Deposition of Lynn R. Farny (Volume 3 of 4)

Armstrong 4




CHURCH OF SCIENTOLOGY INTERNATIONAL, a California not-for-profit religious corporation,
GERALD ARMSTRONG; MICHALE WALTON; THE GERALD ARMSTRONG CORPORATION, a California for profit corporation; DOES 1 through 100, inclusive,



Tuesday, July 26, 1994


Reported by:
CSR NO. 4724
P.O. BOX 862
(415) 457-7899










No. 14

Suppressive Person Declare, Gerry Armstrong, 18 February 1982 [ Revised04-22-1982]


No. 15

Executive Directive, dated 20 September 1984, headed Squirrels

No. 16

One-page memo, HCO Policy Letter of 18 October 1967, Issue IV, Penalties For Lower conditions

No. 17

One-page memo, HCO Policy Letter of 21 October 1968, Cancellation of Fair Game

No. 18

Notice of Motion and Motion of Defendant Author Services, Inc. in Corydon vs. Church of Scientology case

No. 19

HCO Policy Letter of 21 November 1972, Issue I, How to Handle Black Propaganda

No. 20

HCO Policy Letter of 11 May 1971, Issue III, Black PR




BE IT REMEMBERED that on Tuesday, July 26, 1994, commencing at 9:55 a.m. thereof, at the Law Office of William R. Benz, 900 Larkspur Landing Circle, Suite 185, Larkspur, California, before me, SUSAN M. LYON, Certified Shorthand Reporter #5829, personally appeared


called as a witness, who having been first duly sworn, was examined and interrogated as hereinafter set forth.


LAW OFFICE OF WILLIAM R. BENZ, 900 Larkspur Landing Circle, Suite 185, Larkspur, California, appeared as the referee.

LAW OFFICES OF BOWLES and MOXON, 6255 Sunset Boulevard, Suite 2000, Hollywood, California 90028, represented by TIMOTHY BOWLES, ATTORNEY AT LAW, appeared as counsel on behalf of the Plaintiff Church of Scientology.

LAW OFFICES OF FORD GREENE, 711 Sir Francis Drake Boulevard, San Anselmo, California 94960, represented by FORD GREENE, ATTORNEY AT LAW, appeared as counsel on behalf of the Defendants Gerald Armstrong,


et al.

LAW OFFICES OF MICHAEL WALTON, 700 Larkspur Landing Circle, Larkspur, California 94939, represented by MICHAEL WALTON, ATTORNEY AT LAW, appeared as counsel on behalf of DEFENDANT MICHEAL WALTON.

ALSO PRESENT: Gerald Armstrong.



Tuesday, July 26, 1994 9:55 a.m.


(Defendant's Exhibit Nos. 14-17 marked.)


MR. GREENE: Q. Good morning, Mr. Farny.

A. Good morning.

Q. You are still under oath, you understand that?

A. Yes, I do.

Q. I have previously marked a set of exhibits, and the first one is marked as Exhibit No. 14, which is a SEA Organization Flag Conditions Order 6664, dated 18 February 1982.

That's before you now, is it not?

A. Yes, it is.

Q. And would you describe what that is, please.

Well, actually, let me ask you, have you seen that before?

A. I'm not certain I've seen this exact document before. I've seen one or more documents bearing the title Suppressive Person Declare Gerry Armstrong.

Q. And based on your knowledge, was a suppressive person declare issued for Gerry Armstrong in and around February 1982?

MR. BOWLES: Excuse me. Mr. Greene, I want to ask you now what the purpose of this inquiry as it appears to


be part of the cross-complaint that you filed in this action, which has already been stricken by the court.

MR. GREENE: No, this is -- we've been through this before, last time, Mr. Bowles.

This is relevant to Mr. Armstrong's affirmative defense, defenses of unclean hands, of defense based on first amendment, based on duress, and undue influence.

MR. BOWLES: Paragraph 16 of the second amended complained [complaint] specifically alleged that Mr. Armstrong had two suppressive person declares naming him as such, and goes on from there to relate other events following that.

So, Mr. Benz, I want to make sure that we're not going off into discovery in the other action, which apparently has already encompassed such allegations.

MR. BENZ: Well, I haven't seen Exhibit 14, but generally the line of objections here, we are allowing it to progress on the cross-complaint, which is abuse of process, which goes to malice, and also on the affirmative defenses that Mr. Greene has mentioned.

MR. BOWLES: All right. Well, I would object to any extensive discovery, then, it's obviously just going to be used in another case.

MR. GREENE: Well --

MR. BENZ: Well, if it overlaps with this case, we're going to do it here, too. To the extent it doesn't


overlap with this case, we have no interest in going into the other case.

MR. BOWLES: All right.

MR. BENZ: But the allegations of the cross-complaint and the affirmative defenses raised, in my opinion, are sufficient to encompass this from a discovery standpoint in this case.


MR. BENZ: Did you want me to look at 14?

MR. GREENE: I think I have -- our side is neglectful but I guess you should look at my copy here.

MR. BENZ: That's all right. I think that was a general objection rather than specific.

MR. BOWLES: It was specific to this particular document and any testimony regarding it.

MR. GREENE: Okay. So is the objection overruled?

MR. BENZ: Overruled.

MR. GREENE: Q. So, Mr. Farny, based on your knowledge was a suppressive person declare issued for or having to do with Gerald Armstrong in and around February of 1982?

A. I couldn't tell you if it was February or not, but I recall it being in 1982.

Q. And the document which is Exhibit 14, have you seen a document that looks similar at least to that document



A. How similar are you defining similar? I've seen other suppressive person declares.

Q. You're familiar -- you're the litigation handling officer for CSI; right?

A. That's correct.

Q. And you're familiar with CSI's litigation; right?

A. Yes.

Q. And you've been familiar with litigation having to do with Gerald Armstrong since the Church of Scientology of California originally sued him in 1982; right?

A. That's also correct.

Q. Okay.

A. But I don't happen to have whatever suppressive declares that were issued on him memorized.

Q. I understand that.

A. I've given that as best as I can.

Q. And based on your testimony as you sit here now, that appears to be a true and correct copy of the suppressive person declare on Gerald Armstrong you see before us now; right?

MR. BOWLES: Asked and answered.

THE WITNESS: I couldn't say one way or the other. I've given you the best I can.

You know, if you want one or more of the other ones


that you've produced authenticated, I would guess the normal procedure would be to send it to us to admit that that's an authentic copy of it, then I could go check the files, or whatever. But insofar as there was no designation of subject matter here, and insofar as any discussion of cross-complaints was stricken from the cross-complaint, I have Mr. Benz's comments in mind, I am answering your question, I didn't go back and look. It's been many years since I've read one or the other, or both.

Q. All right. So you're familiar, then, with suppressive person --

(Off the record.)

MR. GREENE: Let's go back on the record.

Q. Mr. Farny, did you participate in making the decision that you were the person who was most appropriate for CSI to put forward to testify about the matters pertaining to the lawsuit against Gerald Armstrong that we're here for that's been filed in Marin?

A. Yes, I was.

Q. And were there any attorneys involved in that decision insofar as you were concerned in your participation?

A. Yes.

Q. Now, directing your attention again to Exhibit 14, and going back to 1982, do you have any recollection as to


why a suppressive person declare was issued with respect to Gerald Armstrong?

MR. BOWLES: Objection, assumes facts not in evidence.

MR. GREENE: Which are?

MR BOWLES: Which are that he has any knowledge whatsoever.

MR. GREENE: I don't think you listened to the question, Mr. Bowles. The question was --

MR. BOWLES: Restate --

MR. GREENE: -- asking him whether or not he had any recollection.

MR. BOWLES: Regarding?

MR. GREENE: That's a foundational question.

MR. BOWLES: Go ahead.

MR. GREENE: Do you have the question in mind, Mr. Farny?

A. Yes, I do have a recollection.

Q. And included in your recollection was one of the reasons why Armstrong was declared because he left Scientology without going through the proper procedures?

A. Not that he left Scientology, that he left his position in the SEA organization without going through the proper procedures.

Q. Okay.


A. There's a difference.

Q. All right. That's fine.

And the proper procedure in the SEA organization is designated by the term routing out; correct?

A. Yes.

Q. And Armstrong failed to route out of the SEA organization; right?

A. That's correct.

Q. And is it your recollection also that Armstrong was declared a suppressive person because he spread destructive rumors about senior Scientologists?

A. I have a recollection of destructive rumors being spread.

Q. Okay.

A. I wouldn't be able to put myself in Mr. Laquerre's mind.

Q. I understand that. But it was your knowledge at the time that Armstrong had been reported, at least, to have been spreading destructive rumors about senior Scientologists; right?

A. That's correct.

Q. Now, when Gerald Armstrong left Scientology it was around Christmas time of 1981, wasn't it? Or rather, excuse me, strike that.

When Gerald Armstrong left his SEA org post, it was


around December of 1981, wasn't it?

A. I believe it was in December.

Q. And thereafter he was reported to have made statements that he no longer was a Scientologist; right?

A. That's my recollection.

Q. And that it was his belief that Scientology technology did not work, as well; is that true?

A. I don't remember that one one way or the other.

Q. Based on your recollection of events in and around the end of 1981 and beginning of 1982, is there anything set forth in Exhibit 14 that you believe to be inaccurate?

A. Not that I recall one way or the other.

Q. And there is a particular file at the Office of Special Affairs, is there not, wherein the suppressive person declares relating to Gerald Armstrong are maintained?

A. I would assume so.

Q. Okay.

A. I know we have copies.

Q. Do you know if you have the original?

A. I'm not sure one way or the other.

Q. Where would the original be, if it wasn't in your file?

A.In international justice chief's files.

Q.Where is the physical location of that?


A. Same building.

Q. And where is that building?

A. Corner of Hollywood Boulevard in Los Angeles.

Q. And what's the address?

A. 6331 Hollywood Boulevard.

Q. I want to direct your attention now to Exhibit 15, which is a two-page document entitled Executive Directive, dated 20 September, 1984.

Now, at this point you were working, in 1984, you were working in the legal division of CSI, weren't you?

A. That's right.

Q. And do you recognize this document, Exhibit 15?

A. Yes.

Q. Okay.

MR. BOWLES:, Do you have a copy of that, Mr. Greene?

MR. GREENE: I don't. I apologize.

Actually, I do. I've got a --

MR. BOWLES: Thanks.

MR. GREENE: -- shrunken copy.

Q. Would. you tell me what Exhibit 15 is, please.

A. It's an executive directive of office of Special Affairs International purporting to be issued on or about 20 September, 1984.

Q. Now, have you seen this document or a copy thereof



A. I've seen a copy of the office of Special Affairs International executive directive 19 before, yes.

Q. And what is OSA Int executive directive 19?

MR. BOWLES: You want him to describe the document or --

MR. GREENE: No, just what his --

Q. You say you've seen it before and you're familiar with it. So if you would tell me what the meaning of the document is.

A. It was a document that was issued in the fall, late summer or early fall of 1984 to provide information for Scientologists concerning the ecclesiastical status of certain individuals discussed therein.

Q. And the ecclesiastical status with respect to the individuals set forth in Exhibit 15 is that their actions were destructive and aimed at the enslavement rather than the freedom of man; right?

MR. BOWLES: Are you just reading from the document, Mr. Greene or --


MR. BOWLES: That speaks for itself.

THE WITNESS: That's line two through four, three and four.

MR. GREENE: Q. You can answer the question.


A. It would appear so. That's what the document says.

Q. All right. Now, based on your knowledge of matters which transpired in the fall of 1984 within CSI, it's true, is it not, that it was generally known that Gerald Armstrong had been designated as a squirrel; right?

MR. BOWLES: Objection, vague. Generally known where?


THE WITNESS: I don't know how generally known it was within CSI.

MR. GREENE: Q. It was known to you, wasn't it?

A. I'm not certain that Gerry did much active squirreling. He was obviously included in this issue because of his involvement with Lipkin and Ristuccia in the plot that was revealed in Griffith Park.

Q. Okay.

A. It was -- actually around September was in the process of being revealed, if I remember right. But it was around that time period that that went down as well.

So I'm not certain how much active squirreling he did, but he certainly earned inclusion in this with the rest of these individuals through that activity.

Q. All right. And there's nothing, to your knowledge, that's set forth in Exhibit 15 that's false, is there?

A. I'd have to read the whole thing.


Q. Okay.

A. Now, we're getting into real complicated issues, opinion and purely ecclesiastical communications meant for distribution only within a defined ecclesiastical community and all sorts of things like that. But in any event, within those parameters, I'm not aware of anything within this that's --

Q. False?

A. -- either false or not based upon, you know, a good faith belief and opinion on the part of the church.

Q. And, in fact, this is an ecclesiastical order, is it not?

A. Yes.

Q. Now, directing your attention to the upper left-hand corner of Exhibit 15, at the three lines under OSA INT ED 19 where is says, "All Scientologists Public Notice Board and Staff Notice Board"; do you see that?

A. I do.

Q. All right. That refers to the distribution of this particular document, does it not?

A. In a way. Obviously, all Scientologists would not have been mailed a copy. That would have been a physical impossibility. But it meant that it was available for all Scientologists to read. And the way public parishioners,


non-staff would read it, would be on the notice boards designated for public parishioners of the church at their local church. The staff would read it on the staff notice boards.

Q. And the procedure would be that this executive directive would be distributed to all Scientology organizations for posting; right?

MR. BOWLES: You're asking him hypothetically or are you asking him if he actually knows this document was distributed in that way?

THE WITNESS: He's asking me hypothetically, and I don't know, I don't know if this one was or not.

MR. GREENE: Q. I'm asking you about the procedure.

A. I don't know the procedure with this document. I can see what it says in the upper left-hand corner.

Q. Right.

A. I remember getting one, but I was a little closer than all of the churches of Scientology.

Q. Right. You were right at the heart of the issuance of this, right, because you were in CSI?

A. I was in CSI. Let's leave it at that.

Q. Let me ask you this. At that time you were posted within CSI legal; right?

A. That's correct.


Q. And at that time CSI legal was, as it is now, housed within the Office of Special Affairs; right?

A. That's also correct.

Q. And this was a directive that issued from the Office of Special Affairs; right?

A. It appears to be, yeah.

Q. And so what I'm asking you about is when an executive directive issued from the Office of Special Affairs, to your knowledge, did OSA have a procedure for the distribution of an executive directive which is designated such as this?

A. I have to guess. I don't know.

Q. You have no recollection whether the Office of Special Affairs had any type of procedure for the distribution of a document that was labeled all Scientologists, public notice board and staff notice board; correct?

MR. BOWLES: Is that a question?

It's asked and answered. He just told you that.

MR. GREENE: No. He said, "I would have to guess." He didn't answer the question, Mr. Bowles.

THE WITNESS: Certainly, I got one. Certainly one was distributed within the office of Special Affairs I International. As far as beyond that, I don't remember. I really don't.


MR. GREENE: Q. Let me ask you currently, are there executive directives which issue from OSA today from time to time?

A. Yes, internal to the staff at the Office of Special Affairs.

Q. Are there executive directives that issue from OSA that are not -- today, currently, that are not limited in the scope of distribution to the staff of OSA?

A. Perhaps to other units within Church of Scientology International, but I'm not aware of any beyond that in recent years.

Q. All right. So then based on your current knowledge, when an executive directive issues from OSA currently its distribution does not go beyond units within CSI; is that what you're saying?

A. That's what I'm saying is my current understanding.

I'm trying to think of an instance in recent years where it went beyond that and I can't think of one as I sit here.

He dives for his folder. Perhaps he has one.

Q. Excuse me?

A. I said, "He dives for his folder. Perhaps he has one."

Q. I don't know.

Well, I do. Mr. Bowles has got the exhibits from


before, although we don't have them yet from the other court reporter.

Look at Exhibit 13.

Exhibit 13 is a suppressive persons in the suppressive groups list that we looked at last time; right?

A. Yes, it is. It's not issued by Office of Special Affairs International.

Q. It's a flag order, though; right?

A. No, it's a flag executive directive.

Q. That's different, you're saying, from an OSA ED.

A. Certainly.

Q. So then where flag orders --

A. Flag --

Q. -- that issue from CSI --

(Discussion off the record.)

THE WITNESS: Hang on, let me just stop you because you're talking about flag orders now rather than flag executive directives.

MR. GREENE: Q. Excuse me. Thank you for calling that to my attention.

A. I don't think you intended to do that.

Q. No, you're right, I didn't. And I appreciate your calling that to my attention.

When you've got a flag ED, the distribution of such


is unlimited within the realm of Scientology, isn't it?

A. No, that's not the case.

The distribution would generally be noted in the upper left-hand corner.

Q. Okay.

A. This one said it's to all ethics officers, all organizations and missions.

Q. So that means that all ethics officers who are placed in all organizations and missions would receive a copy of a flag executive directive; right?

A. They would be authorized to receive a copy.

Whether as a matter of practicality and sheer logistics and mechanics whether they would, one would hope so, but I can't say that obviously.

Q. Okay, okay. But they would not violate any kind of Scientology procedure by having access to such an order; right?

A. No, of course not.

Q. And so, then, in contrast to Exhibit 13, Exhibit 15, which is an OSA International executive directive, the distribution of an OSA International executive directive, at least as to 1984, was much broader --

A. No.

Q. -- because --

MR. BOWLES: Objection, vague.


THE WITNESS: Not as a general proposition. In terms of this specific issue, it would seem so from what's noted on the upper left-hand corner.

MR. GREENE: Q. Okay.

A. But we're back to my having to guess whether it was actually effectuated that the public notice boards and staff notice boards in the churches and missions all got a copy.

I'm thinking back to the logistics lines as they existed in 1984 and frankly, I would doubt it, but I'm not here to guess. I'm just saying what my understanding is.

Q. Based on what your understanding in 1984 of the distribution practices of OSA ED's, was there a procedure in effect whereby there was accountability whether the distribution was accomplished?

MR. BOWLES: Objection, vague. Can you explain what you mean by accountability, please?

MR. GREENE: Yes, some way to track it.

THE WITNESS: Do you mean this one or posed to the ED's generally, because as I said, they're mostly internal documents and it would be very easy to see if they were distributed in the Office of Special Affairs International, which at that time occupied one floor of a building, you could look and see if the -- however many staff we had at the time --


MR. GREENE: Q. That's obvious.

A. -- had got a copy. That's obvious.

So insofar as that's concerned, yes, it was not usual for an issue such as this from the Office of Special Affairs to be issued with a designation public notice board/staff notice boards. So I don't know what procedures existed to make sure that they all got one, if indeed there were such procedures.

Q. Well --

A. As you asked me earlier on this Exhibit 13, would it have been a violation of any procedures for this to have appeared on any staff notice boards, no, it would not have.

I can answer it from that direction. I just can't answer it from this direction that we've been going on for some time about.

Q. Was the reason that Exhibit 15 was unusual because the persons enumerated there were considered to be among the worst enemies of Scientology?

A. No, because their acts were so destructive, we felt it important for all church members to know what occurred.

Q. Okay.

A. I wouldn't characterize them the biggest enemies, the most important enemies, no.

Q. They were nonetheless considered enemies; isn't


that right?

A. They were considered suppressive persons and squirrels.

Q. Now, you are also familiar with the global settlement which took place in 1986 with respect to a number of clients who were represented by Michael Flynn; right?

A. Yes.

Q. And among those individuals who were involved in such settlement were included Kima Douglas; right?

A. That's correct.

Q. And was included Laurel Sullivan; right?

A. That's correct.

Q. And, of course, Gerald Armstrong?

A. We thought so.

Q. Now, you worked closely with the lawyers in developing and drafting those settlement agreements; right?

A. As it happens, I did, yeah.

Q. And you are familiar with the terms of those settlement agreements in consequence, aren't you?

A. Certainly am.

Q. With respect to Kima Douglas and Laurel Sullivan, as to both of them, their settlement agreements included non-assistance provisions; right?


A. Yes, they do.

Q. And they included provisions whereby they agreed not to disclose any of their knowledge about Scientology, its practices, or anything about its founder L. Ron Hubbard; right?

MR. BOWLES: Hang on for a second. Let me have a brief --


(Discussion off the record.)

MR. GREENE: Q. Do you have the question in mind?

A. I've got the question in mind.

MR. BOWLES: I object. It's going into other settlement agreements. Number one, it's irrelevant.

Number two, it may violate the terms of those agreements.

THE WITNESS: The terms are confidential. I may have spoke out of turn by answering your first question.

I'm afraid I can't answer your second question because the terms of the agreements are confidential.

MR. GREENE: I would request a direct to this witness to answer the question and the reason is this.

One of the affirmative defenses alleged by Armstrong is that the settlement agreement is a violation of public policy.

And one of the reasons why it's a violation of public policy is because it's not only Armstrong that


signed one of these agreements whereby former knowledgeable, highly placed officials of Scientology were, by virtue of provisions of the agreement, to maintain silence with respect to their knowledge and were required not to testify unless subject to service of subpoena and were required not to make themselves "amenable to the service of subpoena" in a spirit that was contrary to the agreement.

Our position is that, looking at the whole

circumstance whereby it was not only Armstrong who was required to keep his mouth shut and not help anybody who had been hurt by Scientology, but other people as well, that in total that that constitutes a violation of public policy.

Therefore, the question with respect to the existence of such provisions to this witness are relevant to this lawsuit and would overcome any kind of concern that they may be confidential.

That may be true that the terms of the agreements may be confidential, but that does not mean that a court is precluded from inquiring into whether or not such terms exist, and that's why it's relevant.

MR. BOWLES: Mr. Benz, we take the opposite position.

MR. GREENE: Additionally, there's a waiver.


MR. BOWLES: The material is irrelevant.He's gone on for the morning so far into areas that are covered by portions of the cross-complaint that have been stricken from this case that are being litigated down in Los Angeles. He's taking discovery in the other case at this point.

Not only that, but now he's getting into areas of other settlements which are clearly beyond even the scope of that litigation.

But beyond that, this witness is just constrained by the terms of the contract from discussing terms of the other agreements.

MR. BENZ: So the objection, as I understand it, is limited strictly to the particular terms of the settlement agreements with Kima Douglas, and who else?

MR. GREENE: Laurel Sullivan.

MR. BOWLES: He also makes the argument about public policy. That argument he's already lost in the Court of Appeals by the decision that was issued last month.

MR. GREENE: Well, that was a decision based on an appeal of a preliminary injunction. And as you know, Mr. Bowles, a preliminary injunction is, in fact, what it says it is, preliminary.

MR. BOWLES: That's right.


MR. GREENE: Excuse me, Mr. Bowles, excuse me, I don't interrupt you.

MR. BOWLES: I was speaking, you interrupted me.

The Court of Appeals has decided that the church has a likelihood of success on the merits and that, of course, upholds the soundness of the contract.

MR. BENZ: Well, I would disagree with counsel about that. I don't think there's been a decision about that.

My ruling on the particular objection is that I think at this point the question as to the content of the other settlement agreements is going beyond the scope of where we are here, so I'll sustain the objection as to the particular content of the agreement, of the other settlement agreements --


MR. BENZ: -- on the grounds of relevancy.

Now, let me ask one further question, if I may.

Are Kima Douglas or Laurel Sullivan engaged in any present litigation --

MR. GREENE: Not to my knowledge.

THE WITNESS: No, they are not.

MR. BENZ: -- with Scientology?


MR. BOWLES: No, they are not.


MR. GREENE: Q. Also included among the individuals who entered into settlement agreements that were represented by Flynn or in that group of individuals was Edward Walters; right?

A. That's correct.

Q. And also was Nancy Dincalci; right?

A. That's right.

Q. And not only were there of the group or block of individuals in Los Angeles, but there was also a block of individuals in Boston, as well, that were represented by Flynn, the Garretys, they entered into settlement agreements, didn't they?

A. Carol and Paul Garrety entered into a settlement agreement.

I don't believe they lived in Boston, to my recollection.

Q. There was litigation in Boston, wasn't there? That was where the litigation was centered?

A. Garretys' case was in Los Angeles.

Q. That was in Los Angeles, okay.

Also involved in that group was an individual named Peter Graves.

A. In that group, you mean the --

Q. The Garrety group.

A. -- the Flynn clients that settled?


Q. Yes.

A. Yes, he was a Flynn client that settled.

Q. And also a group in Florida; right?

A. Not as part of a December '86 settlement, no.

Q. No, but as part of the settlements that took place in the calendar year 1986.

A. Yes, we settled cases in 1986 in Florida.

(Discussion off the record.)

THE WITNESS: In Florida.

Sorry. I'm getting quieter and quieter.

MR. GREENE: Q. And among those individuals were included Marjorie Wakefield; right? --

A. That's correct.

Q. Nan McLean?

A. Yes.

Q. Gabriel Cazares; right?

A. Yes.

Q. And Tanya Burdon?

A. Yes.

Q. Were there any of those people, to your knowledge, who had not been declared suppressive persons in the -- referring to the Florida people that I just enumerated?

MR. BOWLES: Again, Mr. Greene, what is the relevance of this? You're going off into other former parishioners who have settled cases.


MR. GREENE: The relevance is --

MR. BOWLES: It's pretty remote.

MR. GREENE: -- they were all represented by the same lawyer, it was all part of the same general plan to eliminate from any kind of litigation and from the marketplace of ideas in public persons who were familiar with and willing to testify about what they saw as the truth regarding the beliefs and practices of Scientology.

MR. BOWLES: Mr. Benz, I think we're going far afield here. He's going to be asking questions about Wakefield, McLean, Cazares and these others, what their experiences were with the church, what they may have be-en doing outside and since then.

Why don't we stick to the case at hand.

MR. GREENE: I'm not asking those questions. I'm asking whether they were included also. He's jumping the gun. I haven't gone there.

MR. BENZ: Again, obviously, I'm not ruling on where you're going --


MR. BENZ: -- except to the standpoint you're getting close to the edge.

MR. GREENE: I understand that, but I don't believe I've gone over it.

MR. BENZ: Okay.


MR. BOWLES: You've asked him if they were declared suppressive persons, and that signals to me that you're going off into irrelevant areas.

MR. WALTON: Is that an objection?

THE WITNESS: It was, yes.

MR. WALTON: Well, you made it. Can we get going?

MR. GREENE: Q. Would you answer the question, please.

A. Not without a ruling on the objection.

MR. BOWLES: The objection deals with a specific question as to whether these people were declared suppressive persons.

MR. BENZ: That objection is overruled.

THE WITNESS: I don't remember.

MR. GREENE: Q. You have it within your ability to find out, though, don't you?

MR. BOWLES: Just as much as you do, Mr. Greene.

MR. WALTON: Would you like to have your deposition set, sir?

MR. BOWLES: I'm representing the witness. Why don't you stop interrupting.

MR. WALTON: I believe you interrupted the witness.

MR. BENZ: Just hold it, please.

The questions will be asked. The witness will answer, if he wishes. If there's an objection, please


make it in the form of an objection. We can rule on it.

MR. WALTON: I object to the witness's counsel answering the questions for him.

MR. BOWLES: Objection, vague.

MR. BENZ: Okay.

THE WITNESS: What's your question?

MR. BENZ: Understood, but let's go ahead.

MR. BOWLES: What's your question?

MR. GREENE: Q. The question was and is, you have it within your ability to ascertain whether or not the Florida settling individuals were declared suppressive persons, don't you?

A. Probably.

Q. Now, in Los Angeles also one of the settling individuals was Howard Schomer; right?

A. Correct.

Q. Also known as Homer; right?

A. Yeah.

Q. And Martin Samuels, as well; right?

A. I don't think he lived in Los Angeles.

Q. He was among those that were settled in the Los Angeles global agreement; isn't that right?

MR. BOWLES: Objection. What do you mean by global agreement, Mr. Greene? It's vague. That's your term.

Can you define it, please?


MR. GREENE: The witness knows what I'm talking about.

THE WITNESS: Actually, I had a problem with the words global agreement because it presupposes one agreement that everybody signed on to one document. We settled with him in December of 1986, yes.

MR. GREENE: Q. And that was in conjunction with a number of other people, including Armstrong?

A. That's what we've been discussing, yes, of course.

Q. You don't have any problem knowing that that's what we're talking about, do you?

A. No, I just want to make sure that things are clear for the record. I'm not intentionally trying to be obtuse with you.

Q. That's okay. We'll just both do our jobs.

Now, Michael Flynn also had pending litigation against the Church of Scientology; right?

A. As a party?

Q. As a party.

A. Yes.

Q. Okay. And Flynn's litigation was settled in conjunction with Armstrong and the others in L.A., as well; right?

A. I don't like the phrase "in conjunction with."

Q. It was part of the settlements that were arrived


at, wasn't it?

A. Settled around the same time, yes.

Q. And the way that you went about settling it was that you, meaning CSI, did not provide money separately to Armstrong; right?

MR. BOWLES: Okay, objection.

THE WITNESS: We're getting awful close to specific terms.

MR. BOWLES: That's right. That's my objection.

THE WITNESS: But I think it's been discussed in this litigation on the record that what we did was provided a pool and had the individual parties and Micheal Flynn decide among themselves who got what part of that pool of money.

MR. GREENE: Q. Right.

A. As long as that procedure was agreeable to all the participants.

Q. Right.

A. And whatever they felt among themselves was fair and equitable, they did, as opposed to us arbitrarily putting a value on it.

Q. Right. And that pool of money was provided to Flynn, was it not?

A. No, it was put in escrow.

Q. What was the amount?


A. That's absolutely confidential. You're not getting it here.

MR. BOWLES: Objection. That's the basis of an objection. It goes to the content of the settlement agreements.

MR. BENZ: What's the ---

MR. GREENE: What's the relevance?

MR. BENZ: Yes.

MR. GREENE: One of the affirmative defense was that Michael Flynn had a conflict of interest in representing approximately 20 people, including himself, in one settlement. And that that conflict of interest invaldidates the efficacy of his representation of Armstrong with respect to the settlement and to the settlement itself. It's directly relevant.

MR. BOWLES: It has no relevance. He's asking the question, Mr. Benz, how much was the total settlement amount given to Mr. Flynn.

MR. GREENE: That's right.

MR. BOWLES: That has nothing to do with whether Mr. Flynn had a conflict of interest or not.

Beyond that, he's asking for, again, confidential terms which, by contract, my client is constrained from revealing. It's also irrelevant.

MR. GREENE: There is no basis -- courts contract


rights, do not and cannot supersede a judicial inquiry.

That is certainly within the purview of the court to issue protective orders and we certainly would be willing to enter into an appropriate protective order.

My client is entitled to defend himself against the lawsuit that has been brought against him by Scientology. He hasn't -raised the issue. That issue is joined. He is entitled pursuant to discovery to get information that's relevant to that issue.

And if Gerald Armstrong was one of 20 people who were settled out by Michael Flynn including, Michael Flynn himself, it sure as heck is relevant what the pool of money was that was given to Flynn, which has been admitted here, that that amount is relevant.

MR. BENZ: Well --

MR. BOWLES: He's taking issue with something that Michael Flynn may have done. He might have just as well sued Mr. Flynn if he wants the information.

But how much other people got or how much Mr. Flynn decided to give others out of a total settlement and the total amount are irrelevant to this matter. My client again is constrained. That's our position.

MR. WALTON: It seems to me that Mr. Armstrong should be considered a party to this contract that's considered so confidential. And if he's a party to the


contract, then certainly telling him what the terms are doesn't violate any confidentiality.

MR. BENZ: Well --

MR. BOWLES: That's a matter between Mr. Armstrong and Mr. Flynn. And if Mr. Flynn, if he has a problem with Mr. Flynn, he should sue Mr. Flynn.

MR. GREENE: That's not what is at issue here.

We're not talking about --

MR. BOWLES: Yes, it is. You're talking about a conflict of interest. That's your position relative to Mr. Flynn.

MR. GREENE: And we're talking about a conflict of client that your client participated-in setting up, Mr. Bowles, by setting up a procedure whereby Michael Flynn, which your client knew represented 20 people, including himself, was given a big pot of money, and he was told to go settle the cases. That's relevant to whether or not Flynn had a conflict of interest. And it's also relevant to whether or not there's unclean hands here, both of which have been asserted as affirmative defenses in this case.

THE WITNESS: We are talking about whether Gerry fraudulently conveyed his assets, are we not? Because we haven't discussed it in, so far, the three days that I've been being deposed.


MR. BOWLES: You're well afield already and now --

MR. BENZ: You want to hold it for just a second.

I just want to glance at this thing.


(Discussion off the record.)

MR. BENZ: I'm going to sustain the objection on the grounds of relevance, primarily. We know the fact that Mr. Flynn was involved in this. We know the fact that he was representing others. And we know the fact that he was representing Mr. Armstrong in this when the agreement or whatever it was.

I don't see that at this point the particular amounts and details would add anything to the defenses.

So I am going to sustain it.

As far as the confidentiality, I would prefer to recognize that to the extent that it doesn't jeopardize the parties' case here, but I will not hesitate to pierce the confidentiality if it becomes otherwise important or relevant.

MR. BOWLES: I just note for the record on that point that this is a suit for fraudulent conveyance alleging that Mr. Armstrong has given away his assets defrauding my client. How the terms of a confidential settlement agreement with other parties comes to play on that is remote, at best.


MR. GREENE: Well --

MR. BOWLES: It's not only that, but it's -- all of these specific allegations were stricken from his cross-complaint already.

MR. WALTON: We've already gone through that. This is the third time we've talked about the cross-complaint and the affirmative defenses in Mr. Armstrong's complaint, so let's move on with it.

MR. GREENE: For the record, the reason -- and I take -- respectfully take exception to your ruling --

MR. BENZ: Sure.

MR. GREENE: -- and the reason is because the amount of money, particularly that which would accrue to the benefit of Michael Flynn is directly related and directly relevant to the extent of the conflict.

And not only that, but also in this lawsuit Scientology has represented that there was a lump sum and, that was given to Flynn, that Flynn used to settle his and other cases.

And it's unfair to allow for such a representation to be made but not to allow any inquiry as to what that amount is. So I respectfully disagree with your ruling based on those grounds and the others stated.

MR. BENZ: Understood.

MR. GREENE: Q. All right. Let's go back here to


Exhibit 15.

A. All right.

Q. And you have made reference to Gerald Armstrong engaging in some actions that were destructive and aimed at the enslavement and not the freedom of man.

And I would ask you now to tell me specifically what were those actions, to your knowledge?

A. You must be joking. You're asking me that question?

Q. I am.

A. All right. To the best of my knowledge, making misrepresentations concerning the background of Mr. Hubbard, the founder of the religion; the actions he took to -- in stealing the personal archive documents; his work with agents of the criminal investigation division of the IRS to subvert or to undermine the church, specifically, those actions I referred to earlier. I would think that they would all be encompassed within that.

It's the lies to try and destroy the church, destroy the representation of the religion's founder. That if one believes, as I do, that Scientology frees people, the attempted destruction of that indicates an intention to enslave people.

You asked for my opinion. That's my personal opinion.


Q. Okay.

A. I assume you were referring to the second sentence of this issue.

Q. Correct. I certainly was.

A. All right. So we're moving back in time to 1984 --

Q. That's right.

A. -- and the years immediately prior and subsequent to that.

Q. That's right. And that's what your testimony just referred to; right?

A. Yes. That's correct.

Q. As a matter of curiosity, you said that you believe that Scientology was engaged in the freedom of man, or freeing --

A. Something along those lines.

Q. -- something along those lines?

A. Yes, yes, absolutely.

Q. According to your opinion, are there any other paths aside from that offered by Scientology that free people?

A. Are you asking for my personal opinion or an official church position?

Q. Let me ask you first, official church position.

A. Official church position is it is one of many paths that is a workable solution.


Q. Now, were there incidences where Armstrong, directing your attention on 15 to the second paragraph under the list of names with Scientology, deliberately held policy up to scorn that you recall?

A. I don't remember one way or the other.

Q. Do you recall whether he did, even if you don't recall how he did?

A. Yes.

Q. And what's your recollection whether or not he did?

A. I don't remember how he did.

Q. Okay.

A. You asked me for, you know, if I had a general --

(Discussion off the record.)

MR. GREENE: Q. So that I'm clear, your

recollection is that Armstrong, in fact, did hold policy up to scorn; right?

A. My recollection is that he did something that would fit within this paragraph. What it is specifically a decade later beyond the general categories of conduct that I've articulated in response to a couple of questions ago, I don't remember.

Q. All right. Would then, with respect to what you enumerated on shortly ago, would it be the -- what you say are the misrepresentations regarding Hubbard that would fall within the scope of deliberately holding policy up to



A. Not necessarily.

Q. Okay.

A. They would be -- that would more fit under --

Q. That's okay. Let me ask you another question.

A. -- turning from ethical and moral Scientology principles so.

Q. Do you have a general recollection about the manner in which Armstrong deliberately held policy up to scorn?

A. My general recollection, yes, it's through the lies that were in his declarations through this time period and the lies that he used in order to obtain a judgment he didn't even expect from Judge Breckenridge.

Q. Now, as part of the settlement negotiations with Flynn regarding Armstrong, included in that was an agreement if a reversal of Breckenridge's decision was obtained, to limit damages upon retrial to $25,001; right?

A. There was an agreement at that time to limit the damages to nominal damage, yes --

Q. Okay.

A. -- as we let the Court of Appeals know on the next time around.

Q. And that amount of nominal damages was one dollar more than the jurisdictional maximum that then existed for superior court, right, of $25,000?


A. Yes, because the issues involved in the case were, other than damages, were the more important issues.

Q. Right. The issues in the case that were most important were Judge Breckenridge's characterizations of Scientology; right?

A. Well, it was the ultimate resolution of the injunctive relief that was sought.

Q. I'm sorry. You didn't answer my question.

A. No. I told you what was more important. You asked, wasn't this the important thing. I told you what was the important thing.

Certainly what you said was among them, absolutely, without question. I'm not going to sit here and tell you it wasn't.

But also the ultimate relief we have sought through the judicial process was very important because that was the relief we were seeking.

Q. And also included, in addition to that, what was very important was, would be obtaining a reversal of Judge Breckenridge's characterizations of L. Ron Hubbard; right?

A. Certainly.

Q. And in your view, Judge Breckenridge's characterizations of Hubbard were mistaken and erroneously based upon his crediting Armstrong's misrepresentations; right?


A. Not just his, the others who wer there from the Flynn dog and pony show, yes.

Q. The Flynn dog and pony show, which would include Laurel Sullivan; right?

A. Um-hum.

Q. Edward Walters; right?

A. That's right.

Q. Homer Schomer; isn't that right?

A. I'm trying to think back what he said specifically, but as a general proposition, sure.

Q. Okay. And Sullivan, you're familiar with the litigation Wollersheim versus Church of Scientology; right?

A. Certainly am.

Q. And witnesses for the plaintiffis in that case also included Sullivan; right?

A. Not that ever met Wollersheim, no.

Q. No, but she testified on Wollersheim's behalf, didn't she?

A. Sure, she took her act to his stage and said generally bad things about the religion, but she had no relevant testimony whatsoever to give to that case because she had never met him, and that's part of the misrepresentations that have been flying around here over the years, is that witnesses to torts were removed from


the legal process. That's garbage and you know it.

This paid, hired gun people who would come in and say bad things just because they were being paid to do so were removed from the marketplace forcing you guys to deal with facts, and that appears to be something you can't tolerate, and that's why you got a problem with it, just so we're clear.

Q. I really appreciate your expounding, Mr. Farny.

A. Hey, no problem.

Q. Also, Howard Schomer, Homer Schomer was a witness in Wollersheim, wasn't he?

A. No, he was not allowed to testify. The court ruled he had nothing relevant to say to any issue and forbade him from opening his mouth in front of the jury.

Q. You testified in Wollersheim; right?

A. Yes.

Q. And Edward Walters testified in Wollersheim as well?

A. Same category as Sullivan, yes.

Q. And, in fact, he and Sullivan testified not on any mistreatment of Wollersheim but on the manner in which Scientology operated; right?

A. No. They made up their schtick and just, you know, flapped their gums just like they were being paid to do.

Q. Okay. And then you include, with respect to the


characterization of them making up their schtick and flapping their gums, you would apply the same type of characterization to Gerald Armstrong, wouldn't you?

A. In what context?

Q. In the context of his participation in litigation and his phony declarations?

A. Well, I'll stipulate that the declarations are phony and that they contain lies.

Q. That's your view of them; right?

A. Certainly.

Q. And that Armstrong's -- he was lying about Scientology and its founder, as was Sullivan and Walters; right?

A. All three told things that were not true, that were lies, yes.

Q. And so did Schomer, didn't he?

A. He even admitted to having lied.

Q. Now, the stipulation whereby if Breckenridge's decision was reversed by Scientology's unopposed appeal thereof --

A. Time out, I can't adopt your characterization of it because the appeal at that stage had already been fully briefed, there was no further need for an appeal brief -- now just let me finish.

Q. Go ahead.


A. As you know what occurred, the Court of Appeals sent the case back because the cross-complaint, in their view, hadn't been disposed of. In reality, it had been disposed of by way of the settlement.

And because there was a change of circumstances that Mr. Armstrong felt compelled to communicate to the court, you'll notice he's not been sued for breaching the settlement agreement -- by communicating to the court concerning that appeal, because that was a change in circumstance neither side anticipated. In fact, we've gone out of our way to point that out on a number of occasions and it keeps being raised.

Q. So then in your view -- strike that.

You're familiar with the fact then that Armstrong sought permission from the Court of Appeal to participate in the appeal of his own action; right?

A. Yes.

Q. And in doing so, Armstrong provided the court of appeal with a copy of the settlement agreement under seal; right?

A. I believe it was under seal, that's correct.

Q. And that, so you're stating that you, CSI, does not consider such action by Armstrong in any way to constitute I a violation of the settlement agreement; is that right?

A. What I do consider and what I testified to was that


Armstrong, because of the change of circumstance seeking leave from the court of appeals to file papers, merely that fact, not necessarily anything he said in them or public disclosures he may have made beyond that, but seeking to participate in the appeal is not and was not considered by CSI to be a breach that became part of the Los Angeles action because of the change-in circumstance.

Q. Let me ask you this. Is it the position of CSI that the manner in which Armstrong participated in the appeal constituted a violation of the agreement?

A. Well, whether it is or isn't, my opinion, that's not part of the Los Angeles action.

Q. I'm asking you whether or not the manner in which Armstrong participated in his own appeal was or is considered by CSI to be a breach of the agreement.

A. I don't know if CSI has formally articulated a position on that.

Q. I'm asking you what CSI's position is now.

A. CST's position is that his having sought leave to appeal, you know, to.participate in the appeal would not be the subject of the breach action.

Q. All right. And that leave that Armstrong sought was granted by the Court of Appeal; right?

A. Yes.

Q. And therefore subsequent to that grant, is it CSI's


position that Armstrong's participation in his own appeal in any way constituted a violation of the agreement?

A. I haven't formulated a view on it because I haven't needed to. It's not a subject that's under current litigation.

So, I mean, I'd have to go back. As I recall, he also sought to assist Bent Corydon's effort in unsealing the court file, which I would have considered certainly not in the spirit of how the settlement had been arrived at, or the term -- or what resulted from it.

But that also isn't part of the -- isn't part of the breach action. The precise reasons for it not being part of the breach action, well, it's kind of difficult to talk about because it goes into communications with lawyers.

Q. Okay.

A. But I just, the point I was trying to make is that such a big deal was made out of the agreement Gerry made in December '86 not to further participate in the appeal and what actually happened, because circumstances changed --

Q. I understand.

A. -- based on not what we did, not what Gerry did, but what the Court of Appeals did necessitating a slightly different operating climate.


Q. Right. The stipulation for nominal damages, if there was a retrial of Armstrong One was considered to be part of the settlement with Gerald Armstrong, wasn't it?

A. Well, I don't know what you mean by -- well, I don't want to phrase it that way. I don't know what you're referring to when you say settlement. It is not within the four corners of-the settlement agreement signed between the churches and Gerry.

Q. I understand that.

A. It is part of a package of documents that went with it at the same time.

Q. Now, also included in that package of documents was an agreement whereby CSI agreed to indemnify Flynn in the event that there was a judgment for $25,001 against Armstrong; right?

A. I don't believe CSI is a signatory to that document.

Q. There was another Scientology organization that was a signatory if not CSI; is that right?

A. No, I believe it was one of the lawyers.

Q. It was Earl Cooley, wasn't it?

A. Either him or Heller.

Q. And both of whom were counsel for various Scientology organizations from time to time; right?

A. Certainly.


Q. And that indemnification agreement was part of the package; right --

A. That's right, just, what I said --

Q. -- that you were referring to?

A. -- when I was referring to nominal damages earlier,

I didn't mean $25,001, I meant $1.

Q. You mean zip.

A. No, $1.

The main activity and main intention was on the injunctive claim.

Q. All right. And the injunctive claim was to keep Armstrong silent; right?

A. No, it was to get the documents back and seal them.

Q. And during the course of the Armstrong litigation, there had been a lot of litigation about restraining Armstrong from talking about what he had claimed to be his knowledge of Scientology; right?

A. What's a lot?

Q. That's a good question. There was litigation involving that issue; right?

A. The question was litigated as part of the first Armstrong case.

Q. Right. And part of the first Armstrong case, which you worked on, didn't you?

A. Somewhat.


Q. And it's part of why you're well familiar with Gerald Armstrong's circumstances;

A. That's true.

Q. Involved efforts by CSC to obtain court orders that would prevent Armstrong from disclosing knowledge that he obtained from the documents that he received from Omar Garrison; isn't that right?

A. That he received from Omar Garrison?

Q. Let me back up.

A. Why don't you rewind a little bit.

Q. Sure. Let me rewind a tad here.

You're familiar with Omar Garrison; right?

A. Yes.

Q. Omar Garrison was an independent biographer who was employed to write a biography about L. Ron Hubbard; correct?

A. That's right.

Q. And Armstrong's role in the creation of the biography --

(Discussion off the record.)

MR. GREENE: Q. Armstrong's participation in the --

A. You said role.

Q. I'll take a break.

Armstrong's role in the biography that Garrison was


employed to write about Hubbard was to act as an archivist; right?

A. Generally, yes.

Q. And part of what Armstrong did was to provide documents having to do with Mr. Hubbard's past to Omar Garrison; right?

A. For Garrison to use in the biography.

Q. Correct.

A. That's right.

Q. And Armstrong did do that, to your knowledge, didn't he?

A. Yes.

Q. Now, when Armstrong blew, when he left without routing out, he at some point thereafter went to Garrison and obtained copies of those historical documents regarding Mr. Hubbard; right?

A. Not exclusively.

Q. In part?

A. If my recollection is correct, he snatched them on the way out, as well as obtaining some from Mr. -- that Mr. Garrison was holding temporarily, but which were still bound within the entire ambit of what the authorization of possessing them was, which was for the creation of the authorized biography.

Q. Now, those documents, which both Armstrong, and you


say, took and ones that he obtained from Garrison were considered by CSC to be within the scope of the fiduciary duty that Armstrong owed to CSC; right?

A. The duty to not disclose the contents in an unauthorized manner --

Q. Okay.

A. -- was, certainly.

Q. Right.

And that was one area which CSC wanted Armstrong to keep his mouth shut about; right?

A. In terms of the contents of the specific documents?

Q. Yes.

A. Yes.

Q. However, the contents of those specific documents were not the only area that CSC wanted Armstrong to keep his mouth shut about; isn't that right?

A. At what time, when, under what circumstances?

Q. We're talking about in early 1982.

A. I don't think the issues had arisen yet in early 1982.

Q. How about shortly thereafter?

A. I don't know one way or the other. We're splitting hairs.

Is there something specific that you're looking for?


Q. What I'm trying to ask you is that not only did CSC want Armstrong to keep his mouth shut about what was in the Hubbard documents, but also with respect to his knowledge of Scientology operations, generally speaking.

MR. BOWLES: Objection to form.

THE WITNESS: Well, if he told the truth, that's different than spreading lies about the church. Of course, you're not going to be interested in someone who continues to spread lies about one. I mean, that's kind of natural.

MR. GREENE: Q. I agree with you: And just so I'm clear about what we're talking about here in the lie department, the lies that he spread were the same lies that were erroneously, in, your view, adopted by Breckenridge in his decision, in part -

A. In part --

Q. -- right?

A. -- because he doesn't think he developed his so-called defense yet. So that took a few years to think of.

Q. You're talking about Armstrong?

A. Um-hum, that he used in front of Breckenridge that resulted in the Breckenridge decision, that's what we're talking about.

Q. I just want to make sure we're on the same length.


A. I doubt it, but that's all right.

Q. You're a Scientologist and I'm not.

Now, therefore, as to the Hubbard documents and as to Armstrong's what you said were lies, CSC made efforts to obtain court orders keeping Armstrong silent; right?

MR. BOWLES: Asked and answered.

THE WITNESS: I'm not sure whether the initial temporary restraining order and preliminary injunction covered anything beyond the documents themselves and their contents.

MR. GREENE: Q. That is Judge Cole's order; right?

A. One of them. What was the other judge's name?

I've drawn a blank right now. Cole was one of them, yes.

So I just don't remember the precise terms of the order that we sought and obtained.

Q. And also what you were seeking ultimately in the lawsuit in terms of injunctive relief were the continuation of such orders; right?

A. Generally, yeah.

Q And --

A. Well, with one large addendum to that. We wanted the documents back.

Q. Not to mention that. Of course, of course.

A. Yeah. At that time they were impounded in the court.


Waddington, that's the TRO judge, Waddington.

Q. Right, Waddington and then Cole?

A. That's correct.

Q. You wanted the documents back and you wanted the injunctive relief compelling Armstrong to keep his mouth shut about the contents of the documents to be permanent; right?

A. Correct.

Q. You also wanted Armstrong to be enjoined from continuing to utter lies about the church?

A. See, that's what I don't remember, if that was included or not.

Q. All right.

A. I'm sorry, I just don't remember. Obviously, over time, what has stuck with me as being the focus were the documents themselves because, obviously, for the last dozen years, the documents, of course, received further attention in litigation.

Q. Going back for a moment to the component of the package pertaining to nominal damages --

A. Right.

Q. -- Armstrong's signature was not either on the stipulation or the indemnity agreement; right?

A. It was my understanding he was fully appraised of it, but I don't think his signature appeared on those two



Q. Now, your understanding that he was fully apprised on it is based upon what facts?

A. Communications I received from our lawyer that was talking directly with Michael Flynn.

Q. And what did your lawyer tell you Flynn said?

A. Well, I'm not going to get into the exact words, but the substance of it was that, I mean, I just came away with the understanding that what Mike was telling Mike was getting to Gerry; what Hertzberg and Heller were telling Mike Flynn was getting to Gerry, because throughout the entire several months that the settlement negotiations went on, it was apparent that -- and if this is something Flynn did and didn't tell his clients, well, I can't help that, but it was apparent to us that when Flynn would come back with a position, he was speaking for his clients. It seemed like he had discussed things with one or more of his clients.

Q. Were there discussions between Flynn and Heller and/or Hertzberg pertaining to the non-assistance provisions some time in advance of the December signing date, to your knowledge?

MR. BOWLES: Can you read that back, please.

MR. GREENE: I'll say it again.

Q. To your knowledge were there discussions which


transpired between Flynn and/or Heller on one hand and the Hertzberg and/or Heller on one hand and Flynn on the other directed toward the non-assistance provisions in advance of this signing?

MR. BOWLES: Okay. That's vague, Mr. Greene. What are you talking about non-assistance provisions?

MR. GREENE:--Come on, Tim, you know doggone well what I'm talking about, how Armstrong -- I think, it's 7G and 7H.

MR. BOWLES: Thank you.

MR. GREENE: I think, but it's the 7's for sure.

THE WITNESS: Oh, it's in the 7's.

MR. GREENE: Q. It's in the 7's . So --

A. I believe so, yes.

Q. And when, according to your best estimation, did those discussions occur?

A. My recollection is that that was on the table from the get go. So it would have been for many weeks, I'm thinking into the summer when the negotiations first started.

Q. When did they start, roughly?

A. Oh, you would ask me that.

Q. Generally, speaking, your best estimate.

A. We were still doing the Wollersheim trial. I don't know if it was post-verdict or not. Because I remember


most of our own internal discussions took place in the apartment that Earl had, so we were still doing the Wollersheim trial. My sense is it was pre-verdict. So that would be prior to July of ' 86.

Q. The verdict was actually July 22, 1986, wasn't it?

A. It was 20 something, yeah, I think you're right.

Q. I think so, too. And the verdict in Wollersheim totalled $30 million; right?

A. At that time.

Q. At that time. Later reduced to $2.5 by the Court of Appeal?

A. Thank you.

Q. So then the discussions regarding settlement with Flynn's clients started prior to that verdict, is your best recollection?

A. That is my best recollection. Not too long prior.

Q. All right.

A. But sometime prior, unless I've completely messed and we were talking about in the winter, but I don't think so. I think it started sometime shortly before that, within weeks or whatever.

Q. Mid July, '86?

A. Yeah, but this is so vague right now I -- at some period of time before they were consummated in December.


Q. Yeah, well, I know that. I asked you that question. And I'm getting a little bit more of an estimation from you.

A. That's right.

Q. Your best estimation was December of '86?

A. That's right. I mean, there were discussions off and on from 1979 on with Flynn on settlement so --

Q. Now, at the outset, it was CSI's objective, was it not, to preclude Armstrong from, if possible, from continuing to lie about Hubbard and the church?

A. Well --

MR. BOWLES: Asked and answered.

THE WITNESS: I would phrase it that it was our objective that there be peace. And it was our objective that problems would not continue to be generated which flowed from the lies he was telling. But there was also conduct that would be involved, active assistance to adverse litigants, that sort of thing. It was our intention that there be a clean slate.

MR. GREENE: Q. Right.

A. Then we also have the difficulty of past usages of his lies to deal with, which I think is where you're going, but that's a different question.

Q. Now, in fact, did the whole project have the name Operation Clean Slate?


Heavens no. No, it didn't.

Q. Although clean slate was included in the language of the settlement agreement?

A. I believe those words appear in the settlement agreement.

Q. So then from the very onset of the settlement

discussions with Flynn, with respect to Armstrong and his other clients, we covered that base, when did the -- settlement discussions with Flynn started in the summer of 1986. Was the scope inclusive of many, if not all of Flynn's clients?

A. Well, either right at the beginning or shortly thereafter.

Q. Okay.

A. The concept was a global settlement. The idea of a complete break with no assistance came up, and I know I said earlier from the get go. It was certainly right near the get go.

Q. Right. And now the reason for that would be that it wouldn't make any sense, for example, to get a commitment from Armstrong not to talk or not to assist but not to get one from Sullivan or Walters, it would just be like sticking a finger in the dike if you didn't get all of the ones that were uttering the lies about Scientology and Hubbard; right?


A. Well, that's certainly a logical reasoning.

Q. All right. Now, then, from pretty much the outset CSI was saying to Flynn, we want confidentiality; right?

A. That's my understanding --

Q. Okay.

A. -- based on discussions I had within our side of the settlement group.

Q. All right.

A. And just for clarification, at the time I was --

Q. It was CSC?

A. -- I was participating from CSC's perspective.

Q. Which is Church of Scientology of California?

A. Right.

Q. And also from the outset was included the objective to obtain commitments of non-assistance; right?

A. In some form or another.

Q. And the non-assistance meant that what CSI/CSC sought was to not have the signing individuals executing declarations for other litigants voluntarily, among other things; right?

A. Oh, what we sought was that they would stop what they had been doing, which was going out of their way to hire themselves out as hired guns concerning the church. If they were compelled to testified by lawful process, fine.


Q. Right.

A. But look upon it as a retirement of their activity as hired guns.

Q. Right. You wanted to put the Flynn dog and pony show to rest?

A. That's right. And unless compelled to do so by lawful process. There was no need for it, in any case, in any event. It was just created solely to destroy the church. And we didn't think that destroying the church was very pro-survival, to use the Scientology phrase, thing to do.

Q. Particularly in light of the fact that what Scientology's primary objective is is the freeing of human beings; right?

A. Spiritually, yes, of course.

Q. Now, then the provision of non-amenability to service of process meant, according to CSI, that Armstrong was just what it said, not to make himself amenable to service; right?

A. Not precisely. What it meant was that he was not to go out of his way to voluntarily accept subpoenas just to cover the fact of voluntarily complying, cooperating, rendering his active assistance. For example, arranging to be at a courthouse at a certain time just so that someone could hand you a subpoena.


If he were subpoenaed through no active participation on his own, so be it. He would need to, you know, comport his behavior.

Q. You have no control over whether a court ordered Scientology -- ordered Gerald Armstrong to appear and testify?

A. No, of course. I mean, unless we objected, filed for protective order, that sort of thing. But once the court said the day is done, the man needs to testify, the day is done, the man needs to testify.

Q. Now, in fact, there was a point where one of Armstrong's violations, I believe, was having to do with the first Yanny trial when he appeared and was served with a subpoena; right?

MR. BOWLES: Objection, irrelevant. I mean, again, this is all part of the cross-complaint that we had stricken on motion in this case. And all you're really doing here is try to litigation and gain discovery in non-overlapping matters for the other matter.

MR. GREENE: You know, Mr. -- go ahead, I didn't mean to interrupt you.

MR. BENZ: You're talking about --

MR. BOWLES: Violations of the settlement agreement now.

MR. BENZ: Right. And violating of the settlement


agreement is the basis for the lawsuit here?

MR. GREENE: Absolutely.

MR. BOWLES: No, it's not. The basis for his cross-complaint -- well, the basis for the plaintiff's complaint here is fraudulent conveyance, which, if we win this, will become a tool for collecting on successful action in Los Angeles.

But the terms of the agreemen and the circumstances of it are not directly relevant to this litigation. Now, he's already pled in a cross-complaint all of his alleged circumstances surrounding events after the settlement agreements were entered, and that's what he's getting into now, this so-called Yanny matter.

MR. BENZ: Well, is the question that you're talking about now intended to be a violation of the agreement, and as such, the basis upon which you're claiming potential indebtedness?


MR. BENZ: Then the objection is overruled.

THE WITNESS: Let's look at the complaint in the breach action.

MR. GREENE: Q. I'm just asking you of your own independent recollection.

A. I'd have to look at the document.

Q. So you don't have any independent recollection as


you sit here today whether or not Armstrong's appearance at the Yanny trial and accepting the subpoena was considered by CSI to be a breach of the agreement?

A. That's not your question.

Q. That is my question.

A. No. Your question was whether it's included in the suit. Whether a breach --

(Discussion off the record.)

THE WITNESS: Your question was whether it is included in the suit, whether it was a breach that we sued him for. And I said let's look at the document.

MR. GREENE: Q. Strike that. Does CSI consider that a breach of the agreement?

A. Could I finish? Could I finish my statement, my answer to your question?

Q. I withdraw that question. I think -- thank you for helping me clarify it.

A. Okay. So do you now have a question?

Q. Of course I do.

A. Go ahead.

Q. What my question is is does CSI or did CSI consider Armstrong's appearance at Yanny's trial in Los Angeles and receipt of service of a subpoena to testify to be a violation of the agreement?

A. Well, insofar as my personal observation of how he


received the subpoena seemed to have been a sham just to assist his voluntary cooperation, yes.

Q. Okay.

A. However, whether it's in the complaint, we can look, we've got copies.

Q. Now, and Joseph Yanny, just to get the little bit of context, he was a former lawyer for Scientology; right?

A. He was a former lawyer for at least three Scientology entities, yes.

Q. Right, for RTC?

A. Correct.

Q. And for CSI?

A. Um-hum.

Q. And for CSC?

A. Correct.

Q. Now, your current independent knowledge is that you are not certain whether included in CSI's complaint in Los Angeles against Armstrong as a cause of action is the receipt of the subpoena, right, in Yanny?

A. I'm not certain.

Q. Okay.

A. I would lean toward probably not, but I'd have to look at it.

Looks like you're about to go on. Do you want to do lunch, or do you want to do his question first?


Q. Why don't we do lunch.

A. Okay.

Q. Can we do it in 45 minutes?

MR. BOWLES: No. Go off the record.

(Discussion off the record, followed by the lunch recess.)

MR. GREENE: Q. Back on the record at approximately 1:30.

Mr. Farny, you're still under oath.

A. I am.

Q. You made reference to Armstrong's settlement agreement and the stipulation that we discussed, as well as the indemnity agreement, as being part of a -- I believe your term was package. I don't mean to mischaracterize you.

My understanding was they were all really part of the same transaction; is that fair to say?

A. That's fair to say.

Q. Now, also included in that transaction was an affidavit or declaration signed by Armstrong; isn't that right?

A. An affidavit or declaration, as I sit here, I don't remember which it was. I tend to think it was a declaration.

Q. A sworn statement in writing?


A. Yes.

Q. Now, that sworn written statement, is the original of that in the files of CSC, to your knowledge?

A. No, CSI.

Q. I'm sorry, CSI.

A. Yes, to my knowledge, it is.

Q. And that's maintained there at the Office of Special Affairs?

A. Unless we filed the original somewhere and we have maintained a copy, but I'm reasonable certain that we still retained the original. I'm not 100 percent certain.

Q. Now, was there any discussion about under what circumstances that written sworn statement would be filed in conjunction with the settlement discussions pertaining to Armstrong?

A. I seem to recall that there were, although I don't recall specifics.

Q. Do you recall generalities?

A. The generality that there were discussions of filing that at some point, but I'm not certain.

Q. Was that filed ultimately in litigation with the Internal Revenue Service?

A. I'm not certain. I just don't remember.

Q. All right. Do you recall whether or not that document was filed by CSI or some other Scientology


related entity?

MR. BOWLES: At any time?

MR. GREENE: At any time.

THE WITNESS: If it was filed, it would have been filed by one of the Scientology entities that were a party to this settlement, which was CSC, CSI, and perhaps others.

MR. GREENE: Q. All right. Author Services was a party to that settlement, too, wasn't it?

A. I don't remember. I think there were cases pending against Author Services Incorporated that Flynn had that were part of that overall settlement.

Q. And Author Services Incorporated, to your knowledge, is the corporate entity which handles, at least in part, Hubbard's writings; isn't that right, Mr. Hubbard's writings?

A. It's the literary agent for his literary works, yes.

Q. Now, to your knowledge, one of the primary people, lawyers, on behalf of Scientology related groups that participated in the settlement negotiations was Lawrence Heller; right?

A. He was one of them that participated --

Q. He was one of them.

A.-- yes.


Q. And you know Mr. Heller; right?

A. Yes.

Q. And, in fact, Mr. Heller was present at the point where Armstrong signed his settlement agreement; isn't that right?

A. That's correct.

Q. Now, as part of the-settlement package with respect to Armstrong, was an agreement with Flynn whereby Flynn would not represent people against Scientology in the future included, to your knowledge?

A. Such an agreement was not part of the settlement package with Gerald Armstrong.

Q. Was it part of the settlement package with Michael Flynn?

A. My recollection is that Mike Flynn decided unilaterally that he wanted to do something else with his life. So I wouldn't characterize it as a term of any of the agreements.

Q. Did Mr. Flynn, to your knowledge, ever make such a representation, namely, that he would not in the future represent individuals in litigation against Scientology?

A. I recall him making statements to the effect that he wished to pursue other activities.

Q. To your knowledge, did any of the Scientology related individuals or entities state to Flynn the desire


that he no longer represent individuals in litigation against Scientology?

A. We desired him to be in other areas of the legal activities, as well.

Q. So were those concerns part of the settlement discussions with Flynn?

A. Ours or his? His certainly were.

Q. And what about yours?

A. I don't remember.

Q. Now, those who participated in these discussions included yourself; right?

A. Correct.

Q. Lawrence Heller?

A. Yes.

A. Earl Cooley?

A. Yes.

You're including the settlement group that was on our side of the table, as well as people who directly interfaced with Flynn?

Q. Yes.

A. Because I didn't directly interface with Flynn during those negotiations.

Q. Right, right. Yes, I am.

In addition to those individuals already enumerated, who else participated on your side of the



A. Mike Sutter for CSI.

Marty Ratbin and David Miscavige for ASI and for Mr. Hubbard's interests, insofar as he was a named defendant in any of the suits.

Q. Now, the individual who was primarily responsible for the interfacing with Michael Flynn was Lawrence Heller; right?

A. No.

Q. Okay. Who was it?

A. Michael Hertzberg. Thank you, I forgot that name.

Q. So Michael Hertzberg --

A. Exactly. And I also remember Warren McShane from Religious Technology Center was involved to a certain degree.

Q. All right. Now, at this point does CSI have any objection to Michael Flynn assisting Armstrong, if Flynn so decided?

A. That calls for a legal conclusion I cannot make.

Q. No. I'm not asking you for a legal conclusion.

I'm just asking you for the position of the corporation that you're here representing whether or not, as I said, CSI has any objection against Flynn assisting Armstrong should Flynn so decide.

A. We asked him twice to intervene and help calm


things down early on before this blew up completely. He indicated that he had been unable to make any progress in that regard. So I don't know if he'd have the ability to do anything.

Q. I understand that's your opinion of Mr. Flynn's ability. But my question is directed toward whether or not CSI would have any objections to Flynn so representing Armstrong should Flynn make that decision.

A. Well, I'm unaware of a position being articulated on that beyond what I've said. I'm sorry. I just don't know.

Q. So you have no objection at this time; right?

A. That isn't what I said. Move on. I said I don't know. I haven't formulated a position. I said I didn't know.

Q. All right.

A. Big difference.

Q. What would it take for you to make that decision?

MR. BOWLES: Objection, badgering the witness.

MR. BENZ: Well, I don't know about that, but it calls for speculation.

THE WITNESS: It certainly does, sir. I'm not able to make that speculation.

MR. BENZ: So I will sustain on the ground of speculation, at least.


MR. GREENE: Q. You said that Flynn was asked twice to intervene and calm things down before everything really hit the fan, or that's my paraphrasing --

A. Close enough.

Q. -- when first did that take place? And I'll just incorporate the questions when, who called Flynn, and what did the person say, to your knowledge.

MR. BOWLES: To the extent that calls for attorney-client privileged information, there is an objection raised here.

THE WITNESS: One was in late '87 when there was information appearing that had originated in the universe of data that was associated with the Armstrong litigation. It was appearing in Russell Miller's book, and there was litigation contemplated, actually, initiated concerning that. I did not participate in that one directly. I heard that one after the fact. There was an indication that nothing could be done, wasn't able to do anything.

The second time was later, '88, '89 period. And, again, I believe that time Michael Hertzberg called Mike Flynn.

And then there was a third instance where Harry Heller called Gerry directly. But that was the two times I recalled with Flynn, because things were heating up in


the late '89 period.

Q. All right. Let me ask you some more questions.

Now, when you're referring to Miller's book, that's the book -- first of all, you're referring to Russell Miller; is that right?

A. That's correct.

Q. And the book, is that ultimately published as I believe it's L. Ron Hubbard, Bald Faced Messiah?

A. Bare Faced Messiah.

Q. Bare Faced Messiah.

And that was litigation that was transpiring in Great Britian; right?

A. Right.

Q. And that was brought by CSC?

A. I don't remember.

Q. And with respect to that, the concern was that Miller had access to information which, in your Scientology -- generally, if you can, if you can't, I know you'll tell me -- view only could have been derived from documents sealed in the Armstrong litigation; right?

A. Well, they could have been derived -- the information could have been derived from documents that made their way over there prior to the initial temporary restraining order. But there were other documents that appeared to have resulted from the trial that couldn't


have gotten out any other way. It was our perception that they originated prior to the December '86 settlement. We didn't have a sense that they had originated post-December '86 in terms of new communications.

Q. All right.

A. Although, doubt was cast on that when we didn't really get anything in response to our request that, hey, how do we deal with this stuff, what do we do.

Whereas, we were perfectly free, pursuant to the terms of the settlement agreement to say anything, it was our desire at least some information go along that channel of communication prior to having to jump in with both feet over there.

And even at that point when there was nothing that could be done, it would appear, we made an effort to express things in just the purest form we could without added aggravation.

Q. What do you mean by that, express things --

A. Ken Long's declaration is about as milk toast as it could possibly express the facts that he was trying to express. He could have gone on a serious roll. He didn't.

Q. Right.

A. You know, the information was required to deal with those false reports that were in that book in that


particular case.

It was all that was required, so the effort was made to confine the remarks just to what was needed at the time.

Q. When you make reference to false reports, that's kind of a term of art, isn't it?

A. No.

Q. When you say false reports, you're talking about -- or is it fair to say that what you're referring to is an inaccurate statement of fact?

A. Yes.

Q. Now, when you were working on the Armstrong litigation, while posted within CSC --

A. Okay.

Q. -- working also with you was Ken Long; right?

A. That's right.

Q . And so you and Long worked together on Armstrong's case that was ultimately tried in front of Judge Breckenridge?

A. During various periods of time, yes.

Q. And then Ken Long was the individual who submitted, I think, four declarations in the litigation in Great Britian involving Russell Miller's book.

A. I don't remember if it was that many, but it was definitely more than one, certainly.


Q. Now, when those declarations were submitted, did you consult with Long prior to him drafting or him signing that?

A. No, I did not.

Q. But you were aware that that was happening; right?

A. No, I became aware of that after the fact.

Q. After the fact.

A. I became aware of it in December.

Q. Of 1987?

A. That's correct.

Q. All right. Now, Ken Long currently works as a paralegal within OSA, doesn't he?

A. Yes.

Q. How -- has he had it?

A. I beg your pardon?

Q. What is his post?

A. He is responsible for working with lawyers dealing with matters that are pre-litigation matters.

Q. So there's --

A. Problem resolution.

Q. -- if there's smoke on the horizon, part of his job is to try to prevent it from turning into a fire.

A. Exactly.

Q. And he does so currently on behalf of CSI?

A. That's correct.


Q. Now, going to the second effort to communicate with Michael Flynn -- actually, let me back up.

The first effort in 1987 regarding the Miller litigation, do you know who it was that endeavored to contact Flynn?

A. It was one of the lawyers. I'm not sure which one.

Q. And so when you say one of the lawyers, the universe would be either Heller, Hertzberg or Cooley?

A. Right.

Q. No others?

A. Not to my recollection.

Q. And among those three, would there be a most likely candidate that you could estimate would be the one?

A. I'd have to guess. I'm sorry.

Q. Don't do that.

Now, with respect to the second effort, or actually the second contact to Flynn, that was Hertzberg that made that effort, to your knowledge; right?

A. I think so.

Q. Okay.

A. That's what I testified to a few minutes ago.

Q. Right.

A. I'm pretty sure it was him. It may have been Earl, but I'm pretty sure it was Michael.

Q. Now, that contact pertained to the Corydon


litigation; right?

A. Yes.

Q. And Bent Corydon, he was another author; right? Or at least he published a book.

A. Correct. Thank you.

MR. BOWLES: That's your characterization, Mr. Greene.


Q. And the book that he published was L. Ron Hubbard, Madman or Messiah; right?

A. I get the two words in the title backwards.

Q. Something like that?

A. It's either that or they flipped around.

Q. Messiah or Madman, one of the two; right?

A. It's not that significant a book.

Q. Okay. And that book is permeated with false reports, in your opinion; correct?

A. In my view, yes.

Q. When you made reference to matters starting to heat up, which I understand to be in connection with the court litigation, was more specifically what you were referring to was the service of a deposition subpoena on Corydon's behalf on Armstrong?

A. Not necessarily.

Q. Okay.


A. No. Begin in June of '88, one of the things that Joe Yanny said he was going to do if we didn't resolve matters was do everything we can to undo all the Flynn settlements.

And it was shortly after that that we started hearing rumblings about them from Corydon's lawyers about efforts they intended to make to unseal the files, to undo the settlement agreements and such.

And I don't know if the subpoena had been served yet when the effort was made to communicate with Mike Flynn. Because subsequent to its service Larry Heller spoke with Gerry Armstrong directly. So I'm not exactly sure where it fits in sequence.

But the message we wanted to communicate was, let us work together on this, let us not allow what we made in December of '86 to blowup because of somebody else. We've got a beef and he was just trying to create trouble.

Q. Corydon's lawyers were Toby Plebin and Paul Morantz, M-o-r-a-n-t-z.

A. Yes.

Q. So given the timing, in your view Yanny was really trying to stir it up and was having some effect because all of a sudden then after that Morantz and Plebin started making motions to unseal the file?

A. Either Yanny or Corydon, or Yanny with Corydon, or


Yanny having gotten Corydon to do it, yes.

Q. Is it your understanding that the reason that Hertzberg called Flynn was so as to seek Flynn's assistance not to -- to prevent Yanny from being able to screw up the benefits of the settlement?

A. Essentially.

Q. And when Hertzberg made this call, that was essentially on behalf of all of the Scientology entities that were the beneficiaries of the settlement; right?

A. I couldn't draw that conclusion. CSI was the one who asked him to.

Q. All right. CSI asked Hertzberg to make the call?

A. Yes.

Q. All right. And then CSI subsequently asked Heller to call Gerry directly later on down the line?

A. My recollection is he volunteered.

Q. And CSI didn't object?

A. No.

Q. Now, when the call was made by Lawrence Heller to Gerald Armstrong, one action which preceded said call was the service of a deposition subpoena on Armstrong by Corydon's lawyers; right?

A. Yeah, I guess so.

Q. Okay.

A. That's a long way around that question, though.


Q. Well, some of us --

A. Was it after Gerry was served with the subpoena? Yes.

Q. That's a better way to put it. Thanks.

All right. And at that time there was a recognition, was there not, within CSI that the benefits of the settlement were jeopardized?

A. Hum, the potential existed depending upon the reaction to it. If it was used as an excuse to get on a soapbox and start launching on us, so to speak, yes.

Q. All right.

A. If it wasn't, and if the answers were confined to the questions relevant to the issues legally obligated to answer, then no.

Q. Now, in that same Corydon litigation Homer Schomer was served with a deposition subpoena, too; right?

A. That's correct. I'm glad you bring that up because that was of difference. There was basically three of them, there was Gerry's, there was Laurel Sullivan's and there was Homer's.

(Discussion off the record.)

THE WITNESS: And there are three different circumstances with each.

MR. GREENE: Q. Right.

A. Homer Schomer asked Larry Heller to represent him


so that he could insure of confining his remarks to that which was legally proper, relevant, felt that he would be compelled to answer. His was a viewpoint of open cooperation with us.

We had made peace. He was friendly. We didn't have anybody else to represent him.

Sullivan wasn't friendly, but in my view she just -- she answered the questions. It was not necessarily favorable testimony, no one particularly enjoyed it, but she didn't go out of her way to start a war again.

Gerry handled things differently. His I would put on the other extreme.

Q. So you would characterize Gerry's testimony as that which started a war again?

A. it certainly contributed to it. And also the manner in which he was around to be served with a subpoena, which I believe I covered earlier.

Q. That was basically making himself available; right?

A. Going out of his way to travel from Northern California to Los Angeles and be there at the courthouse and have the other lawyer come and meet him there. And it was beyond that which he would legally be required to do. He was going out of his way to start things. I'm sure he had his reasons for doing so, but that's what occurred.


None of the three, by the way, had really any direct knowledge of Corydon's case, which was the whole point.

Q. Now, so that we're clear, did Gerald travel twice to Los Angeles so as to be available for service of process to testify, or was it once? Did he do so both in Yanny and Corydon?

A. No, no, no. His traveling to Los Angeles was for the Yanny case, I'm sorry.

Q. So you're wrong there; right?

A. I misspoke, yeah.--Thanks.

If that was the subject of his note, he got it right. No, that was the Yanny case; that's correct.

I don't remember how the subpoena got served in Corydon, come to think of it. I mixed the two up. Sorry.

Q. You too?

A. Decidedly so.

Q. All right, now --

A. Because it was part of the same thing, you see. I think it was at the hearing concerning his deposition in the Corydon case that Rick Wing showed up with the Yanny case subpoena. That's why I got the two muddled.

Q. Okay.

A. Sorry.

Q. So insofar as Armstrong's conduct was concerned,


you considered the two instances wherein he was available for service of process to be similar, that he was making himself available?

A. Well, I don't know on Corydon if he was making himself available or not. It was more his reaction to it and his reaction to Laurie's call that indicated that all was not well on the home front. It certainly didn't rise to the level of us running down to the court to sue him.

Q. Right.

A. Which, you know, it took a lot of activity before we finally said, okay, this isn't something we're going to resolve, we've got to enforce.

Q. What is your knowledge of Heller's conversation with Armstrong?

A. Just what Larry told me.

Q. And what was that?

MR. BOWLES: It's attorney-client privilege.


MR. GREENE: Q. So then at that point Larry Heller was acting as counsel for CSI; right?

A. One or more of the settling parties, including CSI, yes.

Q. So that would include CSI, CSC perhaps; right?

A. Perhaps.



A.I'm not certain.


A. I think so, because I think he was in the Corydon case for ASI.

Q. So in that regard you had discussions with Heller pertaining to what was going on with Armstrong; right?

MR. BOWLES: We're not going to get into the content of his conversations with Heller.

THE WITNESS: I think I can safely say that without a problem.

MR. GREENE: Q. Yeah, without --

A. Yes, that's why I'm evoking the privilege.

Q. Now, ultimately Larry Heller's efforts to cool as to Armstrong didn't pan out; right?

A. That's a pretty fair statement.

MR. GREENE: All right. I'd like to mark this next as, I think it's Defendant's 18.

(Defendant's Exhibit No. 18 marked.)

MR. GREENE: Q. Now, when Heller's efforts to cool things out with Armstrong in the Corydon litigation didn't pan out, he moved for protective order; right?

A. He filed a motion on behalf of Author Services Incorporated, yes.

Q. And that's what Exhibit 18 is; correct?

A. Let me finish looking through it. It appears to


be, certainly.

Q. Take your time and look through it.

A. Perhaps you can help me. I see a reference to Homer Schomer's subpoena. I don't see a reference to Gerry's, unless I'm just going totally blind here. I see a reference in the beginning that says certain third party depositions, but I don't see the reference to Gerry.

Q. All right.

A. Maybe you can point me to a particular passage.

Q. All right. Well, let me proceed here. You may be right.

Homer Schomer, as you said he was one of the people who was subpoenaed in the Corydon litigation; right?

A. Yes.

Q. Exhibit 18 actually is a motion for protective orders as to Schomer, not as to Armstrong, you're right, I stand corrected.

A. -- expressed in the plural, motion blah, blah, blah to delay or prevent the taking of certain third party depositions.

Q. Depositions.

A. Plural.

Q. Let's approach it this way.

A. I can only see reference to Schomer.

Q. Okay. The third party depositions that were


involved in the Corydon litigation, as you said, were Sullivan, Armstrong and Schomer?

A. Yes, but I don't know as of the date this was filed which one of -- which one or more of them would have been in play.

Q. All right. CSI's concerns with respect to the depositions of those three individuals was generally the same, wasn't it, namely, all of them had signed settlement agreements; right?

A. Well, our concerns were different depending upon what time we're talking about in the process. I'd say our concerns with respect to Mr. Armstrong's were heightened --

Q. Right.

A. -- and even more so than our concerns with respect to Homer Schomer's --

Q. Right.

A. -- because of the way the two of them reacted to the process.

Q. I understand that.

A. And as regards Laurel Sullivan's --

Q. She was in the middle?

A. -- I think indifference is probably the best description.

Q. What each of those three people had in common was


they had signed settlement agreements in December of '86, at least; right?

A. Yeah.

Q. I'm sorry. One thing that each one of them had in common was that each of them had been signatories in the December '86 settlement agreements with Flynn?

A. That's one of the things. The other thing is that none of them knew buckus about Ben Corydon.

Q. And each one of them had been served in Corydon, right, they also shared that in common?

A. Yes.

Q.. Now, you were aware that Lawrence Heller was seeking a protective order to delay or prevent the taking of third party depositions; right?

A. Certainly.

Q. And you were aware of Mr. Heller's intention to do that before the actual motion was filed and served, weren't you?

A. Yes.

Q. And you were aware of that in the capacity of your post within OSA legal, weren't you?

A. CSI was.

Q. Sorry?

A. CSI was a defendant in the case, as well as Author Services Incorporated.


Q. Okay.

A. The defense team spoke with one another on occasion.

Q. Okay. All right.

A. So, yeah.

Q. Do you recall whether or not CSI joined in the motion brought by Mr. Heller on behalf of Author Services?

A. We may have. I don't remember.

Q. The motion brought by Mr. Heller, however, was with the knowledge and consent of CSI, was it not?

MR. BOWLES: Objection.

THE WITNESS: It certainly was with our knowledge I don't know whether it required our consent.

MR. GREENE: Q. Okay.

A. It was with our knowledge, yes.

Q. Okay. And there was no objection to the motion, was there?

A. No.

Q. Based on your involvement in the pre-settlement planning and negotiation, the two primary attorneys involved were Michael Hertzberg and Lawrence Heller; right?

MR. BOWLES: Asked and answered before.

THE WITNESS: Michael Hertzberg's role was probably paramount because he was the major interface with Michael


Flynn up until the very end. As far as input into the decision making process, I'd say the three lawyers I mentioned before were all, all of them, involved, each on behalf of their respective clients, et cetera.

Q. All right. Now, one of the objectives of the universal settlements was to resolve all Wollersheim like cases; right?

MR. BOWLES: Objection to form. What do you mean by "Wollersheim like cases"?

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

A. I believe you're referring to an analogy expressed in Mr. Heller's papers --

Q. Right, indeed I am.

A. -- at page four, line one. I guess I could read it. And it was probably an accurate description if you take into account the entire description of what is meant by that, the tremendous time and financial burden which litigation of this nature placed not only upon the litigants and their attorneys but the courts involved, as well. So I would say yes.

Q. And Wollersheim like cases refers to where former Scientology staff members or parishioners instituted litigation against Scientology; right?

A. No, not solely, that's too simplistic.

Q. Such characterization would be included, however;


isn't that right?

A. But merely to say yes would be too simplistic. It would change the definition.

The Wollersheim like cases was one of these where you had a stable of professional witnesses, without regard to the merits of a particular case or even the facts, go around try to trash the church from courtroom to courtroom to courtroom. It was one of those types of cases.

Merely somebody having a dispute, filing a suit, the suit gets resolve -- having a dispute, the suit gets filed, the dispute gets resolved, the suit gets resolved, I wouldn't describe as a Wollersheim like case.

And since those two areas of activity are so widely disparate, they're really to the exclusion of each other, they both would fit within what you said. So that's why I can't adopt that characterization.

Q. All right. Now, directing your attention back to the characterization of Gerald Armstrong as a squirrel, included as a basis for such characterization was the assertion that he offered false testimony to the IRS. I'm looking at the third paragraph below the list of names. Right?

A. It says in that paragraph, "Some of these squirrels have offered false testimony to the IRS in order to


protect their overts against mankind and their only way out of this universe."

Q. That's correct. So let me ask you some questions about that paragraph, if I may, as it relates to Gerald Armstrong. Is that all right?

A. Except that I'm not sure as of September 1984 whether he had given such testimony. It does say some of
them. If he had, fine. I'm pretty sure he had, so we can proceed and I'll do the best I can.

Q. All right. Hal Lipkin of the IRS; right?

A. That wouldn't be testimony. It would be, information.

Q. Information?

A. Right.

Q. False testimony here is testimony, to your knowledge, used in the legal sense or in a more generic sense?

A. You got me.

Q. Based on --

A. My guess would be legal, because false testimony implies perjurious conduct rather than merely lies. And I think if it was merely lies, we would have said lies or false statements.

Q. Well, it's your view, is it not, that Armstrong testified falsely in the course of Armstrong One, isn't



A. Yes.

Q. And his declarations contained perjurious lies?

A. Yes. And I'm aware of those going to the IRS, so yes, this paragraph would apply to him.

Q. Now, would you explain to me what your understanding is of the meaning of the phrase "in order to protect their overts against mankind"?

A. Each of these individuals had been in a position of trust with regard to the religion of Scientology.

Gerry had been in a position of trust with regards to the personal archives of the founder of the religion.

Kima, Dee Dee, John Nelson, Laurel Sullivan and David Mayo all had positions of trust, some quite senior to the position Armstrong had.

What this phrase means is that each of these individuals committed harmful acts, an overt is a harmful act, against Scientology in violation of that trust, rather serious harmful acts to wind them up in the position that they were in as of the 20th of September, 1984.

Well, it makes those destructive acts a lot more palatable if one can get the IRS to come down on the church, and that's what's meant by that.

These people were providing false information to


the IRS in order to make less of or destroy that which they had committed serious harmful acts concerning.

Because, otherwise, the severity of their acts if viewed in the cold light of day would have been very difficult for them to face. This made it easier for them to face. In other words, just to give you an example, get in an argument with a guy, you punch him in the mouth, ah, he was a bum anyway, makes it easier than if it was a 70-year-old woman who was hobbling in a cane and you knocked her out.

Q. Right. I think I understand what you mean.

A. All right.

Q. Just like the objectification of something, if you make it a little bit less than human, it's a heck of a lot easier to abuse it; right?

A. That's what I'm talking about. The motivation for that being the harmful acts you have committed against that which you are trying to dehumanize. It's -- the dehumanization is to excuse and make less of the severity of your harmful destructive acts.

Q. Indeed, it's a manner of self-deception; isn't it?

A. Certainly. You could call it that.

Q. It would be like me lying to myself if I'm going to hurt somebody else and I say to -- I come up with some demeaning label that makes that person less than a full


human being, then it's, aw, didn't really hurt them anyway because they weren't really human, something like that?

A. Similar, yes.

Q. Now, directing your attention, still with respect to that paragraph on the phrase "overts against mankind," is it correct to say that since part of the affect of Scientology is the freeing of mankind, that acts that are harmful to Scientology are harmful to mankind?

What my question is, is that what this phrase means, essentially?

A. Why don't you ask me what does this phrase mean?

Q. I'll take your suggestion. What does the phrase "overts against mankind" mean?

A. What it's referring to is the harmful acts that individuals committed were of such severity because of the importance of their positions, some less than others, that it was an overt against mankind, it was a harmful act against mankind.

Q. And the reason that it was a harmful act against mankind is connected with the good that Scientology does for mankind; isn't that right?

A. Of course.

Q. And that's a matter of ultimate ecclesiastical concern; isn't it?

A. Yes.


Q. Now, directing your attention to the last section of that sentence where it says, "Their only road out of this universe."

Could you explain what that means?

A. It is a belief within the church that one can rise to a certain level of spirituality and awareness where one is no longer confined to the laws, trials and tribulations connected with the physical universe. It is our belief that we provide a road out of the trap where the physical universe is.

We're getting into really ecclesiastical matters here, but what this sentence means is that they were committing overts, harmful acts against not only mankind but their own spiritual progress, their own spirituality, their own peace of mind on a cosmic scale, I guess.

Q. So then would it be fair to say they really kind of cut-off like their spiritual nose -- no, that's the wrong way to put it. That by their overts, not only did they hurt Scientology and mankind, but they hurt themselves, too?

A. Without a question.

Q. Now, directing your attention to the -- oh, excuse me, still on this paragraph.

In what litigation had Armstrong filed or submitted written declarations that then went to the IRS?


Actually --

A. Armstrong One.

Q. I'm going to withdraw that. Let me withdraw that.

That's a lousy question.

A. You got an answer to it, though. I gave you the answer.

Q. Let me clean it up.

Earlier you said that declarations executed by Armstrong went to the IRS and therefore that was offering of false testimony which caused Armstrong to fall within the scope of this paragraph that we're discussing.

My question is what declarations, if you can tell me?

A. My recollection is Armstrong One case and Burdon.

(Short recess.)

MR. GREENE: Q. Going back to overts for something, I mean, for a minute, the term overts against mankind, that's overts as used -- this would be the same thing as what's referred to in the Scientology Technical Dictionary as an overt act, wouldn't it be?

A. Let me see the dictionary.

Q. Sure.

MR. BOWLES: Your counsel is handing a copy of a hardbound dictionary to the witness.

This is what, this is a Scientology Technical



MR. GREENE: Yes, it is.

THE WITNESS: I was using definition two, although one and, to a lesser degree three would apply as well.

MR. GREENE: Q. All right. So each one of the definitions set forth in the technical dictionary more or less would apply; right?

A. More or less. I think, though, that number one would probably apply most.

Q. Okay. Would you read the definition into the record, please? All three.

A. Okay. One, "An overt act is not just injuring someone or something, an overt act is an act of omission or commission which does the least good for the least number of dynamics or the most harm to the greatest number of dynamics," and there's a citation for that. You don't want me to read the citations, do you?

Q. No.

A. Two, "An intentionally committed harmful act committed in an effort to resolve a problem," and another citation.

Three, "That thing which you do which you aren't willing to have happen to you," and another citation.

Q. Thank you.

Okay. Directing your attention now to the next


paragraph of Exhibit 15 where in a full sentence it says, "Several of them have misrepresented Scientology practices to the FBI or justice department in a futile attempt to taint the minds of the government and the courts against the Church Scientology."

Based on your knowledge, would conduct that Gerald Armstrong engaged in fall within the scope of the definition of that sentence?

A. Probably.

Q. Okay.

A. Although I think what was being referred to at the time specifically was some specific false testimony some of these others gave which was used in the CSC v. Linberg case by the justice department.

Q. Now, do you know whether or not any of Armstrong's declarations were submitted to the FBI or justice?

A. I don't remember. I think so.

Q. When reference is made in this paragraph to "a futile attempt to taint the minds of the government and the courts against the Church of Scientology," would it be fair to say that inclusive in such efforts were allegations that have commonly come to be known as Scientology's so-called practice of fair game?

A. Are you asking me if such allegations were included within the specific misrepresentations referred to in this



Q. No, I think I"m actually asking you a more general question first.

A. Would you do it again?

MR BOWLES: Rephrase it.

MR. GREENE: Q. Let me rephrase it, try and make it better.

A. Okay.

Q. Would you consider individuals accusing Scientology of practicing something called fair game as being included as an attempt to taint the minds of government and the courts against Scientology?

A. Depends on to whom they made the allegation and when.

Q. If it was made in the course of litigation?

A. Yes.

Q. Now, I believe as Exhibit 16 in front of you -- that's it, okay?

A. Do you need this one anymore?

Q. Yes, we will.

A. All right.

Q. Would you identify Exhibit 16, please.

A. It's a piece of paper with some writing on it purporting to bear a date of 18 October 1967.

Q. And that particular exhibit is -- you've seen that


document before, haven't you?

A. You all have filed it before.

Q. And you've also seen it filed in other litigation, as well?

A. Yes.

Q. And that's what purports to be the fair game policy; right?

A. No.

Q. No?

A. No. There was a specific policy letter called the fair game law that during the brief window of time that the term fair game was used in the church, not as you people define it --

Q. Okay.

A. -- described the fair game doctrine.

Q. This one is entitled penalties for lower conditions; right?

A. That's what it says.

Q. And there is an HCO policy letter of 18 October, 1967; right?

A. It's a document that has those words on it. It's not a policy letter that's church policy or that has been church policy since the '60's, if indeed this particular document ever was.

Q. I understand that. And in that regard I'd like to


direct your attention to Exhibit 17.

A. Yes.

Q. Now, do you recognize Exhibit 17?

A. Yes, I do.

Q. And Exhibit 17 is a single page document that's entitled HCO policy letter of 21 October, 1968; right?

A. Correct.

Q. And that document is entitled cancellation of fair game; correct?

A. That's also correct.

Q. Now, directing your attention to the last paragraph of Exhibit 16, the one that says, "Enemy" -- where it says, "SP order, fair game" -- "may be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist, may be tricked, sued or lied to or destroyed." Now, that's what it says in this document; right?

A. It's what it says in that document, but we're not necessarily talking about the same thing in the cancellation of fair game. There was a specific policy letter called the fair game law and there was another policy letter issued at the same time in 1965 explaining what it was and its genesis. This is not that. This being Exhibit 16.

Q. Well, let's talk about Exhibit 16 a little bit.


Now, the condition that is labeled liability, do you see that?

A. Yes.

Q. Now, liability is a condition that is included within the doctrine of ethics used within Scientology, is it not?

A. Liability is one of the operating conditions described in our ethics system.

Q. Yes.

A. It is not described in the manner in this document.

Q. I'm not asking you that.

A. Which, as I've said, if it ever was -- and I've never been able, by the way, to verify the accuracy of this particular document, but in any event, it would have become a nullity in October of 1968.

Q. That's fine. No. I understand that.

A. Approximately a year before Gerry got involved in Scientology at all, if I remember correctly.

Q. I know. You know, I'm just asking you some questions.

A. Yeah, but you're asking some questions about something that isn't. Why don't you ask me questions about something that is.

This is the sort of nonsense we get in litigation where you take words and try and twist them around with


ancient writings that have nothing whatsoever to do with, one, the fraudulent conveyance at issue in this case, which we still haven't mentioned today, or, two, the litigation involving Gerry Armstrong.

You want to bring out the original documents that described what fair game was during its brief, brief incarnation, all of which occurred prior to Gerry Armstrong's involvement in Scientology, I'd be happy to discuss that with you, and the cancellation, and the reasons for the cancellation.

But I'm not going to have isolated little bits and pieces of paper that neither you, nor I, nor anybody can even verify was authentic 30 years ago when it purports to have been written and have you make statements about my church on the basis of that. I'm just not going to do that.

Q. Okay.

A. So if you want to talk about fair game, since you've used that in such ominous tones throughout the deposition, I'd be more than happy to. This is not that.

So I don't know what you want.

Q. To ask you another question.

A. Okay.

Q. All right. My next question for you is that within the doctrine of Scientology ethics, isn't it true that


there's a condition that's known as treason?

A. There are conditions of treason, doubt, enemy, liability and several others. This is not the formula one applies in order to deal with those conditions.

Q. I'm not not asking you that.

A. It just isn't.

No what you're-saying-is--- it's just a false syllogism. You're asking me A, B, C and D and then jumping to Z as the conclusion.

Q. Okay.

A. Yes, these are ethic conditions. Yes, there was at one time a doctrine called fair game. Yes, there is such a thing as an suppressive person disclaimer. That doesn't make this church policy.

Q. Okay.

A. It's just lawyer word games on your part. And we can play them all day if you want. It's just going to make the court reporter tired.

Q. Well, I appreciate that this is an item that makes you feel defensive.

A. I don't feel defensive at all, Ford. I just don't want you to waste your time trying to construct a house of cards that evaporates at the first -- actually, the sensible question is, is this or has this at any time in the last 20 years been a policy of the Church of


Scientology. The answer to which is no, then it doesn't allow you to build your little house of cards.

Q. Let me ask you this, Mr. Farny, to your knowledge was Exhibit 16 ever submitted in evidence in Armstrong One?

A. Probably. One of his favorite things.

Q. Okay.

A. Doesn't make it real.

Q. Now, the initials SP, those initials refer to a suppressive person; isn't that right?

A. I don't know what they refer to here. I've heard them used and they're generally used in that manner, yes.

Q. Now, directing your attention to Exhibit 17.

A. Um-hum.

Q. Okay. Where SP is used at the end of the last sentence.

A. Yes.

Q. The use of SP there refers to suppressive person, does it not?

A. It does, but you -- I know where you're going with this. You say this policy letter does not cancel any policy on the treatment or handling of an SP, so you get magical and you whip out this penalty for lower conditions and you say, aha, this is the treatment and handling of an SP, it was never cancelled, ergo, you guys are bad people.


It's nonsense. That isn't how it goes.

Q. Right. And it makes you angry, doesn't it?

A. It makes me angry to see you constantly try and use this tactic, which you tried in the Azoran case and you try here and he tried in Armstrong One, to take advantage and use as a litigation ploy. It's built on lies.

Q. Right.

A. It's nonsense and you know it.

Q. That's right. And it's all false, right, Scientology has never had anything that is like what Exhibit 16 purports to be?

A. Certainly not in my experience.

Q. Right. Okay.

And isn't it true that part of the reason why you believe Gerald Armstrong to be a suppressive person is because he has asserted that Scientology practices fair game within the meaning of Exhibit 16?

A. Me personally?

Q. Yeah.

A. No. He tried to destroy the reputation of the greatest man who ever walked the face of this earth, that makes him a suppressive person. The rest is just litigation games, as far as I'm concerned.

Q. And then in the view of CSI, the reason that Armstrong sought to destroy the representation of L. Ron


Hubbard was because Armstrong really couldn't cut the mustard so far as Scientology is concerned; isn't that right?

A. Armstrong was an incompetent researcher. He got to the first --

(Discussion off the record.)

THE WITNESS: Armstrong was an incompetent researcher. He had no idea what he was doing. He gets to the first hurdle and gives up. And rather than actually putting his nose to the grindstone and pulling the string the entire way and finding out what the truth is, he left, and then he realized what he did. And his only hope of keeping his sanity was to try and destroy that which he had abandoned.

MR. GREENE: Q. Right. And that which he had abandoned was allegiance to L. Ron Hubbard; right?

A. That, and a set of operating principles and philosophies and a way of living his life and the spiritual progress one can make in Scientology, certainly.

Q. Right. He abandoned the technology; right?

A. Certainly did.

Q. And that was his only path out of the constraints of this physical universe; isn't that right?

A. If he wants to abandon that path, that's between him and his progress as a spiritual being, that's a


decision that's entirely his own to make. If he chooses not to believe that Scientology is that path, that's his decision to make.

What is wrong is to pervert that which he was entrusted, which to try and reap financial gain in order to excuse the fact that he cannot come to grips with the fact that he has abandoned that. If he doesn't want to be a Scientologist, I could care not a wit, I don't even really care.

Q. All right. All right. What he does which is wrong is that he can't stomach not being a Scientologist and be accountable for that all by himself and he has to take it out by painting Scientology with a black brush; isn't that right?

A. If that's where he's operating from, his solution is pretty obvious. I won't make that characterization. In my view, probably, but that's something only he can answer.

Q. But that's your opinion of Armstrong, isn't it?

A. My opinion is irrelevant.

Q. That's CSI's opinion, isn't it?

A. CSI is a corporation. It doesn't have an opinion.

Q. Well, CSI issues squirrel declares, doesn't it?

A. No. CSI issues suppressive person declares.

Q. But it also issued the squirrel order that's


Exhibit 15, didn't it?

A. Certainly, it did. Certainly, it did. We already covered that.

Q. That's right. And that's what I'm asking you about, Mr. Farny.

A. Ask me a question about that.

Q. I did.

A. Okay. And what is your question?

Q. And my question is, isn't it true that in CSI's view what's wrong with Armstrong is that he did not have and does not have this spiritual wherewithal to cut the mustard according to Scientology technology and therefore has got to basically discredit Scientology in order to keep his own sanity?

A. I don't think that's CSI's view necessarily. It's his conduct that CSI objects to. His making of an agreement in good faith on both sides and then keeping the money and violating that agreement, and while at the same time making himself judgment proof. Those are the parameters of the current dispute.

Whether or not what you said correctly represents his state of mind or my personal opinion about his state of mind really doesn't matter in the litigation.

What matters in the litigation is the specific conduct that violated the terms of the agreement, and that


he sought to make himself judgment proof concerning, that are at issue in both of cases. That's the only parameters of the dispute, you see.

Q. My question to you is whether or not the view that I expressed is that which CSI holds towards Gerald Armstrong, that's the question.

A. I don't know that the corporation necessarily holds that view. I can't speak for the other officers and directors what view they hold. I just -- it's not a question.

Q. It is a question.

A. He seems to be -- well, it is a question, but it's just not a question that can be answered.

Q. It's not a question that you're willing to answer?

MR. BOWLES: He didn't say that. He said --

THE WITNESS: No, not necessarily. I'd be willing to answer it.

MR. GREENE: Q. Would you answer the question, please.

A. Yes. As phrased, no, that isn't our view. No. As phrased what I described as the specific conduct on his part that's at issue in the litigation is probably the only view that CSI as a corporation has because that's the view we've expressed through our communications filed in the lawsuit.


Q. CSI's view towards Armstrong is not restricted only to matters which have been expressed in the course of the lawsuit, though; isn't that right?

A. No, we've expressed views in terms of the media.

Q. And you've expressed views in terms of your own in-house communications, haven't you?

A. Well, certainly, this exhibit here is one such.

MR. BOWLES: You're referring to which --

THE WITNESS: The 1984 document, but the view in 1984 isn't necessarily the view in 1994.

MR. GREENE: Q. Well, let me ask you this, Mr. Farny. Gerald Armstrong's overts have not gotten any better from 1984 to 1994, have they?

MR. BOWLES: Objection, vague. Have overts gotten better? Can you explain what you're talking about?

THE WITNESS: His ability to do harm is less now because he has an audience.

MR. GREENE: Q. He may have less of an audience, but his motivations are just as evil as they were before; is that right?

A. I can't speak for his motivations. I've read his declarations. I can't speak for his motivations.

Q. And his declarations, in your view, are saturated with falsehood; isn't that right?

A. They contain falsehoods.


Q. There's a lot of falsehood; right?

A. Sure.

Q. And that falsehood directly attacks Scientology, does it not?

A. All of the falsehoods probably fall into that category, yeah. We're not talking about General Motors here.

Q. No, we're talking about the Scientology organization.

A. Yes.

Q. CSI doesn't like that; isn't that right?

A. How can a corporation like or not like something?

Come on man. What we have --

Q. Don't play games with me, Mr. Farny.

A. Is that a question, sir?

MR. BOWLES: Wait a minute, objection. This is getting to be badgering. Philosophical.

MR. BENZ: Sustained. If you have a question, ask it.

MR. BOWLES: Let's get down to some facts here, Mr. Greene.


Q. Part of CSI's corporate purpose is to protect the

purity of Scientology technology, is it not?

A. Sounds more like a description of Religious


Technology center's purpose but that is among one of the things we do, yes.

Q. All right. And included within the scope of doing so is addressing false reports regarding Scientology; isn't that true?

A. Sure.

Q. And false reports have originated from Gerald Armstrong; isn't that right?

A. Yes.

Q. And part of what CSI's corporate purpose is is to rectify those false reports that have come from Armstrong about Scientology; isn't that right?

A. It would be such a small area of activity, but no one else would be doing it.

Q. That's what part of the purpose of the lawsuit is; isn't it?

A. This one that we're in? The purpose of the lawsuit that we're in here is to freeze the fraudulent conveyances so when we win in L.A. we can collect them.

Q. The purpose of the lawsuit in L.A. is that; is that right?

A. No. The purpose of the lawsuit in L.A. is to gain back that which we bargained for and paid dearly for in 1986.

Q. And what you bargained for and paid dearly for in


1986 was the ability to stop false reports coming from Armstrong; isn't that right?

A. That was certainly one of the things, yes. Do you have an objection to the truth?

Q. Of course not.

MR. BOWLES: Next question. Next question.

MR. GREENE: Tell your witness.

MR. BOWLES: I'm telling you, Mr. Greene. Don't get into arguments with the witness. Just ask the next question.

MR. GREENE: I'm not getting into arguments --

MR. BOWLES: Yes, you are.

MR. GREENE: -- Mr. Bowles. And thank you very much for your comments.

Q. Now, directing your attention back to Exhibit 15 --

A. Fifteen.

Q. -- and looking at the last paragraph on page one.

A. "Therefore, be it known"?

Q. Oops, I'm sorry. Looking at the paragraph that starts, "They have turned."

A. Yes.

Q. Okay. Would you read that paragraph into the record, please.

A. "They have turned from ethical and moral Scientology principles by demanding no ethics be applied


to them or by them."

Q. According to your knowledge, did Gerald Armstrong fall within the scope of this paragraph?

A. I don't know.

Q. Armstrong had turned from Scientology; right?

A. Well, certainly that part.

Q. And he had rejected Scientology's ethics, hadn't he?

A. Certainly.

Q. And he had rejected Scientology's moral principles as well, hadn't he?

A. That was obvious. Certainly.

Q. And he basically had said, I don't want any of this stuff applied on me, didn't he?

A. I suppose so. I just couldn't think of a specific instance that came to mind that would fit within that paragraph but, yes, I would suppose so.

Q. And at least Armstrong's statements with respect to the past credentials and accomplishments of L. Ron Hubbard would fall within the scope of this paragraph, wouldn't it?

A. I think it falls within the next paragraph more

than this one.

Q. But it falls within this one as well, doesn't it?

A. I don't know. If you think so, fine.


Q. Well, I'm not answering the questions.

A. I didn't write this. The document is over 10 years old. I don't know. I would guess it would seem so.

Q. At the time this document was originated, who was the commanding officer of OSA International?

A. Mike Sutter.

(Short recess.)

MR. GREENE: Q. Now, directing your attention to the settlement agreement --

MR. BOWLES: Do you have it in as an exhibit?

THE WITNESS: I don't remember.

MR. GREENE: Q. What I'd like to do, Mr. Farny, what I was going to say -- ask you whether or not this is all right with you, I want to ask you questions about the meaning of people adverse to or aligned against Scientology.

A. It would help if I had a copy of the agreement in front of me --

Q. Okay. We'll, get a copy then.

A. -- not necessarily as an exhibit but just to refresh.

Q. Okay, that's fine.

(Off the record.)

MR. GREENE: Q. Looking at 7-G on 10.

A. 7-G.


Q. Okay. Now, the first sentence wherein it states, "Plaintiff agrees that he will not voluntarily assist or cooperate with any person adverse to Scientology in any proceeding against any of the Scientology organizations, individuals or entities listed in paragraph one above."

A. Okay.

Q. All right. Now --

MR. BOWLES: Excuse me, just for the record, I understood that you already went through all this before on prior days; is that right?

MR. GREENE: You understand wrong.

THE WITNESS: I'm sorry, Tim, that's not right.

MR. BOWLES: Okay. Proceed.

MR. GREENE: Q. Now, the meaning of the terms "Any person, adverse to Scientology," was it the intent of CSI to include within the scope of that someone who was not in agreement with Scientology's aims?

A. That as its only criteria in a vacuum?

Q. Whether that was one of the criteria.

A. That's -- it makes it too vague to answer. I can answer it the other way.

Q. What's your other way?

A. If that is -- if that is the only criteria that they just don't happen to agree with us, no, it would not fit.


Q. All right.

A. The way it would fit is expressed in the first sentence of paragraph G is, "Any person who is either a plaintiff or defendant or intending to become one," like in actively proceed toward becoming one in litigation or arbitration.

Q. Then why didn't you just plainly state that in this agreement?

MR. BOWLES: Objection, calls for a legal conclusion.

MR. GREENE: No, it doesn't.

MR. BOWLES: Sure it does. He's asking this man why or why not --

THE WITNESS: That's what it says.

MR. BOWLES: -- a legal agreement was written the way it was written.

THE WITNESS: It says, "Any person adverse to Scientology in any proceedings against any of the Scientology organizations."

MR. BENZ: I'm going to sustain the objection.

MR. GREENE: On interpreting what the intent of the parties is with respect to one of the central provisions of the agreement.

MR. BENZ: I have no objection to that question on the intent, but you're not asking intent, you're asking


the witness why he didn't put some language in there. I'm not certain that he was the only author of this. And it is a document that apparently was drafted in collaboration and is an end to litigation. And so why someone didn't do something else I don't believe is an appropriate question.

You can certainly ask what the meaning was.


Q. Now, in your view, for example in the Corydon litigation where Armstrong testified as a witness, he was adverse to Scientology, was he not?

A: He being Corydon?

Q. Armstrong.

A. He was, but not within the meaning expressed in this first sentence of paragraph 7-G.

Q. So what you're telling me is that the intent of 7-G was that no person -- that Armstrong should not cooperate with any person who was a party to litigation with Scientology; is that right?

MR. BOWLES: He's already testified to something else, Mr. Greene, so don't put words in his mouth.

MR. GREENE: I'm asking him a direct question, Mr. Bowles. That's hardly --

MR. BOWLES: You're already asked and answered it.

You've already got an answer to that question.

THE WITNESS: Well, generally, however, since you


posited that hypothetical I could think of an instance where it could apply more broadly, such as if you have someone like Margaret Singer who for a short time made her living testifying in certain Scientology cases, were he to actively assist her to do so, I think it would actually fit within the parameters of this. Although it is largely intended to cover plaintiffs and defendants -- future plaintiffs and defendants, those who are proceedings in that direction.

MR. GREENE: Q. However, it's not strictly limited to that, was it?

A. It would cover the other circumstance. As -- now, assistance then in that circumstance requires amendment because it's not -- if he changes Margaret Singer's flat tire on the road, that would not violate the settlement agreement, but that would be assistance.

If he were to provide her with materials and aid to further her testimony, hypothetically, that would have.

So in that circumstance, assistance would need to be modified.

Q: So in that circumstance assistance would be such activities as would be specific to the provision of information that Armstrong derived in connection with his experience in Scientology; right?

A. I don't know where he would necessarily have


derived it from. It also encompasses acts which aid the person in the proceeding against Scientology, as is modified later in the sentence.

Q. So the point is, though, however, with respect to paragraph 7-G is that the intent of that paragraph is not strictly limited to precluding Armstrong from assisting thosewho are parties to litigation with Scientology; is that right?

A. No, it is not that limited. It goes a little broader than that.

Q. And whether or not someone is adverse depends on the extent of their anti-Scientology activities; right?

A. Well, this paragraph specifically concerns proceedings against, so it would have to be in that context in this --

Q. That's fine.

A. Yes.

Q. Assume that context and then answer my question.

A. So in that context the answer is yes.

Q. Now, if an individual were critical of Scientology practices, would that person be adverse?

A. Well, they could or they couldn't be. I mean, they would, I think, view themselves as being adverse, but adverse as it applies to this paragraph, I don't know because it requires other factors.


Q. Okay. I'm asking you as a general proposition. A. We're talking about this paragraph. I don't want to take a general proposition try and shoehorn it into this paragraph when it has clearly a different definition in this paragraph than it would as a general proposition because "any person adverse to Scientology" is modified by "in any proceedings against any of the Scientology organizations," blah, blah, blah.

Q. So let's assume, as we did before, the existence of a proceeding. And is a person who is critical of Scientology considered to be adverse thereto?

A. Are they a party --

MR. BOWLES: Objection.

THE WITNESS: -- opposing Scientology in the litigation?

MR. GREENE: Q. Not necessarily.

MR. BOWLES: The question is too vague, Mr. Greene, to form an intelligent answer.

THE WITNESS: It would require additional factors.

I think what you're asking me is would they fit within paragraph G of the first sentence. It would require additional factors to be able to determine that.

MR. GREENE: Q. And what additional factors would it require to determine that?

A. They would have to be taking some act, either as a


hostile reporter, and then there would be the provision concerning media, or as a party to the litigation, or even as an expert witness to the litigation on the side opposing whatever Scientology organization was, by way of examples.

See, it's difficult to deal with this in a hypothetical. It's more easily dealt with in the concrete. And it's also more easily dealt with, if I may say, from the conceptual viewpoint of separating one's self from having anything to do with Scientology whatsoever. Then the hair-splitting and the walking the edge of the line just don't come into play because the subject of aiding an adverse litigant just doesn't come up, or, gee, does it count if I help this witness but not the plaintiff, is that really helping the plaintiff. That kind of hair-splitting just doesn't come into play. So it's more easily interpreting within the overall spirit of what this was intended to be to begin with.

Q. Which was to prevent Armstrong from being involved in any kind of litigation having to do with Scientology, in part; right?

A. As regards any acts that occurred from that point to the beginning of time.

Q. Right. And to prevent Armstrong from participating in any kind of public discourse or debate with respect to


the conduct or beliefs of Scientology; right?

A. Unless compelled to do so by lawful process.

Q. Now, in your view, does the word cooperate mean respond to a request for help?

A. Depends on what the request is to do.

Q. Why? I mean, what are you talking about --

A. Why?

Q. -- it depends on what a request is to do?

A. Because you're using cooperate as it's used in paragraph 7-G.

Q. I didn't talk about paragraph 7-G, Mr. Farny.

A. That's just on the second line here, the third word in.

Q. I didn't talk about that paragraph.

A. So purely in the hypothetical --

Q. I asked you --

A. -- does the word cooperate --

Q. --to you.

A. -- apply to an offer of help --

Q. Yeah.

A. -- not in terms of draftsmanship of specific contractual provision?

Q. I'm just asking you what your understanding of cooperate is.

A. So we're divorcing this question from any


application to any drafting or draft or construction of contractual provisions.

Q. We're not doing anything. I'm asking you a question.

A. And I can't answer it unless you define it because I'm not going to have a general definition shoe horned in to a word that is used with precision in this subparagraph in a slightly different manner. Just as you're not going to do that, I'm not going to allow you to play word games because we'll get an incorrect record here. It will be misleading, and you wouldn't want that.

MR. BOWLES: Why don't we get on to some concrete questions, Mr. Greene.

MR. GREENE: You've got concrete questions and a whole lot of speeches by your client, Mr. Bowles.

MR. BOWLES: Well, don't argue, just ask the next question and get on with the litigation.

MR. GREENE: I am. I definitely am.

MR. BOWLES: I disagree.

MR. GREENE: I know you disagree generally and that's your problem.

Q. Mr. Farny --

MR. WALTON: If you have an objection, why don't you make your objection and let's have a rule on it instead of pitter-patter.


MR. BOWLES: Is that your objection?

MR. WALTON: What's the objection?

MR. BOWLES: Objection, no question pending.

MR. GREENE: Q. In your view does the word cooperate presuppose a request for help?

A. Not necessarily.

Q. Mr. Farny, the last sentence of paragraph G does not restrict plaintiff with respect only to litigation, does it?

A. Plaintiff as it's used here in the settlement agreement?

Q. Yes.

A. No, that's not restricted to litigation.

Q. Right.

A. But it is restricted to organizations aligned against Scientology.

Q. Right. Now, if an organization were critical of any practice of Scientology, would such organization be considered to be aligned against Scientology?

A. Not necessarily.

Q. Okay.

A. Aligned against means they have declared themselves to be on the opposite side, opposed to, seeking to destroy.

Q. Okay. Then so if they -- if an organization


declares itself to be opposed to Scientology openly and vociferously, that means that it seeks Scientology's demise, is that what you mean?

A. That's one interpretation of it, sure. I was explaining in expansive terms here that we're not just talking about some mild ill will, we're talking organizations aligned against Scientology.

Q. Would you give me an example of what you would consider to be mild ill will.

A. Excuse me?

Q: Would you give me an example of what you would consider to be mild ill will.

A. Perhaps a reporter that has been fed lies and things and comes to an interview with a negative view but responds to the truth, comes away with an objective view, that sort of thing.

Q. If an organization has not declared itself opposed to Scientology, would you consider such organization not to be aligned against Scientology?

A. Unless by their conduct they have performed an act which is the equivalent of such an open declaration, obviously.

Q. And would the performance of such an act as in your view would bring an organization into the scope of the language of it being aligned against Scientology be


included in the definitions of what is suppressive organizations?

A. Probably.

Q. In the way the term organizations is used in paragraph 7-G, is it required that such organization be formally established?

MR. BOWLES: Are you talking about the last sentence as -- were you talking about the last sentence, Ford, just to clarify?


Q. Do you have the question in mind, Mr. Farny?

A. I have the question in mind, I'm looking at the sentence. The sentence doesn't seem to express such a requirement.

Q. Was it your intent in the manner in which you participated in the creation of this document to not require the definition of organization to necessarily apply to something that's formally organized?

A. I intended it to apply to corporations, unincorporated associations, partnerships, companies, and to a large degree, to some degree, certain governmental agencies of different -- different countries, which have from time to time acted in this manner.

Q. Was there some reason why you decided not to spell that out?


A. This was the wording that was arrived at among the group involved in compiling the papers.

Q. Did you make any recommendation that the specific organizations that were considered to be aligned against Scientology be spelled out?

A. I don't remember precisely. My recollection is that we didn't want to limit it in that manner and we wanted it to be as clear and comprehensive as possible.

Q. And with respect to the desire for the terms of the agreement to be as clear and as comprehensive as possible, was that also part of the basis why the language was picked otherwise in paragraph G of the prior sentence about non-cooperation with any person adverse to Scientology?

A. In any proceeding. I mean, that's got to have the rest of the sentence there.

That was felt to encompass that which needed to be encompassed with sufficient clarity and as clearly as it could be expressed at that time.

Q. And with as broad a scope as possible; right?

A. Well, what we wanted to do is express in writing that which we were at that time in the process of coming to an agreement on, which was a cessation of participation on Gerry's part in the litigation wars as they were ongoing at the time and the attendant fallout activity



So an effort was made to construct a document which defined terms so that it would be perfectly clear what that agreement was, you see.

Q. And that would be sufficiently broad so as to encompass as many situations as possible, some of which you recognized you probably could not foresee?

A. Well, that was the difficulty, is that we didn't want it to be susceptible to hair-splitting which would circumvent the intention of the agreement. And the breadth allows for a sufficient degree of comfort so that it wouldn't be that hair-splitting, or at least so we thought at the time.

Q. And as to paragraph 7- G that particular objective was communicated at the outset to Flynn when serious settlement negotiations commenced in the summer of '86; right?

A. I believe my testimony is either there or shortly thereafter, it certainly was an important consideration from as close to the get go as my recollection allows it to be.

Q. And the same objective is true with respect to paragraph 7-H where plaintiff agrees not to testify or otherwise participate in any judicial, administrative or legislative proceeding adverse to Scientology?


A. You mean, the same intention to make it sufficiently clear and sufficiently broad so as to correctly reflect that he's getting out of the business, quote unquote.

Q. Communicated to Flynn at the onset or shortly thereafter of settlement negotiations in the summer of 1986?

A. Yes, I believe so.

Q. Said to Flynn, we don't want your people testifying against us anymore; right?

A. Right, within the confines that we are able to, you know, to agree to something like that. I mean, the courts have their own say in it and if a court orders somebody to testify, of course they have to testify. But insofar as the career that they all embarked on of being professional witnesses against the church without regard to the facts of the case, yes, we wanted them to seek another career that did not involve being professional witnesses against Scientology --

Q. Okay.

A. -- because they didn't have anything to contribute to the immediate dispute at hand, they had bigotry and prejudice to spread from eons past, as it were.

Q. And it infuriated Scientology that the courts listened to that, didn't it?


A. It infuriated us that some courts listened to it. Fortunately some others did not.

Q. Right, okay. And the individuals you were making reference to was Sullivan; right?

A. She was one of them, certainly.

Q. And Walters?

A. Yes.

Q. Schomer?

A. To a lesser degree, but yes.

Q. Armstrong?

A. Yes.

Q. Douglas, Kima and Michael?

A. Not so much, but they happened to be represented by him.

Q. And Nancy Dincalci?

A. That's correct, she was represented by Flynn.

Q. Peter Graves?

A. Yes, although he didn't come up as much in other cases as some of the others.

For some of his clients, they weren't active participants in this dog and pony show. But we wanted as clean a break as possible so as that they wouldn't want to become active participants in the dog and pony show.

So I don't recall Peter coming up in much of anything other than the litigation he was involved in in



Q. Cazares came up in that regard, though; right?

A. Yeah. He still does.

Q. And Wakefield, as well?

A. Yeah. To a limited degree, certainly.

Q. And Burdon to a greater degree; right?

A. Yes.

Q. And McLean also?

A. Yes.

Q. Now, at the outset or shortly thereafter of the settlement negotiations with Michael-Flynn in the summer of '86, was the objective communicated to Flynn that Scientology did not want any of the members of his dog and pony show to go into some jurisdiction so as to make themselves able to be served and then consequently compelled to testify?

A. I don't know if that was right at the outset or not. What was expressed at the outset was we wanted them to make a clean break.

As it got refined, the various particular expresses for it came. And that concept entered in somewhere along the path that, all right, they've made a clean break, they would, of course, have to be subpoenaed. However, but we don't want them going out of their way traveling into jurisdictions to be subpoenaed because that defeats the


clean break concept. So how do we come up with some language that expresses that?

So the answer to your question is somewhere along the process that was definitely brought up.

Q. Do you recall whether along the sequence of the process when that concept was brought up, was it the beginning, middle or end?

A. The general concept at the beginning, getting towards more the particular expressions more towards the middle, but are closer to the beginning, I think.

Q. And it was your understanding that Flynn was, in turn, conveying this idea of non-amenability to service of process to his clients; right?

A. That was my understanding at the time, yes.

Q. And it was your understanding as well with respect to the other contents of 7-H about not agreeing to testify in any judicial, legislative or administrative proceeding unless subpoenaed; right?

A. Yes.

Q. And also that Flynn was communicating the 7-G provisions with respect to non-assistance to his clients, as well; right?

A. Yes. It was my understanding that he was communicating all of these provisions to his clients.

Q. Was it your understanding that Flynn ever came back


and said with respect to any of them, no way, my clients won't do it?

A. The only thing I recall is he came back and said Gerry would have a hard time with we can say whatever is needful and he can't say anything. And that was the subject of some serious discussion towards the latter few weeks.

Q. Now, in that regard, what you are making reference to is the notion that Scientology related organizations would be free to characterize Armstrong according to the truth and Armstrong would not be free to so respond to whatever such characterization might be; right?

A. Certainly. Because of the amount and degree that his statements had gone out there and the need for communicating on that, you know, so yes.

Q. And therefore the -- according to CSI the confidentiality provisions were not mutual; right?

A. Not all of them. Some of them were mutual as to the terms of the agreement, as to any amounts of money that exchanged hands and such. But in terms of Gerry not speaking of Gerry's experiences in Scientology, that last term was not mutual. We could speak of Gerry and his experience with Scientology. And that was important at the time, considering the use to which his statements had been made.


Q. And when you say the use, that's the use in various litigation, Department of Justice, IRS, et cetera?

A. And media and civil cases, and et cetera.

Q. Now, the intent with respect to 7-I was that those provisions were mutual; right?

A. Except as modified by the lack of restriction on our part on making statements, because most of the statements that were out and about that other people were using concerned past activity, so we could say that.

What this meant to define is what would be at issue in any future proceedings. What would be relevant and at issue which would be just post settlement conduct.

Q. Okay. So the --

A. That is all that is at issue here is, I mumbled it, is the post settlement conduct.

Q. When you say all that is at issue here, you're talking about the current litigation brought by CSI against Armstrong; right?

A. That's right.

Q. Now --

MR. BOWLES: Mr. Greene, we've been going for over an hour and I notice the court reporter is getting tired.

(Short recess.)

MR. GREENE: Q. Mr. Farny, with respect to the settlement agreement, part of the intention of that


settlement agreement was to dispose of Armstrong's pending cross-complaint against CSC; right?

A. Against CSC and others, yes.

Q. And others, okay.

And Armstrong's cross-complaint was set for trial sometime within the first two months of 1987, wasn't it?

A. I think so.

Q. And the scope of the settlement agreement included matters which pertained to the cross-complaint; right?

A. Yes.

Q. Now, for a moment I want to go back to Gabrielle Cazares.

He was the former mayor of Clearwater, Florida; right?

A. Yes.

Q. And his claim against Scientology was in connection with Scientology setting him up with a lawyer that they actually controlled, wasn't it?

MR. BOWLES: Objection, relevance. Again, Mr. Benz, we are going far afield here with other litigants, other circumstances that do not concern this case.

MR. BENZ: At this point I would agree. What's --

MR. GREENE: I'll withdraw the question.

MR. BENZ: All right.

MR. GREENE: All right.


Q. Now, directing your attention -- hold on, actually, before I do that.

Going back for a moment to the Corydon litigation and to the motion for protective order brought by Lawrence Heller.

A. All right.

Q. It was in the course of that litigation wherein Armstrong was served with the civil subpoena to testify in the Yanny trial; right?

A. It was at a hearing held in the Corydon case which I believed concerned, in part, Gerry's deposition.

Q. And that hearing, in fact, had to do with the motion for protective order. This was the hearing on that motion, wasn't it?

A. I think so.

Q. And you were present; right?

A. Yes.

Q. And you were present on CSI's behalf; right?

A. Yes.

Q. Does CSI have any objection to Michael Flynn representing Armstrong adverse to CSI?

A. I don't know. It would depend on the circumstances.

Q. Would the circumstances that it depend on be that you go back and talk to your superiors and they tell you


what to say?

A. Of course not. That was a stupid question.

Q. Now, directing your attention back to Exhibit 15, and looking at the fifth paragraph under the list of names on page one, would you read that paragraph into the record.

A. "They have supported psychiatric aims and principles over Scientology principles in their misrepresentations to Department of Justice representatives, as well as Boston lawyer Michael Flyyn."

Q. Now, would it be fair to say that included in the scope of the assertion that you just read would be the claim that Scientology was psychologically harmful to some people?

A. I don't know what the author of this intended by that.

Q. What's your understanding of it?

A. I don't have any understanding beyond what's written on the page.

Q. Your understanding is, however, though, that that paragraph applied to Gerald Armstrong; right?

A. I don't know, actually. I don't remember.

Q. All right. Now, directing your attention to the paragraph that starts, "Several of them have spoken out."

A. Yes.


Q. Okay. Would you read that paragraph into the record.

A."Several of them have spoken out against Scientologists in good standing to the IRS in a hope that they might escape from their own destructive acts and shift attention from themselves and their crimes."

Q. Okay. Now, Armstrong fell within the scope of that paragraph; right?

A. Certainly.

Q. And how was it that he sought to escape from his own destructive acts and s hift attention from himself and his crimes?

A. Didn't I cover this in detail when I was talking about overts and overts against mankind and their only road out of this universe as set forth in the third paragraph?

Q. Okay, then, so what you're saying then is that this paragraph that we're talking about here, the one that starts with "several of them have spoken out" is another way of describing what is set forth in the paragraph that mentions the overts; is that right?

A. I think they express similar enough concepts that I wouldn't be able to separate them apart as I sit here.

Q. The next paragraph which states, "They have altered and assisted in the alteration of tech in an attempt to


seal off the bridge to those who have fallen prey to their destructive intentions."

That applies to Armstrong; right?

A. As I said earlier in the deposition, I'm not

certain how much active squirreling he was involved in. This, of course, directly applies to Mayo and Vogerdeen and Nelson because of their activities at the Advanced Ability Center.

I'm not certain as I sit here that I can recall anything specifically by Armstrong that would fit in this one.

Q. So then any squirreling in the sense of offering Scientology technology to other people in an unauthorized manner, such assertions do not apply to Armstrong as a general matter, do they?

A. I didn't say that.

Q. Okay.

A. I just said I wasn't aware, I didn't remember now the circumstances in September of '84 whether that would fit with him.

Q. Okay.

A. If you're asking me now am I aware of him doing that, I don't think so. I don't think he is. He's just, from what I know, gone either farther -- I've lost the word -- apart from what would be Scientological


principles. You know, he's -- I've seen a letter from him with either Buddism or yoga type concepts in it. So I actually don't think he's involved in this at the present.

I don't know if I'm wrong or not.

Q. So if I understand what you just said Armstrong's adoption of Buddism precepts takes him even further away from Scientology than he was before, is that what you meant to say?

A. It's a different subject matter. It's not

squirreling of Scientology, which this is referring to, it's just a different subject matter. Roman Catholicism, Hinduism, Judism, it's just a different subject matter.

And he's entitled to pursue whichever religion he believes in. I wouldn't call it squirreling because it's not an alternation of Scientology.

Q. Correct. Squirreling is a term of art that, at least in part is intended to describe those who, without authorization utilize Scientology technology; right?

A. Alter it or attempt to pervert it in some way.

Q. Or attempt to make money off it; right?

A. Yeah. We covered this in the first or second day.

Q. The answer to that is yes?

A. No. The answer is we covered it earlier. We went round and round there for about ten minutes at a time, as well. Squirreling is the alteration and/or attempted


rip-off of Scientologist's technology.

Q. Armstrong at this point is not permitted to follow Scientology, though; right?

A. I don't know what you mean by follow Scientology.

Q. Well, he's not allowed to take any Scientology courses; right?

A. From a church or mission of Scientology, that's correct, because he's not in good standing with the church.

Q. Now, directing your attention to the paragraph that starts, "Their continued harmful acts," would you read that in the record, please.

A. "Their continued harmful acts to themselves and their continued desire to drive others to the level of beasts and animals devoid of spiritual qualities places them in the psychiatric camp of those who manufacture madness for profit."

Q. What is your understanding of what this paragraph means?

A. I don't have one other than what's written here.

Q. Now, would you read the next paragraph into the record also.

A. "Therefore, be it known that these acts of spiritual destruction and cries for no ethics, no morals and no policy have separated them from the body of the


ethical and practicing Scientologists of this planet."

Q. Would it be fair to say that the paragraph that you just read drew a strict line whereby the persons who were the subject of this directive were placed on one side and Scientologists on the other?

A. No. I would say it reiterated a circle that it had drawn --

Q. Okay.

A. -- with them on the outside of the group that they had renounced and sought to destroy. Of course they were on the outside of that group. They were no longer part of it. They had renounced it. They had taken acts seeking to destroy it. So of course they weren't part of it anymore.

Q. Directing your attention to the bylaws of this Exhibit 3.

A. Yes.

Q. Okay. And looking at Bates stamp page 17.

A. Yes.

Q. And if you would take a couple moments and read to yourself the Scientology creed.

MR. BENZ: Where are we on this?


MR. GREENE: Bates stamp 17, which is --

THE WITNESS: Page six.


MR. GREENE: -- page six.

THE WITNESS: All right.

MR. GREENE: Q. Directing your attention to 19 and that section there where it says, "And we of the church believe that the laws of God forbid man to destroy his own kind, to destroy the sanity of another, to destroy or enslave another soul, to destroy or reduce the survival of one's companions or one's group."

Now, the last definition that talks about to destroy or reduce the survival of one's companions or one's group, that includes the definition of an overt that you gave to us earlier, doesn't it?

A. Let me see it.

Q. Handing you the technical dictionary again.

MR. BOWLES: I believe he gave three definitions.

MR. GREENE: You're right.

MR. BOWLES: So is your question addressed to all three definitions?

MR. GREENE: Yes, it is.

Q. Do any of the definitions of an overt in the technical dictionary that you read into the record earlier comport with the tenant of the creed that says that those in the church believe that the laws of God forbid man to destroy or reduce the survival of one's companions or one's group?


MR. BOWLES: Before you answer, I'm going to object to this, Mr. Benz, because I think we're a little far afield, to say the least, of this lawsuit.

Mr. Greene is pursuing a philosophical debate, discussion with the witness, on the meaning of now the Scientology creed, which is a part of the ecclesiastical writings and teaches along with the definitions and in another published volume. I think we're far afield. I think it's a waste of time and I don't think it's relevant.

MR. BENZ: Mr. Greene, on relevance?

MR. GREENE: On relevance, it goes to amis. It goes to motive. These are the very bylaws of CSI that's a party to this lawsuit.

MR. BENZ: Well, on the record, as of the moment I see nothing in this section of bylaws, having heard the definitions in the technical dictionary before, that are going to have much relevance in connection with this particular suit, as far as I can see.

MR. GREENE: Maybe I can lay it out a little more specifically.

MR. BENZ: Do you have an offer, some kind of an offer of proof or connection?

MR. GREENE: Sure. Offer of proof has to do with Exhibit 15, which is the executive directive having to do


with squirrels and what the conduct was of Armstrong, that fell within the definition of the third paragraph underneath the list of names.

The witness testified as to the meaning of overts, confirmed that the overts as used in Exhibit 15 comported with the definition of an overt or definitions of an overt act as set forth in the technical dictionary. And depending -- which are all relevant to Armstong's affirmative defense of unclean hands and affirmative defense of duress and undue influence. And directly relate to the pending question which is focused on specifics of the creed as set forth in the bylaws of CSI, which is the plaintiff in this lawsuit, and which this witness has been designated to represent. And it 's right on and relevant.

MR. BENZ: Well, the creed indicates that the church believes that the laws of God forbid man to destroy or reduce the survival of one's companions or one's group, so I don't see that that goes to any motive of malice or anything else.

MR. GREENE: Well, this witness has testified that he believed that what Armstrong's acts have done is to do exactly that.

MR. BENZ: Exactly what?

MR. GREENS: To destroy Scientology, have been


directed at the destruction of Scientology, that Armstrong's repeated, often repeated falsehoods and misrepresentations about Scientology and about its founder are all directed at the destruction of Scientology, and that's -- Scientology is the group that's referred to here.

It's directly relevant.

MR. BENZ: Well, I think to the extent that you have been discussing that, it's okay, but I don't think going into a generalized language of a creed adds anything to it, so I'll sustain the objection.

MR. GREENE: Okay. Even though the creed is set forth in the bylaws of the very organization that's prosecuting this lawsuit? It's not a generalized question about Scientology, it's specific to the plaintiff in this lawsuit and to its bylaws that it has produced in discovery.

MR. BENZ: I don't see the connection, this portion of the creed with what you're talking about on these other items.


MR. BENZ: Objection is sustained.


Q. Now, going back to the beginning section of the creed, "We of the church believe," are there -- starting on page 17 where it says "We of the church believe" and


going through to page 18, up to the point where there's the next capitalized sentence or phrase, and looking at the subject matter in between those two, my question to you is on whether or not there are any tenants which are not adopted by CSI currently?

A. Notwithstanding the fact that the entire creed is set forth in our bylaws?

Q. That's right. Is this a current and accurate expression of the bylaws?

A. Yes. Which, by the way, answered your last question, the answer to your first question is no. The first question, was there anything in there that we haven't, and then you, rephrased it to is this the current expression.

Q. And then directing your attention to 19, where it says, "We of the church believe that the laws of God forbid man," and then there are those items that are enumerated. In your view is it, or in the view of CSI somebody destroys his own kind or destroys the sanity of another or enslaves another's soul or reduces the survival of their companions, does that put the person beyond the law of God?

A. No, it entirely depends on the person's motivation.

It would be an act which would be in violation and -- not even in violation, that's not the right word. It would be


inconsistent with the creed of the church, which is something one would try to live by.

Merely because of slipping, or merely because of happening to do something that was inconsistent with that, the act would not be correct, the act would not be good, but the individual wouldn't necessarily have renounced the creed because he screwed up, basically.

Q. Okay.

A. They screwed up. There are ways of dealing with that. Nobody's perfect.

Q. Right.

MR. BOWLES: Mr. Benz, I'm going to object to this line of questioning. I think he's droning on with philosophical discourse that hate nothing to do with the


MR. BENZ: The question has been answered.

MR. BOWLES: I understand.

MR. GREENE: One more question.

Q. If the individual did not screw up but engaged in a deliberate and intentional course of conduct, then would the view be that such person would be beyond the laws of God?

A. No man can be beyond the laws of God. It would merely mean he would have renounced this as a creed to live by.


Q. And among such things that that said person would have renounced would have been the inalienable right to think freely, talk freely, write freely on their own opinions, or to utter, or to counter or utter or write upon the opinions of others; right?

MR. BOWLES: Same objection.

THE WITNESS: It's a hypothetical.

MR. BENZ: Sustained.

MR. GREENE: Q. Going back just for a moment to which is the squirrel document --

A. One moment please. Yes.

Q. -- where would all of the information supporting the assertions in Exhibit 15 that apply to Gerald Armstrong be stored?

A. I haven't a clue. This document is over a decade old. I have no idea.

Q. Who would you view as the person most likely to have an accurate idea?

A. Well, that presupposes that there exists a collection of documents that was compiled to support this, rather than information existing within the general body of information that has grown up over the years concerning the Armstrong litigation.

Q. Let's talk about that.

A. I could certainly go through the record in the


several of the cases and find instances to support the statements that apply to him. Whether such a body of compiled knowledge exists or even existed at one time, I have no idea, and that's what I meant by I have no idea.

Q. What is your understanding at the time that this document originated, is it that it originated based on a generalized opinion of Armstrong within CSI or was it based upon documents?

A. I'm sure it was based upon specific conduct on the part of Gerry Armstrong and the others mentioned here. I don't know if there was a specific package of information compiled annotated to each line or whether it was taken from the general body of knowledge and specific acts that Armstrong engaged in that gave rise to this. I just don't know.

Q. Do you have any recollection going back to the time that this document originated whether or not there was any kind of body of written material supporting the claims set forth in Exhibit 15?

A. You mean, collected together and segregated as its own body of documents as opposed to whether there existed at all documentary to support for any of these? I think you're referring to the former, aren't you?

Q. That is correct.

A. A collected package that says here is the annotated


version of this issue? I have no recollection of having done such.

Q. Was it the practice of CSI to have such annotated collection of documents in support of a declaration such as is manifested in Exhibit 15?

A. Sometimes, yes.

Q. And the more important the individual with respect to offering a threat to Scientology, the greater the documentation as a general rule of thumb; is that right?

A. No.

MR. BOWLES: Objection, vague. What do you mean by more important?

THE WITNESS: Sorry. I answered it anyway.

The answer is no, not necessarily.

MR. GREENE: Q. Was there any kind of approach or course of conduct that was -- strike that.

Was there any set standard whereby it was determined whether or not to support claims made about an individual who was designated as a squirrel?

A. I don't understand that.

Q. Do you understand the question?

A. No.

Q. What you told me was that sometimes there were written materials that were correlated together that supported a claim such as are made in Exhibit 15; right?


A. No. What I said is sometimes the issues, executive directives specifically, would have annotated packages that go with them, with the documentary support.

Q. I see.

A. And sometimes they would not.

Q. All right.

A. I just don't know with respect to this one.

MR. GREENE: I'd like to mark this as Exhibit 19.

(Defendant's Exhibit No. 19 marked.)

MR. GREENE: Q. I'm showing you Exhibit 19, which is an eight-page document, which is entitled HCO policy letter of 21 November, 1972.

You can take a look at that, please.

A. Do you want me to read the entire thing or focus on something in particular?

Q. Initially, peruse it.

A. I've perused it.

Q. You're familiar with the term black propaganda, are you not?

A. Yes.

Q. And looking at the first paragraph of Exhibit 19, does that appear, to your knowledge, to be an accurate definition of black propaganda?

A. Yes.

Q. Now, in your view, was Gerald Armstrong engaged in


a campaign of black propaganda against Scientology?

A. Any parameters as to time?

Q. Ever since December 1981.

A. Not the entire time period, but certainly large portions of that, yes.

Q. What portions of that time period do you exclude?

A. The time between when he walked out the door in December '81 and his first act and the time after December '86 up until his first act after that.

Q. And when was his first act after December 1986?

A. To the best of my knowledge, it was in '89 sometime, late '89.

Q. And what specifically was the act to which you were making reference?

A. Those we've discussed at length over the past three days.

Q. Which one?

A. The first, the first one in sequence.

Q. Which was the first in sequence, to your knowledge?

A. The Corydon one, I believe, was the first in sequence.

Q. And with respect to Corydon, what was it that Armstrong, what did he do?

A. What did he do?

Q. Did he testify? What did he do?


A. Once he got into deposition in the spring, I believe, he was spreading black propaganda, spreading lies.

Q. So the black propaganda that he gave and the lies that he spread were given under penalty of perjury in the course of the legal proceeding?

A. By no means all of them. He's done a lot of media in this country and abroad.

Q. And are you familiar with Exhibit 19?

A. I am familiar with the policy letter entitled "How to Handle Black Propaganda. I haven't read this one word for word to make a comparison.

Q. Would you take a look at it to whatever extent you need to tell me, at least generally, it comports with the policy letter with which you are familiar?

A. I'd say generally it does, but that's not an authentication.

Q. Okay.

A. Those are easier done in written discovery when you've got time to do just the word by word comparison.

Anyway, generally it does appear to be that policy letter, yes.

MR. GREENE: I want to mark another exhibit as 20.

(Defendant's Exhibit No. 20 marked.)

MR. GREENE: Q. Exhibit 20 is a four-page document


entitled HCO policy letter of 11 May, 1970. Would you review this document, please.

What I want to know is whether or not, one, you're familiar with it; two, whether or not it generally appears to be an accurate copy of that with which you are familiar.

A. Except for the lines on it --

Q. Okay.

A. -- underlining and bracketing, it appears to be a copy of this policy letter, yes.

Q. All right. Now, would you describe to me, looking at the middle of the page where it says, "Intelligence is covert," and then, oh, I don't know, about five, six lines down where it says "Black propaganda is in its technical accuracy a covert operation where unknown authors publicly affect a derogatory reaction and then remain unknown."

A. Yes, I see that. That does amplify the definition in the other policy letter that you've had me read of black propaganda.

Q. And such amplification would not apply to Armstrong, would it?

A. How's that?

Q. Such amplification as is set forth in Exhibit 20 that I just read and I am directing your attention to, that would not include Armstrong, would it?


A. You mean, he wasn't doing this at any time in the last decade since he left?

Q. To your knowledge, yes.

A. Oh, I would dispute that.

Q. And upon what facts would you dispute that?

A. The whole loyalist incident, which he fought, was hidden from us, and his desire at that point to infiltrate into the organization and to quote him at that time, "to spread chaos and destruction."

So I think that very much was designed on his part to be a black propaganda campaign. That's what he was attempting to do, including the phonying up of forged issues that would be planted in our files. So yes, I would say that's one example, certainly.

Q. When you make reference to a phonied up forged issue, Exhibit 2 would be characterizable as an issue, wouldn't it?

A. Yes.

Q. And the same with 19; right?

A. Yes.

Q. And then the same with 15?

(Off the record.)

MR. GREENE: Strike the question pending.

Q. Mr. Farny, while we've been taking a little break here you've gone through Exhibits 1 through 20. And would


you tell me which Exhibits of 1 through 20 do not constitute issues?

A. All right. And issue is a colloquialism that I was using.

Q. And why don't you describe or define the colloquialism so that we're clear in the sense that you were using it.

A. All right. It's one of the authorized forms of communication of the church on paper that would exclude books.

Q. Okay.

A. It is an individual sheet or sheets imparting some data as -- in one of the official forms of communication. HCO policy letter, HCO bulletin, ethics orders, executive directives and such.

Q. Then would you just note for the record, since there are less of them, which of Exhibits 1 through 20 are not issues.

A. 1, 2, 3, 11, 18, and the book from which 12 is taken, although the individual documents within, in which case I think there's only one here, would be an issue.

Q. Would be an issue, okay.

Okay. It's my turn, I've got to take about a five-minute break.

(short recess.)


MR. GREENE: We're back on the record and are going to conclude today's session and resume tomorrow morning at 9:30.

Thank you, Mr. Farny.

THE WITNESS: Thank you.

MR. BOWLES: And, Mr. Greene, so I assume there's a stipulation for these transcripts that the original is coming to the witness?



THE WITNESS: No. There was a stipulation that we put on the record.

MR. WALTON: We can just do the same stipulation as before.

MR. GREENE: Let's figure it out off the record.

I'm fine with that. I don't care.

MR. BOWLES: I don't even know what it is.

THE WITNESS: Whatever it is --

MR. GREENE: Thank you.


(Whereupon, the deposition was recessed at 4:45 p.m. thereof.)




I, SUSAN M. LYON, a Certified Shorthand Reporter in and for the State of California, do hereby certify:

That the witness named in the foregoing deposition was present and duly sworn to testify the truth in the within-entitled action on the day and date and at the time and place therein specified;

That the testimony of said witness was reported by me in shorthand and was thereafter transcribed under my direction into typewriting;

That the foregoing constitutes a full, true and correct transcript of said deposition and of the proceedings which took place;

That the witness was given an opportunity to read and, if necessary, correct said deposition and to subscribe the same;

That I am a disinterested person to the said action;

IN WITNESS WHEREOF, I have hereunto subscribed my hand this 8th day of August 1994.

CSR #5829