Auditors and scholars who examined CAN accounts found massive irregularities, a usual problem in anti-cult organizations.
by Anson D. Shupe (†) and Susan E. Darnell
Article 9 of 10. Read article 1, article 2, article 3, article 4, article 5, article 6, article 7, and article 8.
![CAN president Ronald M. Loomis (1938–2020). From X.](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-41.jpg)
![CAN president Ronald M. Loomis (1938–2020). From X.](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-41.jpg)
Cult Awareness Network (CAN) president Ronald M. Loomis was especially pleased in Spring, 1987 when an executive director search committee recommended Cynthia S. Kisser of Woodstock, Illinois after six months of deliberations and interviews. He wrote effusively to the CAN affiliates and newsletter subscribers about her business credentials (aside from her academic credentials): “Her professional background includes four years as a business manager with responsibility for general ledger, payroll records, tax reports, monthly billing and company financial matters. She has supervised staffs, set up computer operations and resolved hardware and software matters… She has taught Business Communication for a community college.”
Yet, problems that had plagued the top levels of CFF (Citizens Freedom Foundation) as it turned into CAN continued. Recall that Kent E. Vaughn, CFF Board of Directors member 1982–84, came to the disturbing conclusion that there was an “inner board” of CAN with an agenda beyond CAN’s public pronouncements. In 1981 earlier national director of CFFI-IS (Citizens Freedom Foundation – Information Service), John M. Sweeney, Jr. saw economic problems in the board’s behavior. While he resigned for a number of reasons, including CFF’s rejection of a deprogrammer’s ethics code while simultaneously heavily involved in often illegal, coercive, expensive, and often ineffective “rescues,” he was also unhappy that the group had failed to reimburse him on occasion and considered a collection suit against CFF-IS.
However, his final complaint was that something untoward was occurring in CFF’s management of money yet met a stone wall of silence when he called for an inspection of these issues. He voiced his frustrations: “Why has the CFF-IS Board done all in its power to prevent an audit of the corporate books? Why has over $20,000 worth of donations been buried in an interest-bearing CD account (did the Board approve this action?) or in a checking account? Why wasn’t this donation money stipulated for use in anti-cult projects? Why was money freed up so easily to finance an all-expense-paid trip to Dallas for the Board for an unnecessary meeting yet legitimate bills could not or would not be paid on time? I have records of threatened phone cut-off and late payment notices due to C.’s inefficient method. To protect my reputation and credit rating the WATS and SPRINT have been disconnected because they are in my name” (Letter from John M. Sweeney, national director CFF-IS, from Redondo Beach, CA, February 18, 1981, CAN files).
Ironically, CAN had the same troubles during its existence and demise in 1996. For example, when CAN executive director Kisser came into office in 1987, she appears to have made some radical changes in CAN financial management. In essence she consolidated its finances, with minimal executive office accountability to members. According to one informant knowledgeable about the group, “Kisser changed the financial lines of the Cult Awareness Network. Kisser demanded that all Cult Awareness Network chapters send all of the donations they received, including uncancelled checks, to her at the national office in Illinois. Kisser then cashed the checks, kept the amount of money that she wanted and then mailed the remaining money to the affiliated chapters as she saw fit.”
Ex-deprogrammer Jonathon Nordquist, having met Kisser at a CAN convention, remembered: “Shortly after, [Mary] Krone told me that once Kisser fully learned how to do her new job, that Krone would no longer be working at the national offices… Additionally, I recall an incident that occurred while I was riding in an elevator during the [CAN] convention in Pittsburgh. Also present in the elevator were Mary Krone, Krone’s son, John, Cynthia Kisser and Rachel Andres. Mary Krone was talking about the finances of the Cult Awareness Network when Kisser stated to her: ‘If the cults ever get a hold of our books we’d be in trouble.’”
Having expended its insurance money on fruitless appeals of the Jason Scott/Rick Ross/CAN deprogramming case that awarded Scott over $4 million, and wasted funds on other lawsuits, as its income decreased CAN began to default on its phone bills (all the while continuing to pay director Cynthia Kisser $3000 per month plus lesser amounts to CAN staff).
![Jason Scott (screenshot).](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-1-37.jpg)
![Jason Scott (screenshot).](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-1-37.jpg)
There are several implications. All not-for-profit organizations are required to follow standard ethical and legal protocol particularly with respect to financial management. Complete detailed records must be consistently maintained, then supported by both internal and external audits to ensure both accuracy and propriety. The operations and cash flow must conform to generally accepted accounting standards. A painstakingly extensive review of the allegedly complete court-ordered financial records of CAN confirms blatant impropriety. CAN was classified as 501 (c) (3), a not-for-profit, tax-exempt organization with the Internal Revenue Service. To qualify and comply, certain measures of practice and accounting are required; the organization is accountable by Federal law. The organizational test is a mandate that specific conditions be met and maintained for tax exempt qualification according to the IRS code. To qualify for 501 (c) (3) status the organization must be formed exclusively for literary and scientific purposes; the manner of operation must be described in detail. Furthermore, the articles of the organization must appropriately limit the organization’s purpose, regulate the allocation of contributions, and foster the best interests of the people.
CAN’s admitted affiliation with deprogrammers as confirmed in the Scott trial, among other places, appears to conflict with the IRS limited purpose constraint as well as in the express powers clause [7.8.2] 3.3.4 (02-231999), Express Powers that Cause Failure of Organizational Test.
An organization does not meet the organizational test if its articles expressly empower it: “To have objectives and to engage in activities which characterize it as an “action organization” (Reg. 1.501(c)(3)-1 (b)(3)(iii)); To carry on any other activities (unless they are insubstantial) which are not in furtherance of one or more exempt purposes [Reg. 1.501(c)(3)1(b)(1)(i)(a.)]”
By affiliation, CAN casts at minimum a shadow on these two IRS provisions. We would maintain that given the records and documented activity of this organization, CAN acted in multiple violations of its IRS classification.
One initial and standing concern is that of missing or duplicated documents. The general condition of the financial records is deplorable. Documents are not in chronological order or in keeping with standard bookkeeping practice, making tracking a monumental feat. There are substantial gaps and pertinent items, statements, canceled checks, audits, and so forth are missing. The list is significant. There are no itemized journals or ledgers of income or expenditures (standard accrual accounting), merely sporadic incomplete lists. The financial records are highly questionable and are at best professionally sloppy.
Cash flow is abundantly problematic and highly critical. In mere illustration, a petty cash withdrawal of $1,500 was observed. The established, acceptable norm for an organization of this size would be to maintain a generous $300 fund in total. Of greater concern, A. review of cash receipts reflects numerous and substantial checks issued by CAN (National) to CAN itself with no indication or record of who received said funds, nor of the generating purpose. To illustrate, a $12,000 check issued 3/25/94 by CAN to CAN itself lists an account category #4250 for which there is no correlating account description. The canceled check #184 is not present among those in that series, nor is it ever listed as an expenditure. Interestingly, similar documentation and lack of canceled checks occurs with numerous other like entries.
Or another example: on 1 /19/95 two (2) checks (#5876 and #5877) were issued to J. Gordon Melton and Anson Shupe, respectively, for $600 each. Given their extensive study in this field, both men are known critics of CAN and would certainly not be on its payroll (i.e., certainly not “anti-cult apologists”). This time period ties in to the Lippmann/Scientology lawsuit against CAN with neither party involved beyond personal academic interest and neither party deposed by CAN as part of the lawsuit. (Depositional checks to professionals are rarely made out before depositions are taken.) Neither scholar when questioned has any knowledge of the existence of these checks. The checks were then processed as stop payments. Melton’s the same day, Shupe’s not until April, yet the funds ($1,200) were never reentered into the CAN account to offset the would-be stop payments. Both checks were physically located, reflecting stop payments, yet the bookkeeping does not appropriately correlate. Uncannily, these particular entries were discovered by Shupe personally while examining financial data in the CAN boxes. Why were bogus checks issued, who retained the $1,200, and more importantly, how many other orchestrated entries lie within the records of CAN and to whose financial gain?
![CAN critic J. Gordon Melton, in whose name CAN issued and then cancelled a check: prank or fraud?](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-2-24.jpg)
![CAN critic J. Gordon Melton, in whose name CAN issued and then cancelled a check: prank or fraud?](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-2-24.jpg)
Moreover, while not unheard of, not-for-profit CAN maintained a steady and healthy separate account with the Merrill Lynch firm housing an extremely active money market account with no correlating income relationship as well as certificates of deposit averaging $40,000, far exceeding the standard required reserve. Despite these investments, letters and audits indicate financial distress. According to records, CAN was unable to pay concurrent Sprint network telephone bills, netting numerous final disconnect notices. These concerns led to a recommendation issued by Virginia Hulet, CAN Treasurer (who resigned in October 1989) asking that all Sprint credit cards be returned. From whom? Phone records indicate substantial use by deprogrammers of CAN phone lines, calling from CAN’s national office. We ask again, was this careless mismanagement or diverted attention?
In 1987 Cynthia Kisser, CAN’s Executive Director, directed all chapters’ funds to be generated directly to the National Office. While there was noted Board objection, this practice was implemented, allowing the National complete control of funds with minimal accountability.
![Cynthia Kisser during a very sympathetic interview by “60 Minutes”’s Lesley Stahl, 1997. Screenshot.](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-3-16.jpg)
![Cynthia Kisser during a very sympathetic interview by “60 Minutes”’s Lesley Stahl, 1997. Screenshot.](https://bitterwinter.org/wp-content/uploads/2024/06/BITTER-WINTER-3-16.jpg)
Peat Marwick (KPMG), a respected Certified Public Accounting firm, was procured by CAN to conduct its annual audits. Auditing correspondence consistently expressed numerous concerns regarding the need for improved accounting principles, further suggesting accrual accounting. They cited concern with the lack of internal audits indicating neglect of Auditing Standards No. 50. In the face of rising litigation no expenses allotments were made to accommodate this clear necessity appropriately. Finally on June 1, 1994, a letter signed by KPMG Peat Marwick expressed serious concern regarding CAN’s solvency. In a letter dated June 8, 1995, KPMG indicated an imbalance between the general ledger and the bank reconciliations that had existed since July 1994. In a final communication KPMG elected to withdraw its affiliation with CAN in the face of growing financial concerns.
Countless fringe questions arise when analyzing the CAN boxes: why do CAN records contain an inordinate amount of letters of dispute (i.e., a $26,228.76 disputed Conference balance with the Crown Plaza Hotel in White Plains, NY, November, 1995); why were multiple financial accounts simultaneously active (i.e., 4/9/96 when Cynthia Kisser requested NBD Bank of Skokie to transfer remaining funds to an account titled Cult Awareness Network Corp aka CAN D.I.P); why would an organization of good intent be faced with fiercely escalating litigation (i.e., in 1994 there were 51 lawsuits in various states of settlement as presented to KPMG for completion of ‘94 audit): and finally why did Cynthia Kisser and several staff members continue to receive their salaries (Kisser $1500 every two weeks) beyond the filing of bankruptcy? More importantly, what became of CAN’s final funds in the midst of dissolution?
These examples serve only as a small segment of a greater deluge of seeming impropriety within the CAN financial records. Two outside veteran auditors when questioned regarding potential innocent explanations for these issues stated that this appears to be a case of “money laundering” or of “looting the assets” (their words). Again we ask, is this a case of atrocious bookkeeping or instead calculated misappropriation? Neither option is acceptable per auditing and IRS protocol.
We have evidence of substantial malfeasance throughout the documents purportedly representing the complete fiscal records of this organization. The “why” remains yet to be addressed, the leaders and trustees are yet to be held accountable. This preliminary finding is just that: a highlighted report of what we believe to be a much darker indication than that of poor record-keeping. A Brownie troop with a naive, inexperienced leader might maintain such records and be accused of poor bookkeeping. For an organization with the capital, the influence, and the magnitude of CAN, such explanations are inexcusable and suspect.