Gerry Armstrong--Deposition Lynn R. Farny Volume I 07-11-1994

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IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF MARIN

---oOo---

CHURCH OF SCIENTOLOGY
INTERNATIONAL, a California
not-for-profit religious
corporation,

Plaintiff,

vs.

GERALD ARMSTRONG; MICHALE
WALTON; THE GERALD ARMSTRONG
CORPORATION, a California for
profit corporation; DOES 1
through 100, inclusive,

Defendants.

AND RELATED CROSS-ACTION.

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NO.157-680

DEPOSITION OF:

LYNN R. FARNY

Monday, July 11, 1994

VOLUME I

Reported by:
PENNY L. GILMORE
CSR NO. 4724

PENNY L. GILMORE & ASSOCIATES
DEPOSITION REPORTERS
P.O. BOX 862
ROSS, CALIFORNIA 94957
(415) 457-7899

1

INDEX

Witness: LYNN R. FARNY

Examination by:

Mr. Walton

Mr. Greene

PAGE

110

E X H I B IT S

DEFENDANT'S

1 Five-page document entitled Who Is
Gerald Armstrong

PAGE

2

BE IT REMEMBERED that pursuant to Notice and on

Monday, the 1lth day of July 1994, commencing at the hour

of 10:15 o'clock a.m. thereof, at the conference room of

900 Larkspur Landing Circle, Larkspur, California, before

me, PENNY L. GILMORE, a Certified Shorthand Reporter

licensed by the State of California, personally appeared:

LYNN R. FARNY

a witness herein, who, being by me first duly sworn,

was thereupon examined and interrogated as is hereinafter

set forth.

---oOo---

KENDRICK L. MOXON, Esq. and LAURIE J. BARTILSON,

Esq., representing the Law Offices of Bowles & Moxon, 6255

Sunset Boulevard, Suite 2000, Hollywood, California 90028,

15 appeared as counsel on behalf of Plaintiff.

MICHAEL L. WALTON, Esq., representing the Law

Offices of Michael L. Walton, 700 Larkspur Landing Circle,

Suite 120, Larkspur, California 94939, a defendant,

appeared in pro per.

FORD GREENE, Esq., representing the Law Offices 23 of

Ford Greene, 711 Sir Francis Drake Boulevard, San

Anselmo, California 94960, appeared as counsel on behalf

of Defendant Gerald Armstrong.

3

WILLIAM R. BENZ, Esq., 900 Larkspur Landing

Circle, Suite 185, Larkspur, California 94939, appeared as

the referee in said action.

ALSO PRESENT: Gerald Armstrong, Defendant.

---oOo---

4

EXAMINATION BY:

MR. WALTON: Q. Please state your name for the

record and spell it, please.

A. Lynn Robert Farny: L-Y-N-N; Robert, usual

spelling; F-A-R-N-Y.

Q. Mr. Farny, what's your address?

A. 6331 Hollywood Boulevard.

Q: And you are here on behalf of Scientology; is

that right?

A. I'm here on behalf of the Church of Scientology

International, the plaintiff.

Q. What's their address?

A. 6331 Hollywood Boulevard. I use that as my

mailing address.

Q. How long have you been a member of the Church?

A. A parishioner of the Scientology religion or an

employee of the Scientology Church?

Q. A member of the Church. Are you a member of the

Church?

A. Yes, I am.

Q. How long have you been a member?

MR. MOXON: Objection. Would you please clarify

your question? The witness asked for clarification.

MR. WALTON: Q. Do you understand the question?

A. I do now. You want to know how long I have been

5

a parishioner of the Scientology religion.

Q. How long have you been a member of the Church of

Scientology? Do you understand my question?

A. The interpretation I put on it, since late 1976.

Q. What's the difference between your

interpretation and my question?

MR. MOXON: Objection.

MR. WALTON: Q. Member of the church and a

parishioner, is there a difference in your mind?

A. No, if you are not implying a difference, not at

all. No.

MR. MOXON: He simply asked for a clarification.

There's obviously a difference between the corporate

entity, the Church of Scientology International that's a

party in the case, and the Scientology religion. You can

say how long have you been a Catholic and how long have

you been a member of the Catholic Church, how long have

you been a member of St. Michael's Diocese. That's a

distinction we are asking you to clarify. If you ask a

clear question, no problem.

MR. WALTON: Q. Are you part of the

corporation? Are you an employee of the corporation?

A. Yes, I am.

Q. What's your title?

A. Secretary.

6

Q. How long have you been secretary?

A. June 1988.

Q. Have you held any other position in the

organization? When I say "the organization," I'm talking

about the organization that filed the lawsuit in this

litigation. Do you understand that?

A. Yes, I do.

Prior to my becoming secretary of the

corporation for the Church of Scientology International

I was an employee for approximately four years.

Q. Did your position as an employee involve you

having any kind of title?

A. Yes.

Q. What were your titles starting from the first

and progressing until the last?

A. The entire time I'm been with the Church of

Scientology International I've worked in the legal

department. I've had various job titles, some of which I

don't remember, but they're all in the area of litigation

working in either a paralegal capacity or as an executive

over the department in which the paralegals work.

Q. How big is that department?

MR. MOXON: Objection. Which department?

MR. WALTON: The legal department.

MR. MOXON: Objection as to time. Now?

7

MR. WALTON: Q. What's the biggest it has been

since you have worked in it? What's the maximum number of

people in that department from the time you worked in it

until now?

A. Approximately 50.

Q. Does that include lawyers?

A. No.

Q. What's the smallest that it's been?

MR. MOXON: I object to relevance. Is there

some point as to how large or small the department is?

MR. WALTON: I think it may relate to the amount

of experience that this witness has. This witness is here

on behalf of the plaintiff and I'm going to be asking a

lot of questions. I need to know if he's qualified. I'm

looking at what his qualifications are.

MR. MOXON: Is there a particular qualification

you are interested in?

MR. WALTON: I want to know what his experience

is.

MR. MOXON: How large or how small the

department is is irrelevant to how much experience he has.

MR. WALTON: I don't think so. I think if he's

been working with 50 people, for example, he's been number

two in charge of 50 people, that would indicate a lot of

experience than if he's been working with one person and

8

he's been the second in command.

Can we have a ruling?

MR. BENZ: I'm going to allow the question as to

background.

THE WITNESS: Four.

MR. WALTON: Q. At the present time how large is

it, just approximately?

A. Approximately 25 to 30.

Q. Do you have direct control, management control

over any of these people?

A. Yes.

Q. How many?

A. Three.

Q. To whom do you answer? Who is your supervisor?

A. You want his name, is that what you are asking?

Q. Yes.

A. Ed Parkin, P-A-R-K-I-N.

Q. What is Mr. Parkin's title?

A. Legal activities chief.

Q. Mr. Farny, how many times have you had your

deposition taken?

A. At least a dozen, but I'm not certain how many

times.

Q. How many of those times in relationship to some

Scientology litigation?

9

A. All of them.

Q. How many depositions have you attended?

A. Lots. I wouldn't be able to say how many.

Q. Dozens?

A. Yeah.

Q. Hundreds?

A. Probably not.

Q. Under a hundred?

A. I'd have to guess, but I don't think so.

Q. We don't want you to guess. You have attended

enough depositions to know that.

Could you tell me just briefly what your formal

education is?

A. Four years of college but I didn't graduate.

Q. What was your major?

A. Political science.

Q. Other than your experience with the Scientology

legal department -- and I refer to it because I'm not sure

what you do call it -- what is that department called?

A. Legal Bureau.

Q. Legal Bureau. Other than your experience with

the Legal Bureau have you had any other training either

formal or informal in the law in California: paralegal

courses, that's the sort of thing I'm looking at.

A. I had some undergraduate courses on different

10

aspects of the law, but other than that, no.

Q. Could you give me some examples of the kinds of

things that you do in the legal department currently?

MR. MOXON: Objection. This is irrelevant to

the action.

MR. BENZ: Can I ask a question for my

clarification? Was this witness subpoenaed or noticed by

name or is he represented by representative capacity?

MR. MOXON: Representative capacity.

MR. BENZ: I think you are entitled to go into

what his connection to the plaintiff is.

THE WITNESS: Generally I supervise litigation

involving Church of Scientology International. By that I

mean making sure any cases we have have counsel to

litigate and that counsel is provided with the assistance

required, coordinate activities for one case to the next.

I keep the board books for the corporat1on; ratify

contracts; enter into contracts at the direction of the

board; open bank accounts, that sort of thing.

MR. WALTON: Q. Do you know who supervises

Mr. Partkin?

A. Yes,I do.

Q. Could you tell me?

A. Neil Levin, L-E-V-I-N.

Q. What does Mr. Levin do?

11

A. He's the head of the Legal Bureau.

Q. In these times that you have represented, being

an employee of Scientology -- again, I recognize that

Scientology has a lot of meanings and we'll get into that

in a little while -- for now when I say Scientology or the

organization I'm talking about the entity that's brought

suit here. Do you understand that?

A. I do. It's fine with me if it's fine with the

lawyers.

MR. MOXON: Any time you say "Scientology" or

"Church" you are talking about the Church of Scientology

International?

MR. WALTON: Until I find out who the rest of

the folks are ,and what their relationships are, but at

this point because I am such a novice in this area I can

only --

MR. MOXON: Neophyte.

MR. WALTON: I am indeed. I'm working towards

expertise.

Q. In these times that you represented the Church

in these litigations, and what I'm talking about is in

deposition.

A. You mean testified on behalf?

Q. In deposition only.

A. Okay, fine.

12

Q. Are you in the position that you have selected

yourself to attend a deposition or does someone tell you

to go to a deposition?

MR. MOXON: Objection, it's compound. Question

calls for -- it's impossible to answer that.

MR. WALTON: Q. You find it impossible, sir?

MR. MOXON: I do.

THE WITNESS: If I answer it yes or no you have

no idea which half of the question I have answered.

MR. WALTON: Q. These can go on for days and

days if we get real technical. I don't mean to make it

real technical. We can certainly do it that way. All I

want to know is how you came to be here as opposed to any

of the other people who could have come.

A. I do not mean to be hypertechnical. Once it

gets put on a piece of paper on a transcript any

ambiguities are difficult to interpret.

In any event, I think I understand your

question. If you want to ask it again, otherwise I'm

prepared to answer.

Q. Please do.

A. Usually I have been the one to recommend that I

testify. However, it's always counsel's decision who

represents the Church in a given proceeding. But I don't

recall a time when someone has said that I would be the

13

witness unless, of course, it's one of the lawyers who

said we have a corporate representative deposition notice

and I assume you will be the witness. Generally I would

be the one to make the decision.

Q. In your position in the legal department,

then -- and we'll talk specifically about this case rather

than for purposes of this question -- have you read the

pleadings and the discovery in this case?

A. I've read the Complaint, Answer and

Cross-complaint. Most of the discovery; perhaps not all

of it.

Q. In general when discovery comes in in one of the

Scientology cases is someone assigned to respond to the

discovery?

A. What do you mean?

Q. I mean, for example, say you get, not you, but

say Scientology gets a Request for Production of

Documents; the attorney then gives it to someone in 19

Scientology. Who would they give it to, the legal

department?

A. Yes.

Q. From the legal department who would get it

initially?

A. Generally I would.

Q. What would you do with it?

14

A. Depending on its scope, how large it is --well,

this step doesn't depend --I would sit down with the

lawyer and go over what the parameters are of it and

decide on a course of action I would take in order to

gather up the materials to respond to it, then either

myself or one of the staff, one of the paralegal staff

would go about finding the documents, or whatever, give

them to the lawyer, sit down, go over, determine what's

responsive, and the lawyer would draft the response.

Q. Would you assign the next person if it were to

be assigned?

A. Yes.

Q. I'm not asking you who, but do you recall

assigning in this particular action, assigning any of your

staff to respond to any of the litigation requests, the

discovery requests?

A. I may have had them assist in gathering up

things or xeroxing or whatever, but I worked out the

response with counsel. Responses, actually.

Q. As a sort of an aside, did you bring any

documents today for me?

A. No, sir, I didn't. None were asked for in the

Notice.

Q. No, there were no requests in the Notice, but as

I indicated to both your counsel last week I've never been

15

served with any documents pursuant to --I'm not sure if

it's Mr. Armstrong's request or Mr. Armstrong's

corporation's request, but I understand there were some

documents pursuant to that request. And as I understand

from the letter I received I believe last week, week

before last, there were either some supplemental responses

that were served or some supplemental responses that were I

to be served. Do you know anything about those

supplemental responses?

A. Wow. I was waiting for a question somewhere.

Supplemental responses to document requests in this case?

There's one in preparation, yes.

Q. That hasn't been served?

A. No.

Q. Do you know if there's been an initial service

of documents which responded to a document request?

A. I believe there has, yes.

Q. Do you know to whom that was served?

A. The other defendant.

Q. Which other defendant?

A. Gerry Armstrong through his counsel.

MS. BARTILSON: We sent it. After I got your

letter I sent them out. Take a look, you should have

gotten them.

MR. MOXON: Have you been in your office?

16

MR. WALTON: You use three addresses for me. Which

one did you send it to?

MS. BARTILSON: That I'II have to check.

THE WITNESS: Which one is the right one? We

wouldn't want you to get the --

MR. MOXON: Which one is it?

MR. WALTON: If you send it to the 700 Larkspur

Landing address. Here, let me give you my card.

MS. BARTILSON: Service was done initially when

they were originally responded to. They were sent to an

address for you. Obviously you didn't get them. I don't

know where they were. We served everything on this

office.

MR. WALTON: If you served everything to my

office -address I think it would be a lot clearer because

there have been a lot of things I haven't gotten.

MS. BARTILSON: You have different addresses.

MR. WALTON: Sometimes I get things by fax and

sometimes I don't, although the proofs of service say I

have been faxed sometimes I don't get them. In this case

I am going to need whatever documents have been served.

MS. BARTILSON: Sure.

MR. MOXON: Did Mr. Greene tell you there have

been some documents that have come in?

MR. WALTON: With respect to what?

17

MR. GREENE: I'm going to object to any --

number one, it's not your deposition. Number two, that

would fall within the joint defense privilege and I object

to any response to that question.

MR. MOXON: Object to the --

MR. WALTON: I became aware --I can tell you I

got a letter recently and it indicates from Mrs. Bartilson

some supplemental documents were being sent out and I've

not gotten anything, so...

Q. If you have read the Complaint and you have read

the Cross-complaint then you know who I am with respect to

this lawsuit?

A. Yes.

Q. Who am I with respect to this lawsuit?

A. You are a defendant.

Q. Do you know who I am with respect

to any other Scientology-related lawsuits?

A. I don't believe you are a party to any other

suits that we're involved in.

Q. Do you know anything else about me with respect

to any other Scientology-related lawsuits?

MR. MOXON: Are you referring to the other

Armstrong cases?

MR. WALTON: Q. Any Scientology-related

lawsuit.

18

A. You have been deposed here, perhaps in the

breach case in Los Angeles. I'm not certain of that, but

we saw each other at a hearing at a trial involving Church

of Scientology International in the spring of 1990 wherein

Mr. Armstrong sought to appear voluntarily. Well, there was

a subpoena served and there was a hearing on the

matter, and to my knowledge we have never run across each

other beyond that.

Q. Do you know if I ever represented Mr. Armstrong

as his counsel in any Scientology-related litigation?

A. To my recollection Gerry testified that you were

representing him during the settlement negotiations in

1986 providing advice to him in addition to the advice he

was receiving from Mr. Flynn.

Q. Do you know of any other, any other specific

cases where I have represented Mr. Armstrong as his

counsel in Scientology-related litigation?

A. None that presently come to mind, but if I have

forgotten something perhaps you can reacquaint me with it.

Q. Were you with the Scientology organization

during the time that Mr. Armstrong appeared in his appeal?

Actually it was Scientology's appeal in what this group

commonly refers to as Armstrong I.

A. Yes.

Q. What were you doing for Scientology during that

19

time period?

A. That was a long appeal. I was working in the

legal department.

Q. What were you doing in the legal department at

the time that the appeal was finally decided?

A. Refresh me. When was that?

Q. Do you recall?

MR. MOXON: Mr. Benz, I object on relevance.

We've spent a lot of time on background. I don't know

specifically what he was doing at a specific time. If he

would state the relevance to any of the allegations.

MR. BENZ: Mr. Walton?

MR. WALTON: Mr. Benz, I'm in a very peculiar

position here. Scientology has sued me for three or four

million dollars and they're basing that number on some

litigation that's been ongoing for a dozen years, and I

have not been a party to any of the prior lawsuits,

Armstrong I, II, III and IV, with the exception of having

represented Gerry in an appeal on Armstrong I.

I'm going to want to know what it is, if I lose

on this thing, if I'm a defendant I'm entitled to know

what I'm defending against, and to begin with, I want to

understand a little bit about this organization that's

suing me.

Gerry Armstrong and Scientology have a long

20

history. I have virtually no history with this

organization. And to properly defend myself I'm going to

have to find out some very basic facts.

MR. MOXON: Such as what this witness was doing?

MS. BARTILSON: It's a fraudulent conveyance

action. He's a party to the lawsuit because Gerry

committed property to him, that's why he's a party. The

background information as to what this witness was doing

at the time Gerry was appealing something else has

absolutely no relevance to anything that's at issue in

this case. This is a small and simple case. It's about

property that was conveyed in 1990, that's how we

eliminated the other discovery that's been done in this

case.

MR. BENZ: From the standpoint that it alleges a

conspiracy between the two, I think it would be relevant

to go on to see what the witness knows about the

association between Mr. Walton and Mr. Armstrong, since

that's one of the allegations. To that extent, on that

basis I'll allow that line of questioning.

MR. MOXON: We've not precluded that at all.

What he was asking was what particularly was the witness

doing at a certain point in time.

MR. BENZ: As I understand it -- and correct me

if I'm wrong and we can redirect your question -- but I

21

thought he was attempting to find out whether the witness

was involved in the appeal and what the relationship was

with Mr. Walton.

MR. MOXON: That question is fine. If the

witness wants to answer that question, I have no problem.

THE WITNESS: I think the only question pending

is mine which is when was the oral argument.

MR. WALTON: Q. But you are not asking the

questions. If you don't remember, that's fine.

A. I remember generally. Early '91?

(Directed to Mr. Greene) Do you remember? It

will help answer the question. If you don't want to answer,

that's fine.

MR .GREENE: The opinion came out in October of

'91. I was not involved in the litigation. The oral

argument was in February.

THE WITNESS: That helps. Your question was what

was I doing then?

MR. WALTON: Q. Generally.

A. I was working in the legal department.

Q. Did you do anything on the Armstrong appeal?

A. Yes.

Q. Can you tell just generally what you did?

A. Generally I worked with the lawyers and provided

them with what information they needed in order to produce

22

the briefs and get ready for oral argument.

Q. Having said that, do you recall ever seeing my

name on any of the pleadings that issued from Gerry's camp

as his counsel on the appeal?

A. Now that you brought it up I believe that's

correct.

Q. Do you know if Michael Douglas is a defendant in

this lawsuit?

A. He's not a named defendant at this point.

Q. Do you know if Michael Douglas ever represented

Gerald Armstrong in Scientology-related litigation?

A. Douglas is not a lawyer. I don't believe he

represented him as a lawyer since he is not.

MR. MOXON: Are you referring to Michael

Douglas, the former Scientologist?

MR. WALTON: Yes. I think the deponent had no

problem recognizing which Michael Douglas I was referring

to.

Q. Do you know if Kima Douglas is a defendant in

this lawsuit?

A. Not at present.

Q. Do you know if Kima Douglas had represented

Mr. Armstrong in any Scientology-related litigation?

A. I don't believe she's an attorney, so the answer

would be no.

23

Q. Do you know who Andrew Armstrong is?

A. No, I do not.

Q. Have you ever seen the name Andrew Armstrong in

connection with testimony that Mr. Armstrong, Gerry, has

given in this litigation?

A. Perhaps as someone who received some of Mr.

Armstrong's money, I have a vague recollection of that;

otherwise, no.

Q. Is Andrew Armstrong a named defendant in this

litigation?

A. Not at present.

Q. Do you know if Andrew Armstrong ever represented

Gerry Armstrong in any Scientology-related litigation?

A. I don't think.

Q. Do you know who Gerry Solfvin is, S-O-L-F-V-I-N?

A. I may have seen the name, but otherwise I don't

know.

Q. Would that have been in connection with one of

the names that Mr. Armstrong testified that he had given

property to?

A. I'm not certain.

Q. Do you know if Mr. Solfvin has ever represented

Mr. Armstrong in any Scientology-related litigation?

A. No, I don't.

Q. Do you know who Laurie Eaton is, E-A-T-O-N?

24

A. Is that Laurie Phippeny?

Q. I don't know.

A. No. If they're different people, then no, I

don't.

Q. Do you know if there's a Laurie Eaton, if a

Laurie Eaton has been named as a defendant in the current

litigation?

A. No, she hasn't.

MR. MOXON: Do you want to review the Complaint?

MR. WALTON: Q. Do you know who Nancy Rhodes

is?

A. I've seen that name in this litigation. I

believe it's Nancy Dincalci.

Q. Do you know who Nancy Dincalci is?

A. Yes.

Q. Has Ms. Dincalci been named as a defendant in

this litigation?

A. No, not at present.

Q. Do you know if Ms. Dincalci has ever represented

Gerald Armstrong in any Scientology-related litigation?

A. No, she's not a lawyer.

Q. And Bambi Sparks aka Laurie Phippeny, do you

know who that is?

A. Yes, I do.

Q. Has Ms. Phippeny been named in this action?

25

A. You just reminded me of something. Laurie Ann

as well as the Douglases, I believe it's come up through

discovery, are the directors of Gerry Armstrong's

corporation. So to that degree they would be defendants

because the corporation is a defendant. I want to clarify

that. But as individuals they may not be.

Anyway, Bambi, I believe, has been named as a

defendant.

Q. Has she been served?

A. I actually don't know.

Q. During the time that Mr. Armstrong testified

that he divested --of the people that he's testified that

he divested to who were beneficiaries of his divestment,

Michael Walton, that is me, is the only person who's been

named and served in this lawsuit?

MR. MOXON: I object. The question is vague and

ambiguous. I don't understand what you are asking. It's

also compound.

MR. WALTON: Q. Do you understand my question?

THE WITNESS: I think she said something.

MS. BARTILSON: Misstates the witness's

testimony.

MR. WALTON: Q. Do you understand my question?

A. Not really because it didn't seem to match what

I said.

26

Q. I'm asking do you understand that Mr. Armstrong

released his interest in certain property in 1991, 1990,

1991 and that's what gave rise to this lawsuit?

MR. MOXON: Again I object to the term

"understand." I don't know if you are asking for his

personal knowledge or allegations he has read based on Mr.

Armstrong's testimony or a conclusion you may have

drawn.

MR .WALTON: Let me try to make it more clear.

We'll get it clear.

MR. MOXON: I want a clear question, clear

record.

MR. WALTON: What I'm trying to find out, of

course, is why there's only one named and served

defendant.

MR. MOXON: Why you are being sued?

MR. WALTON: Q. I understand why I'm being

sued. I don't understand why no one else is being sued.

What I'm trying to get at is why Scientology selected me

and if they did only select me because I represented Gerry

on a prior lawsuit I want to get --

A. That's a question I can answer.

Q. Why don't I start with this, because Scientology

has had information, specific testimony from Mr. Armstrong

regarding other beneficiaries, I'm going to call those

27

people, who received property from Mr. Armstrong at the

same time I did. Why has Scientology not filed a lawsuit

against them?

A. At the time we filed the suit I believe the

evidence we had is that you got the lion's share. You got

the house, which was worth nearly half a million dollars

and a substantial amount of cash. I'm not certain we knew

of the extent to which any of these other individuals

received property or money.

Some of the names, as we discussed them, I seem

to recall the evidence in this case is they got small

amounts. When we filed the suit that's the best evidence

we had.

Now since then, as I said, I believe we've added

Bambi as a defendant and perhaps, you know... Beyond that

I don't know the answer to your question. If it was the

government I would say prosecutorial discretion. We're

not.

Q. I'm not sure that exists in civil law anyway.

Since the time of filing of the lawsuit,

however, you have had an opportunity to take

Mr. Armstrong's deposition; is that correct?

A. When you use "you," are you talking about

Scientology?

Q. I'm talking about Scientology.

28

A. Sorry, I was talking through counsel.

MR. MOXON: It is confusing when you say

Scientology. Maybe if you say plaintiff or CSI, identify

it that way.

MR. WALTON: I thought we agreed in the

beginning I could use it that way, but if it's confusing

I'll certainly use "plaintiff."

Q. So plaintiff has taken Mr. Armstrong's

deposition?

A. Yes.

Q. And plaintiff has found out, pursuant to a

direct order I believe from the referee in this case,

exactly what the property in general terms, the property

was that Mr .Armstrong gave away?

MR. MOXON: I object. That calls for a

conclusion that all the property that Mr. Armstrong gave

away has been revealed. You are asking for a conclusion of

the witness whether or not there's been a full

disclosure.

MR. WALTON: Let's break it up.

MR. MOXON: You may have given away property,

too, and I don't know what you have done.

MR. WALTON: I'm talking about the stuff he's

testifying to.

MR. MOXON: Just what Mr. Armstrong testified

29

to?

MR .WALTON: Right.

MR. MOXON: Your question is did he read Mr.

Armstrong's deposition?

MR .WALTON: Q. Did you read Mr .Armstrong's

deposition?

A. Perhaps some of it, yes.

Q. Do you know or does Scientology know -- Do you

know, let's start with that, do you know what

Mr. Armstrong's testimony is as to what he gave away?

A. I'm aware he has testified to having given away

money to various individuals, forgiven debts; he gave you

the house; substantial amount of cash. As far as a

specific memory quiz on how much, as I sit here I wouldn't

be able to remember it. The deposition record would be a

better reflection of that. But I do remember testimony to

that effect, yes.

Q. Because I received the lion's share I was a

named defendant. What about Ms. Phippeny, was she named

as a defendant for the same reason?

MR. MOXON: I object to asking the witness what

the reason was why someone was sued. I don't know what

the relevance is. As to why you were sued, you got that

information and it's, again, asking for a conclusion.

It's also potentially asking for attorney/client

30

privileged information. Obviously he is a representative

of the parties and has had communications from counsel

suing or not suing particular individuals, the relative

strengths and weaknesses, and whatnot. So I also object

on attorney-client basis.

MR. WALTON: I'm certainly not trying to invade

the attorney-client privilege. However, to the extent

that I may have been singled out for inclusion in this

lawsuit because I represented Gerald Armstrong in a prior

litigation, and to the extent that Scientology may

understand that this lawsuit has little or no merit, to

the extent that this may be an attempt to destroy pursuant

to what the courts have called black PR --

MR. MOXON: Mr. Walton --

MR. WALTON: Please let me finish.

MR. MOXON: I understand what you are saying

now. The witness already testified that you received the

lion's share. In fact, I think the testimony was you

received something in the neighborhood of 70 to 80 percent

of the proceeds of the settlement. Now if you consider

that's an inconsequential amount of money, that you

received no benefit from it whatsoever, it was just given

to you, that it wasn't a fraudulent transfer to you of

virtually all of his property, well, if you consider

that black PR you can have any conclusion you want.

31

MR. BENZ: May I suggest that we're departing from

asking the witness questions and I'm not quite clear

what the question was or what its purpose was. If you

want to rephrase it and make it direct so he can have a

direct objection perhaps I can rule on it.

(Record read back.)

MR. BENZ: I think it's unclear. I don't know

what a lion's share is in any given meal. If you want to

rephrase it.

MR. WALTON: Maybe I'll come back to that. Let me

establish a couple more things here.

Q. Scientology, in its lawsuit, and your counsel

just now indicated that Mr. Armstrong gave me a house that

had a worth of $397,000.

MR. MOXON: I made no such statement as to value

of the house. The witness testified earlier what he

thought it might be worth. It's in the record.

THE WITNESS: What's your question, whether I

was paying attention to what he said and heard the number

or whether I have any knowledge of the value of the house

he gave you for no consideration?

MR. BENZ: There isn't a question.

MR. WALTON: Q. I'm about to pose a question.

A. I thought you had asked it, I'm sorry. Go

ahead.

32

Q. How did Scientology arrive at the sum of

$397,000?

A. I'm not certain we did. My recollection is the

value of the house is somewhere in the area of $400,000,

give or take whatever.

Q. How do you have that figure in your mind?

A. I read it in a document.

Q. Do you remember which document?

A. I believe either a deposition transcript or

property record. We do have the property records

concerning the house.

Q. What would the property record have reflected

that would have given you the idea it was around 400,000?

A. That's why I'm not certain. Whether there was

testimony as to the value or whether that was indicated in

any of the property records, I'm just not certain. I

remember reading in a document that that was the

approximate value of the house, as far as I know, that no

one is disputing that.

Q. Could you have read -- could that have been in a

loan document?

A. I don't think so.

Q. Would that $397,000 have included -- would

credit for a mortgage owed have been included in that

397,000?

33

A. have no idea and I haven't adopted your

397,000. I said around 400,000. Your question is would

that have included a mortgage? Is that the equity in the

house or is that the overall value of the house, whatever?

Q. I'm trying to find out --

A. I'm not certain but my understanding is -- and

it's approaching its limit -- is that Armstrong owned it

free and clear -- but I'm not certain of that fact -- at

the time it was conveyed to you.

Q. What's a dead agent pack?

MR. MOXON: Objection, relevance. Does this

have something to do with the transfer?

MR. WALTON: Has to do with documents that I

understand Scientology produced pursuant to a document

request in this litigation.

MR. MOXON: Relevance?

THE WITNESS: Which you didn't receive.

MR. WALTON: I didn't receive, no. And I did

receive this document; it was brought to my attention. I

want to find out now if in fact it was a document

Scientology produced and what it is.

MR. MOXON: Again, I object.

MR. WALTON: Q. Do you recognize --

MR. MOXON: Again, I object as to relevance.

The relevance is that it was produced?

34

MR. WALTON: It was produced, as I understand

it, it was produced in a document request by Scientology.

Mr .Armstrong and Mr .Armstrong' s corporation requested

certain documents responsive to this litigation and this

was one of the documents that was produced. If it wasn't

relevant, why did Scientology produce it?

MS. BARTILSON: They produced a lot of --

MR. MOXON: Can I ask the relevance other than

you think someone else thought it might be relevant?

MR. WALTON: I want to find out --

MR. MOXON: If you don't know if it's relevant or not

then I object to the relevance without a proper

ruling.

MR. WALTON: Let's find out if Scientology

produced it.

MR. MOXON: I'm sorry, I'm asking what the

relevance is other than you think someone else may have

produced it.

MR. WALTON: This is an allegation concerning me.

I would like to find out about them.

MS. BARTILSON: In this document there's

allegations concerning you?

MR. WALTON: That's correct.

MR. BENZ: I think Mr. Walton is entitled to

find out whether or not this witness knows it was produced

35

in the document production in this litigation.

THE WITNESS: Your question, sir?

MR. WALTON: Q. Was this document produced in

response to a document request in this litigation?

MR. MOXON: Hold on a second, let me take a look

at it.

THE WITNESS: It appears to be a document

produced in this litigation, yes.

MR. WALTON: Q. Could you tell me the origin of

this document?

A. How's that?

Q. The origin, can you tell me the origin, where the

document came from?

A. It came from us.

Q. Who prepared it? "From us," you mean the

plaintiff?

A. Yes, the plaintiff. Various staff of CSI. This

looks like my writing in terms of content. It's a

typewritten document.

Q. Who would have directed this document to be

produced?

MR. MOXON: Who would have?

MR. WALTON: Q. Who did, if you know?

MS. BARTILSON: Objection, assumes facts not in

evidence that someone directed it to be written.

36

THE WITNESS: I don't remember. Save you a

second question, I don't remember.

MR. GREENE: Why don't we mark this as an

exhibit since you are asking questions about it?

(Whereupon Defendant's Exhibit number 1
was marked for identification.)

MR. WALTON: Q. What part of this appears to be

your writing?

A. Or was in an earlier incarnation. The material

from the Griffith Park tapes, the material discussing the

breaches. The material concerning Ford Greene does not

appear to be originated from something I wrote. And,

again, as to the earlier portions of it it was either --

there was an earlier incarnation of this that this

material came from a draft, if you will.

Q. This is a document entitled Who Is Gerald

Armstrong. That's, I believe, your document number 200298

on page one. Is that Scientology-marked numeration?

A. If we produced it, which I believe we did, it

would have been our Bates stamp. It goes, for clarity,

through 200302. Ford is happy with that.

Q. I understand that the section representations

referred to attachments that were produced when this

original document was produced.

A. I don't remember. I see references to sections

37

but I don't remember.

Q. So this, when you did that production aspect of

this document that you did, was that within the Legal

Bureau?

MR. MOXON: Objection.

THE WITNESS: Try again.

MR. MOXON: It's vague and ambiguous.

THE WITNESS: I'm sorry, try again. I don't

understand.

MR. WALTON: Q. I'm trying to find out if you

don't really know where it was generated but you did some

work on it and you don't know who directed it to be done,

I'm striving to sort of figure out, narrow down where it

came from.

A. I'm not tracking with you at all. Let's rewind

and start over.

Q. Let's start over. If I repeat a question,

forgive me.

Do you have any idea why this document was

produced?

MS. BARTILSON: Objection, vague and ambiguous.

You mean produced to Ford Greene in this litigation?

MR. WALTON: Produced originally.

Q. Why did Scientology put together a document like

this? Can you explain to me so I understand why?

38

A. It was compiled so we would have a concise

statement so as to respond to Gerald Armstrong's many

media appearances and other statements he was uttering in

violation of his settlement agreement. So it was prepared

so we would have a response to communicate the truth,

things which Gerry tends to leave out of the things he

says.

Q. This is a press release?

A. Where did you get that? Is the question is this

a press release? No.

Q. What would you characterize this document as?

A. A pack of information.

Q. What is a dead agent pack?

A. I was wondering if you were going to get an

answer to that. I assume that was part of the overruled

objection earlier, was the objection to your second

question that you to before that? Is there one?

MR. MOXON: I object as to relevance. What's the

relevance to this case what this term is?

MR. WALTON: I suspect that a Scientologist can

speak for a long period of time without me understanding

anything that's going on because of the sort of sub-

language that exist in Scientology, some of which I read

and don't understand. I need to understand some of the

basic things that go on, some of the basic language. I

39

just want to know what it is. If this is it, I want to

know that, too.

First of all, I want to know what a dead agent

pack is.

MR. MOXON: Again, I object. What's the

relevance to this lawsuit? What does this term have to do

with this lawsuit? I don't understand.

MR. BENZ: I don't know what a dead agent pack

is so I can't really rule on this except does it appear in

here? Does it appear someplace? From whence does it

come?

MR. ARMSTRONG: I would be happy to answer that.

THE WITNESS: As would I on the record. Gerry,

you're not in deposition.

MR. BENZ: I need Mr. Walton to explain to me why

he needs it defined.

MR. WALTON: From my understanding, but then,

again, I'm not sure about this, a dead agent pack and

black propaganda are two ways that I'm told that

Scientology attacks its perceived enemies, and there is an

attack on me in this document that was produced as a

response to a document production in this litigation. I'm

trying to find out what this document is and why there's

an attack on me in it.

MR. MOXON: There's no attack of you in this

40

document, for one.

MR. BENZ: If you want to ask something was this

produced as part of a dead agent pack plan or something,

fine. Without more on what dead agent pack means I

can't --

MR. MOXON: Why don't we let the witness give a

definition so we can get back to the deposition.

THE WITNESS: The phrase "dead agent pack" is

slang. It refers to a pack which compiles the truth about

someone who's been telling lies, and the term springs from

Sun Tsu's book on war and wherein he describes various

different types of agents and one which he describes as

dead agent is one who's been feeding lies whose lies have

been exposed; and as an information source he is dead in

the eyes of the individuals to whom he has been spreading

false information.

That book was written several centuries ago. In

those days he was dead more that just as an information

source. But today it's slang for information pack which, I

if you will, communicates the truth about the individual

in such a way that their credibility with the source to

whom they have been spreading false information no longer

exists.

MR. BENZ: Can I ask one question in case this

comes up again? You are talking a pack?

41

THE WITNESS: P-A-C-K, package. This is a

several page memo which would have documentation attached.

MR. BENZ: I wasn't sure about the word pack or

pact, whatever.

MR. WALTON: Q. Is this a dead agent pack?

A. No, it's a cover write-up but there's no package

of information with it.

Q. I'm sort of at a disadvantage because I haven't

been served with these documents. It's my understanding

there were a number of documents such as four, five, six,

seven, eight, nine, number of sections that are referred

to that Ford --

A. Ford doesn't indicate it's attached; just says

"video available."

Q. In the original that was produced to Mr.

Armstrong' s attorney, would you consider the original as a

dead agent' s pack?

A. As I testified, I don't remember if we produced

the package of information that goes with it. If we did,

I would have, yes.

Q. Is that the same thing as black propaganda?

A. No.

Q. Could you tell me what black propaganda is?

A. Black propaganda is what one is trying to

correct when one compiles a dead agent pack. It's when

42

someone is spreading lies about someone to destroy their

reputation. The way you deal with that is document the

truth, and then the people to whom the black propaganda has

been spread hopefully no longer believe the lies.

Q. Do you have any knowledge of the entities to

whom this document was disseminated?

A. Not really.

Q. Are there any records to show what entities to

whom this document would have been disseminated?

A. No, it no longer would have been kept. It would

have been disseminated where needful to correct false

reports. I don't remember to whom it was disseminated.

Q. On page Bates-stamped 200301, the last line of

the fifth full paragraph, it says "Walton also knew of

Armstrong's intention to breach the agreement and was thus

fully aware of the fraudulent nature of the conveyance."

Do you see that line?

A. Yes.

Q. Is that a line that you wrote?

A. Possibly.

Q. Could you briefly outline what facts Scientology

has in their possession that would support this statement?

A. There's a statement in the first half of the

sentence and a conclusion in the second half. I assume

you want the first half. The second half of the sentence

43

flows from the first half; the basis for the second half of

the sentence is the first half of the sentence. You

want the basis for you knew his intention to breach the

agreement?

Q. That's correct.

A. I saw you stand up in court when he tried to

appear in the RTC v. YANNY trial of March '90 where we

outlined the entire argument of Armstrong striving to

breach the settlement agreement. This was prior to him

divesting himself of his assets to you.

There's also been deposition testimony from your

co-defendant that you were aware of his breaches of the

settlement agreement, at least some of them. So that's

the basis for that. As I said, the second half of the

sentence is a conclusion based on the facts underlined in

the first half.

Q. Let's read the first half: "One of the

recipients of Armstrong's assets was an attorney named

Walton."

A. No, no, no, first half of this sentence:

"Walton also knew of Armstrong's intention to breach the

agreement," that's what I'm talking about. Then the

conclusion that flows from that is, "...was thus fully

aware of the fraudulent nature of the conveyance."

That was a conclusion based on your knowledge of

44

his breaches of the settlement agreement.

Q. I'm sorry, I didn't quite understand your

response. The initial part of the response had to do with

some incident where I stood up at a Yanny --

A. When Armstrong appeared, or sought to appear as a

witness at the Yanny trial, you were there with him. I

don't remember if you made an appearance but you were

there in the courtroom with him. I believe you did

introduce yourself. The entire argument of why he should

not be permitted to testify was laid out and the fact that

it violated his settlement agreement, et cetera. So...

Q. Who made that argument?

A. Counsel for the Church. I believe it was either

Earl Grew or Bill Gresham, counsel for the Church, who was

was trying that case.

Q. What did that indicate to the Church with

respect to me in this litigation?

A. It indicated that you were aware of our position as regards

Armstrong's breaches of the settlement

agreement. That's all I indicated at that time.

You asked what my foundation was for Walton also knew

of Armstrong's intention to breach. I listed that as one of

the issues because I happened to be there that day

and saw you receive the information --

Q. Excuse me, let me --

45

A. -- of deposition question.

Q. You are confusing me. I don't mean to interrupt

you, but I'm not sure how that indicia of that set of

circumstances that you just testified to, is indicia of

Armstrong's --

A. Intention to breach.

Q. -- intention to breach.

MR. MOXON: Do you have a question?

MR. WALTON: He's going to explain to me how it

is.

MR. MOXON: If you want to ask a specific

question... You are asking for a legal conclusion. You

asked for a fact. He gave you reasons why he believed

that. It's been asked and answered. I object on that

basis. If you have a specific question, go ahead.

MR. BENZ: I'II sustain the objection.

MR. WALTON: Q. Are there any other facts that

Scientology has that indicate that I knew of, that I was

fully aware of the fraudulent nature of the conveyance?

A. Without limitations, because there's been

discovery exchanged back and forth in this case and

there's been deposition testimony by your co-defendant

that you knew of his breaches of the settlement agreement.

So I don't want to limit the evidence available in the

case that's already on the record by way of this memory

46

quiz, but certainly there was that day in, I believe,

March '90 that indicated his intention to breach and we

argued that there was an active breach by his

participation in that proceeding because of the sham

nature in which he had arranged to be served with the

subpoena. There was no valid reason for him to be there.

The judge, for whatever reason, saw fit to exclude him.

There has been deposition testimony from Mr. Armstrong of

your knowledge of the breaches of the agreement. There

has been --

Q. Can you be specific about that?

A. Page and line? Of course not.

Q. Not page and line, just generally what breaches

was I aware of? We're talking about before the fact here.

A. I understand. As I sit here what I recall is

his testimony that you were aware that he had no intention

of abiding by the settlement agreement for his own reasons

which he stated specifically. I don't remember, but it's

in his deposition.

Q. As you sit here can you give me an example of

one breach that you accused Mr. Armstrong of doing that I

knew about in advance? I'm talking about specific breaches

here.

MS. BARTILSON: Objection, relevance.

MR. MOXON: Asked and answered, also.

47

MR. WALTON: It hasn't been asked and answered.

The relevance is that every time Mr .Armstrong allegedly

breached an agreement Scientology is looking to me for

$150,000.

THE WITNESS: That's not true at all. No, what

we're looking for from you, sir, I don't want you to --

MR. WALTON: If I am wrong --

(Whereupon a four-way conversation ensues.)

MR. BENZ: I don't think that question was

clear, so if you can rephrase the question. I'm not going

to foreclose the area, but that particular question isn't

clear and the reason it isn't clear to me, if I remember

back that far, is you are not saying -- is the point in

time and you are not making clear, you are not connecting

up whether or not the knowledge -- when the knowledge of

the breach was supposed to be.

MR. WALTON: Let's do that.

THE WITNESS: While you are looking through your

notes might this be a good time for a break?

MR. GREENE: All agreed off the record?

(Brief recess.)

MR. WALTON: Back on the record.

Can I ask you, Mr. Benz, to direct one or the

other attorneys to make objections instead of this double

tag deal?

48

MR. MOXON: I'm representing, Mr. Farny which he

is entitled to individual counsel. She's representing the

plaintiff, okay?

MR. WALTON: I'd also like a directive that when

one person starts to talk he or she be allowed to finish

what they are saying before there's any interruption. If

it's inaccurate or there's some objections, certainly it

may be appropriate to make it, but I'm not sure in the

middle of someone speaking it's appropriate to jump in and

interrupt.

MR. MOXON: I think that's a great idea.

THE WITNESS: Can we agree to the same thing

with respect to my answers? A couple of times you jumped in

a bit early.

MR. MOXON: If you refrain from that we will

appreciate it a lot.

THE WITNESS: I will only say I will do the best I

can.

MR. WALTON: That's all I ask.

A. Mr. Farny, do you know when the Church of

Scientology International was formed?

A. November 1981.

Q. Do you know if it operates under any other

names?

A. Yes, one of our divisions is Golden Era

49

Productions, a registered dba for CSI.

Q. Any other dba?

A. I don't believe so. Wait, yes, perhaps there is

one other called the Uniform Exchange. It's a division

that acquires our uniforms and such. I think they have a

registered dba. Other than that I don't think so.

Q. It acquires the uniforms?

A. Uniforms. We wear uniforms and it acquires it for

staff in bulk, contracts with tailors to make them, such as

that.

Q. When we first started this deposition there was

some question as to what Scientology, when I used

"Scientology," what that meant. How many, if you know,

how many Scientology-related organizations are there?

MR. MOXON: Object. The question itself is

ambiguous. Related organizations? You mean other

religions like any church of any religion is related in

the sense there's churches? There are churches of

Scientology.

MR. WALTON: That's what I'm trying to find out.

I have Religious Technology Center, Church of Scientology

International, Church of Scientology California. I don't

know if there are any others. This is on a face sheet on an

Appellate District Division. I'm just wondering. I'm

trying to get an idea in my mind if CSI has some related

50

entity and where it is in the scheme of things.

THE WITNESS: Okay, now I understand. Your

question is how many?

MR. WALTON: Q. How many are there, just

approximately?

A. Approximately 1400.

Q. Are these described as separate churches or

separate organizations? Could you explain to me?

A. Yes.

Q. Separate organizations?

A. Separate churches, separate organizations.

Q. Is there a sort of a mother organization, sort

of one that controls all the others?

MR. MOXON: Objection, compound question.

THE WITNESS: And calls for a legal conclusion but

I'll answer it anyway.

There is a Mother Church in the hierarchy that

performs the function of the Mother Church regarding the

entire religion and its individual component churches,

missions and groups. That organization is Church of

Scientology International.

MR. WALTON: Q. The plaintiff in this action?

A. You got it.

Q. So CSI doesnot answer to any other

organization?

51

MR. MOXON: Objection.

THE WITNESS: I don't understand your question.

MR. WALTON: Q. It is not controlled by any other

organization?

A. No, it's not controlled by any other

organization.

Q. It's a non-profit organization?

A. Yes, a non-profit religious organization.

Q. Do you know what Religious Technology Center is?

A. Yes.

Q. Does it have any relationship at all to CSI?

A. Yes.

Q. Was is its relationship?

A. Religious Technology Center owns the trademarks

and service marks of Scientology. It licenses us to use

those marks and is responsible for the purity of the

technology of our religion.

Q. Could it for any reason withhold any of the

service marks on any of the technology?

A. Yes. It's never done so with respect to CSI.

Q. With respect to CSI's sort of internal

management is there a Board of Directors?

A. Yes.

Q. How many people on the Board of Directors?

A. Five.

52

Do you know the names of those individuals?

A. Yes.

Q. Could you tell me, please?

A. Maybe six. Marc Yager, M-A-R-C, Y-A-G-E-R;

Michael Rinder, R-I-N-D-E-R; Kirk Weilend, W-E-I-L-E-N-D;

Guillaume Lesevre, G-U-I-L-L-A-U-M-E, L-E-S-E-V-R-E; and

Katherine Rinder.

Q. This is the current board?

A. There may be a sixth but I'm pretty certain

that's all of them.

Q. Do you know if the board meets with any sort of

pre-determined regularity?

MR. MOXON: I object to relevance. I don't know

what the point is in a fraudulent conveyance case what the

activities are of the board. We gave you their identity and

the fact there is one, what further relevance is

there?

MR. WALTON: Again, I'm striving to understand

how the inner workings of this organization, plaintiff

organization, how it works in order to try to put together

some defense. I don't have the facts, and if I

specifically ask something and can't get an answer from the

person that Scientology has provided, then I would like to

know who to go to who may have the answer.

MR. MOXON: You have that question answered, so

53

would you move along?

MR .WALTON: We have?

MR. MOXON: You got their identities.

MR. BENZ: What you are asking is how often the

board meets. Explain to me what the relevance is.

MR. WALTON: What I would like to know is how

often they meet and if there are minutes of any of these

meetings that reflect the fact that the board has decided

that these lawsuits should be filed. If this is not a

board-sanctioned activity, then it's probably not a proper

activity.

MR. MOXON: Completely irrelevant whether it's a

proper or improper activity according to the board.

MR. WALTON: If the board has not approved it

they may not -- whoever has done this may not represent the

Church of Scientology International.

MR. BENZ: It may be relevant but I don't see it

at this point in what's been said. I will say I do not

appear to have and do not know the contents of the

Cross-complaint, if any. So I don't know whose

Cross-complaint it is and what it alleges. So I have no

idea if there's any relevance on that and I have not

attempted to memorize the affirmative defense here, but

from what you have given me I'll sustain the objection.

MR. WALTON: Q. Do you know if the board keeps

54

minutes of its meetings?

A. Yes, I do.

Q. Do you know where the board meets, the physical

address, the location of the board?

A. Did you say where the board minutes are or

meets?

Q. Meets.

MR. MOXON: Objection, relevance.

MR. WALTON: Q. Do you know where the minutes

are kept?

A. Of course I do.

Q. Where are they kept?

A. Kept in my file cabinet. I testified in the

beginning that's one of my functions, to keep them,

maintain custody of them in my file cabinet.

Q. Do you know who the officers are of CSI?

A. Yes.

Q. Can you tell me?

A. President is Heber Jentzsch, J-E-N-T-Z-S-C-H;

vice-president is Liesa Goodman; and Janet Weiland,

W-E-I-L-A-N-D. Liesa is spelled L-I-E-S-A.

Q. That's the same lady that's on the board?

A. No, there's no Liesa on the board. There's a Kirk

Weiland on the board. That's Janet's ex-husband.

It's not relevant to this.

55

I'm the secretary. I have an assistant whose

name is Leslie Browning. And the treasurer is Jonathan

Epstein.

Q. I'd like to go over the specific allegations in

the underlying lawsuit in this matter.

A. You mean the Complaint as opposed to the

counter-claim?

Q. We don't even have to use the Complaint. I just

need to know what the allegations are.

A. In this case?

Q. No, the underlying.

A. Underlying? I guess I'm not understanding you.

Q. Does Scientology, does the plaintiff claim to be

a creditor of Gerald Armstrong?

MR. MOXON: Objection, calls for a legal

conclusion.

MR. WALTON: I'm not talking about in the legal

sense, but if they are a creditor I'm entitled to get that

information. You see what's happened here is that

plaintiff, Scientology, as I've said, has sued me for seven

million dollars based upon, as far as I can tell,

upon Mr. Armstrong's alleged breach of a settlement

agreement in a lawsuit that's titled Armstrong I out in

Los Angeles Superior Court, a case that was settled in

1985 or '86, something like that.

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Again, as I understand it, based upon those

breaches Scientology is claiming that Mr .Armstrong

deposed of money. Using that, they say that they are a

creditor.

What I want to do is I want to find out exactly

what it is that Mr. Armstrong allegedly did with my

participation according to parts of the allegation of the

current Complaint that make me allegedly responsible for a

seven-million-dollar debt. Is that clear? Does that

answer your question?

MR. MOXON: No, you misunderstand the Complaint.

You don't understand.

MR. WALTON: I'm not understanding exactly what

Mr. Armstrong has done that gives rise to a seven-million-

dollar liability.

MR. MOXON: It's in the Complaint.

MR. WALTON: Which Complaint?

MR. MOXON: If there's some ambiguity about it

you should file a demurrer.

MR. WALTON: In which Complaint?

MS. BARTILSON: He did, in fact. It was

overruled.

MR. WALTON: In which Complaint?

MR. MOXON: In this case.

MR. WALTON: It's not set out, as far as I can

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