August 19, 1982

John G. Peterson, Esquire
Trabish & Peterson
4676 Admiralty Way
Marina Del Rey, CA 92091

Re: Your letter of August 18, 1982

Dear Mr. Peterson:

          I am in receipt of your letter dated August 18,
1982 wherein you accuse my client and I respectively of
(1) larceny; (2) receiving stolen goods; and (3) violations
of the canons of ethics.

          Your letter, its allegations, the assorted abusive
and coercive threats and tactics commonly employed by your
client and other relevant matters will be the subject of
Mr. Armstrong's counterclaim in the lawsuit that you have
brought in the Los Angeles Superior Court.

          Although the absurdity of the position set forth
in your letter does not warrant response, I will take the
time to remind you of the following:

          (1) The documents which are now in my possession
as Mr. Armstrong's attorney were legally in his possession
at the time that he turned them over to me.

          (2) My client has a greater right to possess
the documents than does your client. The only person with
perhaps equal possessory right to the documents is L. Ron
Hubbard. Do you represent him? If so, please advise. We
would like to take his deposition.

          (3) The documents reveal numerous fraudulent and
perhaps criminal activities of Hubbard and your client over
the past 30 years and are properly discoverable in any of
the relevant lawsuits by this office against Hubbard and the

Church. Therefore, even in the unlikely event that you
prevailed in the Armstrong civil case, the Church could
not prevent the documents or the information in the docu-
ments from being placed on the public record. Thus, Hub-
bard's 30-year history of fraudulent practices will never
be concealed by the Church, notwithstanding its effort to
do so.

          (4) This office, in response to a Request for
Production of Documents, is agreeable to providing xerox
copies of the documents in my possession for the costs of
copying them.

          (5) The obviously outrageous threat to institute
criminal proceedings against myself or my client will add
to Mr. Armstrong's Counterclaim as soon as dismissal of
such a frivolous suit occurs. Also, my client and I will
then commence an action against your office for malicious
prosecution and/or abuse of process. We will also report
the matter to the appropriate bar authorities for violating
the canons of ethics by using the threat of criminal prose-
cution to resolve a civil matter.

          (6) With regard to the tapes that have been
turned over to me by Mr. Armstrong, the tapes contain evi-
dence of criminal conduct by the Church and its represen-
tatives. I am sure you are aware of the fact that evidence
of criminal conduct is not privileged. Additionally, the
attorney-client privilege is asserted and waived by the
client. Disclosure to a third party of allegedly confiden-
tial a attorney-client communications, as I am sure you are
aware, vitiates the privilege. The tapes were given to
my client by an individual who was present when the tapes
were made. It was that individual's right to waive the pri-
vilege by disseminating information in the tapes as well as
the tapes, themselves, to a third party not present at the
meeting. It is abundantly clear under the case law, there-
fore, that there is no attorney-client privilege in connec-
tion with the tapes. You are hereby advised and placed on

notice, in light of the foregoing legal principles that
the threat of criminal, civil and ethical sanctions against
myself and my client is considered to be an extortionate
threat, and any accompanying acts as threatened, will be the
subject of a lawsuit against you and your client.

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