Wednesday, 23 September 2009

24 The Bookshop

Scientology’s network of bookshops in France, SEL, is entirely independent of the Paris Celebrity Centre, a representative insisted – a key plank of their joint defence against fraud charges.

When Aurore Nadler stood up to testify she knew she had her work cut out for her.

Nadler was the representative for Scientologie espace librairie (SEL), the movement’s network of bookshops in France, which was charged with fraud.

SEL’s Paris branch, which according to the indictment made 80 percent of their turnover, was at the centre of the fraud allegations.

In his indictment, investigating magistrate Jean-Christophe Hullin had concluded that the bookshop and the Celebrity Centre were not the distinct entities they claimed to be – a crucial part of the indictment against them both for organised fraud.

And he had his own ideas about who really ran the business.

Nadler’s difficulty was that although she was in court representing the network of bookshops, she was not its official manager.

That was Danish Scientologist Karen Hansen, who had refused to meet investigators or appear at the trial. From her base in Denmark, she had delegated all powers to Nadler, so it was she who had answered investigators’ questions.

She had told them that she rarely saw Hansen and had been unable to give a clear account of who handled SEL’s business mail, Hullin noted.

Hullin also noted that only Nadler and one of the defendants, Didier Michaux, a salesman at the bookshop, had access to SEL’s bank accounts.

His indictment had argued that Michaux was in fact the de facto manager of the bookshop by virtue of the duties he performed there, something Michaux had denied – and which he denied again during the trial.

Adding to Nadler’s problems was the fact that another of the defendants in the trial, Jean-François Valli had worked both for the bookshop and the Celebrity Centre. For Hullin, that further blurred the lines between the two organisations.

Judge Sophie-Hélène Château had also questioned a number of defendants on a period when the two organisations had shared banking facilities.

Nadler’s task then was to convince the court that the two Scientology organisations – the non-profit Celebrity Centre and the for-profit bookshops – were the distinct entities they claimed to be.

The investigating magistrate had suggested that the curious links between the two had effectively allowed the Celebrity Centre to use the money paid by followers to subsidise the activities of the Paris bookshop – and thus escape paying taxes on the sums involved.

After sketching out the history of the bookshops, Nadler denied suggestions from the prosecutors during the trial that SEL’s accounts were opaque, insisting on their total transparency.

“Every transaction is understandable and visible,” she told the court – including those with the Celebrity Centre.

There had been a period from 1998 to 1999 when the Celebrity Centre had been forbidden to use banking cards, preventing followers from doing courses, she said. So the centre had asked them to help out and they had agreed to give them access to their bank-card machine.

She had checked with an accountant beforehand, the arrangement had been a temporary one and every transaction had been recorded and properly attributed, she said.

Full price never applied

Judge Château had already questioned several witnesses to try to find some logic in the pricing system, which seemed to her to vary from client to client. The pricing of the e-meter, a device used in Scientology auditing, had come in for particular scrutiny.

Nadler, as other Scientologists had already done during the trial, attributed this to Scientology’s discount system.

“There is a full-price from which all the discounts are calculated,” she said, “and I have never heard of an e-meter being sold at full-price.”

These discounts could run up to between 10 and 40 percent and were accorded to members who bought annual or life membership for example, she said.

Judge Château intervened, pointing out that Scientology’s own expert witnesses who had testified to the e-meter’s technical accuracy had been asked what a reasonable sale price would be – and they had suggested far lower figures than those set by the movement.[1]

“Each e-meter is made by hand,” said Nadler. “Some parts are perhaps expensive.” And they also came from 20 different parts of the United States, so transport costs also had to be factored in. In addition to which, they had to be manufactured in special low-humidity conditions.

And why was it necessary to send them back to the United States for maintenance, asked the judge? Were there not technicians who could do it cheaper?

These maintenance checks were not compulsory, she said. But in any case it had to be done by the makers – and that kept the costs down, because they knew what they were doing, said Nadler.

And how much did it cost, asked the judge? About 200 dollars, said Nadler.

And why was it necessary to own two e-meters?

The e-meter was a key tool for auditing and an auditor could not allow a session to stop half-way, so there was always a back-up model in case of a malfunction – however rare an occurrence that might be, said Nadler.

So a lot of Scientologists chose to have two e-meters, while others made arrangements among themselves to share their models, she added.

Later, Judge Château asked how they could justify selling an e-meter for 4,700 euros.[2]

That was the full-price, said Nadler: and the full price was never applied. “The full price is a basis for discounts. You need a basic full price and then you have discounts of between 10 and 40 percent.”

The indictment had also suggested that the mark-up on the books sold in the SEL network was 10 times higher than comparable books in commercial publishing. How did she respond to such allegations that the books cost to much, asked the judge?

“I don’t know where that idea comes from,” said Nadler. The 69-franc cost of a copy of Dianetics for example (10.5 euros), compared favourably with a similar-sized book from a French publisher, which cost 129 francs (19.6 euros).

And why did the bookshop order such large numbers of books in advance, asked the judge? “One gets the impression that it is not good for business,” he added.

That was down to a policy set out by Scientology’s founder, L. Ron Hubbard, said Nadler. They were not allowed to fall below a certain level of stocks – 500 copies of Dianetics, for example.

“That favours your suppliers more than you,” said the judge.

“No, no, no,” said Nadler.[3]

“We don’t do credit”

The indictment had also noted a period when the Crédit Lyonnais bank’s fraud prevention unit had in May 1999 reported problems with payments coming through SEL’s bank-card machines.

There had been a surge in the use of the bookshop’s machines and a number of payments had been disputed and cancelled by the supposed purchasers, who said they had been billed against their will. What had happened there, asked the judge?

“It wasn’t a lot,” said Nadler. Only four bills were involved, and this was the period when the bookshop had shared its facilities with the Celebrity Centre. But one of the bills had been for 10,000 francs (1,500 euros).

One follower had wanted to take a course, an over-zealous employee had sold it, but the sum was not there, which had alerted the anti-fraud unit.

“A strange coincidence,” said the judge.

And who was the salesman involved, asked the judge? Nadler did not know.

“There aren’t that many,” said Judge Château. Nadler had already said that the bookshop employed three staff members – including Valli and Michaux.

“I’m astonished there wasn’t an inquiry,” the judge added.

“I’m certain that we settled the problem, but I don’t remember the details,” said Nadler.

Judge Château asked how the commission system worked at the bookshop, and Nadler explained that if someone bought a book on the basis of advice from one of salesmen, then that salesman would receive five to 10 percent commission.

And what about the delivery-on-payment system, asked the judge? Why run a system under which, when you paid for something in instalments, you only received the goods once the final payment had been made?

“That is a commercial point,” said Nadler. “We don’t do credit because it is hard to manage. We can’t allow unpaid articles to be taken out.”

So if someone chose to pay for an e-meter in instalments, they might have to wait a year before they took delivery, said the judge.

That was normal, said Nadler: “In the same way people pay in advance for courses.”

Judge Château turned to the issue of the personality tests.

Earlier that day, Eric Roux, representing the Celebrity Centre, had played down their significance as a recruitment tool: but it had played a key role in drawing the plaintiff Aude-Claire Malton into Scientology.

Château pointed out that Michaux, while he had also minimised the importance of the test, had also confirmed putting copies of it into books he sent out to customers – at their request, he had said.

Nadler did not think that Michaux had done this systematically. “It was a completely personal initiative.”

If Michaux had been employed by the bookshop, asked the judge, why had it been he who had sold the former plaintiff Eric Aubry his courses, which were the domain of the Celebrity Centre?[4]

“From what I heard, M. Aubry only wanted to deal with Michaux,” said Nadler.

Who runs the shop?

Michaux, she said, was no more than a bookshop employee, selling goods, cleaning the premises and managing the stocks, she said.

“Is he not a bit more than that?” asked the judge.

If he really had been the de facto manager (as the indictment had suggested) he would have managed the other Scientology bookshops around France, said Nadler. But he did not manage them: Hansen did.

And how did she manage this from Denmark, asked the judge?

“I am in contact with her regularly,” said Nadler. At one point, she said, the police had been in her office suggesting that Hansen did not even exist: so she had given them her address.

While Hansen did not handle the day-to-day orders of the bookshops, she was responsible for the overall management, taking care of major decisions, the annual accounts and signing contracts, said Nadler.

Asked by one of the other two judges why the French network of bookshops was managed by someone in Denmark, Nadler explained that this was because she knew Hubbard’s writings very well.

Had Michaux been at fault in his dealings with Aubry, asked Judge Château?

“I don’t know,” said Nadler. “I don’t think so. He sold M. Aubry what M. Aubry wanted to buy. M. Aubry wanted to buy the complete library.”

Judge Château opened the questioning to her two colleagues on the bench, one of whom asked about a passage in which Hubbard compared an e-meter to both a microscope and a lie detector.

This could only be a reference to the foreword to Electropsychometric Auditing: Operators Manual (1952), which had already been quoted during the trial.

Hubbard wrote:

[T]he data contained herein is equally applicable to any “lie detector” as used by police and in psychology laboratories. The measurement of thought with a meter is not new; the understanding and accuracy of measurement is new…

…The invention of the electropsychometer, like so many important things in this cynical and dull age on Earth, is not cited by our generation as very important. Yet in a future time historians may well spend pages and pictures upon it.

For if the truth be known, the electropsychometer utterly dwarfs the invention of the microscope, for Leeuwenhoek found the way only to find bacteria; the electropsychometer provides the way for Man to find his freedom and to rise, perhaps, to social and constructive levels of which Man has never dreamed, and to avoid perils in that route which Man, in going, would have found more deadly than any bacteria ever evolved or invented.

It was this last excerpt passage that one of Scientology’s own experts on the e-meter had dismissed as, “a far-fetched, ambitious and laughable stream of verbosity”.

“It is a very high-performance tool and in this way it is not false to say that it is a scientific instrument as well as a religious one,” said Nadler. “We do not have the right to sell an e-meter to someone who does not want to use it for religious purposes.”

Science and religion

The third judge picked up the questioning, reminding Nadler that some of Hubbard’s claims for the device had left two of their own experts smiling. They had expressed doubts about what they considered to be Hubbard’s unscientific use of terms such as mass and energy.

Nadler insisted Hubbard’s terminology was both very precise and scientific, describing Scientology’s belief that painful memories were what made life difficult for so may people.

“The terminology used comes from our own beliefs,” she added. “He doesn’t say that that is how scientists say things.”

“But there is a mix here of scientific and religious terms,” the judge objected.

“If you are talking about the e-meter… Scientologists have their jargon,” said Nadler. “We have created our own language: energy exists.”

“That means something precise in physics, so that can create confusion,” said the judge.

“I’m not an expert on the e-meter,” said Nadler: but nor was she shocked at Hubbard’s description of the device, she added.

Questioned further, Nadler explained that she had been a Scientologist since 1994 and in the 15 years since then had spent about 35,000 euros on her progress in the movement.

Maître Olivier Morice, the lawyer for the plaintiffs, took over the questioning. He got her to confirm that Didier Michaux had worked both for SEL, the for-profit network of bookshops, and for the non-profit association set up around the Celebrity Centre.

He asked about the word technology, which cropped up so often in Scientology’s literature: was this meant to have a scientific connotation?

“I have trouble understanding technology,” said Nadler.

As he done earlier in the trial, Morice referred to a passage he had quoted from Scientology’s Impact magazine.

In it, Mike Rinder, then commanding officer of the Office of Special Affairs International, had denounced what he called the suppressives – the enemies of Scientology and mankind.

“We won’t stop until those SPs have been shattered: because we do have the technology and the truth,” Rinder had said.[5]

Would Mme Nadler like to explain what this meant, asked Morice?

“No comment,” said Nadler. “I have no explanation to give Maître Morice.”

For the prosecution, Nicolas Baïetto pressed for more details of how Karen Anselm could manage SEL, the network of bookshops in France, without actually being there.

He also pointed out that Nadler had been unable to provide the investigating magistrate her telephone number.

Nadler repeated: “I see her rarely, but I am in regular contact with her.”

Danièle Gounord, a spokeswoman for the movement in France, seemed to think that Nadler ran the business when questioned by investigators, said Baïetto.

“She is mistaken,” said Nadler. “She is confused about SEL. Apparently she doesn’t know about SEL.”

Baïetto asked a series of fairly technical questions on the businesses’ bills as they concerned two of the defendants, the salesman Michaux and Valli.

Nadler provided her answers with increasing confidence and she seemed to have a firm grasp of the details and the documents concerned.

Baïetto did not seem satisfied however, and when he found the answers irrelevant tried to break in – but each time Nadler insisted on finishing what she had to say before letting him put the next question.

The client-transfer accounts

Then Baïetto raised the question of the client-transfer account, and suddenly Nadler appeared to be in difficulty.

In his indictment, the investigating magistrate Jean-Christophe Hullin had noted that a client-transfer account had been set up to allow clients to use transfer money from their Celebrity Centre account to one at the bookshop so they could buy materials there.

This was just the kind of blurring of the business lines Hullin and the prosecutors needed to undermine Scientology’s claim that the two organisations were entirely separate – a key element in their defence against fraud charges.

Nadler tried to explain. “People want to use their money, to use it for a service, to buy a book or something.”

For Baïetto, this transfer of money looked very much as if the Celebrity Centre was giving refunds – and that the bookshop was benefitting.

For Nadler, it an was entirely different situation if parishioners had given money to the Centre which they then spent at the bookshop.

“There are no bad intentions,” she said. “It is transparent.” But she was clearly rattled.

When Baïetto asked how this had worked in the case of the plaintiff Aude-Claire Malton, she said she did not know, which the prosecutor seemed to have trouble believing: there were large sums of money involved here, he said.

Hullin’s indictment had noted that salesmen, such as Valli, who had worked for both the SEL and the Celebrity Centre, had been paid commission by the bookshop for bringing in clients – another blurring of the lines. It was Valli who had sold Malton her books and courses.[6]

Judge Château chose this moment to bring the discussion around to hard sell again: were sales staff not trained in this?

“Not at all,” said Nadler. They were trained in Hubbard’s writings. And like Eric Roux, the representative for the Celebrity Centre, she offered Hubbard’s definition of hard sell.

“Hard sell, for us, means to take care of the person,” she said, using the English phrase.

“That is the Scientology definition,” said the judge. “That is not the translation.”[7]

Nadler tried again. It meant she said, to “take the time necessary with a person to understand their needs and know what writings… will answer their questions.”

When Maître Louis Pamponet, SEL’s defence lawyer, took over, he got her to clarify that the full price of the e-meters, as set down in the official lists, were effectively notional figures, as people always qualified for some kind of discount.

“Different Scientologists have different rights to discounts, which can give the impression that the prices are arbitrary,” said Nadler.

Thus the plaintiff Aude-Claire Malton had been sold one for 3,290 euros; and former plaintiff Eric Aubry had bought two e-meters, for 3,180 and 3,600 euros.

This was an important point for the defence: the indictment had argued that the high price of the e-meters, the figure of 4,870 euros was mentioned, was substantially higher than that of a similar device on the open market (762 euros).

But Pamponet pointed out that Nadler had been unable to find a single bill or receipt indicating that any client had paid full price on an e-meter.

“There is no full-price,” said Pamponet. “She could not find one, she spent last night looking for it.”

And was the salesman free to set the price, he asked?

“Absolutely not,” said Nadler.

He also asked her about the defendant Didier Michaux who, he said, had been betrayed during the trial as someone who was not completely honest. Was that her impression?

“Not at all,” said Nadler. “For me, M. Michaux is a good Scientologist. He has never done anything irregular. He is someone who is very appreciated.”

The prosecutor Baïetto had referred earlier to questions that the tax authorities had raised about the client-transfer accounts: so Pamponet took her back to this point.

“Did you have any problems regarding this from the tax authorities,” he asked?

“Absolutely not,” said Nadler.

And had the tax authorities offered any advice regarding these accounts?

“Absolutely not.”
[1] The indictment was a little confused on this point. It said the manufacturing price of an e-meter was at most 5,000 francs,or 762 euros. (One of Scientology's own expert witnesses put the figure even lower, at 500 euros.) The indictment cited a sale price of 4,847 euros, describing that as about 10 times higher -- when in fact it is more like six or seven times higher (6.36 according to my calculation). Unless the figures quoted are wrong this may simply have been a miscalculation, perhaps based on having confused the franc and euro figures.
[2] I may have misheard: Hullin’s indictment cited a figure of 4,847 euros.
[3] The indictment noted that SEL’s sole supplier was the Denmark-based based New Era Publications International, which produces Hubbard’s works.
[4] The court had already heard that from September 1997 to April 1999 Aubry had spent a little over 324,000 francs (nearly 50,000 euros) on Scientology and finished up heavily in debt. He withdrew his complaint shortly before the court case, having settled with the movement.
[5] Rinder, of course, is now considered a suppressive himself, having quit the movement and been one of the sources for the St Petersburg Times’ series on the violence and abuse inside the movement that focussed on David Miscavige’s assaults on senior staff – including Rinder.
[6] It was Nadler herself who had revealed to investigators during interviews.
[7] Again, it is worth pointing out, that in Scientology terms, Nadler was offering a perfectly accurate definition. “Hard Sell means insistence that people buy. It means caring about the person and not being reasonable about stops or barriers but caring enough to get him through the stops or barriers to get the service that's going to rehabilitate him.” HCO policy letter Sept. 26, 1979.
Not also the official Scientology definition of hard sell: 1. means insistence people buy. (HCO PL 4 Mar 65 II) 2. caring about the person, not being reasonable with stops and barriers and getting him fully paid up and taking the service (LRH ED 159R-1 INT) Modern Management Technology Defined.

1 comment:

  1. Golden Era Productions makes the E-Meters mentioned in this article and they cost around $300-$400 USD to produce. I know, I use to make them. This cost is also high because outdated means of assembly are employed as well as using electronics technology which is 15-20 years out of date. The new Mark VIII Ultra E-meters that have yet to be released cost $40 to make in Japan. In 2004 the Scientology organization was still intending to sell these new meters for around $3500 USD as well.