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Question 10

INTRODUCTION

          In the responses that follow, the Church is providing all of
the information the Service has requested in the various subparts
to Question 10. It is only fair, however, that the following
responses be considered in their proper context, and for that
reason we submit the following additional information by way of
introduction.

          Question 10 relates exclusively to public policy questions,
focusing on civil litigation involving the Church. There is no
escaping the irony of being asked to catalogue the unsubstantiated
allegations of civil litigation adversaries when those allegations
often have been manufactured, promoted, disseminated, and even
subsidized by a cadre of anti-Scientology individuals within the
Service itself. The Church does not believe that the Service as an
institution, hates Scientology. We believe there are and have
been, however, a core of dedicated "Scientology-bashers" within the
Service who have allied themselves with encouraged, and even fixed
the tax problems of the principal sources of the tired civil
allegations we are now being asked to chronicle.

          Question 10.e.i and 10.e.ii request a list of all of the tort
allegations that have been made against any Church of Scientology
in more than a score of cases arising within the last twelve years
and for copies of all verdicts, decisions or findings made by any
court that any of those allegations were true. As may be seen in
the following responses, two of the only four cases where any such
decision has been issued, and a majority of the other cases were
instigated or heavily influenced by the Cult Awareness Network
("CAN").

          CAN and its influence on the litigation in question was
described in passing at page 10-20 of our response to Question 10
of your second series of questions. There is no escaping the fact
that CAN has been able to survive financially and has drawn much of
its false veneer of credibility from the Service's recognition of
it as exempt under section 501(c)(3).

          CAN was formed in 1975, under its original name, Citizen's
Freedom Foundation. CAN's activities, from its inception until
today, have consisted of negative propaganda campaigns against
nontraditional religious organizations and promoting and
perpetrating "deprogrammings," a euphemism for kidnapping people
and using force and coercion to dissuade individuals from
maintaining their voluntarily held religious beliefs.

CAN applied for tax exemption in March of 1976 as an
educational organization. Literature provided with its

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application, however, clearly evidenced CAN's biased views and its
involvement in deprogramming. Indeed this material shows CAN's
close association with Ted Patrick (one of its founders), who has
been convicted on numerous occasions for kidnapping, assault and
related charges arising from his violent deprogramming activities.
It was Patrick who touched off the premier tort case against
Scientology when he deprogrammed Julie Christofferson in 1977.
(This is further described at pages 10-15 and 10-16 of our response
to Question 10 of your second series of questions and infra.)

          The IRS denied CAN'S initial application for exemption because
"after reviewing your publications, we concluded that a significant
portion of your viewpoints were not supported by relevant facts."
CAN reapplied in 1977 but the application and CAN's accompanying
literature showed that CAN had not reformed. Consequently, the
Service again informed CAN that its application was being denied
because "Your revised application for exemption contains
disparaging statements about organizations which are not supported
by facts. Your revised application indicates that the reasons for
our denial of your previous application are still present."
(Exhibit III-10-A).

          CAN did not give up. In July 1978, CAN submitted additional
information to the IRS including a "Statement of Purpose, Functions
and Activities" which included the claim that one of CAN's
functions was to recommend personnel and facilities for
deprogramming. CAN furnished the Service with an example of how
CAN would handle a contact from a caller who intended to join the
Church of Scientology: referral of the person to ex-members for
negative information on Scientology and to an attorney in his or
her area, as well as providing the person with a list of "Dos and
Don'ts" which included advising the person to file complaints with
the government. (Exhibit III-10-B). CAN identified the Church of
Scientology as one of its principal targets and the Service granted
CAN tax exempt status. (Exhibit III-10-C).

          From that point forward until the present, CAN has followed
the precise modus operandi concerning Scientology that it described
to the Service in 1978. CAN refers individuals to ex-members for
negative information about the Church and to attorneys who then
create causes of action against the Church that almost always
recite the same boilerplate tort claims. As will be seen in the
response to Question 1.e.i, a large number of the cases listed in
that section have been filed by attorney Toby L. Plevin. Plevin
is a CAN member who gets all of her client referrals from CAN in
exactly the manner CAN described in its 1978 application
supplement.

          CAN also continues to be involved in the felonious practice
CAN calls deprogramming, which is as flagrant a violation of public
policy as can be imagined. While CAN enjoys exempt status

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its deprogrammers are being arrested and jailed by local police
agencies and the FBI. Recently, CAN deprogrammers Galen Kelly and
Bob Moore, and CAN attorney Robert ("Biker Bob") Point, were
arrested by the FBI and charged with conspiring to kidnap Lewis
DuPont Smith, heir to the DuPont fortune, and to "deprogram" him
from his support of Lyndon LaRouche's political organization.
(Exhibit III-10-D). At this writing there are several other CAN
deprogrammers under indictment as a result of their deprogramming
activities, including Joe Szimhart, Mary Alice Chrnaloger, Karen
Reinhardt and Randall Burkey. (Exhibit III-10-E). It is troubling
that in the face of this kind of evidence individuals in the
Service like Jacksonville District EO agent Melvin Blough, continue
to use CAN as an investigative arm to drum up false charges against
the Church of Scientology. (Exhibit III-10-F).

          There are individuals in the Los Angeles IRS Criminal
Investigation Division ("CID") who harbor sentiments about
Scientology very much akin to those espoused by CAN, who have
directly brought about or have had a major influence on
Scientology-related civil litigation. Much of this information has
been covered before or is covered in more detail in the responses
to specific subparts of Question 10 that follow. Consider the
following:

          * The decision in Gerry Armstrong's case is one of those
described in detail in response to Question 10.e.ii. Armstrong's
fanatical hatred of Scientology ingratiated him with the LA CID and
earned him the status of IRS operative in an unlawful scheme to
infiltrate and destroy the Church through, among other things, the
seeding of Church files with forged or manufactured documents.
Armstrong was a link between the CID and Michael Flynn, whose
multi-jurisdictional litigation campaign against Scientology was
encouraged and assisted by the CID. (See pages 10-8 to 10-16 of
our response to Question 10 of your second series of questions).
The allegations, first manufactured by Armstrong and Flynn, have
been adopted and parroted by many of the other tort litigants whose
cases are described in the response to Question 10.e(i). In
exchange, Gerry Armstrong has been insulated from liability for his
theft of Church documents and encouraged to continue and to expand
his nefarious efforts.

          *The Aznarans, whose case was described at pages 10-18 and
10-19 of our response to Question 10 of your second series of
questions, left the Church and filed suit for $70,000,000,

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resulting almost immediately in their being embraced by the IRS
CID. The CID agents then passed the Aznarans on to like-minded EO
agents in Los Angeles who interviewed them, encouraged them to
continue their attacks on Scientology, treated their claims as fact
and used their allegations as a basis to throw five years of
cooperation from the Church down the drain. A tax debt that the
Aznarans had been unable to handle with the IRS for ten years
disappeared when they became civil litigants against the Church and
CID informants.

          *Question 10.e.iii asks for a description of the criminal case
involving the Church in Canada, which is described in the answer to
Question 10-e-(iii) and in a memo from counsel for the Church of
Scientology of Toronto attached as Exhibit III-10-U. As that memo
details, LA IRS CID agents fed information, allegations and
witnesses to the Ontario Provincial Police ("OPP") and plotted with
Armstrong, Flynn and OPP officers to bring about the "collapse" of
the Church. CID agents traveled to Canada where they encouraged
the OPP to bring indictments, offering to help locate L. Ron
Hubbard and others in the Church if OPP moved forward with their
case. The CID and OPP also utilized apostate David Mayo and his
cronies to recruit ex-GO criminals as government witnesses to
testify against the church and their former subordinates about
crimes that they themselves had perpetrated. Mayo is further
described below.

          * As early as 1969, a CID operative named Gene Allard was
allowed to get off scot-free with the out-right theft of Church
records. (See response to Question 10.d.1, infra.).

          * Laurel Sullivan, who left and became disaffected with the Church
after she was removed from her Church post for being a
Guardian's Office sympathizer, was embraced as an informant by the
CID, and was represented by a government attorney when the Church
sued her personally for improperly disclosing attorney-client
information to the IRS. (See page 3-40 of our response to Question
10 of your second series of questions).

          * As described below apostate David Mayo gained favor with the
IRS as an informant and IRS reciprocated by granting exempt status
to his group in support of his anti-Scientology stance.
This list could go on with example after example of times when
some person or organization has manifested an anti-Scientology
sentiment and has suddenly emerged as an IRS ally, operative or
beneficiary. At that moment such a person or group is transformed
into a fountainhead of unassailable virtue whose claims are gospel,
whose protection is guaranteed and who is given unwarranted,
improper encouragement and assistance. As described in detail
below, while Churches of Scientology receive unprecedented scrutiny
when they apply for tax exemption, apostates who sue the Church and
attack the religion have been aided by IRS tax exemption subsidies.

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          An anti-Scientology sentiment has existed in the IRS National
Office Exempt Organizations Technical Division, dating at least
back to CAN'S 1978 exemption. Certain EO Technical Division
officials appear to have directly colluded with the CID in 1984 and
1985, using information gathered by the CID, including the
statements and allegations of their informants, to sabotage the
Church's exemption proceedings at that time. Evidence of their
bigotry is best seen in their treatment of anti-Scientologists.

David Mayo:

          David Mayo was removed from a senior Church position for moral
turpitude. He was using his position for economic advantage. Even
more serious from a Scientology perspective, he was the source of
serious alteration and denigration of the technical scriptures of
Scientology. Rather than atone for his misdeeds, he left the
Church in 1982.

          Upon leaving, Mayo and a few others established an
organization he called the Advanced Ability Center ("AAC"), which
utilized a badly altered version of Dianetics and Scientology
technology in an effort to lure parishioners away from the Church
for economic advantage. For example, Mayo dropped the use of
Scientology ethics technology altogether, eschewing ethics as an
applicable concept. Solely for the tax advantages it would afford,
he incorporated the AAC under the name "Church of the New
Civilization" ("CNC"), but it operated solely as the Advanced
Ability Center. Mayo's prime objective was to obtain copies of the
confidential upper level scriptures so that he could represent that
CNC/AAC could deliver the entire Bridge as it existed in the early
80's and thus attract a larger following. Mayo conspired with
like-minded apostates in Europe and effected the theft of these
scriptures on December 9, 1983 from AOSH EU & AF in Denmark. These
events prompted the suit by RTC and the Church as described on
pages 10-17 and 10-18 of our response to Question 10 of your second
series of questions. Mayo also actively endeavored to lure
Scientologists away from Scientology, including putting out a
publication of negative propaganda on the Church.

          In 1984 CNC filed for tax exemption. The original application
identified CNC's source of financial support to be "Fees received
from parishioners for counseling." CNC's statement of activities
stated that "The program of activities of [CNC] are limited to
personal counseling and spiritual studies" and responded
affirmatively to questions on whether or not recipients would be
required to pay for counseling. Subsequently, Mayo gave an
opposite answer to the question. Eventually, the 1023 application
was forwarded to National Office for processing by Rick Darling who
inquired further into CNC's fundraising methods. Mayo responded
that "Parishioners receive spiritual enhancement and guidance from
the Church in a program of services for which monies are given and
received" to a question asking why paishioners would donate to CNC.

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          During the same time period Darling and Friedlander were
considering the CNC application, they were using "commercialism" as
a reason to deny tax exemption to various church of Scientology
applicants. Their purported reason was that the Church charged
fixed donations for services giving them a "commercial hue and
purpose." Shortly after issuing adverse determination letters to
the Scientology applicants, EO granted CNC's application on
substantially identical information as to funding practices.

          Mayo had become a CID informant (Exhibit III-10-G) and
Darling/Friedlander were now aware that Mayo was an enemy of the
Church of Scientology. (Exhibit III-10-H). On March 27, 1986,
David Mayo himself responded for CNC to a set of questions from
Darling. In response to a question whether CNC charged fixed
amounts for their services, Mayo provided information which
contradicted CNC's 1023 record and was flatly impossible stating
that CNC had "no predetermined price." (Exhibit III-10-H).

Frank Gerbode:

          Psychiatrist Frank Gerbode is an heir to the Alexander Baldwin
sugar fortune. He left psychiatry for Scientology in the 1970s and
for several years was the mission holder of the Palo Alto mission.
He ran afoul of Church management in the early 1980s when the
Church tried to reform his financial misdealings. In March 1984,
Gerbode left the Church to join up with David Mayo. He set up a
parallel operation he also called Advanced Ability Center in Palo
Alto which, for tax purposes, he named the Church of the Universal
Truth ("CUT"). Gerbode's 1023 application, along with those of CNC
and various Church applicants also went to Darling and Friedlander.

          The exemption applications for the churches of Scientology
were denied; the applications for CNC and CUT were granted. While
Darling and Friedlander asked endless intrusive questions of the
Scientology applicants, they chose not to find out about CNC and
CUT. For example, by the time they recognized CNC's exempt status,
CNC had long since ceased operations. Mayo had cashed in its
assets and deposited them in his personal Liechtenstein bank
account and had gone to work for Gerbode at CUT. He essentially
liquidated the corporation into his own pocket, even though it was
a non-profit organization purportedly dedicated to section
501(c)(3) purposes.

          More specifically, the last known letter from Mayo to the IRS
on the CNC exemption application is the one mentioned above, dated
March 27, 1986. (Exhibit III-10-H). According to the deposition
testimony of his wife, Julie Mayo, CNC closed its doors one month
later, on April 30, 1986, at which time David and Julie Mayo both
resigned their respective director and officer positions. They
also sold the house in which they were living that had been
purchased in their name by CNC as a "parsonage," and using other

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rsed to them from CNC as "severance pay," "travel expenses"and
"vacation pay accrued," they traveled for the next several months
to Europe, Australia and Florida with Gerbode and his wife. While
on this trip they stopped over in Liechtenstein where Gerbode
introduced Mayo to his banker who opened an account for him with
the $80,000 received from the sale of their "parsonage." CNC's
exempt status was granted subsequent to these events. In fact the
only ongoing activity of CNC at the time it was granted exemption
was ongoing litigation with the Church of Scientology.

          Gerbode obtained tax exemption for CUT ostensibly based on
representations that the organization was a church and conducted
exclusively religious activities. (Exhibit III-10-I). In fact,
once tax exempt status was obtained, CUT ceased carrying out any
religious activities and began dispensing a novel brand of
psychology under the name Center for Applied Metapsychology
("CAM"), and promoting Gerbode's personal books and literature,
co-authored by Mayo, much of which are plagiarized from the works
of L. Ron Hubbard. In 1986, Gerbode also established the
Institute for Research in Metapsychology ("IRM"), another tax
exempt organization which operates at the same address using the
same personnel as CAM, and which produces the literature and
materials that CAM promotes and distributes. IRM characterizes
metapsychology in scientific terms, making it clear it is not a
religion and followed no belief system. Yet metapsychology is what
Gerbode's church, CUT operating as CAM, dispenses.

          Compare the representations made by CUT in Exhibit III-10-I,
a letter to the IRS in support of their exemption application in
December 1985, to the representations made by Gerbode concerning
the same organization on November 2, 1992 in Exhibit III-10-J. In
the December 5, 1985 letter in support of its exemption
application, CUT discussed its purported "religious doctrine" and
"religious history" and submitted copies of their baptismal,
funeral and marriage ceremonies, representing that it was a Church
conducting exclusively religious activities. (Exhibit III-10-I).
On November 2, 1992, Gerbode wrote to the City of Menlo Park,
California in response to a "complaint that a church is being
operated at the premises" to set the record straight so that they
would not lose their zoning permit:

          CAM [really CUT] is classified under the IRS code as a church
. . . However . . . CAM does not hold worship services,
perform baptisms, or carry out other such activities typical of
churches.

* * * *

          "'Church' means a structure intended as a meeting place for
organized religious worship and related activities." We feel that
this does not apply to the building or the activities occurring
therein.

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Exhibit III-10-J.

          This is the "church" that passed muster with Friedlander and
Darling as soon as it was apparent to them that, like Mayo, Gerbode
was no longer associated with and was opposed to L. Ron Hubbard
and the Church of Scientology. Gerbode has made substantial
"contributions" to both CAM and IRM, which he deducts on his
personal income tax returns as charitable contributions. However,
at the same time Gerbode receives the direct benefit of the bulk of
these "contributions" from CAM and IRM in the form of rent,
salaries and payment of personal expenses. The organizations also
provide Gerbode with an administrative staff and office facilities,
all tax-free. The following are specific tax law violations
Darling and Friedlander could have found if they had subjected CUT
to the same kind of scrutiny they had subjected Churches of
Scientology to during the same period.

          In 1982 and 1983, prior to the incorporation of CUT, when
Gerbode was still the mission-holder of the Church of Scientology
Mission of Palo Alto, he claimed substantial tax deductions on his
personal tax returns for books, office furnishings, equipment,
artwork, etc., that he purchased for use at the Mission. When
Gerbode left the Mission in 1984 and established CUT, he donated
these same books, office furnishings, equipment and artwork to the
new corporation and again claimed them as charitable contribution
deductions on his personal tax return. These were listed as
donations in the 1023 application for CUT that Darling reviewed in
1986. When Gerbode left Scientology in 1984 he evicted the mission
from his building in favor of his new operations, CAM and IRM from
which he now collects rent. It is also evident that he launders
donations to CAM/IRM back to himself as rent in order to get the
benefit of both the charitable deductions and depreciation
write-offs.

          The IRS continues to probe litigation involving the Church
while it ignored litigation against Mayo et al. Indeed the Service
gave a de facto subsidy to the Gerbode/Mayo litigation by granting
exemption to their litigation tax shelter. In the letter that Mayo
wrote to the Service in support of CNC's exempt status in March of
1986 (Exhibit III-10-H) he sent along part of the complaint in the
suit RTC and CSI had brought against Mayo and CNC which alleged
theft and violations of the RICO statute. Darling apparently did
not consider it necessary to inquire about the possible public
policy implications of this litigation once he saw that Mayo was on
opposite sides in the litigation to the Church and granted exempt
status.

          In 1986, Gerbode and Mayo established and obtained tax exempt
public charity status for the Friends of the First Amendment
("FFA"), an organization purportedly established to support and
promote First Amendment rights, but which in fact enabled Gerbode
to claim tax deductions for hundreds of thousands of dollars he

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"donated" to FFA, which sums were then used to pay Mayo's
litigation costs in his litigation with the Church. Although
Gerbode is not a party to this litigation, a central issue in the
suit concerns the control of copyrights in the name of L. Ron
Hubbard that Gerbode has exploited. Gerbode struck a deal with
David Mayo that Mayo will continue the litigation provided that
Gerbode funds it, with the understanding that Gerbode will be
reimbursed for the litigation costs if Mayo wins a counterclaim for
damages. Thus, Gerbode has used FFA to deduct as charitable
contributions what are in reality his own litigation expenses, that
he expects to recover if the litigation is successful. David Mayo,
on the other hand, hopes to net millions of dollars if the
counterclaim is won. Gerbode has also disguised some of the
millions of dollars he laundered through FAA so that they would not
appear to be from him in order to avoid FFA being found to be a
private foundation, and cemented this by shutting FFA down just
before its advance ruling period on private foundation status
expired in 1990.

The only question Mayo's and Gerbode's groups were asked concerning
litigation was whether their "legal defense fund" was set up solely
to battle the Church of Scientology. When they answered in the
affirmative, exemption was awarded.

Unlike CNC, CUT, and CAN, who to this day enjoy exemption, our
principal clients have no such status. Yet we alone of that group
have been and are providing truthful and full answers to each
question you have asked.

----------------------

All of the information the Service has requested in the various
subparts of Question 10 is contained in the responses to the
individual subparts that follow.

* * * *

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Questions 10.a, 10.b, 10.c and 10.d.2

          In question 10 of our second series of questions, we expressed
our concern over the possibility of continuing violations of public
policy and requested certain information to assuage these concerns.
We have additional follow-up questions in this regard.

          a. Attached is a document relating to a program referred to
as Snow White that apparently existed as of December 16, 1989.
Please explain the apparent discrepancy between the document
contained at the attachment and the response to Question 10.b.

          b. The response to Question 10.b refers to a decision by
Judge Osler of the Supreme Court of Ontario (page 10-5). Please
provide a complete copy of the cited opinion.

          c. What is the status of Operation Transport Company? Does it
continue in existence? If not, please specify when and to whom all
assets were distributed or transferred.

* * * *

          d.2. Please provide the following information with respect to
Exhibit II-10-A; (i) fill in the blank under the heading of
"Primary" contained in #6; (ii) an explanation of the reference to
"HF" or "AS" under the heading of "Primary" at #7; and, (iii) fill
in the blanks under the heading of "Vital Targets" contained in #7.

-----------------

          As a preliminary matter, we note that question 10 has two
subparagraphs denominated as "10.d." For the sake of clarity, we
will refer to the first as "10.d.1" and the second as "10.d.2."
Subparagraph 10.d.1 and paragraph 10.e are addressed in separate
responses. This response addresses the remainder of question 10.

Subparagraph 10.a

          Subparagraph 10.a asks for an explanation of an "apparent
discrepancy" between the response to Question 10.b of your second
series of questions and Exhibit II-10-A.

          That which is attached is a copy of a document written in
December of 1989 by a person holding the position of Snow White
Programs Chief in the Office of Special Affairs United States,

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and describes her functions and those of the Snow White Unit. The
document also specifically mentions the Snow White program and its
"Ideal Scene": "All false and secret files of the nations of
operating areas brought to view and legally expunged and OTC,
"Apollo" and LRH free to frequent all Western ports and nations
without threat and all required ports open and free."

          Initially, it must be stated that the document in question was
stolen from Church offices by an individual who had infiltrated the
Church at the behest of the Cult Awareness Network. It was then
passed on to the IRS by the CAN infiltrator via CAN. (See page
10-20 of our response to your second series of questions and supra
for discussions of the Cult Awareness Network).

          The "apparent discrepancy" to which subparagraph 10.a refers
seemingly arises from use of the word "programs" in a post title
that includes the words "Snow White" viewed against the statement
on page 10-5 of our response to your second series of questions
that "The Snow White program is not being executed today." There is
no inconsistency. That same page also states that the term Snow
White became synonymous with the activity of legally locating and
correcting false reports on the Church. The Church vigorously
pursues these objectives through the use of the Freedom of
Information Act and through direct negotiation with government
agencies intended to persuade them, at minimum, that if expungement
of false reports is not feasible, corrective reports should be
filed.

          The original Snow White program, provided as Exhibit II-10-A,
was written specifically to address problems which existed in 1973
with respect to OTC, the Apollo and Mr. Hubbard. Because the
United States State Department and other government agencies had
engaged in the circulation of false reports, free access to various
Western ports and nations had been severely curtailed. The Apollo
was sold in 1975, OTC became inactive at that time, and Mr.
Hubbard passed away in 1986. Clearly, the original Snow White
program became obsolete within a couple of years of its creation
and is no longer in effect. In fact, the Apollo no longer exists.
Once converted by its new ownership to a restaurant in Texas, it
was involved in a train collision and in dry dock was cut into
scrap. So, there is no way the Apollo will be frequenting Western
or any ports!

          However, obsolescence of the actual program did not invalidate
Mr. Hubbard's observation that when governmental and police
agencies are allowed to accumulate false information in their
files, and disseminate it to other agencies, they then "...tend

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to act on the file without the presence of the real scene data
which is factually good but which is then ignored." In an ongoing
effort to practice the Scientology religion free from the
interference of misinformed government agencies, the Church
continues to pursue the Snow White objectives with the legal means
at its disposal. Only when the Church is free from governmental
harassment and is accorded its rights will the 6 need for Snow
White activities vanish.

Subparagraph 10.b

          Subparagraph 10.b requests a copy of Justice Osler's decision
cited in the June submission. A copy of that Supreme Court of
Ontario decision is submitted as Exhibit III-10-J-1, with the
appropriate sections highlighted.

Subparagraph 10.c

          Subparagraph 10.c addresses the present status of OTC, as well
as details regarding the timing and distribution of any of OTC's
former assets.

          OTC effectively ceased to operate in late 1975 when the Church
activities that had been housed on the Apollo moved ashore in
Florida. OTC remained inactive from that point forward except for
ongoing litigation against the Portuguese government which is
described on page 10-3 of our response to your second series of
questions.

          In July 1981, OTC's aggregate assets were approximately
$2,244,252 plus Pounds Sterling 2,254,852. At that time, OTC
transferred all of its assets except for approximately Pounds
Sterling 200,000 and its pending Portuguese claim to the
Scientology Endowment Trust. This trust was recognized as tax
exempt by the IRS under Section 501(c)(3) in 1983 after the
particulars relating to the transfer of funds from OTC were
specifically reviewed. In 1988, OTC dissolved and all assets still
remaining, approximately $180,000, were transferred to Church of
Scientology Religious Trust.

Subparagraph "10.d.2"

          In Subparagraph "10.d.2," you ask to have some blanks in the
copy of the Snow White program provided to you with the June
submission filled in and for an explanation of the terms "HF" and
"AS."

          The version of the Snow White program provided with the June
submission contained blanks in the places that you noted,
apparently left there by whoever retyped that version. We have
located, and are including here as Exhibit III-10-K, another

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version which appears to be a copy of the original version and
contains no blanks. The abbreviations "Cont," "Gdn" and "DG/US" in
Vital Target 7 stand for Controller, Guardian and Deputy Guardian
United States.

          The abbreviation "HF" stands for Hubbard Freedom Foundation.
Our records show that it was set up as a Liberian corporation in
November 1972 for scientific, research and educational purposes,
received a total of $500 from OTC, but then never became active and
never received any other funding.

          The abbreviation "AS" stands for American Society which was
another Liberian corporation also established in late 1972, at or
around the same time as the Hubbard Freedom Foundation and probably
for similar or related purposes. The best available information is
that the American Society had a fate similar to Hubbard Freedom
Foundation, receiving a small amount of money to get started, but
then never actually carrying out any activities or function.

          As neither of these Liberian corporations was ever active and
as no effort was made to maintain their corporate charters in
Liberia, we assume that they were dissolved by operation of law
many years ago. The Liberian attorney who originally formed them
was killed in a political upheaval more than a decade ago, and we,
therefore, have no access to HF or AS records.

* * * *

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Subparagraph 10.d.1

          In our prior question 10, we expressed our concern over the
possibility of continuing violations of public policy and requested
certain information to assuage these concerns. We have additional
follow-up questions in this regard.

* * * *

d. In CSC v. Commissioner, 83 T.C. 381 (1984) at 431-437, there
is a discussion of the actions of several persons identified by
name or office (e.g., Vicki Polimeni). Please identify the persons
who held the following offices during the period referenced at
pages 431-437 of the CSC opinion: (i) FBO International; (ii) FBO
AOLA; and (iii) FBOs at various other Advanced Organizations as
described at page 431 of the CSC opinion. Please state whether
Vicki Polimeni or any of the individuals identified in the response
to this question have at any time subsequent to 1989 been related
(by reason of being service-provider or otherwise) to any
Scientology-related organization (either as staff or in any other
capacity). Please describe the current relationship between Martin
Greenberg and Scientology-related organizations.

--------------------

          During the period of time described at page 431 and 432 of the
CSC decision, i.e., May through August 1969, there were only three
Advanced Organizations in existence. Consequently, the positions
you have inquired about and the individuals who held them were:

          FBO International -- Al Boughton FBO AOLA -- Lauren Gene
Allard FBO AO United Kingdom -- Don Clark FBO AO Denmark -- Rob
Sanderson

Vicki Polimeni, Don Clark and Rob Sanderson ceased having any
relationship with any Scientology-related organization many years
ago, long before 1989. From 1989 to the present, Al Boughton has
been a staff member at the American Saint Hill Organization (ASHO)
in Los Angeles. He holds the position of Auditing Supervisor for
the Saint Hill Special Briefing Course, responsible for overseeing
the auditing done by students training to be Scientology auditors
on this course. The Church has had no specific information
concerning the activities or whereabouts of Gene Allard since 1981,
when he appeared as an IRS witness in the Tax Court trial of the
CSC case.

          The Church has long suspected that Allard was sent into AOLA
in 1969 by IRS Intelligence Division agent John Daley, to
infiltrate the Church as an agent provocateur. John Daley was an
agent in the IRS' Case Development Unit in Los Angeles, a unit

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which served as a model for a national intelligence operation known
as the Intelligence Gathering and Retrieval System ("IGRS"). The
IGRS was disbanded in 1975 when Congress found that it had
"fostered unrestrained, unfocused intelligence gathering and
permitted targeting of groups for intelligence collection on bases
having little relationship to enforcement of the tax laws."
Congress found that "there were the beginnings of politically
motivated intelligence collection in at least one district; and
evidence that the fruits of similar investigative efforts in two
districts had been destroyed." One of the districts that destroyed
its files on the eve of the Congressional investigation was the Los
Angeles District (i.e. John Daley's files) and the other was the
St. Louis District, where Congress found that a file labelled
"Subversives" that "contained only material on the Church of
Scientology" had been destroyed. (See pages from Supplementary
Detailed Staff Reports On Intelligence Activities And the Rights of
Americans, Final Report of the Select Committee to Study
Governmental Operations With Respect to Intelligence Activities
,
attached as Exhibit III-10-L).

          Circumstantial evidence strongly suggests that Allard was a
clandestine operative who reported to Daley. Daley had been
investigating the Church since at least 1968 and, by the time
Allard first appeared at AOLA, Daley had already used a plant
inside Crocker Bank who provided Daley with illegally-obtained
copies of the Church's confidential bank records. After occupying
the position of FBO AOLA for barely two months, Allard suddenly
disappeared, taking with him some internal Church correspondence
and other Church assets. Allard turned over the documents to the
IRS in Kansas City; the documents were forwarded to John Daley in
Los Angeles.

          The Church filed criminal charges against Allard. He was
later located and arrested by the FBI in Florida and brought back
to Los Angeles. Not long after Daley interviewed Allard in jail,
the California Attorney General's office decided the evidence
against Allard was insufficient and dropped the charges. Then, in
1981, Allard surfaced as a witness for the IRS in the CSC case
along with the documents that he had stolen, admitting on
cross-examination that he was hopeful of receiving a reward if his
testimony resulted in collection of any taxes. Judge Sterrett
demonstrated a willingness throughout the CSC trial to regard any
anti-Church witness as credible, but even he had problems with
Allard's testimony: Judge Sterrett found that "There were
significant inconsistencies in his testimony . . .". 83 T.C.
509.

          Nevertheless, it was Allard's testimony and the documents that
he stole that formed virtually the sole basis for the findings at

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pages 431 and 432 of the CSC decision about which you now inquire.
Judge Sterrett's gratuitous comments suggested that whatever
occurred at AOLA in 1969 constituted some kind of criminal
conspiracy. All of this evidence however, was known in 1969 when
Revenue Agent Woodrow Wilson unsuccessfully sought to institute a
fraud investigation. In June 1969, Daley even went so far as
discussing with California State officials the use of the Allard
evidence as "grounds for dissolution" of the Churches of
Scientology. (Exhibit III-10-M.) In August of 1969, Wilson
presented this information in the form of a "fraud referral" in an
effort to elevate it from "case development" status to an actual
criminal investigation. The fraud referral was declined by the
Chief of Intelligence. (Exhibit III-10-N.)

          You have also asked about the current relationship of Martin
Greenberg to any Scientology-related organizations. Mr. Greenberg
has not been on the staff of any Scientology-related organization
since early 1980's. He is a certified public accountant with an
accounting practice in Clearwater, Florida. Although we understand
that individual Church members have used his services for their
personal or business accounting, he has not to our knowledge been
retained nor has he done any accounting work for any
Scientology-related organizations for many years. Mr. Greenberg is
a parishioner of the Scientology religion.

          While in Los Angeles in 1978, Martin Greenberg, along with CPA
James Jackson, formed the firm of Greenberg and Jackson. In 1983
Greenberg moved away and sold his interest in the practice to
Jackson, who retained the name "Greenberg and Jackson" for the
professional corporation. At that time Mr. Greenberg ceased
having any involvement in or knowledge of the affairs of any
Scientology-related organizations. Recently, Mr. Jackson also
sold his interest in this practice and presently there is neither
a Greenberg nor a Jackson associated with "Greenberg and Jackson."
Several Scientology- related organizations continue to utilize the
services of CPA Brad Bernstein, one of the present shareholders of
that firm.

* * * *

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Questions 10 e(i)-(ii)

          In our prior question 10, we expressed our concern over the
possibility of continuing violations of public policy and requested
certain information to assuage these concerns. We have additional
follow-up questions in this regard.

* * * *

          e. We have carefully reviewed the response to Question 10.d.
The Service still requires a more complete understanding of the
cases listed in the response. Please provide the following
information, as well as any other information or docu- mentation
that you believe would assist the Service in this regard.

(i) For each of the cases listed on pages 10-20 through 10-22,
please provide a short description of all claims by the non-Church
of Scientology parties. In particular, please describe any
allegations that the Scientology-related organizations, and/or the
individuals, described in Question 2.d of our second series of
questions have engaged in any action that is an intentional tort
and/or that would violate any criminal law. In your description,
please include the date the action is alleged to have occurred and
the party alleged to have committed the action.

(ii) For each of the cases on pages 10-8 through 10-22, other than
the "GO Criminal Activity Fallout Litigation" cases listed on pages
10-16 and 10-17, please provide a copy of any jury verdict, or any
decision, finding or statement by a court that any
Scientology-related organization, and/or any individuals described
in our prior Question 10.d, engaged after 1980 in any action that
is an intentional tort and/or that would violate any criminal
statute. The copy should be provided regardless of the ultimate
disposition of the underlying legal action (e.g., even if an appeal
is still pending or the action was settled, dis- missed, or
successfully appealed). With respect to each copy provided, please
state whether the Church agrees with the court's statement, and, if
so, whether there is presently any connection or relationship
between the individual(s) involved and the church.

-------------------

Subparagraph 10 e(i)

          In our response to the Service's prior Question 10.d, we
provided a lengthy description of litigation involving
Scientology-related organizations or individuals since 1980. To
facilitate the Service being able to understand these cases and put
them into proper context, the cases were grouped according to the
kind of case and allegations and the phenomena that brought the
various suits about.

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          In this follow-up question the Service is asking for copies of
any jury verdicts or judicial findings respecting all but a few of
those cases, where it was found that a Scientology-related
organization or individual committed a tort or criminal law
violation; and with respect to just three of the groupings of
cases, the Service wants further information concerning the
allegations made in those cases. Those groupings are: 1) cases
listed as financial or property disputes or transactions; 2)
personal injury or medical-related suits; and 3) suits that appear
to have been instigated directly or indirectly by the Cult
Awareness Network.

          As described above in the Introduction to Question 10, in the
vast majority of these cases the allegations that have been made
and which are described below, trace back in one way or another to
the IRS itself.

          Nonetheless, in the spirit of cooperation, we are providing in
this response all of the information requested -- i.e. the
description of the allegations in each of the cases listed on pages
10-20 to 10-22 of our response to your second series of questions
and copies of the verdicts, decisions and findings requested in
Question 10.e (ii). We feel it is appropriate, however, to make
the following preliminary observations.

Public Policy As An Exemption Issue:

          All of these questions concerning litigation relate to the
issue of public policy. Section 501(c)(3), however, contains no
express condition that an organization must operate in conformance
with public policy to qualify for tax exemption. Whether or not an
organization violates public policy is relevant to exemption only
in the context of whether the organization is operated exclusively
for one of the exempt purposes that section 501(c)(3) enumerates.

          Only one judicial decision has ever applied a public policy
condition to the exempt status of a church -- the Tax Court
decision concerning the Church of Scientology of California (the
"CSC decision"). Judge Sterrett, however, limited his findings of
public policy violations affecting CSC's exempt status strictly to
the activities of the Guardian's Office ("GO") that resulted in a
number of GO members being convicted of crimes. Thus, although the
Service was prepared to present testimony in the CSC case from tort
claimants such as Larry Wollersheim and some of attorney Michael
Flynn's clients, Judge Sterrett precluded that testimony and made
no finding regarding public policy based on any civil tort claims.
(See our response to Question 10.d of your second series of
questions for a description of Michael Flynn's and Larry
Wollersheim's claims infra.).

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          The CSC decision, upon which the Service has often relied,
itself highlights the irrelevancy of pending, dismissed or settled
legal cases where any form of tort allegation has been made. The
public policy issue was addressed in the CSC case and decided in
that case, and the only acts of any Church of Scientology members
that were found to provide a basis for questioning exempt status
were the criminal activities of the Guardian's Office. If Judge
Sterrett did not find the allegations of Flynn's clients,
Wollersheim and the rest to be relevant, there can be no legal
basis for considering the same kinds of allegations now.

          The Church has addressed the Guardian's Office both here (see
responses to Questions 3.e, 10.a and 10.d) and in our prior
response (responses to Questions 3.d and 10.d). The Church also
addressed at some length the various kinds of other litigation
Scientology-related organizations and individuals have been
involved in (response to your prior Question 10.d). On this basis,
the Church feels that it has adequately addressed public policy
against the relevant legal authorities.

Public Policy As Applied to Other Churches:

          The Service has enforced the public policy standard
selectively, applying it only to the Church of Scientology and not
to other churches to which it could just as easily, if not more
appropriately, be applied. For example, for most of the past
decade the Catholic Church has been embroiled in a major scandal
arising from the exposure of an astonishingly large number of
instances of child molestation involving Catholic priests. Copies
of newspaper and magazine articles about this subject are attached
as Exhibit III-10-O. A book published in October 1992, Lead Us Not
Into Temptation
by Jason Berry, states that between 1984 and 1992
four hundred Catholic priests in North America were reported for
molesting children, and in this same period the Catholic Church has
paid out $400 million to resolve these cases. The book further
details how other Catholic officials, including many high in the
Catholic hierarchy, have covered up what occurred or were guilty of
complicity by knowing what was happening and ignoring it or
reassigning a tainted priest to another job where he would still
have contact with children. These are not merely cases where
unproven allegations have been made; some of the cases resulted in
criminal convictions of the priests involved. In the case of
Father Gilbert Gauthe, for example, Father Gauthe pleaded guilty to
36 counts of child molestation while serving as a parish priest in
Louisiana. The attempts to cover-up Father Gauthe's crimes
described in Jason Berry's book spanned the Catholic hierarchy and
included archbishops, bishops, other priests and directions and
orders emanating from Rome. Thus a jury also awarded a verdict of
$1.25 million to one of the victims and his family against the
responsible Catholic diocese.

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          We are not suggesting that the IRS should now investigate the
Catholic Church or make a tax exemption issue out of an unfortunate
scandal that should be dealt with in the criminal justice system.
Rather, this example serves simply to illustrate the unfair double
standard that has been applied to the Church of Scientology.

          Nevertheless, the following is a description of the cases that
were listed in our prior response, describing the allegations in
those cases of commission of intentional torts or violations of
criminal statutes.

Description of Tort Litigation:

          The suits listed on pages 10-20 through 10-22 each have their
own set of facts and assortment of claims, but for the most part
are of the same general character. They involve frivolous claims
by "crazies" who think they can make some money suing Scientology;
suits against former spouses or business associates naming the
Church to seek a tactical advantage; and a considerable number of
suits inspired by the Cult Awareness Network, which bombards the
person with negative information about the Church and then refers
them to an attorney who tells them they can sue the Church and get
rich. (See the "Introduction To Question 10" for further
information on CAN) . There are a few instances, like the Rabel
case, where a stereo speaker fell from the window of a Scientology
mission injuring someone walking below, where there was a valid
claim which the Church equitably settled. Not one of the cases
asked about in Question 3.e.1 has been adjudicated by a court; thus
all the claims listed are unproven.

          Because many of these suits are refund suits, it is useful
first to review the Church's refund policy. It has been a longstanding
policy of the Church that if someone is dissatisfied with
their Scientology services and asks to have their
contributions returned within a three month period, these amounts
will be returned. Likewise, if the person asks for return of
contributions for which no services were received (i.e. an advance
payment), there is no three month limitation period. Anyone newly
enrolling in services at a Church of Scientology is informed of the
policies and signs an agreement to abide by them. As a further
condition of receiving a refund or repayment, the person
understands that they may not again receive services from the
Church.

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          Within the Church, there are two separate terms: A "refund"
refers to a return of contributions to a parishioner within 90 days
of participating in religious services while a "repayment" refers
to a return of a parishioner's advance payment before he or she has
participated in religious services. For simplicity, the following
discussion will use the term "refund" to describe both types of
transactions, because both involve a return of parishioner
contributions.

          The Church's refund policy is exceedingly fair. If someone
isn't happy with Scientology -- which is a very small minority of
people -- he simply has to make a proper request for his donations
back, agree to forego further services and his donations will be
returned. For the Church, in addition to the fact that this policy
aligns with Scientology principles of exchange, it also serves the
purpose of allowing our churches and the parishioners who are very
happy with Scientology, to carry on without the unhappy few in
their midst.

          The presence of a considerable number of refund suits in the
following list is directly related to the influence of CAN and CAN
attorneys. As described in the "Introduction to Question 10,"
CAN's modus operandi is to seek out anyone who is unhappy with
Scientology, feed them negative information and then refer them to
an attorney. The CAN attorney then convinces the person that he
can not only get a refund of his donations, but by allowing the
attorney to handle the claim he can get damages as well, and
possibly get rich. As will be seen in the descriptions of the
cases that follow, almost one for one such suits are ultimately
settled for the refund amount the person could have obtained in the
first place simply by requesting it.

          It is also of interest that we know of no suit filed for
refund that wasn't instigated by CAN. In fact, the Church rarely
has any refund requests, by suit or otherwise, except when
instigated by the IRS-sanctioned CAN. And in most cases, further
discussion reveals the person was quite happy with his service at
the Church and seeks his money back only after CAN has told him how
"terrible" Scientology is.

Descriptions of individual suits follows:

Mira Chaikin v. Church of Scientology. L. Ron Hubbard. et al.:
The following is from the judge's ruling dismissing the case, which
says all that needs to be said about this case:

"In this pro se complaint, which can most charitably be
described as bizarre, plaintiff Mira Chaikin
('Chaikin') alleges that the various defendants are
exploiting her, impersonating her and 'implanting' her.

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She alleges that because defendant Ron Hubbard has been
'flowing to (her) sexually and romantically' she is his
'true wife,' as well as 'having been (his) wife in (her)
last life who was murdered. ' Thus, she further alleges,
defendant Mary Sue Hubbard is 'in no way the wife of
Lafayette Ron Hubbard ' but has merely been impersonating
plaintiff with resulting severe endangerment of
plaintiff's mental health.

"As against the Church of Scientology, Chaikin appears to be
claiming that the organization is acting contrary to its
theoretical foundation. For the reasons set forth below, I
dismiss the complaint.

"An action may be dismissed 'when the allegations of the
complaint are beyond credulity . . .' [cite omitted]. I
find plaintiff's allegations, to the extent they are
comprehensible at all, to be patently incredible.

          Terry Dixon v. Church of Scientology Celebrity Center of
Portland, et al.
: This is a typical CAN-influenced suit for refund
by Terry Dixon, which also asks for damages based on claims of
breach of contract and breach of fiduciary duty. Dixon alleges
that the Church of Scientology Celebrity Centre Portland, Church of
Scientology of Portland and Church of Scientology Flag Service Org,
breached a contract with him and their fiduciary duty, by failing
to deliver to him results he considers to have been promised him
from Scientology religious services. The suit was filed in
December 1990.

          Each of the three churches filed motions to abate the case
pending arbitration, based on enrollment agreements signed by Dixon
while he was in the Church, which include a clause that any
disputes between the Church and the parishioner must be arbitrated.
The judge ordered the case to arbitration and it has now been
settled for the refund amount.

          John Finucane, David Miller, Alexander Turbyne v. Emery
Wilson Corporation, et al.
: This suit was instigated directly by
CAN and CAN attorney Toby Plevin. All of the plaintiffs are
dentists who were clients of Sterling Management Systems (Emory
Wilson Corporation) for a brief period of time and also briefly
received some services from the Church of Scientology of Orange
County. Sterling is a company that has been owned and run by
Scientologists and uses methods of organizational administration
developed by L. Ron Hubbard to help business people improve their
businesses. Some of these individuals, upon being impressed with
Mr. Hubbard's works, have become interested in Scientology.

          The lawsuit was filed in LA Superior Court on December 26,
1991 by Finucane, Miller, and Turbyne, who reside, respectively, in
Aiken, South Carolina, Sacramento, California, and Sohigan, Maine,

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against Sterling and the Orange County Church. The complaint
contains causes of action for deceptive trade practices, fraud, and
injunctive relief, alleging that Sterling misrepresented itself to
be an independent management training organization when, in fact,
it was a part of the Church of Scientology and operated as a
recruitment office for the Church with the goal of procuring new
members and getting them to take Church services.

          Miller and Turbyne settled their cases with the Church of
Scientology of Orange County for a refund, but not with Sterling,
leaving all plaintiffs with claims against Sterling, and only
Finucane suing the Orange County Church. Finucane has so far
refused offers from the Church to have his claim arbitrated as per
the enrollment agreement he signed. The Church therefore filed a
counter-claim and criminal complaint against Finucane relating to
his breach of contract (his refusal to abide by the enrollment
agreement) and invasion of privacy (for secretly tape-recording a
conversation with a Church staff member and then broadcasting a
heavily edited version of it on national television).

          Dorothy Fuller, an individual v. Applied Scholastics International,
et al.
: This is another Toby Plevin, CAN instigated
suit filed in April 1992. The claims are breach of lease, fraud
and negligent misrepresentation. Applied Scholastics leased a
residential property from Fuller who claims that the house was
misused in several ways, including housing more people than agreed
upon in the lease, use of the house as a child center, dormitory
style living, and fabrication of products for resale. Thus it is
a minor property dispute escalated by Plevin into tort litigation.
It is expected that this suit will be quickly settled.

          Lisa Stuart Halverson v. Church of Scientology Flag Service
Organization, et al.
: This was another suit for refund that CAN
attorney Toby Plevin filed, alleging several torts for purposes of
effect. The claims were for violation of the deceptive practices
act and fraud, based on Halverson being told she could get a refund
and then not being able to get it. The suit was settled for the
refund amount.

          Thomas and Carol Hutchinson v. Church of Scientology of
Georgia, et al.
: The complaint in this suit is virtually a carbon
copy of the complaint in the Corydon case, one of the Michael Flynn
cases listed at page 10-13 of our prior response. Although the
Corydon case was settled, Hutchinson apparently got a copy of the
complaint, very likely provided by CAN, and felt its inflammatory
claims against a wide array of Church organizations would add spice
to what is otherwise a suit for refund of money paid to the Church
of Scientology of Georgia. The claims are stated as fraud and
deceit and infliction of emotional distress, seeking unspecified
damages and injunctive relief. However, the claims revolve around
a core that the teachings of Scientology differ from those of

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Fundamentalist Christianity, a topic constitutionally barred from
secular adjudication.

          The Church anticipates dismissal of this suit, favorable
summary judgment or settlement for a refund of the Hutchinson's
donations.

          Mark Lewandowski v. Church of Scientology of Michigan, et
al.
: This suit was against the Church of Scientology of Michigan
and two individuals, one former and one current staff member of the
Michigan Church. Mark Lewandowski, who had previously been under
psychiatric treatment with a substance abuse disability, took some
courses at the Church of Scientology of Michigan in 1988. Although
Lewandowski's relationship with the Church was short, in his suit
he alleges that the Church committed consumer fraud by failing to
ascertain his unstable mental condition, fraud, for allegedly
misrepresenting the nature of the courses he took, and intentional
infliction of emotional distress through the above. The nature of
Lewandowski's claims and allegations strongly suggest that he was
influenced to file suit by CAN.

          This case went before a mediation panel where a settlement was
accepted by the Lewandowski's attorneys for a refund. The Church
of Scientology of Michigan is in the process of paying this amount
to end the suit.

          Peter and Francis Miller v. Church of Scientology et al.: The
suit was filed on April 29, 1991 by CAN attorney Toby Plevin
against several organizations, including CSI, Church of Scientology
Orange County and Sterling Management Systems. This suit makes
claims not unlike those of the Finucane suit described above, that
they were misled into Sterling and Scientology and therefore want
their money back. The claims include fraud, breach of express
and/or implied warranties, invasion of privacy, intentional
infliction of emotional distress and negligence. The Millers'
claims against Sterling were arbitrated, with the millions the
Millers originally claimed reduced to the refund amount. The case
is still at the pleading stage as regards the Church parties.

          Dee and Glover Rowe v. Church of Scientology of Orange
County, et al.
: This is another Toby Plevin/CAN suit naming the
Church of Scientology of Orange County, RTC, CSI, the Sea Org and
Does 1-100. It was filed on October 7, 1991, alleging
fraud/deceptive trade practices, invasion of privacy, false
imprisonment, assault, and intentional infliction of emotional
distress. The suit essentially repeats the allegations made by the
Rowes in the May 6, 1991 edition of Time magazine, that they took
courses at Sterling Management Systems and allegedly under the
guise of management training were induced to take Scientology
services. Discovery in this case has demonstrated that the Rowe's
claims are contrived and maliciously false, and that these are
people with a history of criminal activity. Glover Rowe embezzled

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money from a fraternity in college and Dee Rowe has a history of
emotional turbulence starting long before any contact with any
Scientology organization. One of their claims, which has already
been dismissed on summary judgment, was that the Church bugged
their hotel room. This was a completely fabricated claim as seen
by the fact that the staff of the hotel testified that this was
impossible and that the Rowes could "support" it only by stating
without any proof that their room "must have been bugged." It was
not, a fact quickly recognized by the court. The Rowes were
referred to Time magazine by CAN and continue to be encouraged by
CAN.

          Pretrial summary judgment motions are still being considered
in this case and the Church expects all of the Rowe's claims to be
dismissed. The Church also expects to prevail on a counterclaim
naming the Rowes and CAN defendants, for libel and breach of
contract, and that by deprogramming the Rowes, CAN interfered with
the Church's relationship with the Rowes.

          Frank and Joan Sanchez v. Sterling Management Systems, et
al.
: This is yet another CAN-inspired suit involving a dentist,
Frank Sanchez and his wife, Joan Sanchez, filed against Sterling,
the Church of Scientology of Orange County and IAS.

          The Sanchezes attended a Sterling seminar at the end of
October 1989, after which Sanchez asked Sterling to administer a
program in his office. The Sanchezes went to the Church of
Scientology of Orange County in December 1989 and were involved
with the Church for less than a month. Sanchez wanted help with
his marriage as he and his wife had marriage counseling over a
twenty year period but it had been unable to straighten out
problems arising from twenty years of adulterous affairs. Joanne
Sanchez was opposed to the trip to Sterling and Orange County and
went only because her husband wanted her to go.

          The Sanchezes paid some money to Sterling and the Orange
County Church, but then returned to New Mexico and refused further
participation in any services at either Sterling or the Church,
which would appear to have been directly caused by negative
information provided them by CAN. Although the bottom line of what
they are seeking is a refund of their money, their complaint asks
for damages for breach of contract, intentional infliction of
emotional distress, breach of covenant of good faith and fair
dealing, for fraud and all the usual, boilerplate CAN allegations.
The suit was dismissed with respect to the Orange County Church and
it is expected that ultimately it will be settled for a repayment
of the money they paid to Sterling.

          Thomas Spencer v. The Church of Scientology, et al.: This
suit was settled for a refund and dismissed on August 31, 1992. It
was another suit for refund laced with the standard CAN claims,

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breach of contract, fraud, and intentional infliction of emotional
distress.

          Irene Zaferes v. Church of Scientology: This was a personal
injury suit filed in April 11, 1989. The plaintiff was a Hollywood
woman who claimed that a wrongful death occurred when her brother,
Luke Andrea (a.k.a. Louis Zaferes) died on April 12, 1988, some
months after he did some "heavy construction work" at the Church of
Scientology Flag Service Org, while having a heart condition.
Zaferes was acting as her own attorney. The case was dismissed.

          Jo Ann Scrivano v. Church of Scientology of New York, et al.:
Jo Ann Scrivano, had an extensive psychiatric history including the
use of heavy psychiatric drugs, before she came to the Church of
Scientology Mission of Long Island in January of 1986. After
receiving a small amount of introductory level auditing for which
she donated $450, Mrs. Scrivano became upset and blamed this on
her auditing. She was offered her money back, but refused it and
left. She subsequently filed a suit naming not just the Long
Island Church but also a number Church organizations that had never
heard of her. She even alleged an array of torts and sought
$10,000,450 in damages. Her claims include Fraud, Constructive
Trust, Breach of Fiduciary Duty, Malpractice, Negligence, and
Intentional Infliction of Emotional Distress. None of these claims
is true, and both Scrivano's own attorneys and the judge assigned
to the case have encouraged her to accept a token settlement
offered by the Church just to get rid of the suit.

          Marissa Alimata and Richard Wolfson v. Church of Scientology
of California, etc., et al.
: This case, of Marissa and Richard
Wolfson, furnishes an excellent example of how any fruitcake can
file a civil suit. The Wolfsons sued for $1 billion alleging
intentional infliction of emotional distress and that the conduct
of the Church was "outrageous, fraudulent, malicious, abusive,
indecent, intentional, unduly influential, willful, wanton and
beyond bounds of common human decency." They claimed to have been
subject to "undue influence" and to have suffered "violation of
fiduciary relationship," interference with prospective economic
advantage, loss of consortium and fraud. Before winning summary
judgment on all of the Wolfsons' claims, the church was required to
endure the public airing of delusional charges and suffer through
such bizarre conduct as Mr. Wolfson appearing at his deposition
dressed as Mrs. Wolfson.

          Sherry Fortune v. Church of Scientology American Saint Hill
Organization and Chuck Tingley
: This case was brought by Sherry
Fortune against the Church of Scientology American Saint Hill
Organization and Chuck Tingley, her former husband, an independent
contractor who had been a computer programmer at the Church. The
case was essentially a domestic dispute between Fortune and Tingley
that involved the rights to some computer software Tingley had
developed. Fortune believed that naming the Church in her suit

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would give her additional leverage over her former husband so she
alleged that the Church was guilty of intentional interference with
economic advantage, fraud and misrepresentation, intentional
infliction of emotional distress, and conversion. The frivolous
claims against the Church were dismissed and Fortune and Tingley
reached a settlement between them.

          Gary and Susan Silcock v. Church of Scientology, Mission of
Salt Lake, et al.
: The Silcock's received some religious services
from the Church of Scientology Mission of Salt Lake in 1984 and
then asked for a refund. The refund amounts requested were paid to
the Silcocks and the suit was dismissed in September 1986.

          Pedro H. Rimando and Irene Marshall v. The Church of
Scientology of San Francisco, et al.
: This suit was a suit brought
by the parents of Rodney Rimando, a former Church staff member who
committed suicide in November 1986 by jumping out of a window of a
Church of Scientology building. The suit's claims were wrongful
death, intentional infliction of emotional distress, negligence,
and outrageous conduct. The suit claimed that Rimando came to the
Church of Scientology of San Francisco for spiritual guidance and
that no precautions were taken to prevent his suicide or see that
he got psychiatric help. This suit only came about because a CAN
attorney incited the parents to file it. The parents did not
really believe the Church to be responsible for their son's
suicide. The suit was never served and was voluntarily dismissed
with prejudice.

          Wendy and William Rabel v. Eric Rising, Jane Doe Rising,
Church of Scientology Mission of University Way, et al.
: As
described previously, this suit involved an incident where a stereo
speaker placed in the window of the University Way Mission in
Seattle, Washington fell out of the window and struck Wendy Rabel
on the head. A settlement payment was negotiated and the case was
dismissed in January 1988.

          Francine Necochea, a minor child, by her Guardian Ad Litem
Cecilia Garcia v. Church of Scientology, et al.
: This was an
insurance suit dealing with an incident in 1983 when a girl on a
motorized bike hit a Golden Era Studios Bus. She sustained a
broken leg and other minor injuries. The girl's family sued the
Church and the Church's insurance company handled the case and
settled it for $5,000.

          Roxanne Friend v. Church of Scientology International, et
al.
: Some background leading up to the filing of this suit will
help make it understandable.

          Shortly after breaking away from the Church of Scientology,
Roxanne Friend became romantically involved with a
non-Scientologist. After an on-again, off-again relationship, they

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finally broke off the relationship in August 1989. For months
after this Friend experienced what she later characterized on a
medical questionnaire as a "nervous breakdown."

          Documents authenticated by Friend in her own hand illustrate
her state of mind during this period, and outline the series of
bizarre and violent acts that she admits were preceded and prompted
by the break-up with her non-Scientologist boyfriend. She first
secretly absconded with her former boyfriend's young son and
molested him sexually. She next tried to persuade a karate
instructor to murder her former boyfriend. Failing this, she wrote
letters to the ex-boyfriend claiming that he had drugged,
hypnotized and forced her to perform lewd sexual acts for he and
his friends. When all of this further alienated the man, her
conduct became more bizarre. She scrubbed her mare's vagina with
bleach causing the animal severe pain and then physically assaulted
and injured the proprietor of the stable when she tried to
intercede on behalf of the horse. A bit later Friend was stopped
for dangerous reckless driving and resisted arrest by assaulting a
police officer.

          Church staff who knew Friend and Friend's brother, nonetheless
attempted to help by taking her to doctors in Los Angeles and then
escorting her to Florida to be in a less stressful environment
where she could also be examined by doctors. Once in Florida,
Friend refused help, and went to the police with the hallucinatory
claim that someone put crack cocaine in her cigarettes to account
for her bizarre behavior. She was taken to a hospital at her
insistence. The Church attempted to get her to submit to a full
medical examination, knowing that most such behavior episodes are
initially prompted by some undetected and untreated physical
ailment. Friend refused.

          Friend was then taken to her mother along with a written
recommendation from the Church that she receive a full medical
examination.

          Friend's mother ignored the recommendation and Friend was
later arrested, incarcerated in a mental hospital and sent for
counselling at a Jewish support group. A psychiatrist at that
group turned her over to the Cult Awareness Network (CAN). As they
do in every such case, CAN promptly pumped Friend full of false and
derogatory information about the Church and turned her over to
their attorney Plevin. Up to that point, when CAN became involved,
Friend had never considered the efforts of the Church members to
help her as anything other than help, and despite her agitated
state, had never accused the Church of causing the condition --
indeed she recognized that the break-up of her ill-fated romance
was what brought it on. After being manipulated by CAN, however,
Friend decided the Church was to blame and should pay her damages.

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          Months after the Church had its last communication with
Friend, she finally received two medical examinations. The first
found nothing wrong with her. The second found that she had a
large lump in her abdomen and it was diagnosed as a very rare form
of cancer. Friend's CAN attorneys, the same attorneys who had
represented the Aznarans (see description of the Aznaran litigation
in the response to your prior Question 10.d) considered this the
next best thing to a plane crash, and suddenly saw in Friend the
prospect of a circus trial with a dying woman to play on the
emotions of a jury. Her attorneys rushed to court with a lawsuit
that claimed the Church was responsible for her cancer not being
earlier detected by not allowing her to see a doctor, and that all
her psychotic episodes stemmed from this undetected physical
condition. The attorneys characterized the efforts of Church
members to help her as examples of assault and battery, wrongful
imprisonment, invasion of privacy and intentional infliction of
emotional distress. The suit also claimed the Church was guilty of
fraud and false advertising and breached express and implied
covenants in representing it would refund money to those not
satisfied but then failing to do so.

          These claims were completely unfounded as discovery proved
that Friend had seen many doctors on a regular basis during the
period that she was at the Church, both at the Church's direction
and on her own, and thus the Church took the appropriate measures
to see that she got the care and diagnosis needed. Her own doctor
testified that the type of cancer Friend contracted was very rare
and virtually undetectable by modern medical science until well
developed and spread. The doctor testified that the only way to
detect such cancer was for the patient to complain of a lump and
then have a biopsy performed. Friend subsequently testified that
she had felt a lump developing for two years, but never mentioned
it during that time to the several doctors she did see.

          The Church settled this case for nuisance value, for less than
the cost of a trial, even if the Church prevailed. David Miscavige
met with Friend in settlement talks as he was concerned that her
attorneys would leave her destitute when doctor reports were
submitted in court stating she only had several months left to
live. Once settlement terms were generally agreed upon, the first
thing Friend did was ask whether if she miraculously recovered,
could she get back into the Church and take services. Thus, in the
final analysis Friend herself acknowledged that her frightening
claims against the Church were contrived.

          To our knowledge, despite the claims that were made by Friend
and her attorneys of imminent death, she is still alive.

          Bruce and Lynnel Arbuckle v. Skip Pagel M.D., Church of
Scientology Celebrity Center Portland, et al.
: This suit was
brought by the parents of Chris Arbuckle, a former Church

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parishioner, who died of kidney failure. The suit's claims were
wrongful death against Scientologist Dr. Skip Pagel and the
Tuality Community Hospital, and breach of fiduciary duty against
the Church of Scientology Celebrity Centre Portland, Church of
Scientology of Portland and Church of Scientology Mission of
Fairfax. Arbuckle, a 25-year-old chiropractor, participated in the
Purification Rundown after first receiving a physical examination
by Dr. Pagel. Subsequent to this Arbuckle died, in August of
1986, of a heart attack resulting from a kidney failure which
followed a dying liver, with the cause of the dying liver
attributed to "probably hepatitis" on the death certificate. The
complaint alleged that the Purification Rundown caused this to
occur. What was found on further examination was that Arbuckle was
known to be abusing steroids for body building purposes, that he
had undergone a bout of hepatitis prior to doing the Purification
Rundown (which he did not disclose to Dr. Pagel), and that a
pathologist familiar with Arbuckle's death stated that his liver
died as a result of Hepatitis B, and that there was no way the
Purification RD could have caused this to occur. The suit was
settled and dismissed in August 1990.

          In re Dynamic Publications Inc.: Dynamic Publications was a
company owned by two now-expelled former Scientologists, who filed
for bankruptcy in early 1987 in United States Bankruptcy Court for
the District of Maryland. The trustee in bankruptcy, appointed by
the court to collect all the assets of the company, determined that
these individuals had made donations to Churches of Scientology and
Scientology-related organizations through the company and sought to
get some of this money back as having been fraudulently conveyed
when the company was in debt. The suit was settled in January of
1991.

          Ted Patrick, et al. v. Church of Scientology of Portland, et
al.
: The Church of Scientology of Portland filed a suit against the
deprogrammers of Julie Christofferson in September, 1980, suing
them for barratry and practicing medicine without license. Ted
Patrick, a convicted felon, was one of the deprogrammers. He filed
a counterclaim in September 1980 alleging abuse of process and
claiming that the Church's suit was frivolous and vexatious. The
attorney on the suit was an associate of Michael Flynn associate.
The counter-suit was ultimately dismissed.

          Gregory F. Henderson v. A Brilliant Film Company, et al. and
Gregory F. Henderson v. Marvin Price, et al.
: Henderson had a
contract with Brilliant Film Company to shoot a movie written by L.
Ron Hubbard. Brilliant Film went bankrupt and Henderson filed suit
on May 14, 1982 against a series of defendants, including L. Ron
Hubbard. It raised financial claims and also that there had been
a conspiracy to induce Henderson to agree to a loan that would not
be repaid and to keep him from pursuing his legal remedies. He

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also filed a second suit, against Marvin Price, an ex-Scientologist
who had was the mission holder of the Church of Scientology Mission
of Stockton stating claims for negligent misrepresentation, fraud,
breach of fiduciary relationship and conspiracy to defraud. The
suit with Brilliant Film Company was settled and the other suit was
then dismissed with prejudice in July 1984.

          Peter Siegel v. Religious Technology Center, et al.: Peter
Siegel is a "sports hypnotherapist", doing business as "Achievement
Plus Institute". Siegel used a logo similar to a trademark owned
by RTC. Attempts were made prior to litigation to settle Siegel's
confusion as to the ownership of the mark, which was registered by
RTC in December 9, 1986, and to obviate the need for litigation.
Siegel was uncooperative in this and RTC and CSI filed suit.
Siegel filed a pro per cross-complaint on December 20, 1989 for
registration of the mark in his name, cancellation of RTC's
registration, trademark infringement, intentional infliction of
emotional distress and revocation of RTC and CSI's tax-exempt
status. Siegel has no valid claim to this trademark and RTC's
summary judgment motion is presently pending. Although Toby Plevin
came in at the last minute to represent the defendant at the
summary judgment hearing, the court, after hearing her argument,
told Plaintiff's counsel to propose an order on the summary
judgment motion to be written from the viewpoint that the court was
ruling in Plaintiff's favor. The court has also asked for more
detailed information concerning RTC's pending motion for attorneys'
fees.

          Steve Dunning v. Church of Scientology, et al.: Dunning was
a Church staff member for three months in 1983 and came and went
for very brief periods after that. He is currently in a half way
house for psychiatric patients where he committed himself because
he could not function in the outside world, has an outstanding
warrant for his arrest in North Carolina for assault with a deadly
weapon and another arrest for threatening someone with a knife. He
filed a suit against the Church asking for over $5 billion claiming
breach of contract, breach of implied covenant of good faith and
fair dealing claims, fraud and intentional infliction of emotional
distress. The suit was completely groundless and it was dismissed
in favor of the Church in August 1987 when Dunning failed to appear
at the hearing on the Church's Motion for Entry of Final Judgment.

          Jeff and Arlene Dubron v. Church of Scientology
International, et al.
: This suit which named 21 defendants and 50
"John Doe" defendants, alleged claims of defamation, invasion of
privacy, outrageous conduct, and negligent infliction of emotional
distress. The suit stemmed out of an incident where some Church
staff posted a notice around Scientology churches calling for
Scientologists to report unethical conduct and used some facts
concerning Dubron as an example. The suit was voluntarily
dismissed.

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          Vicki Adler v. American Sun, Inc., Church of Scientology of
Los Angeles
: This suit alleged emotional distress as a result of
Adler's alleged brainwashing by American Sun, a business owned and
operated by several Scientologists. The suit was essentially an
employment dispute between Adler and American Sun where Adler made
Scientology an issue to intimidate the company. The suit was
settled and dismissed in 1988.

          Benham v. Church of Scientology Celebrity Center of Dallas
This was a personal injury case in Dallas, Texas. Vicki Benham
alleged that she was injured while on the Purification Rundown and
that she had emotional distress. The case was settled in 1991 for
a refund and nominal nuisance fee which was paid by the insurance
company.

          Michael Burns v. The Recording Institute of Detroit, Inc., et
al.
: This case was filed on July 25, 1991 against the Church of
Scientology of Michigan, Church of Scientology Flag Service Org and
several individual Scientologists, and a recording school owned by
a Scientologist. Burns claimed that he was subjected to mind
control by the Scientologist from the recording school and that
this induced Burns to become involved with Scientology and join
Church staff, which prevented him from pursuing his studies in the
recording field. The case alleged fraud, breach of contract,
intentional interference with a contractual relationship,
intentional infliction with emotional distress, and conspiracy.
The suit has no merit and is expected to be dismissed shortly.

          Clay Eberle and Eberle & Jordan Law Firm v. Church of
Scientology of California
: Eberle is an attorney who formerly
represented refund/repayment claimants suing the Church. His suit
alleges that he was damaged when CSC settled directly with some of
the claimants as the claimants then did not pay him attorneys'
fees. In April 1988, the Court granted the Church's summary
judgment motion dismissing the case and ruled that there was a
qualified privilege for the Church to deal directly with its former
members notwithstanding the retention of an attorney by the former
member, and there was no evidence that the Church intended for the
persons to breach their attorney/client contracts with Eberle, and
no evidence that the Church caused the attorney/client contracts to
be breached.

          Mario Metellus v. Church of Scientology of New York, and
Linda Barragan
: Metellus was a non-Church member who responded to
an advertisement placed by the New York Church for part-time help.
After working less than a day, on November 29, 1989 he was
dismissed. Metellus refused to leave and the police had to be
called in to remove him from the premises. Metellus even
refused to respond to the police officer's directions to leave and

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was arrested. When Metellus refused to allow the police to take
his fingerprints, he was held in custody. The complaint, claimed
that Metellus was falsely accused of criminal trespassing and
falsely arrested. Metellus also sued the City of New York. The
complaint against the New York Church was settled for a nominal
amount.

Subparagraph 10.e(ii)

          In this subparagraph, the Service has asked for a copy of any
verdict, decision or judicial finding that any Scientology-related
organization or individual was involved in the commission of an
intentional tort or violation of criminal law. Copies of these
documents are attached as Exhibit 10-P. There were verdicts, or
decisions with judicial findings of intentional torts in only four
of the cases discussed on the pages of the prior submission
referenced in this question, and all of these cases were discussed
in the response to Question 4.d of the Service's May letter -- the
Stifler case, the Christofferson case, the Wollersheim case, and
the Armstrong case, discussed at pages 10-12; 10-15 to 10-16;
10-16; and, 10-12 respectively, of our prior response.

          The Service has asked the Church to state whether it agrees
with the findings of the Courts in each of the above decisions.
The Church's response to this part of the question follows:

Lawrence Stifler v. Church of Scientology of Boston:

          The Stifler case was, for all practical purposes, won by the
Church, as the only money judgment in the case was entered against
an individual Church member for $979 in medical bills. This was
one of Michael Flynn's stable of cases described in our prior
response at 10-12. Lawrence Stifler accosted a staff member of the
Boston Church, Roger Sylvester, on the streets of Boston,
Massachussetts in the early 1980's. Stifler verbally abused
Sylvester for attempting to disseminate his religion. Both men
lost their tempers and came to blows. As a result of the
altercation Stifler suffered a minor injury to his knee. Stifler
filed suit claiming $4,250,000 in damages.

          During the 1984 trial, Flynn attempted to show that the
altercation was part of a nefarious Church of Scientology scheme.
Flynn sought to introduce his standard retinue of professional
anti-Church witnesses in order to reap a large punitive damages
award. The Court refused to go along with this charade, bifurcated
the Boston and California Churches from the trial and prohibited
Flynn from introducing any of his general Scientology issues or
"evidence."

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          Stifler claimed to have suffered major trauma to his knee
which had permanently incapacitated him. Yet, when the evidence
was presented at the trial, the defense showed that whatever
injuries he may have suffered at the time of the altercation with
Sylvester were extremely minor. Evidence supporting this defense
included photographs of Stifler engaging in competitive stair
climbing up skyscrapers at the very time he claimed to be
incapacitated. The jury awarded a mere $979.00 against Sylvester
to cover Stifler's medical costs, and the Church defendants were
dismissed from the case.

          The Church disagrees with the fact that Stifler was awarded
any money at all. The Church agrees with the dismissal of the
Church of Scientology of Boston and the Church of Scientology of
California from the case.

Church of Scientology v. Gerald Armstrong:

          We have included some background information here and an
epilogue to the decision in question. That is because the Service
has continuously thrust the Armstrong case at us, demanding an
explanation. The Armstrong case decision was so inflammatory and
intemperate that it was used to stigmatize the Church in the legal
arena and make other outrageous decisions possible. As we shall
demonstrate below, all this decision ever involved was Armstrong's
state of mind, which subsequently obtained evidence proved
conclusively to be one sordid, sado-masochistic nightmare.
Furthermore, Armstrong's state of mind horror stories have fallen
on deaf ears in recent litigation. Relying on Armstrong or the
Armstrong decision is wholly unjustified.

          During the later years of his tenure as an employee of the
Church, Gerald Armstrong was placed in charge of a huge quantity of
documents that belonged to Mr. Hubbard that contained private and
personal information regarding Mr. Hubbard. Part of his duties
included research to support the work of an author who had been
retained to write an authorized biography of Mr. Hubbard.

          In late 1981 after the initial clean out of the higher levels
of the Guardian's Office, and when investigations were turning
toward identifying those in alliance or sympathy with the GO,
Armstrong suddenly vacated Church premises and left its employ,
taking with him huge numbers of confidential documents that
belonged to Mr. Hubbard or his wife which the Church was holding
as bailee. It was no coincidence that Armstrong left at that time
because he had repeatedly expressed his ambition to join the GO and
work in Bureau 1 (Information Bureau), the same area of GO that had
been responsible for the criminal acts of the 70's. Armstrong also
had been a long-time friend and confidant of Laurel Sullivan. Just
prior to the take over the GO taking place, Sullivan had made a

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proposal to place convicted GO members into corporate positions of
control throughout the top of the ecclesiastical hierarchy. She
was also found to be spying on the CMO for the GO during the early
days of the CMO's investigation into the GO. Armstrong assisted
and supported Sullivan in her efforts.

          In the summer of 1982 the Church received evidence that Armstrong
had stolen thousands of documents from archives when he
left the Church. Church counsel wrote to Armstrong, demanding that
he return them. Armstrong denied the theft.

          Once the demand for return of documents was made, Armstrong
turned the stolen documents over to Michael Flynn, with whom
Armstrong decided he could make a lot of money.

          In August 1982, the Church sued Armstrong for conversion,
breach of fiduciary duty and confidence, and invasion of privacy
based on Armstrong's theft of extensive amounts of private papers
owned by the Church or the Hubbards. The Church sought return of
the papers and the imposition of a constructive trust over them,
and any proceeds derived from them, as well as preliminary and
permanent injunctive relief against dissemination or disclosure of
the private documents.

          In September 1982, Armstrong, represented by Flynn, answered
the complaint and raised the defense that he was justified in
stealing the documents entrusted to him as a fiduciary because he
wished to make public information about Mr. Hubbard and the Church
out of fear for his safety and well-being. His defense was
stricken on four different occasions by three different judges.

          In April 1984, the case was assigned for trial before Judge
Paul Breckenridge, Jr. At that time, the Church presented motions
in limine to prevent Armstrong from introducing the stolen,
confidential documents since their introduction into evidence would
vitiate the very rights of privacy the action sought to protect.
The Court not only allowed Armstrong to introduce the confidential
documents, but also allowed him to raise his four-times stricken
defense with a new perverted twist. He would not have to prove
there was anything to fear from the Church, but only his state of
mind when he stole the documents. The Church was completely
ambushed in the trial by these documents, as in most cases
Armstrong had stolen the only copy that existed. Then, after he
and Flynn had ample time to prepare their case from them, the
documents were placed under seal in the Court. Although the
inflammatory allegations that Armstrong made and purported to
support with these docments could have been shown to be false or
grossly distorted by other evidence, the Church had no chance to
prepare and put on that evidence before being hit with the
documents in court.

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          During the trial, Armstrong presented testimony from numerous
witnesses who testified for the purpose of establishing Armstrong's
supposed "state of mind" with regard to his alleged justification
for stealing the documents. Each of the witnesses was hostile to
the Church and, in fact, was a plaintiff against or taking a
position adverse to the Church in other litigation in which Flynn
was the counsel. Each witness gave general testimony about his or
her own viewpoint on relationships with the Church in an effort to
bolster Armstrong's state of mind justification defense.

          The Court did not allow the Church to put on evidence to rebut
the testimony of those witnesses. The Court also declined to allow
the Church to put on evidence explaining the confidential documents
and precluded the Church's proffered rebuttal evidence on the
ground that the adverse testimony was admitted only for the purpose
of establishing Armstrong's state of mind and not for the truth or
falsity of the matter testified about.

          On July 20, 1984, Judge Breckenridge issued a Statement of
Intended Decision which became final a month later, which held that
the Church had "made out a prima facie case of conversion...,
breach of fiduciary duty, and breach of confidence" (as the former
employer who provided confidential materials to its then employee
for certain specific purposes, which the employee later used for
other purposes to employer's detriment). Judgment, however, was
entered in favor of Armstrong. The Statement of Decision adopted
as the facts of the case the allegations which Armstrong had made
in his trial brief. These allegations included the statements on
which Armstrong premised his justification defense; i.e., that
defendant "... became terrified and feared that his life and the
life of his wife were in danger, and he also feared he would be the
target of costly and harassing lawsuits." The judge went on to
pontificate on the psychological mind-set of not only Mr.
Hubbard, but Scientology at large. The only lawsuit that there was
to fear was the one that was ultimately filed for return of the
stolen documents. It never would have been brought had Armstrong
voluntarily returned the documents when asked, despite the theft.

          The IRS CID, however, absorbed Breckenridge's findings as the
definitive statement of what Scientology is, and used this decision
and the Flynn witnesses who testified at the trial as the nucleus
of their investigation. The Church tried repeatedly to explain to
the IRS that the Armstrong decision was nothing more than a
statement concerning Armstrong's state of mind. The CID and EO
weren't interested, as they found in Armstrong a kindred spirit who
echoed their own sentiments. They therefore embraced Armstrong and
the Flynn witnesses and used their fabrications as the basis for
their investigations and denials of exemption.

          Evidence found after the Armstrong trial proves not only that
Armstrong never was afraid of the Church as he claimed at trial,

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but that he was engineering a plan to infiltrate and take over the
Church at the behest of the CID.

          Shortly after the trial, Armstrong's conspiracy against
the Church surfaced when he sought, at the behest of IRS CID agents
Al Lipkin and Phillip Xanthos, to recruit Church employees and
organize them against the Church. To this end Armstrong contacted
a Church member and former friend to enlist his aid in recruiting
a group of dissident Scientologists to overthrow Church management.
After this individual, however, informed the Church of Armstrong's
plan, it obtained permission from the Los Angeles Police Department
to conduct undercover surveillance of Armstrong. The Church then
used two "undercover" persons to collect evidence of Armstrong's
machinations.

          Videotaped conversations show that Armstrong intended to
recruit additional persons to create "as much shit for the
organization as possible." Armstrong intended to foster this plan
by creating sham lawsuits against the Church, seeding the Church's
files with forged and "incriminating" documents which would then be
seized in a raid by the Internal Revenue Service as part of the
then ongoing CID investigation, taking control of the Church after
such a raid, and lying under oath to prevent discovery and to
protect Armstrong's co-conspirators.

          Armstrong admitted on videotape that there was no basis in
fact for his justification defense since he had no fear that anyone
associated with the Church could or would harm him. Speaking with
an undercover operative known to Armstrong as "Joey," Armstrong
revealed his "justification" defense for the fraud it was, and that
his only "fear" was that his conspiratorial plans would be
discovered:

JOEY: Well, you're not hiding!

ARMSTRONG: Huh?

JOEY: You're not hiding.

ARMSTRONG: Fuck no! And. . .

JOEY: You're not afraid, are you?

ARMSTRONG: No! And that's why I'm in a fucking stronger
position than they are!

JOEY: How's that?

ARMSTRONG: Why, I'll bring them to their knees!

(Exhibit 10-Q).

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          Armstrong requested that the undercover persons give him
Church documents so that he could forge documents in the same
style. In particularly revealing language with respect to the
documents he stole and later relied on at trial, Armstrong stated
with respect to forgeries that he can "create documents with
relative ease" because he "did it for a living." (Exhibit III-
10-Q).

          Armstrong then planned to "plant" forged, incriminating
documents in the Church's files so that those documents could be
later discovered and used to discredit the Church. Armstrong
planned to "tip off" investigators for the Criminal Investigations
Division of the Internal Revenue Service once the phony documents
were safely planted so that they could be "discovered" in a later
IRS raid.

JOEY: (Laughs) Great, so what kind of stuff are we going
to want to create and who's going to get it?

ARMSTRONG: That's what we need to talk about!

* * *

JOEY: -- and what do the agencies want on this?

ARMSTRONG: O.K. Well, the agencies have asked for some
specific things, that's all they asked for. Now - - * * *

JOEY: Now, who wanted this?

ARMSTRONG: CID.

(Exhibit III-10-Q).

          The videotapes also reveal Armstrong's true motivations and
his systematic and fraudulent sabotage of the trial. Armstrong
stated he would bring the Church to its knees and that the
fomentation of litigation was one of the prime vehicles for
accomplishing this objective. He stated:

ARMSTRONG: That they're going to lose in a whole bunch of
jurisdictions. They're going to lose, they're going to
lose, they're going to lose (tapping his palm each time he
said it). And they're going to start losing (shrugs) 1985.
They only even have to lose one, and attorneys all over the
country are going to jump on the fucking bandwagon. And
watch, you know, all of a sudden you've got precedents
being established, which are incredible.

(Exhibit III-10-Q).

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          Armstrong further explained that, from his perspective,
neither the truth nor good faith play any significant role in
litigation. He instructed the undercover Church member that facts
mean nothing to a civil litigant and that truth is merely an
avoidable obstacle. Armstrong explained how a civil claim can be
pursued despite an absence of a claim or essential facts:

ARMSTRONG: They can allege it. They can allege it. They
don't even have -- they can allege it.

MIKE: So they don't even have to have the document
sitting in front of them and then --
ARMSTRONG: Fucking say the organization destroys the
documents

* * *

ARMSTRONG: Where are the -- we don't have to prove a
goddam thing. We don't have to prove shit; we just have
to allege it.

(Exhibit III-10-Q).

          As to Armstrong's "dedication to the truth," for which he is
complimented in the trial court's decision, Armstrong took the
opportunity to instruct both "Joey" and "Mike" separately on the
need and desirability of lying under oath:

ARMSTRONG: . . . . By the way, no one will ever get any
names, any communications, any times, any dates or anything
out of me, that's just the way it is. I'll go to prison
before I ever talk, okay. So you have to know that, because
they're wanting to depose me every couple of months. I'm
simply saying no, anyone I talked to that's, that has nothing
whatsoever to do with this lawsuit, the causes of action in my
lawsuit began in 1969 when I was enticed into the Sea
Organization and it ended in 1981, or they actually they
continue on because you guys have continued to harass me but
you...

MIKE: Not us, hey!

ARMSTRONG: No, I'm telling you what I would tell them in
deposition, but they don't get anything else, go ahead.

MIKE: Okay, so that, that's fine, we have an agreement on that
point.

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ARMSTRONG: Right. And you guys also have to have your
agreements marked out between yourselves too, like, I don't
know who knows I'm involved but, I'll deny it!

MIKE: Okay, well, we haven't said anything either.

ARMSTRONG: Good, Good.

(Exhibit III-10-Q).

          Armstrong was even more direct in discussing the fine points
of perjury when speaking with Joey:

ARMSTRONG: OK. What are our conversations, should it come
down to it?

JOEY: What do you mean?

ARMSTRONG: What do we talk about. You're deposed. You walk
out there, and there's a PI hands you paper, saying you're
deposed Jack, and not only that, you're out of the
organization. And what do you say in deposition. Well,
Armstrong and I talked about this, and he had a whole bunch of
ideas about how to infiltrate the communication lines and
spread turmoil and disaster, you know! What are we doing here?
That's my question, before I tell you my ideas on documents.

* * * *

ARMSTRONG: OK. So as far as the doc... Let me just say ah, you
and I get together, we get together because I have a goal of
global settlement. You have felt that the turmoil and abuses
and so on have gone on too long... Hence we get together and
discuss things. We have not discussed anything about a
destruction of the tech, or Scientology is bad, or anything
like that. Are we agreed?

JOEY: Yeah.

(Exhibit III-10-Q).

          The evidence shows Armstrong's state of mind, not to be fear,
but instead to be of a calculating, aggressive and dishonest
character.

          Armstrong's own writings illustrate Armstrong's state of mind
to be sickly and twisted. Attached are two examples of Armstrong's
writings illustrating Armstrong's psychosis and his plan to entrap
a senior Scientologist in a compromising sexual situation, as
previously presented but not provided to the Service. (Exhibits
III-10-R and III-10-S).

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          We do not enjoy even reading much less repeating Armstrong's
demented ramblings. However, we have tried to explain to the IRS
at every level that the Armstrong decision only stood for what
Armstrong's feigned state of mind was during the trial. Yet, the
allegations kept getting raised for us to have to deal with as some
sort of fact. And they are being raised here again.

          The Armstrong case was reviewed by the California Court of
Appeal in summer 1991. The Court of Appeal refused to accept the
evidence that the Church had discovered after the trial as outlined
above, on the technicality that the trial court never got to see it
first (an impossibility since it was obtained after the trial).
The Court of Appeal upheld Breckenridge's decision on the legal
technicality that it believed a justification defense is available
to defend against theft in California. As to the Church's protest
to the gratuitous and condemning language of the Armstrong
decision, the Court of Appeal ruled there was not a problem of
stigmatization because Breckenridge was only reciting Armstrong's
purported state of mind - exactly what we had been telling the IRS
from 1984 to this writing.

          In December 1986, Armstrong entered into a settlement
agreement with the Church as part of the overall Flynn case
settlement. The agreement was designed to resolve all present
and future issues between the parties. Armstrong agreed not to
insert himself into future legal proceedings regarding the Church
absent legal process. Within a short time after receiving the
Church's money, however, Armstrong embarked on a course of conduct
in direct, intentional violation of that agreement.

          Upon entering into the agreement, Armstrong acknowledged that
he understood the provisions of the settlement and had received
legal advice thereon. Armstrong now states, however, that he found
these provisions to be "not worth the paper they were printed on."
He now says that he "put on a happy face" and "went through the
charade" of signing the settlement agreement. The Church recently
sued Armstrong for his blatant disregard of his obligations under
the settlement agreement. After a full hearing, in which Armstrong
was able to fully air his "justification defense", essentially
replaying his 1984 case, another Superior Court Judge was not
impressed and slapped Armstrong with a preliminary injunction. So,
history has proven Breckenridge wrong. Armstrong is anything but
frightened. As he so clearly said - "just allege it."

          There is a compelling body of evidence that suggests that
Armstrong case was manufactured and arranged by the IRS prior to it
even going to trial. The following is brief synopsis of some of
that evidence:

          - The IRS was part of Armstrong's attorney Flynn's FAMCO plan
from the very beginning. FAMCO documents disclosed plans to create

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"Federal and State attacks" with the objective of "closing orgs".
Flynn conducted a FAMCO conference in May 1981 that included
"representatives of Internal Revenue Service"

          - The IRS was the recipient of attorney-client privileged
audio-taped conferences that were stolen by Armstrong. The IRS
pleaded at one point during the US v. Zolin proceedings (see more
about this below) that they had received a copy of the tapes from
a "confidential informant" whom they refused to identify. This
revelation shows the CID had a very strong vested interest in
Armstrong being found justified, after they were in receipt of
stolen property. This is evidence of motive for tampering with the
outcome of the Armstrong case. It also explains their conduct in
illegally and secretly obtaining a "legitimate" copy of the tapes
from the Superior Court after the Breckenridge decision had been
rendered.

          - Despite the fact that communication with the IRS or any
other federal agency was never an issue in the Armstrong case,
Breckenridge's ruling inexplicably invited Armstrong to discuss
the contents of the sealed archives documents, and share them, with
"any duly constituted Governmental Law Enforcement Agency".

          - During post trial proceedings, Armstrong's counsel let slip
a mention to Judge Breckenridge that "The IRS is interested, as the
court probably knows. An investigation is ongoing right now with
respect to the IRS criminal office concerning the testimony in this
case and the evidence that was introduced at trial." However, the
Church knew of no such investigation and was not informed of such
for 2 months. In fact, the CID to this day claims the
investigation did not begin until July. Apparently, the IRS saw
fit to inform Armstrong, his attorneys, and a sitting Judge about
their investigation before informing the Church or the individual
targets. The only explanation for this is ex parte communication
with the judge on the part of the IRS to the exclusion of the
Church.

          - Discovery in the Canadian case revealed that Armstrong's
video taped statements concerning Flynn, the IRS CID and the
Ontario Provincial Police (OPP) actively conspiring to create the
"collapse" of the Scientology religion were borne out. Detective
Ciampini's notes revealed constant communication with Armstrong,
Flynn, and LA CID agents. The CID agents travelled to Canada in
late 1984 to coordinate. Canadian documents and agent testimony
also revealed that Ciampini and his associates travelled to LA to
coordinate with Armstrong and LA IRS in April 1984 - one month
BEFORE the Armstrong trial.

          - The CID's own Special Agent's Report of May, 1985 also
corroborated that they were working in alignment with the FAMCO
plan and Armstrong's video taped aims. The report stated that the

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objective of the investigation was to cause the "ultimate halt" to
and "final disintegration" of the Church of Scientology.

          - In the David Miscavige v. IRS FOIA case covering the IRS
CID files, the IRS has strenuously evaded acknowledging the name of
a single informant, despite the fact Mr. Miscavige has provided
public documents irrefutably proving two dozen of them are Flynn
clients. In fact, every single witness for Armstrong was an IRS
CID informant. The CID has gone so far as to knowingly file a
forged document in order to prejudice the court in the effort to
prevent the disclosure of any documents generated by informant
contacts.

          - LA CID agents have sworn under oath several times that the
CID investigation started as the result of a 11 July, 1984 New York
Times story that covered the Armstrong case. Yet, the New York
Times story itself quoted an IRS spokesman as claiming the
"Internal Revenue Service has been investigating Mr. Hubbard's
financial arrangement with the Church of Scientology for more than
a year."

          - On Sept 26, 1984 David Miscavige met with several high
ranking IRS officials in Washington D.C. including Al Winbourne,
Charles Rumph, Joe Tedesco, Marvin Friendlander, and Bill Connet,
to answer to allegations made in the New York Times article since
that was what purportedly caused the CID investigation. When Mr.
Miscavige began by asking how the NY Times article could be the
impetus for the CID investigation when the same article states it
has been going on for a year, none of the IRS personnel could
answer and in fact ended the entire discussion on the article - yet
an explanation of the article is precisely why they asked for
someone to attend this meeting.

          CID agents continuously dispute evidence that their
investigation began earlier than the 11 July, 1984 New York Times
article. If the investigation started before 11 July, then it
would clearly show there was no "reason" for it, other than the
reason that has been clearly emerging in evidence obtained through
discovery in Canada, and in FOIA cases - to wit, the CID started
the investigation much earlier, orchestrated the Armstrong case and
N.Y. Times article as a pretext to justify their concerns, with
the aim to bring about the "final halt" to and "ultimate
disintegration" of Scientology.

          The Church contends the 1984 Armstrong decision was brought
about by IRS agents illegally working in collusion with private
litigants. The Church vigorously disagrees with the 1984 decision
and with Judge Breckenridge's observations about Scientology. The
Church agrees with the 1992 Armstrong decision preliminarily

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enjoining him from injecting himself into other private and
government actions concerning the Church.

----------------

          Among the fall-out from the Armstrong case has been litigation
for most of the past decade over the IRS's use of some of the
fruits of Armstrong's theft. In addition to Mr. Hubbard's private
and personal papers, Armstrong stole a tape made of a GO attorney
conference in 1980. This conference was attended by Laurel
Sullivan (later an IRS informant) who headed a project called
Mission Corporate Category Sort Out (MCCS). The purpose of MCCS
was to align the Church's corporate structure with its expanding
ecclesiastical hierarchy. MCCS was disbanded in early 1981,
coincident with the overthrow and disbandment of the GO, when it
was learned that Sullivan was attempting to place some of the
indicted GO criminals in high corporate positions and also in
control over the trade and service marks of Dianetics and
Scientology.

          The IRS gained illegal possession of these tapes through a
secret summons served on clerk the Superior Court (Frank Zolin)
without notice to the Church. A Federal Court later ruled the IRS
must return the tapes back to their sealed position in the Superior
Court. In defiance of the court order, the IRS made a copy of the
tapes, transcribed them, and sent the transcripts to IRS agents
around the country. Several CID and EO agents working on Church
cases fully reviewed the transcripts, while the Church itself never
had access to them.

          The IRS has used the existence of the stolen tapes against the
Church both in court and in the exemption proceedings. Knowing
full well that the Church did not have access to them or knowledge
of their contents, the IRS has demanded the Church provide copies
of them in virtually every 1023 proceeding.

          This ploy was taken to its most outrageous extreme in the CST
declaratory judgement case before the Court of Claims in Washington
DC. The Department of Justice attorney representing the IRS in
this litigation vehemently asserted the bald face lie that CST
failed to establish its entitlement to exemption by not providing
copies of the MCCS tapes during its exemption proceedings. He used
that as the stepping stone for the rest of his argument in which he
speculated that nefarious purposes for the establishment of CST
were evident in the MCCS tapes, and that these inferences had to be
accepted since CST failed to produce them. Not only were the tapes
unavailable to the Church, contrary to DOJ assertions, but the IRS
had possession of them and knew they didn't contain the inferences
put forth to the court. The big lie was pressed so insistently and
forcefully that the judge bought and premised his entire ruling on
it.

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          These tapes are still the subject of ongoing litigation. The
most recent decision was rendered by the United States Supreme
Court on November 16, 1992 in (U.S. v. Zolin which acknowledged
that the IRS had access to the tapes in 1984 and had access in 1991
up through present time. In fact, the IRS argued unsuccessfully
that because they had the tapes, the Church's appeal of the ruling
granting the IRS access was moot.

Christofferson v. Church of Scientology:

          The Christofferson case, described at pages 10-15 and 10-16 of
our prior response, went to trial twice, had two jury verdicts and
both verdicts were overturned. The case ultimately was settled as
a nuisance.

          Julie Christofferson made her claims against the Church only
after being kidnapped and deprogrammed by convicted felon and CAN
founder Ted Patrick, and after being induced to file suit by
unethical attorneys as part of Michael Flynn's FAMCO scam, as
described in the response to Question 10.d of our prior response.
Christofferson's attorneys were FAMCO members.

          Christofferson claimed that she had been defrauded,
brainwashed and subjected to emotional distress. The first trial
of the case, conducted in 1979, was a free-for-all, in terms of
Scientology bashing. The judge at that trial allowed
Christofferson's counsel to parade a string of former members and
store-bought psychiatrists through the court room and essentially
put the Scientology religion on trial, as seen through their
hate-filled eyes. This resulted in a verdict against the Church of
Scientology of Portland and other Church entities in the Portland
area, of $2 million.

          The Oregon Court of Appeals resoundingly reversed the verdict
on the ground that it was a runaway, heresy trial prohibited by the
First Amendment. The case was remanded for a new trial.

          Given the admonitions of the Court of Appeals in remanding the
case, the second trial should have been better controlled. It was
not. If anything the second trial, conducted in 1985, was worse,
as by that time Michael Flynn had put together a regular traveling
circus of apostates that he exported to his allied FAMCO attorneys
who were trying the case. All the witnesses had three things in
common. One, they had never met Julie Christofferson. Two, they
were all represented by Flynn and had a stake in the outcome of the
litigation. Three, they were CID informants. This was the same
turn-key arrangement used in the Armstrong case.

          None of the witnesses had a single thing to say about
Christofferson. They were simply summonsed to rant about the

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"evil" Church for days on end. Gerald Armstrong, an IRS informant
whose love poem to a pig was written at plaintiff attorney Gary
McMurry's farm-home between days of testimony, spent several days
denigrating the Church and its beliefs.

          On cross examination Armstrong was questioned about the facts
disclosed in the video tapes outlined earlier in the Armstrong
section of this answer. True to his premeditated pledge to deny
any of it, even under oath, he proceeded to do just that. Thus, he
denied that he had ever been involved in any planning to take over
the Church or to seed its files with phoney documents in
preparation for a CID raid, and other similar facts that the tapes
clearly documented. He was asked if he ever met with anyone to
discuss anything like this. Armstrong vehemently denied it. His
blatant perjury then was exposed when the Los Angeles police
department sanctioned video tapes were put into evidence.

          Within two hours of this testimony, CID agents and District
Counsel attorneys were in Portland in the Judge's chambers, and in
a clear attempt at intimidation, demanded access to and sealing of
the tapes. Simultaneously, CID agents Lipkin and Ristuccia visited
the Chief of the Los Angeles police department to arrange cover for
their operation. This case should have exploded in the plaintiff's
face with a summary perjury conviction of her star witness.
Instead, as a result of IRS CID interference it was allowed to run
its full course as a modern-day heresy trial against the
Scientology religion.

          Not only was Armstrong not charged with perjury, but other CID
informants such as Laurel Sullivan, Bill Franks, Eddie Walters and
Howard Schomer, were also allowed to disparage the Scientology
religion to their heart's content; and CAN psychologist Margaret
Singer, whose theories on "cults" and "brainwashing" have
subsequently been completely discredited in several courts, was
allowed to expound upon those theories making Scientology out to be
something entirely evil and diabolical. This went on to the point
where once again Scientology was on trial and the jury was
overwhelmed by the poisoned atmosphere and the inflammatory
accusations.

          The resulting $39 million verdict was so outrageous that a
public outcry went up, not just from Scientologists but from the
religious community at large. The judge himself was shocked, and
in admitting that the case had gotten out of hand in violation of
the court of appeals ruling in the first case, declared a mistrial
and nullified the verdict completely.

          The Church thus does not agree with the verdict reached by the
jury but does agree with the mistrial declaration that nullified
that verdict exactly 60 days after it was entered. Lawrence
Wollersheim v. Church of Scientology of California
.

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           The Wollersheim case, discussed on page 10-16 of the prior
submission is still under consideration by the California Supreme
Court. The original $30,000,000 verdict was reached after months
of testimony by Michael Flynn's regular stable of witnesses,
including Laurel Sullivan, Eddie Walters, and psychiatrist Margaret
Singer, none of whom had even met Larry until the eve of trial.
The trial was no different than Christofferson - same witnesses,
same documents - except that it lasted for an additional two
months. The entire trial was five months of unrestrained ridicule
and attack of the Scientology religion.

          On appeal the verdict was reduced by the California Court of
Appeal to $2.5 million. The Court of Appeal characterized the
amount of the verdict as "preposterous." Although clearly shocked
by the outrageous verdict, the court of appeal went out of its way
to recite a factual record absolutely unsupported by the record
below to justify Wollersheim receiving the $2.5 million they
arbitrarily decided he was entitled to.

          Both Wollersheim and the Church filed petitions with the
United States Supreme Court. Wollersheim's petition was denied,
but the United States Supreme Court granted the Church's petition,
vacated the judgment and remanded the case to the state appellate
court for further proceedings. On remand, the Court of Appeal
issued a new decision giving Wollersheim a choice of accepting a
$2.5 million award or having the case remanded for a new trial.
When Wollersheim refused to accept the award, the Court of Appeals
changed their decision and, instead of sending the case for a new
trial as required, amended the decision to affirm their original
award of $2.5 million.

          That decision was superceded as a matter of law by the
California Supreme Court's grant this summer of CSC's Petition for
Review. The matter is pending before the California Supreme Court.
The final adjudication of this case is yet to be made.

          However, the only thing the Church of Scientology was ever
guilty of with respect to Larry Wollersheim was trying to help him,
which is why he kept coming back for over a decade, even after
being expelled for unethical conduct. The Church obviously
disagrees with the jury's treatment of the Wollersheim case as well
as the dishonest manner in which the California Court of Appeals
dealt with the case on both occasions on which that court acted.
The Church agrees with the US Supreme Court's decision vacating the
judgment, and the California Supreme Court's decision to review the
case.

          Wollersheim, an attendee at numerous CAN functions, has
recently communicated directly with Church counsel. This is

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significant because the communication from Wollersheim confirms
what the Church has asserted about Wollersheim the entire time --
he is deranged and delusional. As can be seen from the attached
correspondence (Exhibit III-10-T), Wollersheim's current position
is that the Church of Scientology is some sort of massive United
States government intelligence experiment run amok. Wollersheim's
theory even has the Internal Revenue Service, along with the FBI,
Justice Department and the Judiciary, having their actions with
respect to Scientology dictated by the CIA:

          "If you were sitting as director in one of the super-secret
intelligence agencies or think tanks would you hesitate for a
moment to run interference on the outer agencies, the FBI, the
Justice Dept., the IRS or the Judiciary if this would insure that
national security interests in this valuable thought reform field
experiment would not be terminated. Wouldn't you also periodically
let the lower agencies publicly rough up Scientology to help
maintain the great religion cover and release some of the pent up
victim and social back-pressure."

          Wollersheim's letter is plainly the ramblings of a decayed
mind, but it illustrates the sort of persons against whom the
Church has been forced to defend itself and further illustrates
that any reliance by the Service on the claims of anti-Church
plaintiffs like Wollersheim and other CAN members is seriously
misguided.

CONCLUSION

          As you no doubt expected, we don't agree with the negative
decisions concerning some Scientology corporations in the 1980s.
More importantly, through the passage of time we are being
vindicated.

          The Service has criticized the Church for being over-litigious
in fighting dissidents. In virtually every instance, however, it
has been the Church that in the first instance was required to
defend itself in litigation commenced by these dissidents;
litigation packaged, marketed and sold by cynical merchants of
religious intolerance like Michael Flynn, CAN and a significant
element of the IRS.

          As detailed in this and our previous submission, we have to
litigate seriously because we have been subjected to great
persecution. Perhaps those in the Service who complain about our
"litigious nature" do so because we didn't just fold under the
onslaught of IRS sponsored attacks and this upset the best laid
plans of the IRS Scientology-haters. The Service exhibits
remarkable temerity to ask us to "explain" such cases when it was
so integral in creating them.

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          The Service also has directed the support these dissidents
receive. An LA district counsel attorney encouraged Vicki Aznaran
to "take a stand" against Scientology, and her lawyer discussed her
civil case strategy at length with LA District Counsel and EO
agents. Once Aznaran was on board her ten year old personal income
tax dispute with the IRS magically disappeared. Laurel Sullivan
was represented by the U.S. Attorney's office (on the
justification she was an IRS informant) in a civil case brought by
the Church against her for violating the attorney-client privilege.
Mayo's perverted version of Scientology principles received tax
exemption as soon as he became an IRS informant. Even Flynn's
"Scientology Victims Defense Fund" which raised "donations" to fund
his contingent fee litigation against the Church received tax
exemption.

          Cult Awareness Network received exemption as soon as they
stated in writing that they would actively refer innocent inquiries
about Scientology to lawyers. No cases remain in existence that
were not started or maintained by Cult Awareness Network, which
continues to operate under the IRS' imprimatur. If the IRS were to
withdraw its support, CAN and its instigated cases would disappear.

          Our consistent view has been that the civil litigants are
solely motivated by greed. The exception is Armstrong who we truly
believe to be psychotic. During the 1980's, the IRS used every
single civil litigant against Scientology as an IRS witness. The
government, however, has no business in taking sides in a religious
or civil dispute. It is indeed ironic to note that once the Flynn
civil litigation in the 80's was settled, with the exception of
Armstrong, we hear no more of their "horror stories" from these
paragons of virtue claiming to be interested only in "principle"
and "what is right."

          But there is a more important point to be made. You are still
holding us to a higher standard in these proceedings, which is not
a fair and impartial administration of tax law. These decisions
--Armstrong, Christofferson and Wollersheim-- concerned CSC. Even
putting aside whether we were right or not in the court room, how
could these decisions have anything at all to do with these current
proceedings? CST, RTC and CSI did not even exist when these
individuals left the Church and the decisions in the aforementioned
cases are not against these corporations.

          We have more than answered your questions on the subject of
litigation and we want you to understand how unfair we think this
is. After all, as we have shown, significant elements within the
IRS have actively participated in the litigation with a vested
interest in the outcome. So you are asking us to defend ourselves
against unfair attacks that your own agency has had a hidden and
illegal part in creating. To understand why we have had to engage
in so much FOIA litigation, you need only look at the bizarre

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occurrences in our general litigation. So why continue this war of
attrition? Who keeps pushing to ask us questions about our civil
litigation? It isn't relevant to these proceedings and this should
be the end of it.

          Everybody today knows Pontius Pilate was a toady who rendered
a dishonest decision to curry favor from the Roman establishment.
Judge Breckenridge is of the same ilk. The true story of his
decision is in LA CID files - provided they haven't been destroyed
to avoid our FOIA litigation.

          It is time to end this shameful IRS involvement in trying to
destroy Scientology. Why must the Service follow in the footsteps
of the Nazis, who spread black propaganda about the Jews so that
the German people would be inured to the massacre of millions.
This is the same tactic used by significant and powerful elements
within the Service in their dissemination of false information and
active participation in attempting to destroy us.

          We have no doubt that the IRS officials involved in unreasoned
hatred and war against us are morally certain of their correctness
that this isn't the same as the early Roman attacks on
Christianity, that it isn't the same as the Nazis' genocide against
the Jews. No doubt, the Romans and Nazis also showed the same
moral certainty. Many such dogmas have borne the imprimatur of
government--the indestructibility of the Roman Empire, the
supremacy of the Aryan race, the inevitable triumph of communism
over capitalism, the legal segregation of the races. History,
however, always has proven otherwise: Rome fell, the Nazis were
defeated, communism collapsed and apartheid was unmasked for the
evil it is. History is on our side today.

* * * *

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QUESTION 10.e.iii

iii. The Service understands that criminal legal proceedings are
pending in Canada. Please provide a full description, including
the current status of the proceedings.

          In the preceding subparts to Question 10 and the response to
Question 10.d of your second series of questions, the Church has
described in detail litigation involving Scientology-related
organizations or individuals in the United States. This final
subpart broadens the scope of the Service's public policy inquiry
to include Canada. While the relevance of this inquiry is perhaps
more attenuated than those concerning U.S. litigation, at the same
time it provides a fitting conclusion because the Canadian case
mirrors much of what occurred in the U.S., including a leading role
played by the IRS. We are providing a full description of the
Canadian proceedings below, and have also attached as Exhibit III-
10-U, a memorandum prepared by counsel for the Church of
Scientology of Toronto, setting forth his perspective on this case
in response to this question.

Canadian Criminal Proceedings:

          The acts that were at issue in Toronto occurred nearly 20
years ago, from 1974 to 1976. Canadian law, however, has no
statute of limitations to bar anachronistic prosecutions such as
occurred in this case. All the acts at issue were committed by
Guardian's Office members during the same time period as similar
acts in the U.S. These included a conspiracy of infiltration and
theft of documents in Canada similar to that which lead to the
trial and convictions of GO members in the U.S. Yet, it was not
until March of 1983, when the GO criminals in the U.S. had long
since been convicted and sentenced, that the Ontario Provincial
Police ("OPP") conducted the largest raid in the history of Canada
against the Church of Scientology of Toronto.

The Guardian's Office Clean-up:

          In our prior response, the Church's response to Question 3-d
provided a detailed description of the actions taken by the Church
to investigate and disband the Guardian's Office ("GO"). This
included sending missions from CMO INT to Guardian Offices around
the United States and in other countries to investigate involvement
by GO staff in illegal activities and, based on the findings, to
purge offending staff from Church employ. The Guardian's Office
Canada, located in Toronto, was one of those offices investigated.
A CMO mission found that some of the GO staff had been involved in

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illegal activities. Actions were therefore instituted to weed out
and discharge those involved. Church executives insisted that all
wrongdoers make up for damage done to society by full and
appropriate amends. During the thorough clean-up process, those
who earnestly complied through thousands of hours of
community-based charitable works, although barred from Church
staff, were allowed to otherwise retain their membership in the
Church. Those who refused to take responsibility for their actions
were expelled.

          A clique of the most high level GO members in Canada, lead by
Brian Levman and Marion Evoy, who ran the Guardian's Office in
Canada and, in fact, were the ones originating criminal activities
and ordering them carried out, refused to take any responsibility
for their acts and were expelled from the Church. Their refusal to
cooperate with investigations into the extent of the criminality
made it impossible for the CMO missions to find out just how
pervasive the crimes committed by GO Canada were.

          By January of 1983 it was well known to the OPP that the
Church had dismissed from staff all people even tangentially
involved in criminal activities committed in the mid 70's, and no
one then currently on staff had the slightest inclination to commit
crimes, and could not be induced to despite the best efforts of OPP
informants. In February 1983, after 2 years of reorganization, a
CMO mission fired to GO WW to begin the disbandment of the entire
GO network. By late February 1983, GO WW no longer existed, and in
the last week of February 1983, GO Canada was disbanded. This
drove Ciampini and the OPP into a frenzy of activity.

          Just two weeks later, as if fearing that the clean-up and
elimination of the GO would completely undermine any case against
the Church, the OPP conducted the largest raid in Canadian history,
smashing Church property with sledgehammers and axes, and seizing
two million documents, including confidential priest-penitent
confessional materials from 641 parishioners. All together a total
of 950 banker's boxes full of materials were carted off from the
Church.

          Why did the OPP do this, almost a decade after the alleged
acts occurred, six years after the FBI had raided U.S. churches
and punished the masterminds of this activity in the US? It was at
least in part pursuant to the goal of destroying the Scientology
religion. It was also in large measure aimed at aiding U.S.
attackers, including Scientology-haters in the IRS.

          The IRS, Michael Flynn and his clients Gerry Armstrong and
Laurel Sullivan, were key sources who had supplied the OPP with
information for the warrant used in the raid. Indeed, a large
portion of the Toronto warrant dealt with allegations of fraud
(saying Church services did not result in spiritual betterment)
and tax fraud against the Church based on information provided

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by these IRS witnesses. The warrant predicted broad charges being
laid, not only against the Toronto Church, but against the
religion's Founder, L. Ron Hubbard, and senior Scientologists such
as David Miscavige and Lyman Spurlock.

          The two other main informants for the warrant were former
Church members John and Nan Mclean. Documents received under the
Freedom of Information Act evidence that during the 1970s and early
1980s while the Mcleans were assisting the OPP infiltrate the
Church, they were at the same time acting as agents for the IRS.
The Mcleans were also plaintiffs in one of the many Flynn FAMCO
lawsuits. Other FOIA documents revealed that the OPP had arranged
for government legal assistance in the form of money for the
Mcleans' attorneys in order to prosecute their civil claims.

          Immediately following the raid, Ontario attorney general Roy
McMurtry told the news media that a US government agency was
coordinated with and served to help spearhead the investigation
leading to the raid. Subsequent discovery showed the US agency
working hand in glove with the OPP was the IRS. After the raid,
IRS agents in LA CID became regular communicants with Detective
Ciampini to get information seized in the raid and share with him
information from their investigation. In August 1984, CID agents
Al Lipkin and Stephen Petersell went to Toronto and met with
Ciampini and the forensic accountants who had examined seized
Church financial records.

          Because of an agreement made with Church counsel, none of the
seized documents could be given to foreign agencies. Nevertheless,
the Crown allowed IRS agents Lipkin and Petersell to be briefed for
several days on the information from the documents, including
extracts from the documents themselves. CID agent Lipkin advised
Ciampini that if the OPP indicted L. Ron Hubbard and others, the
IRS would assist in locating them. Clearly the IRS was encouraging
the OPP to go forward with charges despite the stale nature of the
evidence, hoping to bolster their own chances to bring charges of
some kind in the U.S.

          In March 1984, Church representatives went to Toronto to offer
the Church's cooperation to the Crown law offices in prosecuting
the GO criminals responsible for the criminal acts in Canada. The
Crown categorically rejected the Church's good faith offer saying
they held all the cards. Instead, the Crown Law Office twisted the
Church's offer of good faith cooperation as a threat by the Church
against the GO criminals and used this to convince the criminals to
accept immunity from prosecution and attack their former religion
and the very subordinates they had ordered to commit the crimes in
question.

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          Initially, the Toronto GO criminals were so uncooperative that
the Crown could not even communicate with them directly. The Crown
Law Office approached apostate IRS informant, David Mayo, for help
in gaining support from the criminals. The OPP also utilized Mayo
as a middleman to approach the expelled former Church members, as
they knew Mayo was a GO supporter and part of the same splinter
movement. The government chose sides in a religious dispute and
went with those demonstrably guilty of criminal acts because they
were willing to denounce the religion of Scientology.

          In December 1984, 18 months after the raid, the OPP brought
charges against the Church of Scientology of Toronto and 19 named
individuals alleging theft of confidential information and
property, breach of trust, and possession of stolen information and
property. None of the other charges against the Church as set
forth in the search warrant that authorized the raid - tax fraud,
consumer fraud and conspiracy to commit indictable offenses - were
raised in the indictment. After an extensive review by forensic
accountants and Revenue Canada agents of all Church finance records
and correspondence which had been seized in the raid, no evidence
of any financial crime was ever found and no charges proceeded from
these allegations. The only charges brought concerned the breaking
and entering, and the infiltration activities by the GO.

          The Crown gave immunity to the real culprits who actually
ordered the activities of the charged individuals. Those given
immunity were the GO staff who had been at the top-levels of the
Guardian's Office in Canada and who had planned out and ordered the
criminal activities. Those who were prosecuted were the
lower-level staff who were following these orders. In an
unprecedented move, no member of the Board of Directors of the
Church of Scientology of Toronto was charged, but rather the entire
corporation itself was - a clear move by the Crown to attempt to
stigmatize the entire religion for the acts of a few long-since-
expelled criminals.

          During the preliminary hearings from 1988 to 1990, the Crown
produced no evidence that the Church as a corporate entity had
advocated the illegal actions of those charged. Evidence that was
produced showed that the Church forbade actions which violated the
law, was not aware of these individuals' activities and that when
they were discovered, the Church removed these people from staff
and disbanded the Guardian's Office. Several charges were dropped
as a result of the preliminary hearing.

          The individuals who were indicted offered to plead guilty if
the Crown would drop the charges against the Church, because
neither the Church nor its directors nor Church members had any
idea that the criminal acts in question were being committed.

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          The Crown refused to change its position, insisting that the
Church plead guilty as well.

          In the litigation of this case, which spanned most of a
decade, during which time government officials expended $15 million
in attempts to "get" the Church of Scientology. As described
below, of 19 original charges, only 12 proceeded to trial and of
those the Church was acquitted on 10. The remaining two are on
appeal. The case was ill-intentioned from the outset and fell
apart in court.

          In November 1991, the Ontario Court of Justice ruled that the
search of the Toronto Church premises was unlawful and violated the
Church's rights under the Canadian Charter of Rights and Freedoms,
which affords protection from unreasonable search and seizure. The
Church had shown in the months-long evidentiary hearing that the
OPP timed the raid to coincide with press deadlines of the
international media; that many of the searching officers acted
with no specific instructions or were left unsupervised, seizing
everything in sight.

          The judge ruled that the OPP failed to respect the terms of
the search warrant that safeguarded against a general rummaging of
the premises. Although the Crown argued that the police had acted
in "good faith," the judge found that the police either were
unaware of this limitation or chose to ignore it, and he could not
find they had acted in good faith. The judge found that the
instigator of the raid, Detective Al Ciampini, was not a credible
witness.

          The judge cited as a significant example of the massive
over-seizure, the large amount of religious confessional material
respecting Church members taken by the police, noting that
confessional material from 641 parishioners was unlawfully seized
in violation of their privacy rights.

          The judge also found it ironic that for two years prior to the
raid, the two OPP officers, placed inside the Church as plants, had
stolen hundreds of documents without authorization and without a
warrant. These stolen documents then were used in the Information
section of the warrant as the justification for the raid. The fact
that the information came from documents the OPP had unlawfully
stolen from the Church was withheld from the Justice of the Peace
who issued the Warrant. The judge also observed the ironic fact
that the OPP's undercover police officers had done the very thing
that was now the subject of charges against the Church and some of
its members. The judge's ruling resulted in acquittals on 7 of the
remaining 12 charges, and the elimination of all theft charges.
The remaining five charges for Breach of Trust were left for trial.
The crime was that certain GO members had worked for Ontario
government agencies, had signed confidentiality agreements and then

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breached those agreements by passing on information concerning the
agencies' activities outside the agencies.

          The trial judge allowed the Crown to keep the Church in the
case as a party on a tenuous legal theory. The law that was used
to support the Crown's position is called the "Dredge & Dock" case,
in which a court had ruled that a corporation can be held
criminally liable for the actions of its employees. This case was
relied on even though it clearly pertained to a profit-making,
commercial enterprise, had never been applied to, nor is applicable
to, a church and had never been applied to an organization that had
thoroughly and demonstrably taken responsibility to rectify the
actions of the miscreants.

          The trial proceeded in April and May 1992. The Crown put on
several ex-GO criminals, all of whom had been expelled by the
Church in the early 80s. They testified under immunity even though
they were the masterminds of the Canadian criminal activity. These
criminals testified against their erstwhile juniors, whom the
criminals had ordered to commit criminal acts. The criminals also
were allowed to manufacture justifications for their own
unconscionable conduct, laying the blame on the Church's doorstep
with tortured and false stories about their states of mind.

          The Toronto Church had no local witnesses testify as there was
no one locally in good standing who knew the first thing about the
criminal activity from the 1970s. Senior Scientologists from
California did travel to Toronto to testify. David Miscavige, who
Ciampini had earlier threatened to indict solely for the purpose of
getting ex-GO criminals to testify, voluntarily testified. He told
the entire story of the GO take over, what lead to it, how it was
carried out, and how the Church was so offended by the GO's crimes
that it was the only entity or individual that volunteered its
services to the Crown to prosecute the wrongdoers. None of the
Church witnesses attempted to justify a single act of the GO.
Instead they outlined how the GO had covered up their criminal
activity from Church management, and when management found out
about the acts, it acted, swiftly and responsibly.

          Once the evidence was all in, the trial judge, misusing the
"Dredge and Dock" case essentially directed a verdict for the
Crown. The Judge stated that whether the GO was separate and
autonomous or not, and whether or not they withheld from the Church
what they were doing, and whether or not the Church cleaned house
long before the OPP and Crown were even interested in any criminal
charges, did not matter. He told the jury that despite the
unrefuted nature of the evidence of the Church witnesses mentioned
above, they must return a verdict against the Church on certain
counts. Notwithstanding the de facto directed verdict, the jury
found the Toronto Church innocent on 3 of the 5 counts tried. It

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was convicted on two counts of breach of trust. 3 ex-GO
individuals were convicted on between one and two counts of breach
of trust each.

          No jail terms were given to any of the individual defendants.
One was fined $5,000 and two others were each fined $2,500. No
probation or community service work was ordered, in acknowledgment
of the fact that they had already done thousands of hours of
community service at the direction of the Church. The Church was
given a fine of $250,000, one quarter the sum the Crown pleaded was
an appropriate minimum.

          The judge acknowledged that the alleged criminal acts had
taken place more than 15 years ago and that all those responsible
were removed by Church officials from positions of authority. He
also recognized that not a single member of the present Board of
Directors was a director at the time of the offenses, and that most
present parishioners were likely not even members of the Church
then. He specifically found that in light of those facts,
deterrence was not required of the Church.

          Following the decision, Church counsel immediately served the
government attorney with a Notice of Appeal on the two counts upon
which the Church was found guilty. The Church and Church counsel
fully expect these convictions to be overturned. Not only was a
novel extension of the law used to find corporate responsibility,
but the trial was fraught with numerous other errors. The fact
that the directing minds of the GO criminality, who testified for
the Crown under grants of immunity, were allowed to go on week
after week denigrating the beliefs and practices of the religion in
their attempt to lay the blame for their own acts on the Church's
shoulders, made for an inquisition-like, heresy trial.

          On September 15, 1992, the Church filed notice of a $19
million Constitutional Damages suit against the Ontario Provincial
Police and the Crown law office for the unconstitutional search and
seizure in the 1983 raid. At the center of that suit are the
discriminatory and violent acts manifested by the OPP's raid; a
raid that has already been ruled to have been illegal and conducted
in bad faith.

          The Toronto case began with dozens of charges being proposed
in the early 1980's. Internal OPP memoranda obtained through
discovery have shown that the aim of the case was to complement the
plans of IRS CID and US private litigant to physically overthrow
leadership of the mother Church and to wipe out the religion of
Scientology. It began with infiltration and attempted entrapment,
followed then by an unconscionable physical assault on the Toronto
Church, later ruled illegal and unconstitutional. The case was
pressed by the OPP and Crown, despite the Church providing evidence
it expelled the culprits and was willing to cooperate in their
prosecution. The individuals who were convicted, GO underlings of

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the Crown's immunized witnesses, had already made up for their
wrong-doing years prior to trial at the Church's insistence. The
Crown's animus against the Church was so strong that
notwithstanding the failure of the IRS CID's takeover plan, and the
failure of the US litigants against the Church, they pressed
forward by dismissing dozens of capital crime cases in order to
make room for their several week heresy trial against Scientology.

          The fact that the OPP and Crown walked away with 2 counts of
breach of trust, a fine less than 1/4 of what they argued was the
minimum possible, and no jail time for any of the individual
defendants amounts to one of the biggest embarrassments in the
entire history of Canadian jurisprudence. Nevertheless, the Church
will continue to fight until justice is completely served. And
that means reversal of the two breach of trust convictions, and
full recompense awarded for the OPP's vicious and illegal raid on
the Toronto Church.

* * * *

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