JOHN G. PETERSON, ESQ.
PETERSON & BRYNAN
8530 Wilshire Boulevard, Suite 407
Beverly Hills, California 90211
(213) 659-9965

Attorneys for Plaintiff and Cross-Defendant
Church of Scientology of California

SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES

PLEASE TAKE NOTICE that, on February 12, 1986, at 9:00 a.m. or as soon thereafter as counsel may be heard, in Department 57 of the above-entitled court, located at 111 North Hill Street, Los Angeles, California, Cross-Defendant Church of Scientology of California will move for a stay of the Court's order of July 2, 1985 as set forth herein. Also, set forth herein is cross-defendant's further response to the Court's order of July 2, 1985. This Motion is brought pursuant to Code of Civil Procedure Section 128(8), Evidence Code Section 320, the attached Memorandum of Points and Authorities, the attached Declaration of John G. Peterson, the pleadings on file in the above-named case, and all such matters oral and documentary as

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may be brought to the attention of the Court at or prior to the hearing on this Motion.

Dated: January 22, 1986

Respectfully submitted,

PETERSON AND BRYNAN

Attorneys for Cross-Defendant
Church of Scientology of California

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MEMORANDUM OF POINTS AND AUTHORITIES

I

PRELIMINARY STATEMENT

The Church of Scientology of California [hereinafter the "Church"] is now faced with either "possible contempt or other sanctions" as threatened by this Court in its order of July 31, 1985, or with submission to the destruction of its First Amendment rights and the near certainty of false claims concerning the disclosure of information from its auditing files should Gerald Armstrong [hereinafter "Armstrong"] ever receive them through discovery.

On July 2, 1985, this Court issued an order requiring the Church to produce, for an in camera inspection, the auditing or preclear files relating to Gerald Armstrong. The Court also ordered the Church to produce or furnish for inspection "all matter which reflects any statement, or summary of statements" made by Armstrong contained in those auditing files.

After several stays of the Order were entered and vacated, this Court on December 9, 1985, ordered that compliance be made to its order of July 2, 1985, as modified, within twenty days -- by January 3, 1985. A stipulation between the parties continuing compliance until January 22, 1986, was subsequently filed and granted.

In Armstrong's Third Amended Cross-Complaint, he alleges in the fraud cause of action that auditing disclosures were represented to him to be completely confidential and that this was false (page 17 section e and

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page 18 paragraph 15) and is also alleged under the Breach of Contract cause of action (page 28, paragraph 39 and page 30, paragraph 42). In Armstrong's second cause of action for Intentional Infliction of Emotional Distress at page 23, paragraphs 23 and 24, he alleges that the Church "disclosed to third persons the confidential information disclosed by Cross-complainant during auditing." Armstrong supports his need to discover his preclear folders based on these claims in his complaint; however, he has been unable to show any facts or evidence to support these claims.

At no point, either in discovery or in the underlying trial, has Armstrong been willing or able to state exactly what information was supposedly disseminated from the auditing files and to whom.

"Q Do you contend that at any time since December 12, 1981, any confidential material contained in an auditing or pre-clear or any other kind of confidential file has been disseminated concerning you?

"A Excuse me?

"Q Do you contend that any confidential information contained in a pre-clear, auditing, or other confidential-type processing file has been disseminated concerning you?

"A I don't know."

August 18, 1982 Deposition, pp. 230-231. Instead, he has made generalized statements. He makes speculative unsupported claims to "prove" that it happened to others and so must have happened to him. He now claims that he must first learn what information is in these auditing files before, he can determine what information was

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disseminated. This is circular reasoning and surely improper pleading. A claim must be made on a good faith belief and some facts to support the belief in that claim. To plead a cause of action without any basis in an attempt to justify a fishing expedition and an unconstitutional intrusion into internal ecclesiastical folders is improper. It has always been the internal law of the Church that a preclear would never see his or her pc folder.

Armstrong knew it, understood it and agreed to abide by this internal ecclesiastical law. This civil court cannot violate this constitutionally protected area of the religion. Serbian Eastern Orthodox v. Milivojevich, (1976) 426 U.S. 696 (the Court held that civil courts may not inquire at all into "matters of discipline, faith, internal organization, or ecclesiastical rule, custom, or law."; In Watson v. Jones, 13 Wall (80 U.S.) 666 (1872) the Court held that:

"The judicial eye cannot penetrate the veil of the church for the forbidden purpose of vindicating the alleged wrongs of excised members; when they became members they did so upon the conditions of continuing or not as they and their churches might determine, and they thereby submit to the ecclesiastical power and cannot now invoke the supervisory power of the civil tribunals."

If Armstrong is allowed the ability to review the auditing files, and to determine what information is contained in them, he will plant forged documents, manufacture false evidence and suborn perjured testimony, and then falsely claim that this preclear information was disseminated by

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the Church.

The Church is gravely concerned about this likelihood for the following reasons:

1. The auditing files almost certainly contain information relating to the great majority of Armstrong's life, thereby allowing him to choose almost any traumatic event in his life , manufacture false evidence and claim that the Church disseminated that information;

2. Armstrong has admitted, under oath and after leaving the Church, that he knew of no dissemination of information from his preclear files;

3. Armstrong has admitted, in a videotaped interview, to creating forged documents for placement in Church files for the sole purpose of giving the false appearance of unethical or illegal actions committed by the Church; and

4. Armstrong has admitted, in a videotaped interview, his intention to commit perjury, as well as advising others that proof is not required to make allegations.

For these reasons, as detailed more fully below, the Church requests that Armstrong be required to execute an itemized, verified offer of proof regarding the information he alleges has been disseminated from auditing files before the court proceeds further. The Church is confident that Armstrong cannot show good cause why he needs the preclear folders. Also, a summary judgment motion to be filed by January 24, 1986, will make them irrelevant.

///

///

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A. Information Demonstrating The Likelihood That Armstrong Will Falsely Claim Dissemination Of Auditing Files

In late 1984, Armstrong met and surreptitiously conspired with Church of Scientology staff members, known as the "Loyalists", whom he believed to be opponents of current Church management. In November, 1984, several police sanctioned videotapes were made of such meetings between Armstrong and these persons and, in April, 1985, these videotapes and portions of other written materials furnished by Armstrong to the Loyalists were introduced as exhibits in the trial of Julie Christofferson Titchbourne v. Church of Scientology, Mission of Davis, et al., Circuit Court of the County of Multnomah, Oregon, No. A7704-05184.

The videotapes show that during his meetings with the Loyalists, Armstrong made a number of admissions reflecting directly on his criminal state of mind and the reliability of his testimony. For example:

1. He admitted his intention to create forged documents, and indicated that he had done so previously:

MR. ARMSTRONG: Well, I got a view, of course, from you, of course, that some- one at least considered that I HELP [International Hubbard Ecclesiastical League of Pastors] was, you know, their Achilles heel, as it were. (LAUGHS) So we thought, "Shit, shouldn't I get some I HELP materials?" So hence I asked. Now issues, [Church bulletins] I wanted to know, number one, how they're run off, what the type face is like. Are these like this? You know -

MR. JOEY: These are the real McCoys.

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MR. ARMSTRONG: You see, because I think that during a part of this, we can simply create these. You know. I can create documents with relative ease, (LAUGHS) you know; I did it for a living. (LAUGHS) Transcript of November 7, 1984, p. 4, attached hereto as Exhibit "A" to Declaration of John G. Peterson. (emphasis supplied)

2. He stated his intention to "bring them [Church management] to their knees." Transcript of November 7, 1984, p. 9, attached hereto as Exhibit "A" to Declaration of John G. Peterson.

3. He admitted that he had been involved in working against the Church even prior to the time that he officially left in December, 1981:

MR. JOEY: What's your -

MR. ARMSTRONG: My purpose?

MR. JOEY: Yeah. For the Church.

MR. ARMSTRONG: Well, my purpose initially is global settlement. I want that. I've done this shit now for going on three years, and even longer before that when I was inside . . . . Transcript of November 7, 1984, p. 13, attached hereto as Exhibit "A" to Declaration of John G. Peterson, (emphasis supplied)

Armstrong's own words above clearly show his intention and how he used the Court to satisfy his plans. He was plotting to bring church management to its knees so he could extort a settlement of his $81.4 million personal injury case. The videotape shows that even while he was still in the Church he was plotting his personal injury case and he lied to this Court when he testified that he stole documents to protect himself. He stole documents

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only to extort money from the Church and use in his personal injury case. The candid and recorded words out of Armstrong's own mouth show conclusively the lengths he will go in order to make and forward his personal injury case. Armstrong has no evidence of any dissemination from the pc folders and he is seeking access to them only to manufacture and plant false evidence to bolster his deficient claim.

4. He furnished a variety of "literary" materials, apparently for potential publication, to a member of the Loyalists, including the disgusting "Operation Long Prong" attached as Exhibit "E" to the Declaration of John G. Peterson. The extremes of illegality to which Armstrong was prepared to go in order to carry out this conspiracy is demonstrated by a blackmail and extortion scheme called "Long Prong" which Armstrong attempted to perpetrate. This was a plan to set up a senior Scientologist with a woman in order to upset his marriage, degrade his reputation within the Church and blackmail his cooperation in Armstrong's scheme to subvert Church of Scientology management. (See also p. 21 of Exhibit "A" for discussion of furnishing such "art work" for publication.)

5. While he claimed in the videotape that his goal was "global settlement," Armstrong admitted that it was still, if settlement failed, his intention to continue with his $81.4 million suit because "that's going to pay off sooner or later. "Exhibit "A" at p. 23.

6. As an example of how Armstrong would not hesitate

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to commit perjury to support his case or a claim for damages, in testimony in Oregon he admitted that, despite his prior testimony in the underlying case herein that L. Ron Hubbard controlled the Church; in the subsequent Christofferson trial, he stated under oath that he did not know who was actually in control of the Church:

MR. ARMSTRONG: Well, who is ASI? Who are these people? Give me an org board. Tell me who the opposition is, who knows what. Where does Marc Yager fit in all of this, you know, what is the actual line of control? Who is in charge? 'Cause someone is. . . . Transcript of November 9, 1984, p. 6, attached hereto as Exhibit "B" to the Declaration of John G. Peterson, (emphasis supplied)

7. He admitted that he would perjure himself, and attempted to suborn the perjury of "Mr. Joey":

MR. ARMSTRONG: By the way, I'll never admit that anything comes from Michael [Flynn], including any complaints which I may have drafted. (Transcript of November 9, 1984, p. 7, attached hereto as Exhibit "B" to Declaration of John G. Peterson.

* * *

MR. ARMSTRONG: Okay. What are our conversations, should it come down to it.

MR. JOEY: What do you mean?

MR. ARMSTRONG: What do we talk about? You're deposed. You walk out there and there's a PI, he hands you a paper saying you're deposed, Jack. And not only that, you're out of the organization. And, 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,

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before I'll tell you my ideas on documents.

****

MR. ARMSTRONG: Okay. So as far as the doc - let me just say . . . ah, this is why we 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 that Scientology is bad, or anything like that. Are we agreed? (Transcript of November 9, 1984, pp. 9-10, attached hereto as Exhibit "B" to Declaration of John G. Peterson.)

8. He proposed the creation of phony documents which could be spread throughout the Church through the use of internal communications lines:

MR. ARMSTRONG: People can draft the stuff. Um, it just seems like - the guts of - you know, there's three things, right - there's personnel and comm lines and money. That's about it. An organization's comm lines are of various kinds, and I think that you can use the fact, you know, realize what their comm lines are and plug into them. That's all I was trying to convey. . . . Transcript of November 9, 1984, p. 7, attached hereto as Exhibit "B" to Declaration of John G. Peterson

* * *

MR. ARMSTRONG: . . . So it seems to me that the use of the communication lines - I don't know maybe you guys are using them, but it seems to me that you don't have a way of printing anything to get an issue [Church document] on the lines, to use for anything, right? I'm saying that I can do it. I'm saying that I can type those goddamn things and duplicate them and make them look exactly the same. . . . (Transcript of November 9, 1984, p. 11, attached hereto

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as Exhibit "B" to Declaration of John G. Peterson.) (emphasis supplied)

Armstrong's statements clearly indicate his willingness to plant documents in order to create false pictures and destroy the Church. If Armstrong had access to the preclear folders he could forge "church" documents showing improper use of the preclear folders and plant these documents in the Church or have them anonymously mailed to his attorneys. If allowed access to these materials, he is obviously more than capable of anonymously sending them to the Los Angeles "Times" or to friends, solely to claim "dissemination" by the Church to support a non-existent claim and to boost his already outrageous damages demands. The Court must not forget that it is Armstrong and his counsel, Michael Flynn, who already appear to have violated this Court's sealing orders as set forth in the pending Motion to Initiate an Investigation. Their lack of respect for the privacy of others, as revealed in the Motion for Investigation, leads to the inescapable conclusion that they will not hesitate now to violate any sealing orders in exchange for the chance to falsely create "damages" for Armstrong.

This Court must also remember that Michael Flynn has also evidenced a propensity for the public dissemination of auditing information pertaining to his clients. On June 25, 1983, during a public speech he gave to a group calling itself "Phoenix" in Los Angeles, Flynn divulged auditing information relating to several of his clients -- Marjorie Hansen and Janet Troy. Flynn had obtained this information

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from another client of Flynn's who had wrongfully obtained the pc folders. (See Transcript of speech, attached to Declaration of John G. Peterson as Exhibit "F".) Where he thinks it to his benefit, as he might well here, Flynn has already proven himself capable of widely disseminating such information to the detriment of his client.

Having the preclear folders held either in camera or under seal is no protection at all. Were the Church to produce the preclear files in chambers or under seal, the Court were to deny Armstrong access to the folders, counter-claimant could take a Writ and ask that the preclear folders be made an exhibit and part of the record. Sealed exhibits are not safe in Los Angeles Superior Court as proved in the underlying case when IRS agents wrongfully obtained access to and copied sealed materials. This court has already expressed its view that documents that come before this court become exhibits and open to the public. The history of this case proves that seals and in camera submissions are meaningless.

The Court of Appeal has held that attorney-client privileged documents should not be viewed in camera. The Church strongly believes that priest-penitent documents hold an equal if not greater degree of privilege. Any submission either under seal or in camera is not only a violation of the spirit of the law of privilege but an unconstitutional violation of the Church's rights.

The above examples, and others included in the attached Declaration of John G. Peterson, conclusively demonstrate that

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Armstrong is willing to stoop to any lengths, including the commission of such illegal acts as conspiracy, perjury, subornation of perjury, and forgery to achieve the destruction or overthrow of the Church and to pursue his personal injury case. He appears to be unstable, as demonstrated by the exhibits to Mr. Peterson's declaration, and this type of instability lends great credence to the Church's belief that he will use materials from the auditing files to falsely claim information has been disseminated. Armstrong knows that there is no factual basis for his claim that the Church has disseminated preclear information, and the request for the auditing files has been no more than a desperate attempt gain information to allow him to manufacture and plant phony documents to support his allegations.

II.

BECAUSE A DISPOSITIVE MOTION IS SOON TO BE FILED PENDING. A STAY SHOULD BE GRANTED UNTIL THESE ARE HEARD

The Church has raised serious objections to this Court's Order of July 2, 1985. Nonetheless, this Court has chosen to ignore those objections, and to order the production of sacred and ecclesiastical materials. The circumstances now existing demand an equitable solution. This Court should stay its Order pending resolution of the Motion for Partial Summary Adjudication of Issues which the Church will be filing on January 24, 1985. The granting of that Motion will dismiss those portions of the cross-complaint relating to dissemination of auditing

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information and will moot that section of the order of July 2, 1985 ordering production of the auditing files. This Court must also stay its Order of July 2, 1985 pending resolution of the Motion to Initiate an Investigation as the results of that investigation will clearly point out the danger of wrongful access to confidential materials surrendered to the Court or turned over to Armstrong and his counsel. The results of that investigation will be conclusive that these preclear folders must remain with the Church to protect everyones' interests of privacy and confidentiality, even Armstrong's.

III

THIS COURT HAS THE AUTHORITY TO ENSURE JUSTICE RESULTS BY SETTING THE ORDER IN WHICH EVIDENCE IS INTRODUCED

Code of Civil Procedure § 128(a)(8) authorizes this Court to take the steps necessary to ensure that justice results from the current situation:

"(a) Every court shall have the power to do all of the following:

. . .

(8) To amend and control its process and orders so as to make them conform to law and justice."

Moreover, Evidence Code § 320 specifically authorizes this Court to establish the order in which proof is presented:

"Except as otherwise provided by law, the court in its discretion shall regulate the order of proof."

Together, these code sections clearly authorize this Court to amend its order of July 2, 1985 by requiring that Armstrong furnish an itemized, verified offer of proof.

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IV

CONCLUSION

This Court has the inherent power to ensure that justice results from its rulings. It should require Armstrong to furnish an itemized, verified offer of proof as to the specific information he alleges has been disclosed from the auditing files relating to him. It should also stay execution of its Order of July 2, 1985 until the Motion for Partial Summary Adjudication of Issues has been resolved, and until the pending Motion for Investigation has been resolved and the investigation completed. To do otherwise, in view of Armstrong's admitted intention to commit perjury, to forge and plant documents in files, and his extreme instability, would create injustice and inequity.

Dated: January 22, 1986

Respectfully submitted,

PETERSON AND BRYNAN

By:[signed]

JOHN G. PETERSON, ESQ.
Attorneys for Cross-Defendant

Church of Scientology of California

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JOHN G. PETERSON, ESQ.
PETERSON & BRYNAN
8530 Wilshire Boulevard, Suite 407
Beverly Hills, California 90211
(213) 659-9965

Attorneys for Plaintiff and Cross-Defendant
Church of Scientology of California

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

I, JOHN G. PETERSON, state as follows:

1. I am an attorney licensed to practice law in the State of California. I was specially admitted in Oregon as counsel for the Church of Scientology of California in the case of Julie Christofferson Titchbourne v. Church of Scientology, Mission of Davis, et al., Circuit Court of the County of Multnomah, Case #A7704-05184.

2. Gerald Armstrong was a witness for the plaintiff in the Christofferson case. He testified on direct examination for two days and on cross examination for over five days. I was present during his examination, and am familiar with his testimony.

3. During the course of Armstrong's testimony, a

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video tape of Armstrong surreptitiously conspiring with a Church of Scientology staff member whom Armstrong believed to be an opponent of current Church of Scientology management was introduced into evidence and played to the jury. Several documents in Armstrong's own handwriting were also introduced into evidence.

4. This conspiracy came to light through the actions of an attorney and private investigator working together to expose the conspirators. They videotaped with sound recording meetings between Armstrong and a Church of Scientology staff member posing as a disaffected member of a cell known as the "Loyalists", who were supposedly working within the Church to covertly take over current management. Armstrong made contact with a "Loyalist" named "Joey" and explained to the conspirators his plans for covertly and illegally attacking the Church of Scientology and L. Ron Hubbard. Joey and the Loyalists were created after the Church learned of Armstrong and Flynn's desire to get an inside source within the Church.

5. In the course of their contacts, the investigators were able to obtain several videotapes of conversations between Armstrong and Joey. These tapes were admitted into evidence in the Christofferson trial and transcripts of the recordings are attached as Exhibits "A", "B", "C", and "D" to this Declaration. This Declaration also includes, in its text and attached as Exhibit "E", data taken from written materials passed to the Loyalists by Armstrong. The documents referred to here and in some cases attached as exhibits were also presented to the Christofferson court.

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6. As these materials are extremely revealing of a major conspiracy, I strongly urge the Court to read them completely. However, recognizing their length, and in the interests of judicial economy, I have included highlights from these documents in the body of this Declaration while enumerating the specifics of the conspiracy uncovered:

A. Attempting to forge documents and plant them in Church files for the following purposes:

1) To discredit the Church's evidence implicating Flynn in the theft and forgery of a $2,000,000.00 check from the account of L. Ron Hubbard by means of placing phony documents in Church files.

2) Falsely implicating L. Ron Hubbard and Church leaders in non-existent acts against Mr. Flynn.

GA: That's exactly the sort. . .the CSW [the name given to a form of internal Church of Scientology memorandum] is the greatest weapon you guys got. You know, the CSW about the situation with the Pi's given that someone is in a position that they would be doing such a thing. I think, you know, how about if I've got a letter that Eugene Ingram [a private investigator who has done extensive work for the Church of Scientology] works for L. Ron Hubbard, you know. OK. OK, then you say, well let's say you guys have the information somewhere that Brackett Denniston of the US Attorney's Office felt that this whole thing was a set up, and then you say, 'Well we can't have that problem. Here's this letter out there saying that he works for Hubbard. We can't endanger the Source (a colloquial Scientology reference to L. Ron Hubbard.) We have to act. So, therefore here's my proposal.' And just the fact of having that goddamn proposal of some guy standing up and saying, 'I've got to defend Source,' you've got such incriminating information in the

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CSW, you follow? Even if they responded at all, they're acknowledging that this is, that's true.

J: So we put a letter together sayin' that. . .

GA: I'm saying a CSW and you keep your copy of the CSW. They're goin' to come around hunting; "Where the fuck is it? Ah, shit, got rid of it all" -- except you've made it off the property and you've got it somewhere. Type it off the property and bring it in. Never, there's no problem bringing stuff in. Right? You could bring stuff in, and maybe you can't sit at your desk and type it. I don't know, I don't know the demographics and the geographies and anything else in the place, but it seems to me that it's a much more high security deal than it was. Am I right?

J: Yeah, a little difficult, just, in getting things typed -- typing, you're sitting typing and typing things out. . .

GA: Exactly. . .

J: . . .and someone walks in, "What's happening here?" What are you going to say?

GA: But just maybe that sort of stuff can be done, issues could be created, stuff can go in. But, I mean I'm not really saying create incriminating evidence of which there are no facts, you know; but just to write about the speculation.

(Exhibit B, Transcript of video recording, November 9, 1984, pages 11-12)

B. Orchestrating a coup within the Church to replace those individuals currently in control by getting a group within the Church to file a lawsuit drafted by Flynn and designed to obtain a receivership on all properties and assets based on phony allegations -- with no factual support beyond what would be planted in Church files -- and having the newly

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installed junta immediately settle all of Flynn's litigation, including Gerry Armstrong's $81,400,000.00 claim, handing over to Flynn millions of dollars:

GA: I don't know if it makes sense to you to sort of divide up the organization and, uh, go after people on that basis. Just so that you know, "Shit, we have this group covered," and then divide it up structurally so that you have all the various key points which have to be covered. I think that you guys will be able to take over and then use operating income to continue the battle. And that way you can secure the building, take it over, and I think that it's going to take that kind of thing. . . .

(Exhibit A, Transcript of video recording, November 7, 1984, page 11)

GA: You know, it could just, it could just be done. The whole. . .you know ... take. . .if you guys concentrated only on the CSC. .on the blue building. And divide the damn thing up and just, you know, the day that the thing happens. You know, the day that you file your complaint, then just call everyone and say that there's a meeting.

(Exhibit C, Transcript of video recording, November 17, 1984, pg. 5)

GA: Well, there are hundred of lawsuits? that's standardly what lawsuits are, you know, a lotta times a. . . lawsuits have that form. It is simply a disagreement over who has control of corporate funds. That is, that is simply the issue. They don't allege that there was any criminal misconduct or illegal use of the funds or anything.

M: But this is alleging that there's criminal misconduct.

GA: That's right and the reason for that is because with that, if you can get any of those things, then, then the court can act immediately to freeze the

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accounts.

(Exhibit C, Transcript of video recording, November 17, 1984 pg. 18)

C. Suborning perjury in order to cover up this extensive criminal conspiracy and particularly in order to prevent any disclosure of Michael Flynn's involvement.

J: OK. Any news from Michael?

GA: No.

J: Great. I got this this is good.

GA: By the way, I'll never admit that anything comes from Michael, including any complaints which I may have drafted.

J: Why's that?

GA: Because that's how I've got to approach it.

(Exhibit B, Transcript of video recording, November 9, 1984, page 7)

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

J: What do you mean?

GA: What do we talk about? You're deposed. You walk out there and there's a PI--hands you a 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 (laughs) What are we doing here? That's my question, before I tell you my ideas on documents.

GA: 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 the abuses and so on have gone on too long. Hence, we get

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together and discuss things. We have not discussed anything about a destruction of the tech or that Scientology is bad, or anything like that. Are we agreed?

(Exhibit B, Transcript of video recording, November 9, 1984, page 9-10)

The videotape evidence and cross-examination testimony show clearly that Armstrong was working closely in these activities not only with Michael Flynn, but also with AUSA Brackett Denniston and the FBI and IRS. Indeed, he claimed that he was a "federal witness" and had been offered access to a "safehouse" by the government.

D. Implementing a bizarre plot to entrap and destroy a senior Scientologist by means of sexual seduction and blackmail.

This example of Armstrong's bizarre behavior and emotional instability, attached as the first document to Exhibit "E", is a writing, apparently for potential publication, provided by Armstrong to the "Loyalists" for their assistance in locating a publisher and their assistance in carrying out his scheme. The document, one of the most disgusting examples of perverted and warped "literature" ever written, speaks far more clearly of Armstrong's morality and mentality than can I. It is inconceivable that such a sick person could have the right to view documents sacred to the Church without first, at the very least, arrangements being made to protect the Church from any further pathological behavior.

7. On August 18, 1982, Armstrong admitted, under oath,

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that he knew of no dissemination of of information from the auditing files pertaining to him. That admission was made in a deposition taken in the underlying case less than one month before he filed a cross-complaint alleging the disclosure of information from those files. (See Deposition Transcript, p. , attached hereto as Exhibit "F".)

8. On June 25, 1983, during a Los Angeles speech given by Michael Flynn to a group calling itself "Phoenix", Flynn made several direct references to information obtained through auditing from several of his clients. A copy of that transcript, which is already part of the record in the underlying case, is attached hereto as Exhibit "G". At pp.__ and of that transcript, Flynn refers directly to auditing information pertaining to Marjorie Hansen and Janet Troy, both of whom are his clients.

Executed this 22nd day of January, 1986 at Los Angeles, California.

I declare under penalty of perjury that the foregoing is true and correct.

[signed]

JOHN G. PETERSON, ESQ.

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Exhibits

Exhibit A: Scientology's transcript of video recording, November 7, 1984

Exhibit B: Scientology's transcript of video recording, November 9, 1984

Exhibit C: Scientology's transcript of video recording, November 17, 1984

Exhibit D: Scientology's transcript of video recording, November 30, 1984

Exhibit E: Handwritten notes

Exhibit F: Deposition of Gerald David Armstrong (excerpt) 08-18-1982

Exhibit G: Phoenix Meeting - 25 June 1983 Los Angeles, California