Daniel A. Leipold,
Esq., State Bar No. 77159
Robert F. Donohue, Esq., State Bar No. 110505
Cathy L. Shipe, Esq., State Bar No. 156453
HAGENBAUGH & MURPHY
Suite 8200
701 South Parker Street
Orange, CA 92668
Telephone: (714) 835-5406
Mark Goldowitz, Esq. 1611 Telegraph Ave., Suite 1200
Oakland, CA 94612
(510) 835-0850
Attorneys for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DECLARATION OF GRAHAM E. BERRY IN SUPPORT OF MOTION BY DEFENDANT LARRY WOLLERSHEIM TO AMEND ___________________________
Date: May 14, 1997 Time: 9:00 a.m. Dept: 14
I, GRAHAM E. BERRY, DECLARE:
1. I am an attorney at law duly licensed to practice
before all the courts of the State of California and am a partner
of the law firm of Musick, Peeler and Garrett, LLP. I have
personal knowledge of all the matter set forth herein and if
called upon to do so, I could and would competently testify
thereto under oath.
2. Prior to becoming a partner with Musick, Peeler and
Garrett, LLP, declarant was a partner of Lewis, D'Amato, Brisbois
and Bisgaard, and at that time, attorneys of record for defendant
Uwe Geertz, Ph.D. in the matter of Church of Scientology
International, etc. v. Steven Fishman and Uwe Geertz, United
States District Court, Case No. CV 91 6426 HLH(Tx). Church of
Scientology International voluntarily dismissed the District
Court action before trial; however, during the course of
discovery, pursuant to a request for production, Church of
Scientology International produced approximately 2,094 pages of
records reflecting Church of Scientology International's
Application for Recognition of Tax Exemption under Internal
Revenue Code Section 501(c)(3) and records associated therewith.
These records were produced by Church of Scientology
International on or about November 4, 1993 pursuant to
defendant's request for production. Each and every one of the
2,094 pages were received Bate stamped beginning with number
150,000 and numbered consecutively through 152,094. Along with
the Bate stamp number, each page is identified by the prefix "CSI
Prod", and the production date 11-4-93.
3. Any and all exhibits proffered in support of
defendant's motion to amend that is identified with the "CSI
Prod" prefix, date and Bate stamp number are true and correct
copies of the documents produced by Church of Scientology
International, pursuant to discovery in the aforementioned United
States District Court action Church of Scientology International,
etc. v. Steven Fishman and Uwe Geertz.
/ / /
I declare under penalty of perjury that the foregoing is
true and correct.
Executed this _____ day of February, 1997 at Los Angeles,
California.
__________________________________
GRAHAM E. BERRY, Declarant
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO AMEND JUDGMENTS
1. BASIS OF MOTION.
Defendant Larry Wollersheim seeks to amend the June 3, 1994
and November 8, 1996 final judgments awarding him costs and
attorneys' fees, to add Religious Technology Center ("RTC") and
Church of Scientology International ("CSI") as real party
plaintiffs and judgment debtors. Those judgments are for the
amounts of $132,676.57 and $298,039.74, respectively.
Overwhelming evidence shows that RTC and CSI are the alter
egos of plaintiff Church of Scientology of California ("CSC") and
have been since RTC and CSI were incorporated in the early
1980s. As a matter of Scientology doctrine, a single
individual, "Sea Org" Captain and RTC's Chairman of the Board,
David Miscavige, wields unchallenged control over all Scientology
matters -- including the instant litigation -- unhampered by such
bothersome details as corporate boundaries.
As a result, the unity of interest between Scientology's
corporations is so pervasive as to expose the notion of their
independent existences as an utter ruse. CSC, in particular, is
nothing more than a shell. RTC and CSI have financed and
controlled CSC's case against Mr. Wollersheim since its
inception.
The equities in this matter fall squarely on the side of
Larry Wollersheim and demand that this motion be granted. If
not, an inequitable result will follow, because CSC's assets have
been willfully depleted, leaving it without adequate means to
satisfy the judgments against it.
2. FACTUAL AND PROCEDURAL HISTORY.
a. Mr. Wollersheim's Scientology Experience.
Larry Wollersheim joined the Church of Scientology in 1968
and participated in its exercises for years before leaving.
While associated with Scientology, Mr. Wollersheim experienced
severe psychological distress and eventually contemplated
suicide. Finally, having decided his problems were directly
related to his Scientology activity, he resisted the coercive
measures designed to keep him in the organization, and quit.
In 1980, Mr. Wollersheim filed suit against CSC for fraud
and infliction of emotional injury (hereinafter, that case is
referred to as "Wollersheim I"). When the case was tried in
1986, a unanimous jury found Scientology had subjected him to
"fair game," a form of punishment by which Scientology enemies
may be "injured by any means," including being "tricked, sued or
lied to or destroyed." SS-2.
In addition to the psychological torture he endured, both
while in Scientology and after fleeing it, Mr. Wollersheim's
evidence established Scientology's effective scheme to ruin his
successful photography business. The business went bankrupt. In
July of 1986, the jury awarded him $30 million.
CSC filed the present lawsuit, seeking to set aside the
Wollersheim I judgment, in 1993, nearly seven years after the
jury in that case reached its verdict. In the intervening years,
the underlying case wound its way through the appeals courts, a
process in which Mr. Wollersheim consistently prevailed. When
CSC's appellate road was near its dead end, this case surfaced.
/ / /
b. After Many Years as Scientology's Chief Organization,
CSC Was Gutted, and RTC and CSI Were Incorporated,
Diverting Funds Away from CSC Largely to Frustrate Mr.
Wollersheim's Ability to Collect a Judgment.
When Mr. Wollersheim filed suit against CSC in 1980, it was
the dominant Scientology entity. SS-4. Incorporated in
California in 1954, CSC was Scientology's "mother church." SS-5.
As of July 1981, CSC's net worth was $340 million. SS-6.
Beginning in late 1981, Scientology underwent an ostensible
reorganization. As a result of this project, which was called
"Mission Corporate Category Sort-Out" ("MCCS"), 60 to 70 percent
of CSC was divested by the end of December 1981. SS-7. When, in
1985, it appeared to Scientology that Mr. Wollersheim might win
his lawsuit, the decision was made to strip CSC of what was left.
SS-8. Thus, the remaining 30 to 40 percent of CSC was gone by
May of 1985. SS-9. A year later, Wollersheim I would go to
trial.
After the MCCS reorganization, CSC was no longer the central
entity. Instead, CSI had been formed to become the new "mother
church," overseeing most other Scientology organizations,
including CSC. SS-10. Under the new hierarchy, the only entity
superior to CSI was RTC, which purported to own and license
certain rights to CSI and other entities. SS-11.
While the reorganization was engineered partly to defraud
the government, the looting of CSC's assets was specifically
designed to prevent Mr. Wollersheim, among others, from ever
collecting a judgment. SS-12. At an October 1982 conference of
"mission holders" (franchisees), Scientology officials Lyman
Spurlock and David Miscavige, both of whom were founding trustees
of RTC in 1981, announced the goal of the reorganization: to make
Scientology "impregnable." SS-13.
Elaborating on this message, Miscavige assured the meeting's
attendees that the MCCS project had resulted in a "corporate
structure [which] assures Scientology being around for eternity."
SS-14.
Before the reorganization, the most prosperous units in
Scientology were included under CSC's corporate umbrella, and CSC
received regular income from them. SS-15. For example, prior to
1981, local Scientology branches such as those in San Francisco
and Los Angeles paid monthly management fees to CSC. SS-16.
After the corporate "sort-out," however, those payments -- which
range from five to 10 percent of weekly receipts from 98
organizations -- were routed to the newly formed CSI. SS-17.
The result: 25% of CSI's revenue consists of "management
payments" received from Scientology organizations. SS-18.
That these management payments are significant is seen in
the example of the Flag Service Organization, a one-time branch
of CSC. In 1981, it became a separate corporation known as
Church of Scientology Flag Service Organization (CSFSO). SS-19.
Like Scientology's other organizations, CSFSO began making its
payments to CSI after the MCCS project; by 1989, CSI was
receiving some $200,000 per week in fees from CSFSO alone. SS-20.
Its income stream having been stripped from it, CSC became a
"dormant" corporation devoid of activity. SS-21. In its 1993
application for 501(c)(3) tax exempt status, CSI represented
that CSC had been inactive since at least 1991 -- two years
before it filed this lawsuit. SS-22. As CSC's president, Neil
Levin, has testified, this "inactive" status means CSC has no
employees and transacts no business. SS-23. President Levin
himself, who last received a salary from CSC the year before this
lawsuit was filed, devotes no time to the performance of CSC-
related duties. SS-25. Instead, his energy is spent on his true
employment -- within CSI's Office of Special Affairs. SS-26.
Just as the use of CSC as a repository of revenue was
aborted, so have its assets been depleted -- an action taken
expressly to thwart efforts by Mr. Wollersheim to collect a
judgment. SS-12. As of April 1986, CSC claimed a net worth of
$18.6 million. SS-30. In July of that year, just after Mr.
Wollersheim won his $30 million verdict, one of CSC's directors,
Lynn Farny, agreed on the record that CSC would not dispose of
its assets except in the ordinary course of business. SS-33. Of
course, by the time of Mr. Farny's pledge, CSC's "ordinary course
of business" no longer included any revenue-generating activity
-- all income was now being routed to CSI and/or RTC.
Two months later, in September of 1986, CSC moved the trial
court for a waiver of Code of Civil Procedure 917.1's
requirement that a bond equal to twice the amount of the judgment
be posted to stay its enforcement on appeal. In his minute
order, Judge Ronald Swearinger, ruling on CSC's motion, rebuffed
CSC's claim of indigency:
"Proof has shown that [CSC] transferred virtually all
of its assets and functions out to other Scientology
entities subsequent to the filing of this action and as
late as just before a scheduled trial date in this
case. If the defendant is indeed indigent, it is an
indigency of its own making. Proof has shown that
Scientology as an overall entity is comprised of
numerous operating entities, including defendant, and
that they are all inter-related, being parts of a
monolithic whole. Transfers of assets and functions
from one entity to other entities are more pro forma
than actual. In the case of the transfers in question
here, they are seen as mere 'jiggery pokery.' The
power to transfer out to a sister entity is the power
to transfer back in 'when the heat is off,' so to
speak. The claim of relative indigency is not believed
by the court and the court has had ample opportunity to
examine and consider the credibility of the defendant
during 5-1/2 months of trial and extended post-trial
proceedings." SS-34.
The depletion of CSC's assets was attributable in part to
the settlement of other lawsuits against it. One such
settlement, in the amount of $800,000, was achieved in late 1986
on behalf of ex-Scientologist Gerald Armstrong. SS-35. In a
stunning move which unmistakably reveals the unity of interest
among Scientology's corporations, the 1986 settlement agreement
with Armstrong was executed by CSI, a non-party. CSC, the actual
cross-defendant in the case, was merely named as a beneficiary of
that agreement. So was RTC. SS-36.
Not surprisingly, by May 1995, CSC's assets had dwindled to
$35,000, on deposit in a Luxembourg bank. Another account had
been opened at a New York bank on CSC's behalf -- with CSI funds
-- in order to pay a sanctions award issued against CSC. SS-38.
CSC now holds neither real estate nor personal property
anywhere in the world. SS-39. Thus, in keeping with
Scientology's goals, plaintiff CSC has become just a ransacked
shell whose only purpose is to sue Larry Wollersheim.
c. The Unity of Interest Between CSC, CSI and RTC is
Clear; In Scientology, the Parameters of the Corporate
Structure are Ignored in Favor of a Supreme Authority
Called the Sea Org.
Its 1981 "reorganization" notwithstanding, all of
Scientology's professed labyrinth of corporations is a sham. As
noted, both the Wollersheim I trial judge and the Ninth Circuit
Court of Appeals, in U.S. v. Zolin, 905 F.2d 1344 (9th Cir.
1990), have denounced the fraudulent purposes underlying
Scientology's corporate scheme. Even more fundamentally, the
United States Claims Court, in attempting to untangle the
corporate web in Church of Spiritual Technology v. United States,
26 Cl. Ct. 713 (1992), aff'd., 991 F.2d 812 (Fed. Cir. 1993),
finally declared:
"After carefully examining the record and attempting to
understand the nominal corporate structure of
Scientology it is apparent to the court that it is
something of a deceptis visus. Real control is
exercised less formally, but more tangibly, through an
unincorporated association, the Sea Organization, more
commonly referred to as the Sea Org.
....
"[Church of Spiritual Technology ("CST")] staff and
officers are required to be members of the Sea Org,
which gives CST the distinction of being a Sea Org
Church. CSI, RTC, ..., in short, all high ranking
organizations are Sea Org Churches." (26 Cl. Ct. at p.
718.)
As the Claims Court recognized, the seat of power in
Scientology resides firmly in the Sea Org. It is from the Sea
Org that the strings in all Scientology organizations --
irrespective of corporate boundaries -- are pulled. SS-42. The
compliance of Scientology corporations with orders from the Sea
Org is ensured by the policy of appointing only Sea Org officers
to the corporations' highest posts. SS-43.
The highest ranking Sea Org officer is Captain David
Miscavige. SS-44. As previously noted, Miscavige was also a
founding trustee of RTC and is now its chairman of the board.
SS-45.
Importantly, although Miscavige presently associates himself
with RTC, his corporate affiliation is actually immaterial; it is
as the most senior officer in the Sea Org, that he runs the whole
Scientology show. Thus, in the mid-1980s, Miscavige reigned
over Scientology from his position as chairman of Author
Services, Inc. (ASI), a for-profit corporation ostensibly created
as a literary agency for L. Ron Hubbard. SS-47. In 1987, during
an IRS investigation of ASI's ties to Scientology's non-profit
corporations, Miscavige simply moved the seat of power to RTC and
appointed himself chairman of the board. SS-48.
d. David Miscavige and Other Sea Org Officers Within RTC
and CSI Have Controlled This Litigation and the Defense
of the Underlying Wollersheim I Case All Along.
It must be remembered that, as a purportedly indigent and
"dormant" entity, CSC could not have prosecuted the instant
lawsuit on its own behalf. Management of the case had to have
come from somewhere else, and it did: Sea Org officers operating
within RTC and CSI have controlled CSC's litigation with Mr.
Wollersheim for more than 15 years.
The central figure in the collaborative scheme to manipulate
CSC's litigation with Mr. Wollersheim is Sea Org Captain David
Miscavige. Before moving to RTC, Miscavige managed the defense
of Wollersheim I from his post at ASI, assisted by other Sea Org
officers. SS-49. So interested was Miscavige in the
Wollersheim I case that he attended the trial. SS-51.
During the discovery phase of Wollersheim I, Vicki Aznaran,
a Sea Org officer and managerial official of RTC who later became
its president, received a command to destroy certain documents
which the court had ordered CSC to produce to Mr. Wollersheim.
SS-53. The directive to destroy them was issued by David
Miscavige. SS-55.
Next, in keeping with L. Ron Hubbard's "scriptural" edict to
use litigation as a weapon against Scientology enemies, the
Wollersheim II case emerged. Filed in November of 1985 -- by RTC
and CSI -- the case sought to derail Mr. Wollersheim's lawsuit
against CSC. In it, plaintiffs alleged that the possession and
use of certain documents by Mr. Wollersheim, his attorneys and
experts in the case against CSC constituted RICO violations and
copyright infringement, among other things. SS-57.
Although RTC and CSI would be its plaintiffs, the decision
to file the Wollersheim II case was made by, among others, Sea
Org officers David Miscavige, Norman Starkey, and Marty Rathbun
-- all of whom were then associated with ASI, a purportedly
separate corporation! SS-50, 58. Also participating in this
decision was RTC officer Vicki Aznaran. SS-58.
Among the attorneys representing RTC and CSI in Wollersheim
II was Earle Cooley, who was simultaneously defending CSC in
Wollersheim I. SS-59. Incredibly, both RTC and CSI claimed, as
elements of their damages in Wollersheim II, the costs and
damages arising out of Mr. Wollersheim's case against CSC! SS-
60. The RICO statement containing this claim was signed on
behalf of RTC and CSI by Attorney Kendrick Moxon, who also
represented CSC in Wollersheim I post-trial matters, and who
again represents CSC in this case. SS-61.
In May of 1990, District Court Judge James Ideman dismissed
the Wollersheim II complaint, adopting the recommendations of
Special Master James Kolts, who had found:
"The plaintiffs' case against the [] defendants borders
on the frivolous and malicious, boiling down to
penalizing an attorney simply for conducting necessary
discovery to represent his or her client's case."
(Emphasis added.) SS-64.
Ever litigious, RTC and CSI appealed the dismissal of
their claims against the Wollersheim II defendants; curiously,
their Amended Notice of Appeal was filed on behalf of not only
RTC and CSI, but CSC -- a nonparty -- as well. SS-66. The
Ninth Circuit affirmed. SS-67.
Once the Wollersheim I trial was over, a discussion among
high-ranking Scientology officials was led by Sea Org officer
Marty Rathbun. Rathbun, who would soon become RTC's president
and a trustee of CSI (SS-50), told the group of a plan to steal
the medical records of Charles O'Reilly, one of Mr. Wollersheim's
attorneys. SS-68. This plan was ordered by David Miscavige.
SS-70. The goal was to obtain information which might be useful
in blackmailing O'Reilly into easing off the $30 million verdict.
SS-71.
e. CSI Provided the Financial Support Needed to Defend
Wollersheim I and Prosecute the Present Action.
By its own admission, the looting of CSC left it without any
resources -- and certainly not enough to bring or maintain this
action. Enter CSI, which all along had been providing the
financial support CSC needed to litigate against Mr.
Wollersheim. SS-72.
Scientology maintains a "central reserve system" to fund
such things as legal affairs and "emergencies." SS-73. Among
the entities participating in this system are CSI and CSC. SS-
74. The fund is administered by a committee consisting entirely
of CSI staff members. SS-75.
The reserve's expenditures are considerable. In each of the
years 1987 and 1988, for example, the committee authorized $12
million for expenses related to lawsuits and "defense of the
activities" of Scientology. SS-76.
Whether through this fund or by some other route, CSI paid
CSC's defense costs arising from Wollersheim I. SS-72. CSI has
also financed the present litigation. SS-77. And, as CSC
President Levin has testified, he recalls no written agreement
between CSI and CSC for the repayment of attorneys fees. SS-78.
Consequently, although Mr. Wollersheim won his 1986 verdict
of $30 million against CSC, it was CSI which mounted the
counterattack. Its funding of the present lawsuit was part of
the strategy to prevent Mr. Wollersheim from enforcing his
judgment -- a campaign which has been successful to this day,
more than a decade after the verdict. "Not One Thin Dime For
Wollersheim" was and is the battle cry. SS-79.
Nor, according to CSI, would any claimant be paid a dime; in
a 1982 bulletin to Scientology "orgs," CSI claimed the "new,
totally secure corporate set-up" would protect Scientology as
follows:
"Not one individual has successfully obtained one dime
in any effort to attack the Church. Strong legal
precedent set in recent months ensures they never will.
"Whereas in 1981 the Church was faced with several
dozen court cases of major proportion, we are now
handling - and successfully - just the last handful
with ease. The Church and its members have gained a
great deal of respect as law abiding organizations and
citizens.
"THUS ALL POSSIBLE LEGAL THREAT TO THE CHURCH OR THE
FOUNDER ARE BEING HANDLED FAVORABLY." (Underscore and
capital lettering in original; bold type emphasis
added.) SS-80.
Perhaps the most interesting aspect of this bulletin is its
reference to lawsuits against "the Church" -- rather than against
the individual corporations. Clearly, Scientology approaches
litigation against any of its entities as something to be dealt
with by all of them.
This is further illustrated by a balance sheet, submitted by
CSI to the IRS in 1993 in connection with Scientology's bid for
501(c)(3) tax-exempt status. Listed as a liability of CSI's on
that document is a "$30 million judgment on appeal" -- the same
judgment Mr. Wollersheim had won against CSC. SS-81.
f. RTC's Retributive Efforts Against Mr. Wollersheim Based
on His Judgment Against CSC Continue to the Present
Day.
The interest of RTC in CSC's litigation with Mr. Wollersheim
persists even today. In the ongoing Wollersheim V case, the
Colorado District Court matter involving claims of copyright
infringement and trade secret misappropriation, plaintiff RTC
began by petitioning the magistrate, in August of 1995, for an ex
parte Writ of Seizure as authorized under federal copyright
laws. SS-82. Among the lawyers representing plaintiffs in
case is the same Earle Cooley who tried the Wollersheim I matter
and appeared in both Wollersheim II and III. SS-84.
The petition having been granted, agents of RTC raided
the home of Larry Wollersheim, purportedly for the authorized
purpose of locating L. Ron Hubbard-authored material whose RTC-
owned copyrights were allegedly being infringed. SS-86. As part
of the raid, RTC ran a word search of Mr. Wollersheim's computer.
Amazingly, among the keywords used in the search were
"Swearinger" (the judge in Mr. Wollersheim's case against CSC)
and "O'Reilly" (Mr. Wollersheim's attorney in that case). SS-87.
Another of RTC's search terms was "Leipold," referring to
Mr. Wollersheim's attorney in this case. SS-87. The results
of such a search, as RTC and its counsel well knew, could only
have turned up material relevant to Mr. Wollersheim's litigation
with CSC (material protected by the attorney-client privilege or
attorney work product doctrine) -- but absolutely nothing
authorized by the magistrate's narrow order allowing a search for
specific, copyrighted material. Nor could RTC's use of these
search terms have produced anything relevant to its current
claims against Mr. Wollersheim.
Moreover, attached to RTC's verified first amended complaint
in Wollersheim V is a copy of a "confidentiality agreement"
executed solely between CSC and Mr. Wollersheim. SS-89. That
RTC has a copy of that agreement, and claims to be its
beneficiary, is telling; it seems even Scientology's corporations
themselves forget they are supposed to be separate.
3. EQUITY DEMANDS THE FINAL JUDGMENTS AGAINST PLAINTIFF CSC,
AWARDING COSTS AND ATTORNEYS FEES TO DEFENDANT WOLLERSHEIM,
BE AMENDED TO INCLUDE RTC AND CSI AS JUDGMENT DEBTORS
BECAUSE THE EVIDENCE FIRMLY ESTABLISHES RTC AND CSI HAVE
MANIPULATED AND CONTROLLED CSC'S LITIGATION WITH LARRY
WOLLERSHEIM FROM THE BEGINNING.
California law strongly supports Mr. Wollersheim's effort to
amend the June 3, 1994 and November 8, 1996 judgments awarding
him costs and fees, to add RTC and CSI as judgment debtors.
a. Courts Have Broad Discretion to Amend Judgments to Add
Additional Judgment Debtors as Justice Requires.
First, the Court is vested with discretion to use all means
to carry its jurisdiction into effect by Code of Civil Procedure
187. Included among the courts' powers under Section 187 is the
authority to amend a judgment at any time to add additional
judgment debtors. (NEC Electronics Inc. v. Hurt (1989) 208
Cal.App.3d 772, 778; Mirabito v. San Francisco Dairy Co. (1935) 8
Cal.App.2d 54, 57.)
Moreover, "[t]he greatest liberality is to be encouraged in
the allowance of such amendments in order to see that justice is
done." (Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14,
20.)
Justice cries out for amendment of the judgments awarded to
Mr. Wollersheim in this case. As the Court of Appeal observed in
upholding the anti-SLAPP judgment of dismissal herein:
"...an examination of the history of the underlying
litigation reveals that the instant action is
consistent with a pattern of conduct by the Church to
employ every means, regardless of merit, to frustrate
or undermine Wollersheim's petition activity." (Church
of Scientology of California v. Wollersheim, supra, 42
Cal.App.4th 628, 648; emphasis added.)
One of the many means Scientology has used to undermine Mr.
Wollersheim's victories is the "corporate reorganization." It is
no coincidence that the razing of CSC in favor of RTC and CSI
began just after the Wollersheim I case was filed and was
completed just before it went to trial.
The case at bar is simply a further manifestation of
Scientology's continuing campaign to punish Mr. Wollersheim. The
only way justice will be done is to deny RTC and CSI the fruit of
their endeavors.
b. Mr. Wollersheim's Mountain of Evidence Far Exceeds the
Burden of Proof He Must Sustain to Prevail.
The standard of proof in a motion of this type requires the
moving party to overcome the presumption of the separate
existence of the corporate entity. (Mid-Century Insurance Co. v.
Gardner (1992) 9 Cal.App.4th 1205, 1212.) The judgment is
properly amended where the movant shows substantial evidence that
a party's alter ego should be held accountable for that party's
wrong. (NEC Electronics, supra, 208 Cal.App.3d at p. 777;
Ukegawa Brothers v. Agricultural Labor Relations Board (1989) 212
Cal.App.3d 1314, 1323.)
By any measure, Mr. Wollersheim's evidence is substantial,
providing dramatic proof that Scientology is but one
organization, run by its Sea Org officials. Moreover, the
veracity of the evidence can hardly be challenged: the
overwhelming majority of it comes from the mouths, and word
processors, of Scientology officials themselves.
c. Application of the Alter Ego Doctrine is Warranted
Where, as Here, a Sufficiently Strong Unity of Interest
Exists Between the Entities in Question and Failure to
Apply the Doctrine Would Lead to an Inequitable Result.
In general, when determining whether to employ the alter ego
doctrine, two factors should be considered: 1) whether there is
such unity of interest and ownership that the separate
personalities of the corporation and the purportedly "distinct"
entity no longer exist, and 2) whether, if the acts are treated
as those of the corporation alone, an inequitable result will
follow. (Sheard v. Superior Court (1974) 40 Cal.App.3d 207, 211-
212.)
There is no litmus test to determine when an entity's
corporate veil should appropriately be pierced; rather, the
result depends on the circumstances of each particular case.
(Mid-Century Insurance Co., supra, 9 Cal.App.4th at p. 1212.)
Where some conduct amounting to bad faith makes it inequitable
for an entity to hide behind the corporate veil, the alter ego
doctrine is properly employed. (Id. at p. 1213.)
RTC and CSI have surely set a new standard for conduct
amounting to bad faith. Intent on keeping Scientology
"impregnable," they have used CSC as both a sword and a shield.
After first gutting it of assets to thwart the enforcement of Mr.
Wollersheim's hard-won multimillion dollar judgment, they then
used it as a weapon to, in the appellate court's words, "bludgeon
[Mr. Wollersheim] into submission." (CSC v. Wollersheim, supra,
42 Cal.App.4th at p. 649.) There can be no more appropriate
circumstances than these in which to amend a judgment to add
alter egos.
1. The Absolute Unity of Interest Between CSC, RTC
and CSI Forecloses the Notion That They Retain
Separate Personalities.
As has been conclusively demonstrated, there is just one
Scientology, a clandestine society proffering imaginary corporate
lines to keep the public confused and at bay. Even if its
corporations are taken at face value, it is clear the same Sea
Org officers, starting with David Miscavige, wield power over all
the entities. Plainly, these Sea Org leaders have, through RTC
and CSI, financed and controlled CSC's litigation with Mr.
Wollersheim.
None of the cases located by Mr. Wollersheim's counsel, in
which the alter ego doctrine was held applicable, even come close
to involving the volume or quality of evidence Mr. Wollersheim
places before the Court. For example, in Carr v. Barnabey's
Hotel Corp, supra, the plaintiff sued a corporation (Barnabey's)
and obtained a judgment, later learning a partnership
(Peppercorn) was the true principal. In upholding the amendment
of the judgment adding Peppercorn as a defendant, the court first
noted that Peppercorn's failure to advise the plaintiff an entity
other than Barnabey's owned the hotel in question "approached a
fraud on the court." (23 Cal.App.4th at p. 20.) The court
further observed:
"The same lawyer represented Barnabey's and Peppercorn.
Although the record does not tell us who paid for the
defense, we know that Barnabey's, in whose name the
defense was conducted, had no assets." (23 Cal.App.4th
at p. 21.)
Here, there is an overlap in legal representation between
CSC, RTC and CSI, as was true in Carr. Also, as in Carr, CSC's
assets have long since been depleted, leaving it unable to pay
its litigation expenses. But here, there is more: we do know who
has paid CSC's legal bills -- CSI. Finally, and importantly, the
dissipation of CSC's assets was undertaken for the specific
purpose of warding off Mr. Wollersheim's anticipated collection
efforts. Thus, the evidence at bar is much weightier, and
demonstrates a greater degree of fraud, than that which warranted
the amendment of the judgment in Carr.
Indeed, Mr. Wollersheim's evidence suffices no matter which
of California's published alter ego cases is used as the
yardstick. For example:
In Thomson v. L. C. Roney & Co. (1952) 112 Cal.App.2d
420, a corporation was held to be the alter ego of the
defendant/judgment debtor, where 1) all of defendant's
assets had been transferred to the corporation prior to
commencement of the action, but the entities retained an
interlocking directorate and mutual officers and gave no
outward indication of a change; 2) the corporation had
furnished defendant with large sums of money without formal
resolution; 3) the corporation had the power to take action
which was binding on defendant; and 4) both entities had the
same attorney. (112 Cal.App.2d at pp. 428-429.)
In Mirabito v. San Francisco Dairy Co. (1935) 8
Cal.App.2d 54, a corporation which had assumed the
defendant's assets was its alter ego, where: 1) the entities
shared a president, vice-president and secretary; 2) the
secretary had verified the answer; and 3) the defendant was
a "nonoperating" company but appeared active because the
alter ego corporation conducted business in the name of the
defendant. (8 Cal.App.2d at p. 58.)
In Jack Farenbaugh & Son v. Belmont Construction (1987)
194 Cal.App.3d 1023, the doctrine was properly applied to an
individual who, according to the declaration of movant's
attorney, participated in the litigation by taking a
deposition, trying the case and attending the judgment
debtor exam. (194 Cal.App.3d at p. 1030.)
As in these cases, Mr. Wollersheim's evidence establishes
that: RTC and CSI officials actively participated in his
litigation with CSC; CSC is a nonoperating shell funded by CSI;
the same attorneys have represented all three entities (in some
cases simultaneously); and, all of the corporations share common
goals. Of course, Mr. Wollersheim has an additional bit of
crucial evidence: CSC was gutted, and RTC and CSI were formed,
specifically to defraud Mr. Wollersheim and others.
Thus, the "unity of interest" factor, as set forth in Sheard
v. Superior Court, supra, weighs solidly in favor of defendant
Wollersheim.
/ / /
2. The Equities Fall Entirely On the Side of
Defendant Wollersheim.
The unity of interest between RTC, CSI and CSC having been
solidly established, the next question under Sheard is whether an
inequitable result will follow if the judgments are not amended.
Initially, in weighing the equities, it is crucial to remember
that Mr. Wollersheim is the defendant in this lawsuit. Unlike
the plaintiffs in the alter ego cases cited infra, he had no role
in determining which entity would be on the opposite side of the
lawsuit from him!
If Mr. Wollersheim knew from the outset of this case that
RTC and CSI were the proper plaintiffs, there was initially no
reason for him to seek the court's affirmation of the point; he
was not the party seeking redress. It is only since the
judgments awarding him costs and attorneys fees have become final
that Mr. Wollersheim has had a stake in seeing that the proper
parties are present in this litigation.
Inequity has stalked Mr. Wollersheim for the entire history
of his involvement with Scientology. He has weathered years of
brutal litigation with the organization -- bravely prosecuting a
claim that a unanimous jury and every subsequent reviewing court
has agreed was worth multi-millions of dollars -- only to be
harassed at every turn. Rather than receiving the proceeds from
his fairly-won judgment, he has received four summons and
complaints, three of which have been ruled meritless so far.
Nearly eleven years after the verdict he persevered to win, Larry
Wollersheim has yet to collect a dime.
Instead, he has dodged another bullet, launched at him in
the form of this case, and has come away with two more money
judgments in his favor.
The analysis of the Court of Appeal, examining the history
of this litigation and the underlying Wollersheim I matter,
reveals that the inequity wrought by Scientology's behavior is so
severe as to have undermined Mr. Wollersheim's constitutional
rights:
"The Church argues that it has every right to exhaust
its legal remedies, including appeal rights. We agree.
However, when a litigant continuously and
unsuccessfully uses the litigation process in filing
unmeritorious motions, appeals and lawsuits, such
actions have constitutional implications..." (CSC v.
Wollersheim, supra, 42 Cal.App.4th at p. 649.)
The unmeritorious motions, appeals and lawsuits about which
the appellate panel spoke were not financed by the "indigent"
CSC; they were paid for by CSI. They were managed by RTC. They
have caused Mr. Wollersheim untold years of torment and, as the
CSC v. Wollersheim panel found worthy of note, the litigation has
cost him at least $300,000 of his own money and put him another
$900,000 in debt. (Id. at p. 649, fn. 6.)
There can be nothing inequitable about saying "Enough!" to
Scientology's "jiggery, pokery" tactics and holding the true
parties, RTC and CSI, responsible for the judgments rendered in
this case. An observation by the court in Mirabito v. San
Francisco Dairy Co., supra, is particularly apt in this case:
"To hold otherwise upon the facts herein would be to
deny respondent the fruits of fairly contested
litigation, place a premium upon acts and conduct which
have misled a litigant, and frustrate the very purpose
of our jurisprudence." (8 Cal.App.2d at p. 60.)
d. Granting This Motion Will Not Offend the Due Process
Rights of RTC or CSI.
The amendments Mr. Wollersheim seeks do not give rise to due
process concerns because, as alter egos of CSC, RTC and CSI
controlled this litigation and thus were virtually represented in
the lawsuit. (See, Ukegawa Brothers, supra, 212 Cal.App.3d at
pp. 1322-1324; Carr, supra, 23 Cal.App.4th at pp. 21-22.)
In Farenbaugh & Son v. Belmont Construction, Inc., supra,
194 Cal.App.3d 1023, the appellate panel noted the "new"
defendant's active participation in the original trial "satisfies
the elements of fair trial as required by due process." (194
Cal.App.3d at p. 1031.)
To add RTC and CSI as plaintiffs and judgment debtors will
not be to add new parties; rather, it will merely serve the
equitable purpose of correcting the judgment to reflect the names
of the true parties who took part in the litigation all along.
(See, i.e., NEC Electronics, supra, 208 Cal.App.3d at p. 778.)
4. CONCLUSION.
As the evidence conclusively demonstrates, Mr. Wollersheim's
victories in this case have been won against at least three
entities, RTC, CSI and CSC, even though only one of them has
cared to call itself a plaintiff. RTC's and CSI's control of
this case having been firmly established, and the equities
falling entirely on the side of Mr. Wollersheim, he respectfully
requests that the Court grant this motion and add Religious
Technology Center and Church of Scientology International as
judgment debtors on the two final judgments dated June 3, 1994
and November 8, 1996.
Dated: April __, 1997
HAGENBAUGH & MURPHY
By____________________________ DANIEL A. LEIPOLD Attorneys for Defendant, Larry Wollersheim TABLE OF CONTENTS
1. BASIS OF MOTION.. . . . . . . . . . . . . . . . . . . . . 1
2. FACTUAL AND PROCEDURAL HISTORY. . . . . . . . . . . . . . 2
a. Mr. Wollersheim's Scientology Experience. . . . 2
b. After Many Years as Scientology's Chief
Organization, CSC Was Gutted, and RTC and CSI
Were Incorporated, Diverting Funds Away from
CSC Largely to Frustrate Mr. Wollersheim's
Ability to Collect a Judgment.. . . . . . . . . 4
c. The Unity of Interest Between CSC, CSI and
RTC is Clear; In Scientology, the Parameters
of the Corporate Structure are Ignored in
Favor of a Supreme Authority Called the Sea
Org. . . . . . . . . . . . . . . . . . . . . . 8
d. David Miscavige and Other Sea Org Officers
Within RTC and CSI Have Controlled This
Litigation and the Defense of the Underlying
Wollersheim I Case All Along. . . . . . . . . . 10
e. CSI Provided the Financial Support Needed to
Defend Wollersheim I and Prosecute the
Present Action. . . . . . . . . . . . . . . . . 13
f. RTC's Retributive Efforts Against Mr.
Wollersheim Based on His Judgment Against CSC
Continue to the Present Day.. . . . . . . . . . 15
3. EQUITY DEMANDS THE FINAL JUDGMENTS AGAINST PLAINTIFF
CSC, AWARDING COSTS AND ATTORNEYS FEES TO DEFENDANT
WOLLERSHEIM, BE AMENDED TO INCLUDE RTC AND CSI AS
JUDGMENT DEBTORS BECAUSE THE EVIDENCE FIRMLY
ESTABLISHES RTC AND CSI HAVE MANIPULATED AND CONTROLLED
CSC'S LITIGATION WITH LARRY WOLLERSHEIM FROM THE
BEGINNING.. . . . . . . . . . . . . . . . . . . . . . . . 17
a. Courts Have Broad Discretion to Amend
Judgments to Add Additional Judgment Debtors
as Justice Requires.. . . . . . . . . . . . . . 17
b. Mr. Wollersheim's Mountain of Evidence Far
Exceeds the Burden of Proof He Must Sustain
to Prevail. . . . . . . . . . . . . . . . . . . 18
c. Application of the Alter Ego Doctrine is Warranted
Where, as Here, a Sufficiently Strong Unity of
Interest Exists Between the Entities in Question
and Failure to Apply the Doctrine Would Lead to an
Inequitable Result. . . . . . . . . . . . . . . 19
1. The Absolute Unity of Interest
Between CSC, RTC and CSI Forecloses
the Notion That They Retain
Separate Personalities. . . . . . . . 20
2. The Equities Fall Entirely On the
Side of Defendant Wollersheim.. . . . 23
d. Granting This Motion Will Not Offend the Due
Process Rights of RTC or CSI. . . . . . . . . . 24
4. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . 25
TABLE OF AUTHORITIES
CASES
Carr v. Barnabey's Hotel Corp. (1994)
23 Cal.App.4th 14, 20 . . . . . . . . . . . . . . 18, 20, 25
Church of Scientology of California v. Wollersheim,
42 Cal.App.4th 628, 648 . . . . . . . . . . . . . 18, 20, 24
Church of Spiritual Technology v. United States,
26 Cl. Ct. 713 (1992),
aff'd., 991 F.2d 812 (Fed. Cir. 1993) . . . . . . . . . . .9
Jack Farenbaugh & Son v. Belmont Construction
(1987) 194 Cal.App.3d 1023. . . . . . . . . . . . . . 22, 25
Mid-Century Insurance Co. v. Gardner (1992)
9 Cal.App.4th 1205, 1212. . . . . . . . . . . . . . . 18, 19
Mirabito v. San Francisco Dairy Co. (1935)
8 Cal.App.2d 54, 57 . . . . . . . . . . . . . . . 18, 22, 24
NEC Electronics Inc. v. Hurt (1989)
208 Cal.App.3d 772, 778 . . . . . . . . . . . . . 17, 19, 25
Sheard v. Superior Court (1974)
40 Cal.App.3d 207 . . . . . . . . . . . . . . . . . . 19, 22
Thomson v. L. C. Roney & Co. (1952)
112 Cal.App.2d 420. . . . . . . . . . . . . . . . . . . . 21
U.S. v. Zolin, 905 F.2d 1344
(9th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . .9
Ukegawa Brothers v. Agricultural Labor Relations Board
(1989) 212 Cal.App.3d 1314, 1323. . . . . . . . . . . 19, 25
STATUTUES
Code of Civil Procedure 187 . . . . . . . . . . . . . . . . . 17
Daniel A. Leipold, Esq., State Bar No. 77159 Robert F. Donohue, Esq., State Bar No. 110505 Cathy L. Shipe, Esq., State Bar No. 156453 HAGENBAUGH & MURPHY Suite 8200 701 South Parker Street Orange, CA 92668 Telephone: (714) 835-5406
Attorneys Specially appearing for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DECLARATION OF DANIEL A. LEIPOLD IN SUPPORT OF MOTION BY DEFENDANT LARRY WOLLERSHEIM TO AMEND JUDGMENT
Date: May 14, 1997 Time: 9:00 a.m. Dept: 14
I, Daniel A. Leipold, declare as follows:
1. I am an attorney at law duly licensed to practice law
in the State of California and am a member of the law firm of
Hagenbaugh & Murphy, attorneys of record specially appearing for
defendant Larry Wollersheim in the within action. I am familiar
with the matters set forth herein and if called as a witness, I
could and would competently testify thereto.
2. Since 1991, I have been involved in the defense of
multiple lawsuits brought by members of, and entities associated
with, Scientology. I have further developed professional,
networking relationships with other attorneys defending against
similar lawsuits and/or prosecuting claims on behalf of persons
aggrieved by Scientology practices. Thus, I have become privy to
a wealth of evidence developed in these cases, accumulated by
both my office and by the offices of the various attorneys with
whom I have developed these networking relationships.
3. Accompanying defendant's motion to amend as Exhibit "L"
is a true and correct excerpt from the deposition of Warren
McShane, taken in the case of RTC, et. al. v. Netcom Online
Communication Services, Inc. (USDC Case No. C-95-20091), a case
in which I served as counsel to defendant Tom Klemesrud.
4. Accompanying defendant's motion to amend as Exhibit "S"
is a true and correct excerpt from the deposition of Vicki
Aznaran taken in Vicki Aznaran, et. al. v. CSC, et. al., USDC
Case No. CV 88-1786-WDK).
5. Accompanying defendant's motion to amend as Exhibit "T"
is a true and correct excerpt from the deposition of Vicki
Aznaran taken in in RTC, et. al. v. Wollersheim, USDC Case No. CV
85-711).
6. Accompanying defendant's motion to amend as Exhibit
"DD" is a true and correct copy of a list of search terms
employed by agents of RTC in August 1995 while conducting the
raid of Larry Wollersheim's home pursuant to the Writ of Seizure
obtained in the federal court in Denver. I originally learned of
this document from Mr. Wollersheim; at the time, I was
representing him only in the case herein. Since that time, I
have been admitted pro hac vice to represent him in RTC v.
F.A.C.T.Net (Wollersheim V), the case which began with the
issuance of the Writ of Seizure. After learning of this document
from Mr. Wollersheim, I obtained a copy of it from the office of
Faegre and Benson, the attorneys who originally represented him
in the RTC v. F.A.C.T.Net case, and I then had a discussion about
it with one of the attorneys representing plaintiffs in that
matter, whom I believe was Todd Blakely. That attorney confirmed
the authenticity of the document during the conversation. As
the attorney now representing Mr. Wollersheim in the RTC v.
F.A.C.T.Net case, I have reviewed the files and can now confirm
the document submitted as Exhibit "DD" is the search terms list.
I declare under penalty of perjury that the foregoing is
true and correct.
Executed this ____ day of _______________, 1997 at Orange, California.
_____________________________
DANIEL A. LEIPOLD
Daniel A. Leipold, Esq., State Bar No. 77159
Robert F. Donohue, Esq., State Bar No. 110505
Cathy L. Shipe, Esq., State Bar No. 156453
HAGENBAUGH & MURPHY
Suite 8200
701 South Parker Street
Orange, CA 92668
Telephone: (714) 835-5406
Attorneys Specially appearing for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
SEPARATE STATEMENT OF FACTS AND EVIDENCE IN SUPPORT OF DEFENDANT WOLLERSHEIM'S MOTION TO AMEND THE JUDGMENTS
Date: May 14, 1997 Time: 9:00 a.m. Dept: 14
Defendant Larry Wollersheim submits the following statement
of facts and evidence in support of his Motion to Amend the
Judgments awarding him costs and attorneys fees in this
matter.
FACT SUPPORTING EVIDENCE1.There are five separate
cases in the Wollersheim saga.1. Exhibit "C" (Summary of
History of Wollersheim
Litigation with Scientology
entities), as authenticated by
Declaration of Robert F.
Donohue, 6.
2. Scientology's policy of Fair Game states: "ENEMY. 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."2. Declaration of Dennis Erlich of 10/26/92, filed in opposition to plaintiff's application for preliminary injunction in Hart v. CAN (LASC No. BC043303 6, and Exhibit "B" attached thereto.*3. Although the Wollersheim v. CSC jury's $30 million award to Mr. Wollersheim was reduced by the appellate court to $2.5 million, that judgment against CSC, with interest, will be worth $5,770,565.25 by April 30, 1997.3. Declaration of Craig Stein, 11.
4. At the time Mr.
Wollersheim filed his lawsuit
against CSC on July 29, 1980,
and prior to the formation of
CSI and RTC in late 1981 and
early 1982, CSC ran all the
organizations of Scientology.
4. Exhibit "D" (Second
Amended Complaint in
Wollersheim v. CSC, No. C332
027).*
Transcript from 10/82
Mission Holders' Conference,
remarks of Lyman Spurlock (p.
4), attached as Exhibit "3"
to, and authenticated by,
Declaration of Stacy Young,
16, 20.
5. CSC was incorporated in
California in 1954 and was
Scientology's "mother church"
until CSI was formed in late
1981.5. Exhibit "A" (Excerpts
from Deposition of Neil Levin
in Wollersheim v. CSC) 9:20-
23, 61:3-18, as authenticated
by Declaration of Robert F.
Donohue 7;
Transcript from 10/82
Mission Holders' Conference,
remarks of Lyman Spurlock
(p.4), attached as Exhibit "3"
to Declaration of Stacy Young.
Declaration of Stacy
Young, 2.
6. The net worth of CSC in
July of 1981 was $340 million.6. Exhibit "I" (Trial
testimony of William Franks in
Titchbourne v. Church of
Scientology, Mission of Davis
(Cir. Ct. Oregon No. A7704-
05184)* 2044:12-2045:12.
7. Starting in December
1981, Scientology underwent a
corporate reorganization,
called "Mission Corporate
Category Sort-Out" (MCCS).
Sixty to 70% of CSC was
divested at the end of
December, 1981. 7. Exhibit "J" (Excerpt from
Vol. 91 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC, testimony
of Lynn Farny)*, 14309:24-
14310:11;
First Declaration of
Gerald Armstrong (filed in
Wollersheim v. CSC)
(Wollersheim I), dated
2/11/85,* 1-5.
Church of Spiritual
Technology v. U.S., 26 Cl.Ct.
713, 716 (1992), aff'd. 991
F.2d 812 (Fed. Cir. 1993).*
8. When, in early 1985, it
appeared to Scientology's OSA
(Office of Special Affairs)
unit that Mr. Wollersheim
might be winning his lawsuit,
the decision was made to strip
CSC of what it still had.8. Declaration of Stacy
Young, 7, 11.
9. The remaining 30 to 40%
of CSC was gone by May of
1985.
9. Exhibit "J" (Excerpt from
Vol. 91 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC, testimony
of Lynn Farny),* 14309:24-
14310:11
10. When CSI, a corporation,
was formed in late 1981, it
replaced CSC as the "mother
church." As of 1995, CSI
continues to be the mother
church and in this capacity
oversees most other
Scientology entities,
including CSC.
10. Exhibit "A" (Levin
deposition) 61:3-18;
Exhibit "B" (Attachments
to Form 1023 Application for
Recognition of Exemption,
submitted to IRS by CSI in
pursuit of 501(c)(3) tax
exempt status; produced by CSI
in CSI, et. al. v. Fishman,
et. al., USDC Case No.
CV916426 HLH(Tx))
(hereinafter, "Tax Records"),
p. 150063, as authenticated by
Declaration of Graham Berry,
3.
Declaration of Stacy
Young, 22.
Transcript from 10/82
Mission Holders' Conference,
remarks of Lyman Spurlock
(p.4), and Chart of new
corporate structure, attached
as Exhibits "3" and "5" to
Declaration of Stacy Young.11. According to the
hierarchy established by the
MCCS reorganization, the only
Scientology entity superior to
CSI is RTC, a corporation
which owns and licenses
Scientology trademarks and
service marks.11. Exhibit "P" (RTC Articles
of Incorporation);*
Exhibit "B" (Tax records)
pp. 150004, 150192- 150194;
150227-150235;
Transcript from 10/82
Mission Holders' Conference,
remarks of Lyman Spurlock
(p.5), and Chart of new
corporate structure, attached
as Exhibits "3" and "5" to
Declaration of Stacy Young.
12. Scientology gutted CSC of
all its assets to prevent
Wollersheim and other
litigants against Scientology
from collecting judgments.12. Declaration of Stacy
Young, 10-12, 15;
13. In October 1982,
Scientology held a "U.S.
Missionholders Conference" to
explain the MCCS corporate
reorganization, at which
Scientology officials David
Miscavige and Lyman Spurlock,
both of whom were founding
trustees of RTC in 1981,
explained the reorganization
had been intended to make
Scientology "impregnable."13. Exhibit "B" (Tax records)
pp. 150232-150234, 153890;
Exhibit "P" (RTC Articles
of Incorporation);
Exhibit "L" (Excerpt from
deposition of Warren McShane
in RTC, et. al. v. Netcom On-
Line Communication Services,
Inc., et. al. (USDC Case No.
C-95-20091)) 220:11-221:3, as
authenticated by Declaration
of Daniel A. Leipold, 3;
Declaration of Stacy
Young, 16;
Transcript from 10/82
Mission Holders' Conference,
remarks of David Miscavige
(p.7) and Lyman Spurlock
(p.6), attached to as Exhibit
"3" to Declaration of Stacy
Young.
14. At the 10/82
Missionholders Conference,
David Miscavige told attendees
that the reorganization had
resulted in a "corporate
structure [which] assures
Scientology being around for
eternity."14. Transcript from 10/82
Mission Holders' Conference,
remarks of David Miscavige
(p.7), attached as Exhibit "3"
to Declaration of Stacy Young.
15. Before the 1981
reorganization, the most
prosperous units in
Scientology were within CSC,
and CSC received regular
income from them.15. Transcript from 10/82
Mission Holders' Conference,
remarks Lyman Spurlock (p.4),
attached as Exhibit "3" to
Declaration of Stacy Young;
CSC v. Commissioner of
Internal Revenue, 823 F.2d
1310, 1313-1314 (9th Cir.
1987).*
16. Organizations such as
Church of Scientology San
Francisco, the Advanced Org of
Los Angeles and FOLO Western
U.S., all part of CSC until
late 1981, paid CSC monthly
management fees.16. Exhibit "A" (Levin
deposition) 63:18-64:2;
74:7-9; 137:7-14;
Transcript from 10/82
Mission Holders' Conference,
remarks of Lyman Spurlock
(p.4), attached as Exhibit "3"
to Declaration of Stacy Young;
CSC v. Commissioner of
Internal Revenue, 823 F.2d
1310, 1313-1314 (9th Cir.
1987).
17. After the reorganization,
the payments previously made
by Scientology organizations
to CSC were to be paid to CSI.
CSI receives five to 10
percent of weekly receipts
from 98 Scientology
organizations.17. Declaration of Stacy
Young, 21;
Exhibit "A" (Levin
deposition) 137:24-138:6;
139:22-140:4;
Exhibit "B" (Tax records)
pp. 151414-151415; 151576-
151577.
18. Twenty-five percent of
CSI's revenue consists of
management payments received
from Scientology
organizations.18. Exhibit "B" (Tax records)
p. 151414.
19. Flag Service Organization
was part of CSC until 1981,
when it was incorporated as
Church of Scientology Flag
Service Organization (CSFSO).19. Exhibit "A " (Levin
deposition) 137:24-138:6;
139:22-140:4.
Exhibit "B" (Tax records)
p. 150063.
20. After 1981, CSFSO began
making management payments to
CSI; by 1989, these payments
averaged $200,000 per week.20. Exhibit "B" (Tax records)
p. 151577.21. CSC is a "dormant"
corporation which has no real
activities.21. Exhibit "A" (Levin
deposition) 5:19-22; 40:25-
41:4.
Exhibit "B" (Tax records)
p. 153800.
22. As of May 1995, CSC had
been dormant "for several
years." In its 1993
application for tax exempt
status, CSI provided
information gathered in 1991,
responding to an IRS inquiry
about why CSI had
characterized CSC as
"inactive." There, CSI
claimed CSC to be among
"entities that were once
active but are no longer
carrying on any activity....
CSC is termed inactive because
it is no longer carrying out
any activity though it was
once an active church
corporation."22. Exhibit "A" (Levin
deposition) 41:1-3.
Exhibit "B" (Tax records)
pp. 150004-150005; 153800.
23. CSC has no employees and
transacts no business.23. Exhibit "A" (Levin
deposition) 40:25-41:4; 57:23-
58:2.
Exhibit "B" (Tax records)
p. 153800.
24. When CSI applied to the
IRS for 501(c)(3) tax exempt
status in 1993, it did not
include CSC among the entities
for which it sought
protection.24. Exhibit "B" (Tax records)
p. 150004-150005.
25. President Levin of CSC
devotes no time to CSC-related
duties, nor has he been paid a
salary by CSC since 1992.25. Exhibit "A" (Levin
deposition) 46:5-12; 50:6.
26. As of 1995, in addition
to his status as president of
CSC, Neil Levin is employed by
CSI as a tax handling officer
in the Office of Special
Affairs International (OSA). 26. Exhibit "A" (Levin
deposition), 19:23, 55:13-20.
27. Scientology's Office of
Special Affairs (OSA) was
previously known as the
Guardian's Office, a unit
affiliated with CSC which
handled public relations,
intelligence and legal matters
for all of Scientology.27. Declaration of Stacy
Young, 6.
Exhibit "J" (Excerpt from
Vol. 91 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC, testimony
of Lynn Farny)*, pp. 14301,
14303.
28. The former Guardian's
Office became known as the
Office of Special Affairs in
approximately 1983.28. Declaration of Stacy
Young, 6.
29. In approximately 1985,
OSA's operations were
transferred from CSC to come
under CSI's control.29. Exhibit "A" (Levin
deposition) 19:23.
Exhibit "B" (Tax records)
p. 152248.
Declaration of Stacy
Young, 11-14;
30. As of April 30, 1986, CSC
claimed its net worth was
$18,667,947. 30. Exhibit "M" (Balance
Sheet dated 4/30/86, prepared
by Greenberg & Jackson, marked
and received as Exhibit 478 in
post-trial matters in
Wollersheim v. CSC).*
Exhibit "J" (Excerpt from
Vol. 91 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC, testimony
of Lynn Farny)*, p. 14305:17-
14306:6.
31. The $18.6 million figure
representing CSC's purported
net worth as of April 1986 was
prepared by the accounting
firm of Greenberg & Jackson;
among that firm's principals
was Marty Greenberg, a staff
member within the precursor
entity to Scientology's OSA
unit, the Guardian's Office.31. Exhibit "N" (GO List,
marked and received as Exhibit
94 in Wollersheim v. CSC
trial),* p. 353-A.
Exhibit "HH" (Master
Index to Reporters' Transcript
on Appeal in Wollersheim v.
CSC), p. xxxiv.*32. As of 1994, Lynn Farny is
an officer of CSI.32. Exhibit "O" (Notice of
Filing Amendment and Amendment
to Bond for Stay of Execution
of Judgment, filed 6/24/94 in
consolidated actions RTC v.
Scott and RTC v.
Wollersheim.)*
33. On July 29, 1986, Lynn
Farny, in his capacity as a
director of CSC, agreed on the
record in Wollersheim v. CSC
that CSC would not disburse,
dispose of, spend, transfer or
convey assets of CSC without
prior approval of the court
except in the ordinary course
of business.33. Exhibit "K" (Excerpt from
Vol. 97 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC, testimony
of Lynn Farny)*, p. 14912:22-
14913:27.
34. Los Angeles Superior
Court Judge Ronald Swearinger,
ruling on a post-trial motion
in Wollersheim v. CSC,
determined on the basis of
evidence before him that CSC
had voluntarily depleted all
of its assets to sister
corporations during the
pendency of the case to create
the appearance of indigency.34. Exhibit "Q" (Minute Order
of the Court entered 9-26-86
in Wollersheim v. CSC).*
35. In December 1986, ex-
Scientologist Gerald Armstrong
settled his claims against CSC
for $800,000 in an agreement
executed by CSI. These claims
had been advanced by way of a
cross-complaint filed in the
matter of CSC v. Armstrong, in
which CSC sued Mr. Armstrong
for conversion of
"confidential" documents.
L.A. Superior Court Judge Paul
Breckenridge dismissed CSC's
complaint in 1984, finding Mr.
Armstrong's possession of the
documents justified by his
fear for the lives of his wife
and himself and the belief
that he needed the documents
as leverage against the
threats. The court of appeal
affirmed that decision.35. Exhibit "R" (Mutual
Release of All Claims,
executed between Gerald
Armstrong and CSI in
settlement of cross-complaint
in Armstrong v. CSC LASC No. C
420153), as authenticated by
the Declaration of
Ford Greene, 7.
Declaration of
Ford Greene, 2-6.
CSC v. Armstrong (1991)
232 Cal.App.3d 1060.
36. The settlement disposing
of Gerald Armstrong's claims
against CSC, executed by
representatives of CSI, named
CSC, RTC and "all Scientology
entities" as beneficiaries of
the agreement.
36. Exhibit "R" (Armstrong
settlement).
Declaration of
Ford Greene, 6.
37. In March 1996, CSC
deposited the contents of its
Luxembourg bank account, which
by then totalled $38,993.09,
with the Court, in response to
Mr. Wollersheim's motion for
the appointment of a receiver.37. Declaration of Craig
Stein, 6.
38. As of May, 1995, CSC
banked at Republic Bank in New
York and at Krediet Bank of
Luxembourg. The Luxembourg
account had $35,000 in it.
The New York account had been
opened with CSI funds to pay a
sanctions award in Wollersheim
v. CSC.38. Exhibit "A" (Levin
deposition) 37:22-38:20;
46:19-20; 47:12.
Declaration of Craig
Stein, 17.
39. As of May, 1995, CSC owns
no personal property and no
real property anywhere in the
world.39. Exhibit "A" (Levin
deposition) 124:4-18.
40. As of May, 1995, the only
cases in which CSC was a
plaintiff or cross-complainant
were the present one and the
case of RTC v. Scott, which
had been consolidated with RTC
v. Wollersheim (Wollersheim
II). The Scott and
Wollersheim II cases had both
been filed in the 1980s.40. Exhibit "A" (Levin
deposition) 52:12-53:15.
Exhibit "E" (First
Amended Complaint in RTC, et.
al. v. Wollersheim, et. al.
USDC Case No. 85-7197 MRP)*
Exhibit "F" (Caption page
from Complaint in RTC, et. al.
v. Scott, et. al. (USDC Case
No. 85711);*
41. The Sea Org is an
unincorporated paramilitary
organization whose bank
reserves in July of 1981
totalled $150 million.41. Exhibit "B" (Tax records)
p. 150160-150161.
Exhibit "I" (Testimony of
William Franks in Titchbourne)
p. 2041, l. 4-20.42. Power over all
Scientology entities is
exercised by the Sea Org
irrespective of corporate
boundaries.42. Declaration of Stacy
Young, 17;
Exhibit "S" (Excerpts
from deposition of Vicki
Aznaran in Vicki Aznaran, et.
al. v. CSC, et. al., USDC Case
No. CV 88-1786-WDK), 335:17-
23, as authenticated by
Declaration of Daniel A.
Leipold, 4.
43. The highest posts within
Scientology corporations are
occupied by officers of the
Sea Org. 43. Exhibit "B" (Tax records)
pp. 150159, 153818-153819.
44. Captain David Miscavige
of the Sea Org is its highest
ranking officer.44. Exhibit "B" (Tax records)
p. 153819.45. A founding trustee of RTC
in December 1981, David
Miscavige is its current
chairman of the board.45. Exhibit "B" (Tax records)
pp. 150232, 150234, 153890;
Exhibit "L" (McShane
deposition) 220:11-221:3.
46. As the only non-Brevet
captain in the Sea Org,
Miscavige is the only one
whose rank is not dependent
upon his continued service in
a particular post.46. Exhibit "B" (Tax records)
pp. 153818-153819.
47. Prior to 1987, David
Miscavige ruled Scientology
from his position as chairman
of Author Services, Inc.
(ASI), a for-profit
corporation ostensibly created
as a literary agency for L.
Ron Hubbard.47. Declaration of Stacy
Young 18, 25.
Exhibit "T" (Excerpts
from deposition of Vicki
Aznaran in RTC, et. al. v.
Wollersheim USDC Case No. CV
85-711) 45:14-46:2, as
authenticated by Declaration
of Daniel A. Leipold, 5.
48. In 1987, when the IRS
began investigating ASI's ties
to Scientology's non-profit
corporations, Miscavige moved
the seat of power to RTC and
appointed himself chairman of
the board.48. Declaration of Stacy
Young 25.
49. Before moving to RTC,
Miscavige managed the defense
of the Wollersheim I case from
his post at ASI, assisted by
other Sea Org officers.49. Declaration of Stacy
Young, 25.
Exhibit "S" (Vicki
Aznaran deposition in Vicki
Aznaran, et. al. v. CSC, et.
al.) 332:6-333:22, 366:1-8.
50. Other ASI personnel
assisting in the management of
CSC's defense in Wollersheim
v. CSC were Marty Rathbun and
Norman Starkey, both Sea Org
officers. Rathbun eventually
became a director of RTC and
its president, as well as a
trustee of CSI. Starkey was
one of RTC's founding
trustees.50. Exhibit "S" (Vicki
Aznaran deposition in Vicki
Aznaran, et. al. v. CSC, et.
al.) 366:1-8;
Exhibit "B" (Tax records)
pp. 150007-150009, 150232,
150234, 151380, 153819.
51. Miscavige attended a
portion of the Wollersheim I
trial.51. Exhibit "K" (Excerpt from
Vol. 97 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC), p.
14912:22-14913:27.52. In Scientology, the term
"PC file" refers to an
adherent's "pre-clear" file
and contains information
gleaned from a Scientologist's
"auditing" sessions. 52. Exhibit "S" (Excerpts
from deposition of Vicki
Aznaran in Vicki Aznaran, et.
al. v. CSC, et. al.), 335:17-
23.
53. Between mid-1983 and
early 1986, Vicki Aznaran held
command positions at RTC,
including the position of
president. She was also a Sea
Org officer. While an officer
of RTC, she received an order
to destroy the PC files of
Larry Wollersheim and others
involved in litigation against
Scientology.53. Exhibit "S" (Excerpts
from deposition of Vicki
Aznaran in Vicki Aznaran, et.
al. v. CSC, et. al.) 214:6-16;
215:1-7; 332:19-333:22;
Supplemental Declaration
of Vicki Aznaran (filed
herein, Joint Appendix on
Appeal, Vol. 3, p. 783),* 8.
Exhibit "B" (Tax records)
p. 150243.
54. In CSC, et. al. v.
Superior Court, et. al.
(Wollersheim III) (in which
Mr. Wollersheim was a
defendant), CSC claimed Judge
Swearinger's order in
Wollersheim I, compelling
production of Mr.
Wollersheim's PC files,
violated plaintiffs' freedom
of religion. The case was
dismissed in November of 1986.54. Exhibit "G" (Second
Amended Complaint in CSC, et.
al. v. Superior Court,
Swearinger, Margolis and
Wollersheim (USDC Car No. CV-
86 1362 ER).*
55. The directive to Vicki
Aznaran to destroy Mr.
Wollersheim's PC files was
issued by David Miscavige.55. Exhibit "S" (Vicki
Aznaran deposition in Vicki
Aznaran, et. al. v. CSC, et.
al.) 332:6-333:22, 366:1-8.56. All writings of L. Ron
Hubbard are considered
"scripture" in Scientology. In
or about 1968, L. Ron Hubbard
wrote that "The purpose of the
suit is to harass and
discourage rather than to win.
[] The law can be used very
easily to harass, and enough
harassment on somebody who is
simply on the thin edge
anyway, well knowing that he
is not authorized, will
generally be sufficient to
cause his professional
decease. If possible, of
course, ruin him utterly."56. Exhibit "B" (Tax records)
p. 150064.
Second Declaration of
Gerald Armstrong (dated June
4, 1993 and filed herein in
conjunction with defendant's
first motion for attorneys
fees), 5, and Exhibit "A"
attached thereto.*
Declaration of Vicki
Aznaran in U.S. v. Fishman, p.
4, l. 3-11 (and cover
declaration filed in
conjunction with defendant's
Anti-SLAPP Motion to Strike
herein).*
57. RTC and CSI v.
Wollersheim (Wollersheim II)
was filed on 11/4/85. In it,
the plaintiffs claimed the
possession and use of certain
documents in the prosecution
of Wollersheim I by Mr.
Wollersheim, his attorneys and
experts constituted, inter
alia, RICO violations and
copyright infringement.57. Exhibit "E" (First
Amended Complaint in RTC and
CSI v. Wollersheim, et. al.).
58. The decision to file the
Wollersheim II case was made
by Sea Org officers David
Miscavige, Norman Starkey,
Marty Rathbun and Vicki
Aznaran, among others. 58. Exhibit "T" (Excerpts
from deposition of Vicki
Aznaran in RTC/CSI v.
Wollersheim) 684:1-685:21.
Exhibit "B" (Tax records)
p. 153819.
59. Among the attorneys
representing RTC and CSI in
Wollersheim II was Earle
Cooley, who was also
representing CSC in
Wollersheim I at the time.59. Exhibit "V" (Notice of
Final Judgment filed by Earle
C. Cooley and Kendrick L.
Moxon on 3/11/94 in
Wollersheim v. CSC)*;
Exhibit "K" (Excerpt from
Vol. 97 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC), pp.
14912:22-14913:27.
RTC v. Wollersheim, 796
F.2d 1076 (9th Cir. 1992).*
60. In Wollersheim II, both
RTC and CSI claimed, as
elements of damages, the costs
and damages award arising out
of Mr. Wollersheim's case
against CSC.60. Exhibit "U" (Plaintiffs'
Statement in Response to OSC
Re Rico Claims, filed 8/21/89
in consolidated actions RTC v.
Scott; RTC v. Wollersheim
(USDC Case Nos. 85711/
857197),* Responses to
Questions 4, 8 and 17 (pp. 4,
42, 45.)
61. The RICO statement
containing RTC's and CSI's
damages claims was signed by
Attorney Kendrick Moxon
(himself a former staff member
of Scientology's Guardian's
Office), who represented CSC
in Wollersheim I post-trial
matters, and who represents
CSC herein.61. Exhibit "U" (RICO
Statement), p. 45.
Exhibit "V" (Notice of
Final Judgment in Wollersheim
I);
Exhibit "N" (GO List),
pp. 352-C, 387-B;
Exhibit "HH" (Master
Index to Reporters' Transcript
on Appeal in Wollersheim I) p.
xxxiv.
62. Bowles & Moxon was the
firm handling the majority of
Scientology's legal work. In
1991, the firm was paid
$3,199,232.53 by CSI alone.62. Exhibit "B" (Tax records)
pp. 153847-153850.
63. In eventually awarding
$2.9 million in attorneys fees
to defendants in RTC v. Scott,
the action with which
Wollersheim II was
consolidated, the court
adopted the recommendations of
Special Master James Kolts,
who found plaintiffs had
abused the federal court
system by using it to destroy
their opponents. This
decision was affirmed by the
Ninth Circuit Court of
Appeals.63. Exhibit "X" (Memorandum
of Decision by Special Master
James Kolts in RTC v. Scott,
dated 1/20/93),* p. 2.
Exhibit "Y" (Memorandum
Opinion of Ninth Circuit Court
of Appeals, filed 4/11/96, in
RTC v. Scott).*
64. In dismissing the
Wollersheim II complaint in
May of 1990, the District
Court judge adopted the
recommendations of Special
Master James Kolts, who found
the complaint to have been
"frivolous and malicious."64. Exhibit "W" (Order of the
Honorable James Ideman
Clarifying Prior Order
Adopting Conclusions and
Recommendations of Special
Master RE Rico Claims).*
Exhibit "GG" (Excerpt
from Evaluation of Order to
Show Cause Re: Rico
Statements, signed by the
Honorable James G. Kolts on
3/7/90),* p. 44.
65. Before Wollersheim II was
dismissed, RTC and CSI
petitioned the Ninth Circuit
Court of Appeals for the
disqualification of the entire
U.S. District Court for the
Central District of
California, based upon bias
and prejudice. The Ninth
Circuit denied the petition
and ordered it stricken.65. CSC v. Wollersheim (1996)
42 Cal.App.4th 628, 636.
66. The Amended Notice of
Appeal, in which the dismissal
of the "Greene defendants"
(Mr. Wollersheim, his
attorneys and expert
witnesses) in Wollersheim II
was filed on behalf of RTC and
CSI, as well as nonparty CSC.66. Exhibit "Z" (Amended
Notice of Appeal filed on
9/11/90 in USDC consolidated
actions RTC v. Scott; RTC v.
Wollersheim (Nos. 85711/
857197).*
67. The dismissal of the
Wollersheim II complaint was
affirmed by the Ninth Circuit
Court of Appeals.67. RTC and CSI v.
Wollersheim, et. al., 971 F.2d
364 (9th Cir. 1992).*
68. In April or May of 1987,
Sea Org Captain (Brevet) Marty
Rathbun discussed a plan to
steal the medical records of
Attorney Charles O'Reilly with
other high-ranking Scientology
officials and three private
investigators.68. Declaration of Joseph A.
Yanny (originally filed in RTC
v. Yanny, LASC No. C6902111
and subsequently filed herein,
Joint Appendix on Appeal, Vol.
1, pp. 281-309),* 21(a).
69. Joseph A. Yanny is an
attorney who has previously
represented CSC, RTC and CSI
in cases including Wollersheim
II and Wollersheim III.
Before he ceased representing
Scientology entities in
November of 1987, he attended
meetings at which David
Miscavige, Marty Rathbun and
others discussed ways of
pressuring Mr. Wollersheim's
attorneys into easing off the
verdict, and he witnessed
Miscavige's and Rathbun's
directives regarding the theft
of Mr. O'Reilly's medical
records.69. Declaration of Joseph A.
Yanny (Joint Appendix pp. 281,
295:10-296:6), 1, 2, 21.
Exhibit "E" (First
Amended Complaint in RTC v.
Wollersheim ("Wollersheim
II"));
Exhibit "G" (Second
Amended Complaint in CSC, et.
al. v. Superior Court, et. al.
(Wollersheim III).
70. The order to steal Mr.
O'Reilly's medical records was
implemented on orders from
David Miscavige.70. Declaration of Joseph A.
Yanny, (Joint Appendix pp.
295:10-296:6), 21(a).
71. The goal of the plan to
steal Mr. O'Reilly's medical
records was to obtain
information useful to
blackmail him into easing off
the $30 million verdict.71. Declaration of Joseph A.
Yanny, (Joint Appendix pp.
295:25-296:6), 21(a).
72. CSI paid CSC's defense
costs in Wollersheim v. CSC
(Wollersheim I).72. Exhibit "A" (Levin
deposition) 60:21-24.
73. Scientology maintains a
central reserve system to fund
activities such as expansion,
defense and emergencies.73. Exhibit "B" (Tax records)
p. 151572.
74. Among the Scientology
entities participating in the
central reserve system are CSI
and CSC.74. Exhibit "B" (Tax records)
p. 151574.
75. The central reserve fund
is administered by a committee
consisting entirely of full-
time employees of CSI.75. Exhibit "B" (Tax records)
pp. 151578, 151580, 151882.
76. The central reserve
committee authorized $12
million annually in 1987 and
1988 for legal fees, court
costs and other expenses
related to the defense of the
activities of Scientology.76. Exhibit "B" (Tax records)
p. 151602.
77. CSC's attorneys fees
arising from the present
litigation have been paid by
CSI.77. Exhibit "A" (Levin
deposition) 59:22-60:9.
78. CSC President Levin
recalls no written agreement
between CSC and CSI for the
repayment of attorneys fees.78. Exhibit "A" (Levin
deposition) 60:14-16.
79. Scientology's vow never
to pay Mr. Wollersheim's
judgment was captured in the
phrase, "Not One Thin Dime for
Wollersheim," which became a
slogan for the Wollersheim
case. This sentiment was
echoed by Attorney Earle
Cooley, who told the Los
Angeles Times: "Larry
Wollersheim will never collect
a dime."79. Declaration of Stacy
Young, 10.
Exhibit "FF" (Los Angeles
Times article of 7/23/86).
80. A 1982 bulletin from CSI
to Scientology "orgs"
proclaimed the "new, totally
secure corporate set-up" would
ensure no claimant against
Scientology would ever be paid
"one dime."80. International Management
Bulletin No. 1, dated
11/23/82, attached as Exhibit
"2" to, and authenticated by,
Declaration of Stacy Young,
16.
81. In its 1993 application
for 501(c)(3) tax exempt
status, CSI submitted a
Consolidated Balance Sheet to
the IRS which included as a
liability of CSI's the $30
million judgment obtained by
Mr. Wollersheim against CSC.81. Exhibit "B" (Tax
records), p. 151594.
82. In August 1995, as a
precursor to its filing of the
Wollersheim V case, RTC filed
an ex parte petition in
federal court in Denver,
seeking a Writ of Seizure, as
authorized under U.S.
copyright laws, to enter the
home of Lawrence Wollersheim
and to search for and seize
certain materials apparently
authored by L. Ron Hubbard.82. Exhibit "AA" (Motion for
a Writ of Seizure and
Impoundment of Infringing
Trade Secret Articles filed by
RTC in RTC v F.A.C.T.Net, et.
al. USDC Civil Action No. 95-
K-2143.)*
83. Subsequent to the filing
of RTC v. F.A.C.T.Net, et. al.
(Wollersheim V), another
plaintiff, Bridge Publications
Inc. (BPI), has joined in the
litigation as a plaintiff.
BPI, a Sea Org entity which
was formerly a part of CSC,
has a board of directors
appointed by CSI.83. Exhibit "H" (First
Amended Verified Complaint and
its Exhibit "I", filed in RTC
v. F.A.C.T.Net, et. al.)
Note: because the attachments
to the amended complaint are
voluminous and largely
irrelevant to the instant
motion, only Exhibit "I" is
provided here;
Exhibit "B" (Tax records)
pp. 157303, 157307, 157340;
Church of Spiritual
Technology v. U.S., 26 Cl. Ct.
713 (1992), aff'd., 991 F.2d
812 (Fed. Cir. 1993).*
84. Among the lawyers
representing the plaintiffs in
RTC et. al. v. F.A.C.T.Net,
et. al., was Earle Cooley, who
also represented RTC, CSI and
CSC in Scientology's previous
litigation against Mr.
Wollersheim. 84. Exhibit "V" (Notice of
Final Judgment in Wollersheim
v. CSC)*;
Exhibit "K" (Excerpt from
Vol. 97 of Reporter's
Transcript on Appeal in
Wollersheim v. CSC), pp.
14912:22-14913:27.
RTC v. Wollersheim, 796
F.2d 1076 (9th Cir. 1992).*
Exhibit "H" (Wollersheim
V amended complaint).
85.The writ of seizure
authorized by the U.S.
magistrate pursuant to RTC's
application was subsequently
vacated, and RTC and BPI
failed in their effort to
obtain a preliminary
injunction when the court
determined plaintiffs were
unlikely to prevail on the
merits, and the balance of
hardships weighed in favor of
Mr. Wollersheim and the other
defendants.85. Exhibit "BB" (Memorandum
Opinion and Order of the
Honorable John L. Kane, Jr.,
filed 9/15/95 in RTC v.
F.A.C.T.Net, denying
plaintiffs' motion for
preliminary injunction and
ordering the return of all
seized items),* p. 18.
86. The order granting the
petition for a writ of seizure
authorized agents of RTC to
enter Mr. Wollersheim's home
to search for materials
apparently authored by L. Ron
Hubbard whose RTC-owned
copyrights Mr. Wollersheim was
alleged to have infringed.86. Exhibit "CC" (Order to
Clerk to Issue Writ for
Seizure of Articles Infringing
Statutory Copyright and
Containing Misappropriated
Trade Secrets and Order for
Impoundment, filed 8/21/95 in
RTC v. F.A.C.T.Net),* pp.2-3.
87. When agents of RTC
conducted their search
pursuant to the writ of
seizure, they ran a search of
Mr. Wollersheim's computer,
seeking documents by means of
a list of keywords; among the
keywords employed were
"Swearinger," "O'Reilly" and
"Leipold."87. Exhibit "DD" (List of
search terms employed by
agents of RTC searching Mr.
Wollersheim's computer
pursuant to order authorizing
writ of seizure), as
authenticated by Declaration
of Daniel A. Leipold, 6.
88. Mr. Wollersheim's counsel
in this lawsuit, Daniel A.
Leipold of Hagenbaugh &
Murphy, substituted into the
Wollersheim V matter on behalf
of Mr. Wollersheim in 1996,
pursuant to an approved
application pro hac vice.88. Exhibit "EE" (Memorandum
Opinion and Order filed
11/21/96 in RTC and BPI v.
F.A.C.T.Net, et. al., granting
application pro hac vice of
Daniel A. Leipold),* p. 26.
89. RTC and BPI attached a
copy of a "confidentiality
agreement" executed solely
between CSC and Lawrence
Wollersheim to the complaint
filed in RTC and BPI v.
F.A.C.T.Net (Wollersheim V).89. Exhibit "H" (First
Amended Complaint, 36, 51,
and its Exhibit "I," in RTC v.
F.A.C.T.Net, et. al.).
90. RTC's current presient,
Warren McShane, gave a
declaration in RTC and CSI v.
Wollersheim (Wollersheim II),
when he was secretary of RTC
and assisted Scientology
counsel in a "paralegal"
capacity. There, he
acknowledged RTC, CSI and CSC
all have the same purpose of
advancing Scientology beliefs.90. Exhibit "L" (McShane
deposition) 8:20-21, 11:10-23.
Declaration of Warren
McShane filed in RTC, et. al.
v. Wollersheim, et. al.
(Wollersheim II),* 8-10.
Dated: April 10, 1997
HAGENBAUGH & MURPHY
By____________________________ DANIEL A. LEIPOLD Attorneys Specially appearing for Defendant, LARRY WOLLERSHEIMDaniel A. Leipold, Esq., State Bar No. 77159 Robert F. Donohue, Esq., State Bar No. 110505 Cathy L. Shipe, Esq., State Bar No. 156453 HAGENBAUGH & MURPHY Suite 8200 701 South Parker Street Orange, CA 92668 Telephone: (714) 835-5406
Mark Goldowitz, Esq. 1611 Telegraph Ave., Suite 1200 Oakland, CA 94612 (510) 835-0850
Attorneys for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DECLARATION OF CRAIG J. STEIN IN SUPPORT OF MOTION BY DEFENDANT LARRY WOLLERSHEIM TO AMEND JUDGMENTS ___________________________
Date: Time: Dept:
I, CRAIG J. STEIN, DECLARE:
1. I have personal knowledge of the facts stated in this
declaration and if called as a witness, I could and would
competently testify thereto.
2. I am an attorney at law duly admitted to practice
before the Courts of New York and California and am one of the
attorneys of record for defendant Larry Wollersheim.
3. Larry Wollersheim's original 2.5 million dollar
judgment against Church of Scientology of California now stands
with the addition of interest at $________________. Over the
last several years, I have attempted to satisfy this judgment by
attempting to obtain the appointment of a receiver for various
assets of Church of Scientology of California. On October 26,
1994, defendant's motion for the appointment of a receiver to
enforce the judgment was denied by the Honorable Diane Wayne.
Defendant's motion was denied without prejudice.
4. On or about February 18, 1997, the motion was renewed
by defendant before the Honorable John T. Shook and that motion
too was denied.
5. Since obtaining his judgment against Church of
Scientology of California, the attorneys for CSC have essentially
pleaded indigency representing that it only has $35,000 in cash
which was deposited with this Court. Declarant is informed and
believes that Church of Scientology of California has purposely
since on or about the beginning of 1981 depleted the corporate
assets of Church of Scientology of California to render it a
meaningless shell with no purpose other than to act as a
litigation battering ram against the perceived enemies of
Scientology. By stripping Church of Scientology of California of
any stated purpose or daily activity, Scientology made the
appointment of a receiver pointless.
I declare the foregoing to be true under the penalty of
perjury pursuant to the laws of the State of California this
_____ day of April, 1997 at Los Angeles, California.
__________________________________
CRAIG J. STEIN, Declarant DECLARATION OF LAWRENCE DOMINICK WOLLERSHEIM
I, LAWRENCE DOMINICK WOLLERSHEIM, declare as follows:
1. I have personal knowledge of all facts contained within
this declaration and if called to testify thereto, I could and
would be competently able to do so.
2. I am a party to the within litigation. Initially, when
this lawsuit was filed against me by the Church of Scientology of
California, I was unable to locate an attorney and therefore, my
initial response to the case was in pro per.
3. I have been involved in continuous litigation with
Church of Scientology entities since at least 1980. Initially, I
sued the Church of Scientology of California in a Los Angeles
County Superior Court action. That action went to trial in 1980
and I received a unanimous jury verdict in my favor in the amount
of $30,000,000. Later, that verdict was reduced on appeal to
$2.5 million but otherwise it has withstood every attack that
Scientology has thrown at it. That action has come to be known
as the "Wollersheim I" suit.
4. During the course of the Wollersheim I suit, I was sued
not once, but twice by Scientology in federal court for the
Central District of California. The first suit (Wollersheim II)
was a RICO (Racketeer Influence Corrupt Organization) suit
against myself, my attorneys and my expert witnesses which was
filed by Religious Technology Center ("RTC") and Church of
Scientology International ("CSI"). At the time of dismissal, the
Court stated that the suit "borders on the frivolous and
malicious."
5. The other suit filed in federal court during the course
of the trial was a "civil rights action" filed by the Church of
Scientology and various "Reverends" of other Scientology
entities. This suit was also dismissed.
6. The fourth suit (Wollersheim IV) is this action. A
defunct corporation, CSC sued me in an effort to engage me in
prolonged litigation and to deprive me of my underlying judgment
in Wollersheim I. The Court of Appeal stated at page 649 of its
opinion in this matter, "When a litigant continuously and
unsuccessfully uses the litigation process in filing
unmeritorious motions, appeals and lawsuits, such actions have
constitutional implications which may be reviewed on a motion
under 425.16." Church of Scientology v. Wollersheim, 42
Cal.App.4th 628, 649.
7. A similar opinion was expressed in the unpublished
Ninth Circuit Court of Appeal opinion in Wollersheim II. This
opinion, issued April 11, 1996, states that Scientology has
"utilized every device that we on the District Court have ever
heard of to avoid such compliance, and some that are new to us.
This non-compliance has consisted of evasions,
misrepresentations, broken promises and lies, but ultimately with
refusal. As part of this scheme to not comply, the plaintiffs
have undertaken a massive campaign of filing every conceivable
motion (and some inconceivable) to disguise the true issue in
these pre-trial proceedings. Apparently viewing litigation as a
war, plaintiffs by this tactic have had the effect of massively
increasing the cost to the other parties, and, for awhile, to the
Court. . . ." RTC v. Scott/RTC v. Wollersheim D.C. Nos.
9455781/9455920 - unpublished memorandum of opinion in an appeal
from the United States District Court for the Central District of
California.
8. RTC and CSI have once again sued me, this time in
District Court in Colorado (Wollersheim V). This action is
currently pending and is in the discovery stage.
9. On March 8, 1997, I traveled to Clearwater, Florida to
participate in a demonstration at Scientology headquarters there.
I was picketing regarding the suspicious death of a Scientology
member, Lisa McPherson , who died while in the custody of the
Church. The Coroner's Office found that she died of dehydration
with her body covered with insect bites. During the course of
the demonstration, one of the attorneys for Scientology in the
Wollersheim V case, Elliot Abelson (who identifies himself as
Scientology's general counsel), approached me in the company of
Michael Rinder, the head of Scientology Legal and Intelligence
Division. Mr. Rinder is an employee of the Office of Special
Affairs of the Church of Scientology International which is NOT a
party to the Wollersheim V case. Mr. Abelson advised me that he
hoped that I did not take all the litigation he was involved with
against me personally, it was just a job. During the course of
this conversation, I advised him that I was confident that I
would be able to prevail once again in the Wollersheim V
litigation. I further advised them that it was likely that they
would lose many of their copyrights that they were suing over.
At this point, both Mr. Abelson and Mr. Rinder smiled at me and
Mr. Rinder said, "You don't have enough money to do that."
10. Based on my continuous litigation with Scientology,
since 1980, including litigation with Scientology entities, CSI,
RTC and CSC, it is extremely clear that Wollersheim II, III, IV
and V were filed for no other purpose than to deprive of my
ability to collect my judgment in Wollersheim I and to beat me
into submission through the continuous gross misuse of the
litigation process. This continues to this day by the admission
of Mr. Rinder in the Wollersheim V case. Scientology continues
to throw its massive assets at me to make an example of me to the
world. Scientology and its various entities, CSC, RTC and CSI
want the world to know that it is useless to depend on the civil
litigation system as Scientology will NEVER pay "one thin dime"
to Larry Wollersheim, or anyone else.
11. I know, from personal knowledge from my 16 years of
litigation with Scientology, that there is absolutely no
corporate integrity whatsoever to Scientology.
I declare, under penalty of perjury that the foregoing is
true and correct.
Executed this day of , 1997, at Boulder,
Colorado.
LAWRENCE DOMINICK WOLLERSHEIMDaniel A. Leipold, Esq., State Bar No. 77159
Robert F. Donohue, Esq., State Bar No. 110505
Cathy L. Shipe, Esq., State Bar No. 156453
HAGENBAUGH & MURPHY
Suite 8200
701 South Parker Street
Orange, CA 92668
Telephone: (714) 835-5406
Attorneys Specially appearing for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DECLARATION OF Ford Greene IN SUPPORT OF MOTION BY DEFENDANT LARRY WOLLERSHEIM TO AMEND JUDGMENT
Date: Time: Dept:
I, Ford Greene, declare as follows: 1. I am an attorney at law duly licensed to practice law in the State of California. The matters set forth herein are personally known to me and if called as a witness, I could and would competently testify thereto. 2. I served as counsel to Gerald Armstrong in the case entitled Church of Scientology International v. Armstrong (Marin County Superior Court Case No. 157680), filed in February 1992. The case centered on a dispute about the scope of the December 1986 settlement agreement executed between Mr. Armstrong and Church of Scientology International ("CSI"). That agreement had been achieved in settlement of Mr. Armstrong's cross-complaint against Church of Scientology of California ("CSC") in the matter of CSC v. Armstrong, Los Angeles Superior Court No. C420153. 3. The complaint in CSC v. Armstrong charged Mr. Armstrong, an ex-Scientologist, with conversion, alleging he converted certain "confidential" Scientology documents to his own use. The court dismissed that portion of the action in August 1984, after determining Mr. Armstrong was justified in removing the documents because he reasonably believed his life was in danger and that possession of the documents was necessary for the safety and protection of his wife and himself. Attached to Defendant Wollersheim's Separate Statement of Facts and Evidence as Exhibit "N" is a true and correct copy of the memorandum decision by Superior Court Judge Paul Breckenridge containing the order of dismissal. 4. The Second District Court of Appeal affirmed Judge Breckenridge's judgment of dismissal in a published opinion, CSC v. Armstrong (1991) 232 Cal.App.3d 1060. 5. After CSC's complaint against him was dismissed, Mr. Armstrong continued to prosecute his cross-complaint against CSC. Ultimately, by agreement between Mr. Armstrong and CSI, this cross-complaint was settled in December 1986. In exchange for his signature on a Release of All Claims and Settlement Agreement, Mr. Armstrong accepted a settlement in the amount of $800,000. 6. Although representatives of CSI executed the Release of All Claims and Settlement Agreement, CSI specifically named CSC and Religious Technology Center, among others, as beneficiaries of the agreement, along with "all Scientology and Scientology affiliated organizations..." 7. Accompanying Defendant Wollersheim's Separate Statement of Facts and Evidence herein as Exhibit "M" is a true and correct copy of the Mutual Release of All Claims and Settlement Agreement executed between Mr. Armstrong and CSI. I declare under penalty of perjury that the foregoing is true and correct.
Executed this ____ day of _______________, 1997 at San Anselmo, California.
_____________________________
Ford Greene
Daniel A. Leipold, Esq., State Bar No. 77159
Robert F. Donohue, Esq., State Bar No. 110505
Cathy L. Shipe, Esq., State Bar No. 156453
HAGENBAUGH & MURPHY
Suite 8200
701 South Parker Street
Orange, CA 92668
Telephone: (714) 835-5406
Mark Goldowitz, Esq. 1611 Telegraph Ave., Suite 1200 Oakland, CA 94612 (510) 835-0850
Attorneys for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DEFENDANT LARRY WOLLERSHEIM'S MOTION FOR AN ORDER ADJUDICATING THAT DEFENDANT IS ENTITLED TO ATTORNEYS' FEES (FILED CONCURRENTLY WITH DEFENDANT'S MOTION TO AMEND JUDGMENTS) (C.C.P. 425.16 and 1025.5) ___________________________
Date:
Time:
Dept:
TO PLAINTIFF, CHURCH OF SCIENTOLOGY OF CALIFORNIA, AND ATTORNEYS
OF RECORD:
PLEASE TAKE NOTICE that defendant Larry Wollersheim
hereby gives notice of defendant's intent to obtain an order from
the above-noted Court at the time of the hearing of defendant's
motion to amend judgment that defendant is entitled to the
recovery of attorneys' fees for the preparation and attendance of
the hearing of defendant's motion to amend the two separate
judgments for attorneys' fees ordered by this Court against
plaintiff, Church of Scientology of California, on June 3, 1994
and on November 8, 1996.
Defendant's motion is brought pursuant to C.C.P. Sections
425.16; 1021.5 and applicable California case law.
Dated: March 11, 1997
Respectfully submitted,
HAGENBAUGH & MURPHY
By______________________________
ROBERT F. DONOHUE
Attorneys for Defendant,
LARRY WOLLERSHEIM
INTRODUCTION:
On February 1, 1996 the Court of Appeals affirmed this
Court's dismissal of the complaint and awarded fees pursuant to a
special motion to strike brought by defendant, Larry Wollersheim,
under Code of Civil Procedure Section 425.16 and awarded
Wollersheim fees on appeal. On June 3, 1994 and November 8,
1996, this Court ordered two judgments for those attorneys' fees
against plaintiff Church of Scientology of California. By way of
this motion, defendant is requesting the award of additional
attorneys' fees for the preparation and the filing of defendant's
motion to amend the two separate judgments.
DEFENDANT IS ENTITLED TO RECOVER FEES FOR THE MOTION
TO AMEND THE TWO JUDGMENTS ENTERED BY THIS COURT:
The Court in Serrano v. Unruh ("Serrano IV") (1982) 32
Cal.3d 621, has stated that a party is entitled to compensation
for all hours reasonably expended on a fee application. In that
regard, the Court held:
"We conclude that, absent circumstances rendering an award
unjust, the fees should ordinarily include compensation for
all hours reasonably spent including those relating solely
to the fee."
32 Cal.3d at 634. (See also Downey Cares v. Downey Community
Development Commission (1987) 196 Cal.App.3d 983, 997.)
The purpose of this motion is only to obtain an order from
this Court that defendant is entitled to reasonable attorneys'
fees for the preparation and attendance of defendant's motion to
amend the judgments. With that order in hand, if the parties are
not able to informally resolve the amount of costs and fees due,
defendant will bring a subsequent noticed motion to establish the
amount.
Defendant does not intend to restate or argue the merits of
the pending motion to amend in these papers. Suffice it to say
that defendant's motion to amend is the only equitable avenue
available to satisfy the two outstanding judgments given the fact
that although plaintiff Church of Scientology of California filed
the lawsuit against Wollersheim, it was in effect, nothing more
than a straw corporation or "corporate shell" being run and
directed by its alter egos, Church of Scientology International
(CSI) and Religious Technology Center (RTC). In fact, CSI and
RTC have been using CSC as a "judgment proof" battering ram to go
after many individuals under its "Fair Game" policy. The facts
submitted in support of defendant's motion to amend
overwhelmingly support the proposition that all of the assets and
finances of Church of Scientology of California were transferred
out of that corporation and into other various Scientology
organizations, including but not limited to, CSI and RTC. As
noted above, the California Supreme and Appellate Courts provide
abundant authority for an award of attorneys' fees to amend the
two outstanding judgments to include alter egos, CSI and RTC as
judgment debtors.
CONCLUSION:
For all of the foregoing reasons, defendant hereby
respectfully requests from this Court an order adjudicating that
defendant is entitled to attorneys' fees for the preparation and
attendance of the hearing of defendant's motion to amend the
judgments obtained against plaintiff Church of Scientology of
California. Defendant hereby only seeks an order from this Court
that defendant Wollersheim is entitled to reasonable attorneys'
fees with the understanding that if the parties are not able to
informally resolve the amount of costs and fees due, defendant
will bring a noticed motion to establish same.
Dated: March 11, 1997
Respectfully submitted,
HAGENBAUGH & MURPHY
By______________________________ ROBERT F. DONOHUE Attorneys for Defendant, LARRY WOLLERSHEIM
Daniel A. Leipold, Esq., State Bar No. 77159 Robert F. Donohue, Esq., State Bar No. 110505 Cathy L. Shipe, Esq., State Bar No. 156453 HAGENBAUGH & MURPHY Suite 8200 701 South Parker Street Orange, CA 92668 Telephone: (714) 835-5406
Mark Goldowitz, Esq. 1611 Telegraph Ave., Suite 1200 Oakland, CA 94612 (510) 835-0850
Attorneys for Defendant, LARRY WOLLERSHEIM
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
CHURCH OF SCIENTOLOGY OF CALIFORNIA,
Plaintiff,
v.
LARRY WOLLERSHEIM,
Defendant.
______________________________ ) ) ) ) ) ) ) ) ) ) ) _)No. BC074815
DECLARATION OF ROBERT F. DONOHUE IN SUPPORT OF DEFENDANT LARRY WOLLERSHEIM'S MOTION TO AMEND JUDGMENTS ___________________________
Date: Time: Dept:
I, ROBERT F. DONOHUE, DECLARE:
1. I am an attorney at law duly licensed to practice
before this Court and am a member of the law firm of Hagenbaugh &
Murphy, attorneys of record for defendant, LARRY WOLLERSHEIM.
The foregoing is of my own personal knowledge or based upon a
review of depositions, pleadings and various records submitted by
the Scientologists in this matter and other litigation and as to
those matters, I believe them to be true and correct. If
required, declarant could and would competently testify thereto.
2. Attached hereto are a total of six pages prepared by
declarant reflecting the basic hierarchy chart of the Scientology
organizations, as well as a brief outline of the five
"Wollersheim" case histories. The first page represents the
Scientology hierarchy as it relates to Church of Scientology
International (CSI). Although not all encompassing, it entails
all the primary organizations connected to CSI as well as
numerous officers, directors and trustees, per the tax records
submitted by CSI in 1993 to the IRS in a bid for tax exempt
status. For the Court's convenience, page one also contains a
definition list of many Scientology organization acronyms
obtained from the tax records and from the published decision
Church of Spiritual Technology vs. United States Claims Court
(1992) 26 Cl.Ct. 713.
3. The second page represents the basic hierarchy of the
Religious Technology Center (RTC) and its relationship to the
Inspector General Network (IGN). Also on the second page is the
connection between Author's Services, Inc. (ASI) and the Author's
Family Trust. These flow charts also identify numerous officers,
directors and trustees as provided by CSI to the IRS in 1993.
4. The third page represents the list submitted by CSI to
the IRS in 1993 reflecting the "highest ranking officers" of the
Sea Organization of Scientology.
5. Declarant also included wherever applicable in
parentheses, a six digit number which reflects the actual Bate
Stamp page number of the document submitted by CSI to the IRS in
1993. The Bate Stamps are those of CSI when produced through
discovery by CSI in another Scientology lawsuit. The foundation
for the tax records can be found in the accompanying Declaration
of Graham Berry to plaintiff's motion to amend judgments.
6. Pages four through six reflect a brief review of the
five Wollersheim cases, including pertinent dates, attorneys of
record and case disposition.
7. Attached as Exhibit "A" to defendant's evidence packet
is a true and correct copy of the deposition of CSC President
Neil Levin taken in Wollersheim v. CSC (Wollersheim I) on
5-31-95.
I declare under penalty of perjury that the foregoing is
true and correct.
Executed this _____ day of April, 1997 at Orange,
California.
__________________________________
ROBERT F. DONOHUE, Declarant
WOLLERSHEIM LITIGATION HISTORY
A. WOLLERSHEIM I:
Wollersheim vs. CSC (1989) 212 Cal.App.3d 872:
1. Complaint filed 7-28-80.
2. Attorney Earle Cooley represented CSC.
3. Trial started 2-18-86.
4. On July 22, 1996, a jury awarded 30 million dollars in
favor of Wollersheim (later reduced to 2.5 million dollars).
5. CSC's Petition for Writ of Cert denied by U.S. Supreme
Court 3-7-94.
B. WOLLERSHEIM II:
RTC and CSI vs. Wollersheim
(Ninth Circuit 1992) 971 Fed.2d. 364:
1. Complaint filed 11-4-85 against Wollersheim, his
attorneys and trial experts (in Wollersheim I) alleging RICO
action and copyright infringement claim. Consolidated with the
District Court action RTC, et al. vs. Robin Scott, et al., Civil
Action 85-711 MRP.
2. Attorney Earle Cooley, Joseph Yanny and John Peterson
representing the plaintiffs.
3. RTC and CSI claimed as an element of damages in their
RICO statement the cost of defending the Wollersheim I action and
admit that CSI and RTC were real parties in interest to the
Wollersheim I action. (See defendant's Exhibit "U", RICO
statement of RTC and CSI signed by attorney Kendrick Moxon.)
4. RTC filed petition to the Ninth Circuit to disqualify
entire Central District. (The Ninth Circuit struck the petition.
See CSC vs. Wollersheim (1996) 42 Cal.App.4th 628, 636.)
5. The District Court dismissed Wollersheim, his attorneys
and experts (stating the suit bordered on the frivolous and
malicious), the order of which was affirmed by Ninth Circuit.
(See RTC vs. Wollersheim 971 F.2d 364, 365 (9th Cir. 1992).) The
case continued as to the other defendants.
6. On 4-11-96 the Ninth Circuit issued an unpublished
memorandum upholding the Honorable James M. Ideman's order of
judgment and imposition of 2.9 million dollars attorneys fees
against RTC affirming that RTC had filed its complaint in bad
faith to harass the defendants. (See defendant's Exhibit "Y",
memorandum of Ninth Circuit Court of Appeals No. 94-55781, pages
5-7 and page 12.)
C. WOLLERSHEIM III:
CSC, et al. vs. Superior Court, et al., U.S.D.C. CV86-1362:
1. The complaint filed by CSC and six individually named
"reverends" of Scientology alleged violation of the plaintiffs'
civil rights to practice religion against the trial judge in
Wollersheim I, Ronald Swearinger, and the Honorable Alfred
Margolis (who had made previous pretrial rulings in the case), as
well as the entire Los Angeles Superior Court.
2. The action was dismissed by the Court in November,
1986.
3. Attorney Earle Cooley and John Petersen represented
CSC; attorney Timothy Bowles represented all but one of the
"reverends" of Scientology.
D. WOLLERSHEIM IV:
CSC vs. Larry Wollersheim (1996) 42 Cal.App.4th 628:
1. The complaint filed on February 16, 1993 was one to set
aside the Wollersheim I judgment and for other equitable relief.
2. The action was filed by Kendrick Moxon of the law firm
of Bowles of Moxon.
3. The complaint contained allegations that trial judge
Swearinger was prejudiced and acted with malice against CSC.
4. The complaint was dismissed pursuant to the defendant's
CCP Section 425.16 (SLAPP) Motion.
5. The trial court awarded defendant attorneys' fees and
costs in the amount of $132,676.57.
6. The Court of Appeal affirmed and also awarded defendant
attorneys' fees on the appeal.
7. The trial court awarded d