)
Cause of Action
The claim is as follows: Section 170 of the Internal
Revenue Code allows deductions for charitable contributions. The
Supreme Court in Hernandez held that payments made to the Church
of Scientology for auditing and training sessions were not
deductible as charitable contributions under Section 170 of the
Code.[322] The Court determined that the payments were part of a
quid pro quo transaction and thus ineligible for "gift or
contribution" status under Section 170.[323]
The IRS, in Revenue Ruling 93-73, announced that
payments made to the Church of Scientology for auditing and
training sessions are deductible under Section 170 of the
Code.[324] The terms are detailed in Exhibit 3, section VII(B)
" . . . . .the full amount of the fixed
donation for these services shall be treated as a charitable
contribution under Code section 170 and shall not be
challenged on that basis."
Under Revenue Ruling 93-73, Scientologists are allowed
deductions for quid pro quo transactions which are denied to
members of other religions, transactions which have been held by
the Supreme Court in Hernandez to fall outside the purview of
Section 170 of the Code. Revenue Ruling 93-73 and the formerly
secret agreement (Exhibit 3) thus gives preferential treatment
to members of the Church of Scientology in violation of the
Establishment Clause of the First Amendment.[325]
Standing [326]
Plaintiff claims a special standing to bring this action
due to "injury in fact." Scientology corporations have paid
large sums of money collected as "charitable donations" to
harass plaintiff, up to and including physical attack on four
occasions, and for other purposes which are clearly outside of
the legislatively sanctioned uses of "charitable donations."
(For a massive listing of such abuses see
http://www.lermanet.com/cos/pattinson1.htm.)
Plaintiff refers the court to files "ceders" for an
account of three of the attacks, and "triple.picket" for the
last. ("car.chase" is another in the series.) These published
documents (which plaintiff certifies as signed declarations) may
be found at ftp://ftp.netcom.com/pub/hk/hkhenson.
In addition, plaintiff has standing as a federal
taxpayer if the court decides the above descriptions of injury
is not adequate to confer standing.
Frothingham establishes a general prohibition against
taxpayer suits.
Flast establishes an exception to the Frothingham
prohibition. Therefore, in order to assert standing as a
taxpayer, plaintiff must show that the claim falls within the
parameters established in Flast.
The nexus test from Flast requires the plaintiff to show
a logical nexus between status as a taxpayer and the claim
sought to be adjudicated.[327] The test has two prongs.[328]
First, the plaintiff must establish a logical link between his
or her status as a taxpayer and the type of legislative
enactment being challenged.[329] The Flast Court and subsequent
cases[330] have interpreted this requirement to be satisfied by
a federal tax payer only when the enactment is an exercise of
Congress's Article I, section 8 taxing and spending power.[331]
Second, the plaintiff must establish a nexus between taxpayer
status and the precise nature of the constitutional infringement
alleged.[332] This second nexus requires the plaintiff to show
that the challenged enactment violates a specific constitutional
limitation imposed on the congressional taxing and spending
power.[333]
The legislative enactment challenged in this claim is a
clear exercise of Congress's Article I, section 8 taxing power.
Congress delegates its taxing power to the IRS. The IRS
exercises that power to promulgate regulations which are
presumptively law unless found to be arbitrary and capricious.
The IRS also issues Revenue Rulings stating its opinion in
particular fact situations. While these rulings are not
considered law, there are circumstances under which they will,
in effect, carry legal weight because of the limitations imposed
on taxpayer standing. Revenue Ruling 93-73 is therefore an
exercise of Congress's Article I, section 8 taxing and spending
power. Thus, the first prong of the nexus test is satisfied.
The Establishment Clause, under the Flast holding, is a
specific constitutional limitation on Congress's taxing and
spending power.[334] The history of the First Amendment shows
that the drafters of the clause intended to prevent taxation by
the government for the purpose of supporting churches and
religious institutions chosen by the majority.[335] Thus, the
second prong of the nexus test is satisfied. The plaintiff
should therefore have standing to challenge Revenue Ruling 93-73
in federal court.
The merits of the plaintiff's Establishment Clause claim
are as follows: The initial inquiry when a claim of
denominational preference arises is "whether the law facially
differentiates among religions."[336] If no facial preference
is found, the analysis moves to the Establishment Clause test
developed in Lemon.[337] The Lemon test is a three-pronged test
and the challenged enactment must satisfy each part
separately.[338]
Plaintiff believes that a court examining the closing
agreement between Scientology and the IRS would find that
Revenue Ruling 93-73 facially differentiates among religions.
This ruling provides that payments made to the Church of
Scientology for auditing, processing, and other religious
education courses are deductible under Section 170 of the
Code.[339] Revenue Ruling 93-73 declared Revenue Ruling 78-189
(which held the opposite) obsolete.[340] Revenue Ruling 93-73
thus gives preferential treatment to members of the Church of
Scientology by allowing them deductions for quid pro quo
transactions that are denied to other religious organizations.
In the unlikely event the court did not find that Revenue
Ruling 93-73 facially differentiated among religions, the ruling
would be scrutinized under the Lemon test. Under this test, the
ruling would probably fail. The first prong of this test
requires that the enactment have a secular legislative
purpose.[341] Revenue Ruling 93-73 was issued to give
preferential tax treatment to members of the Church of
Scientology in violation of the law as announced by the Supreme
Court in Hernandez. Such a purpose can hardly be considered a
"secular legislative purpose."[342] The second prong requires
that the enactment's principal or primary effect be one that
neither advances nor inhibits religion.[343] Revenue Ruling
93-73 advances Scientology by allowing its members to deduct as
charitable contributions payments made to the Church in quid pro
quo transactions which are denied to other religions under
Section 170. The last prong of the Lemon test provides that the
enactment must not foster excessive government entanglement with
religion.[344] If the court reached this last prong, it would
find that the closing agreement entangled the government (IRS)
and Scientology to an impressive degree, making Scientology
almost part of the IRS for enforcement of the tax code on its
members. Thus Revenue Ruling 93-73 might be held
unconstitutional all three prongs of the Lemon test.
(As a further note--which was not known Ms Elliot--the
IRS deal with Scientology made IRS enforcers/informers out of a
large number of Scientology's corporate officials.
The Supreme Court has recently expressed some
dissatisfaction with the three-pronged Lemon test.[345] In Lee
v. Weisman,[346] a 1990 Establishment Clause case, the Court,
without expressly abandoning the test, did not discuss it and
instead applied a test suggested by Justice Kennedy in an
earlier Establishment Clause case, County of Allegheny v.
ACLU.[347] The test involves "a single, careful inquiry into
whether the practice at issue provides direct benefits to a
religion in a manner that threatens the establishment of an
official church or compels persons to participate in a religious
exercise contrary to their consciences."[348]
Even under this newly proposed test, Revenue Ruling
93-73 would be held unconstitutional. Revenue Ruling 93-73
provides direct benefits to the members of the Church of
Scientology, and federal taxpayers are compelled to subsidize
Scientology education courses that may be "contrary to their
consciences." Therefore, although it is not clear which test
(the Lemon test or the test outlined in County of Allegheny v.
ACLU) is to be applied in Establishment Clause cases, Revenue
Ruling 93-73 should be held unconstitutional in either case.
To sum up the argument, under Marbury v. Madison, the
Supreme Court has the ultimate duty of statutory interpretation.
Although Congress may delegate rule-making authority to
government agencies entrusted with the responsibility of
administering and enforcing specific statutory schemes, agency
regulations must remain subject to judicial review. The
situation created by Hernandez and Revenue Ruling 93-73,
discussed in this Comment, exemplifies the need for independent
judicial review.
The Supreme Court in Hernandez interpreted § 170 of the
Code and held that it did not encompass fixed payments made to
the Church of Scientology for auditing and training sessions.
The IRS, in Revenue Ruling 93-73, determined that such payments
were fully deductible under Section 170 of the Code. In effect,
the IRS overruled the Supreme Court.
In addressing the validity of Revenue Ruling 93-73, two
important issues are raised. First, a court reviewing the
controversial ruling must determine whether Hernandez precludes
any further interpretation of Section 170. Specifically, the
issue is whether the Supreme Court was interpreting a statute,
Section 170, or an agency interpretation of it. Second, the
reviewing court must examine the longstanding limitations
imposed on taxpayer standing.
Plaintiff argues that the Supreme Court in Hernandez was
interpreting a congressional statute. The Court conclusively
ruled on the deductibility of fixed payments made to the Church
of Scientology for auditing and training sessions. Therefore,
the statute was no longer subject to agency interpretation on
this issue. As such, Revenue Ruling 93-73 is invalid.
Plaintiff has more than a little sympathy for the IRS,
having been subjected--like the IRS but at a much less extensive
level--to scientology's policies of using litigation to
"overwhelm," "harass" and wear down perceived enemies and
would-be commercial competitors or whistleblowers. According to
Scientology dogma and religious scripture, "the purpose of a
lawsuit is to harass, not win on the merits." Another
Scientology directive is to "always attack, never defend." Such
litigation is intended to eliminate, harass and intimidate
witnesses, and to obstruct justice, and is funded now by tax
exempt money often illegally and fraudulently obtained from
members such as Pattinson at the URL above.
The IRS was subjected to an overwhelming number of
lawsuits in addition to private investigators poking into every
aspect of the lives of many agents and commissioners. There has
been widespread and publicly reported speculation that blackmail
or bribery was involved.
In spit of plaintiff's sympathy for the IRS, the IRS
cannot be allowed to overrule Supreme Court decisions just to
get Scientology off their backs, and out of their garbage.
FIRST CAUSE OF ACTION Against Defendant IRS and Does 1 through
36, Inclusive, for Civil Rights Violations 42 U.S.C. Sections
1985 and 1988)
Defendants, by virtue their Secret 1993 Closing Agreement with
Scientology have acted under color of Law to deprive Plaintiff
of certain Constitutional Rights including, but not limited to,
the right to freedom of religion, particularly freedom *from*
religion, by giving financial advantage to Scientology which
defendants knew from long, bitter and personal experience would
be used to suppress freedom of speech, the right of freedom of
association, the right to due process of law, the right to hold
property, the right to be free from discriminatory practices,
and the right to enjoy the civil rights guaranteed under law on
an equal basis with all citizens.
SECOND CAUSE OF ACTION Against Defendant IRS and Does 1 through
36, Inclusive, for Conspiracy (Misrepresentation of Charitable
Nature).
Defendants knew from long experience and many court cases
including the Supreme Court that Scientology was not qualified
under Section 170 as a 501(c)(3) organization. The fact that
the IRS tried to keep the agreement with Scientology secret (and
did for four years) makes it clear that defendant knew that what
they were doing violated Section 170 as written by Congress and
interpreted by the Supreme Court.
The Defendants violated public policy by conspiring to defraud
the United States' government to their personal benefit and as a
result, tax-exempt income was made available to finance overtly
criminal acts, commerciavbl activities and subversive
international political goals.
THIRD CAUSE OF ACTION Against Defendant IRS and Does 1 through
36. Declaratory and Injunctive Relief)
Plaintiff refers to and incorporates by reference, each and
every paragraph set forth above, as though each were fully set
forth herein.
Defendants through their actions described herein have committed
violations of the Establishment Clause contained in the First
Amendment to the United States Constitution and have thereby
excessively and unconstitutionally entangled Church and State.
Plaintiff desires a judicial declaration and related temporary
and permanent injunctive relief, that:
Defendants' activities, as set forth in certain paragraphs
above, are in violation of the Establishment Clause of the
United States Constitution Section 170 of the Internal Revenue
Code and that revenue ruling 73-93 be set aside by this court.
WHEREFORE, on the First, and Second, Action, Plaintiff requests:
Reasonable attorneys' fees and an appropriate Lodestar; Costs of
suit incurred herein: Such other and further relief as may be
proper and just; Punitive or exemplary damages in an appropriate
amount or a reward based on the IRS formula of 10% or as the
court deems proper.
WHEREFOR, on the Third Action, Plaintiff requests:
Reasonable attorneys' fees and an appropriate lodestar; An
injunction as requested herein; Costs of suit incurred herein;
Such other and further relief as may be proper and just. The
requested Declarations as to the applicable provisions of the
Constitution of the United States, the United States Tax Code,
and other federal and state statutes, rules and regulations that
are being violated by the Defendants.
And, such other and further relief as is requested herein,
provided at law or may be just and proper. </P> </DIR> <P>
Dated: December 31, 1998
H. Keith Henson, pro se