About the MCCS (Mission Corporate Category Sortout) tapes...

Caroline

Patron Meritorious
From: Gerry Armstrong <[email protected]>
Newsgroups: alt.religion.scientology
Subject: MCCS meeting transcript
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I have received an MCCS meeting tape transcript recently and a query
as to whether it is the partial tape transcript referred to in the
reported U.S. Supreme Court case U.S. v. Zolin, 491 U.S. 554 (1989).
http://www.gerryarmstrong.org/50grand/legal/us-v-zolin-us-sup-1989-06-21.html

In seeking possession of the MCCS tapes, which had been held by the
Clerk of the Los Angeles Superior Court following the 1984 trial in
the Scientology v. Armstrong case, the IRS had submitted a partial
transcript to the U.S. District Court to demonstrate a crime-fraud
exception to the attorney-client privilege. The MCCS meeting that was
recorded involved of course a number of attorneys for Hubbard and
Scientology, as well as Sea Org and GO staff members working on MCCS.
Scientology founder L. Ron Hubbard ordered MCCS, and current cult head
David Miscavige operated the mission.

I have never seen what transcript the IRS used, and I did not give the
IRS any transcript at any time. I wrote the note that precedes the
transcript in 1982 and my ex-wife Jocelyn transcribed the tape. If the
IRS used it, the Service did not get it from me, and I do not recall
to whom I may have given it besides my attorneys, but I obviously gave
it to someone because it has now come back to me.

Because of the ongoing investigation of Scientology cult fraud, I am
posting this now, and I am grateful to whoever sent it to me. If
anyone knows if this is the partial transcript that was central to the
U.S. v. Zolin cases I would like know. The published opinions and a
number of other documents relating to MCCS are webbed on my site at:
http://www.gerryarmstrong.org/50grand/legal/other-scientology-litigation.html

The U.S. Supreme Court stated in its ruling:

The IRS denied that the transcripts were made using tapes obtained
from the Superior Court or from any other illicit source. Agent​
Petersell declared: "The partial transcripts were not prepared by the​
United States from the tapes in the custody of the Superior Court for​
Los Angeles County, California, nor from copies of the tape now in the​
custody of the Clerk of this Court. The transcripts were obtained from​
a confidential source by another Special Agent prior to the issuance​
of this summons. The source was not a party to Church of Scientology​
v. Armstrong, No. 410153, nor an attorney for any party in that​
proceeding." See Declaration of Agent Petersell in No. CV85-0440-HLH​
(Tx) (March 21, 1985). As the District Court made no finding of​
illegality, we assume for present purposes that the transcripts were​
legally obtained.​

http://www.gerryarmstrong.org/50grand/legal/us-v-zolin-us-sup-1989-06-21.html

My note:

Transcript of tape recording made 29 September 1980 at a meeting of
Scientology legal personnel, MCCS Mission personnel and attorney's of
Scn, LRH and Gold or New Era Pictures the film crew co.).


When I have been able to identify the speaker I have noted his or her
initials beside the statement. When I have not been able to identify
the speaker there are no initials.


The following people attended the meeting:

CP: Charles Parselle, then DGL WW.

AW: Alan Wertheimer, attorney for LRH who worked closely with Laurel
Sullivan and the MCCS mission, attempting to have LRH retain control
without liability or responsibility.


LS: Laurel Sullivan, LRH Personnel PR, and I/C of the Legal mission,
MCCS, which was attempting to shield LRH.


LB: Lisa Britowich, Laurel's junior on MCCS. Now kicked out,off
staff. Was in the GO at the time.


JM:James Murphy, LRH's tax attorney. He worked in the same firm as
Alan Wertheimer, - Rosenfeld, Meyer & Sussman in Beverly Hills. I
believe Rosenfeld, Meyer & Sussman have been dropped by the
organization. Wertheimer I know for sure has been dropped, Murphy I'm
not sure of.


DS: Dick Sullivan, Laurel's husband,and junior on the MCCS mission.

MC: Melanie Cook, attorney at Rosenfeld, Meyer & Sussman, who did a
lot of work on trademarks, etc.


Ron Fujikawa, worked on the film deals. Part of MCCS's actions was to
work out the legal arrangements for LRH to get paid for the films, and
I believe retain copyrights for them, plus work out distribution lines
with Pubs DK, and other related matters. Fujikawa is an attorney in
Century City.


I was given this tape by Barbara DeCelle, secretary on the MCCS
mission, in late 1981. Barbara had transcribed the various tapes and
gave me the cassettes for my use.


Some of the statements, particularly regarding RRF, eg. see p. 8 and
9, are very interesting.


GA

The transcript:

I have gathered a fair amount of information on this and I have been
quoted by people who actually do documentary work of $22,750.00 for a
script for a half hour educational film.

It's low.

The numbers are low.

In part because documentaries and educational films are methods for
writers, directors and other talent to break into the business and
therefore (inaudible). So, I guess one of the problems then is that
anything you pick that is even reasonably on the high side is subject
to challenge because they will definitely be able to go and find other
people to work for < inaudible >.

CP: Right. So it could be as low as three.

It could be as low as three. There are other services that are
involved here in addition just to writing the script.

AW: And L. Ron Hubbard is not an unknown quantity. He's not somebody
trying to break into the business.

Admittedly.

CP: That's right.
Just the economics of making a half hour or an hour of educational
film is such that they can't afford to pay someone a great deal of
money. Certainly not the amounts that were originally contemplated or
have actually been paid in this particular arrangement.

CP: Right. That's right. Thereof one has to look at the fact that he
trained an entire crew for the Church. All those people are now
available to continue film-making for the Church if the Church wishes.
Plus the scores. All on their account. As far as we were concerned, he
trained them up. They are Church employees, they're Scientologists and
they are probably going to go on making films for Church purposes. But
even so, if we look in - I mean, I just did my little calculation and
it came out to just 1/2 a million. That's 33 times 15,000 and if you
add on bits for film scores and bits for the work for training and
something for the fact that he's not a newcomer trying to break into
the field as far as we are concerned.

LS: He also is the only person in the world who could ever write these
... the way they were written.

-1-

LB: Yeah.

LS: There's that.

CP: That's right. It's the score. I mean, it would have been really
impossible for CSC (Church of Scientology of California) to have gone
to another author for those films because they are entirely technical
films. He's the only chap who could have done it. But...

LB: He's also I think a ... there's more significance on the fact that
he was the author and what would the Catholic Church pay the Pope, for
instance to do that; or if Jesus Christ was alive today, what would
they pay for a lecture? You know.

LS: We're talking about a non-unknown quantity ... in the field.

LB: Yeah. There's a significance that's attached that makes his words
extremely valuable - priceless - to the Church that is different than
you are talking about you are just going to pay somebody to direct an
educational film. Well, you're going to pay Professor Joe Schmoe in a
University to be the lecturer for that film or if you are going to
hire, you know, a <inaudible> person to do it. There's going to be a
difference...

AW: You have two problems and you raise an interesting point in what
Jesus Christ would charge or what he would get paid. But ah, the two
things that are going on is that LRH does not want to be accountable
for all of the acts of the Church of Scientology since some of those
could be slightly out of bounds and he doesn't want to be in a
position where he is held accountable, on one hand. On the other hand,
the Church is attempting to maintain a certain tax exempt status and
they are worried that the status of the Church can be characterized as
nothing other than an alter ego for L. Ron Hubbard whereby certain
profit-making things are done in the name of the Church. So, with
those two things going on, what we're trying to do is have some sort
of structure whereby as much of those two things will continue as long
as possible. And I am not trying to say that what he has done is not
worth 2.1 million dollars <inaudible>... but you are talking about a
jury of 12 people who may have to decide whether L. Ron Hubbard is
sufficiently interwoven in the affairs of the Church to be held
accountable for some astrocity that should happen in the future.

LB: I understand. I just want to make sure that in a deal -if we're
going to have to deal with LRH - that it's due; I think Charles
<inaudible> are attaching a significance to

-2-

that. Well as long as we are going to attach a significance to his
contribution to the film-making, it should be, you know, <inaudible>.
male - Well, at some point you draw the line, I don't know if it's
worth 5 million dollars and I don't know if it's...

LS: Well, lets just look at his idea of it. His idea was that he
didn't want it... (someone entered the room)... The other point was
that LRH did not want any significance put on any services that he
provided the Church unless it was absolutely necessary... and this was
his instruction. He didn't want to be paid for anything other than the
goods that he actually delivered. Now, over the last few months, Mary
Sue has changed that because we have to justify the 2.1. She has said
we will count that now as an advice from a different period of time
and now we look at it again and that's why we are now considering
assigning significances to his abilities to edit film, shoot film,
create sets, music, etc. So, we don't want to go overboard on
assigning significances to service. We just want regular assets which
is the purpose for even assigning values to the services is only to
<inaudible>.

CP: Well, I think we can look at it from this point of view. As far as
the Church is concerned, if we paid him 2.1 million for making these
films for which ordinary industry standard is very, very, very much
less, we face an inurement problem. Therefore, if the Church's
attorneys had been involved with this transaction, we would have
advised the Church not to pay that kind of money because it would be
dangerous to our exempt status. However, if you would like to say that
he will do the work for nothing, obviously, the Church is - I,
representing the Church's attorney viewpoint, would say, "Terrific,
you're going to do it for nothing; that's fine." But of course, one
also has considerations as <inaudible> Scientologist which says it's
not right that he should make 33 films and occupy a good portion of
time doing that for no recompense whatsoever. I just want to - so as
far as I'm concerned, it can be as low as it can be from the Church
viewpoint but there is a point beyond which it cannot go and that is
the point at which it becomes unjustifiable in terms of industry
standards. Not taking the lowest possible figure, but taking the
highest reasonable figure. So, I put it back to you now as Ron's
attorney.

AW: If we're talking about a low figure, depending on how low it were,
I might say, the risks don't justify the benefits in this particular
instance because I know that he doesn't want to be named in lawsuits
and he does not want his finances looked into and where the line is,
just as with drawing any of these financial lines, I don't know.
Perhaps, as we're thinking about 2 million it could be an advance
against number

-3-

6; partly it could be compensation for services; partly it could be an
advance against a future share of the profits.

CP: Right. In terms of risk to him arising out of this particular
transaction, it's hard to see how there could be any risk. It's not
like, for example, the Purification Rundown where people might sue for
claiming injury.

AW: The real risk is the fact that the man has been paid a lot of
money which is greater than it should be...

CP: Right. But that's no risk to him.

AW: And fortunately for you... I think it is because the inurement has
two sides to it. If the Church is his alter ego, then he will be held
accountable for the acts of the Church, as well as the Church losing
its tax exempt status which is of no significance to him as L. Ron
Hubbard.

CP: I can't myself see it... I can see that the Church would lose its
tax exempt status if inurement is found but at the moment I can't see
how that would create a liability for him.

AW: Well, the whole piercing of the corporate veil in <inaudible>
cases is what we're talking about here. You know, where a person sets
up a corporation to run a business and the business has liabilities
and the person just says, "Well, it was my corporation; wasn't me. So,
go sue the corporation if you like, but it has no assets." And
<inaudible> it says if it is unjust to treat liabilities to the
corporation in the matter where the individual gets <inaudible>.

CP: Yes, but that I can - I can see that but I don't think that a
finding that part of the net earnings inured to his benefit in itself
pierces the corporate veil. Unless it could be showing that
corporation was indeed a sham for his benefit which would actually be
inconceivable in terms of the amounts of money involved. His take of
compensation...

AW: I'm not sure what the courts require. If I were on a jury and
somebody got paid 2 million dollars where $250,000, $300,000 or
$500,000 was the appropriate amount, the difference would be large
enough to me as an individual to think that perhaps something shady
was going on.

CP: So, in essence, what you're saying is that if the Church loses its
exempt status on the basis of inurement to him, there could also be a
finding that the whole corporation was in fact a sham for his benefit.
Which indeed, the IRS, are alleging in the current case and therefore
other litigants could pursue him directly bypassing the Church.

-4-

AW: A lot of this also is cumulative because there are other things
going on: The fact that he writes books which the Church publishes and
sells and pays for advertising and so forth and there's probably some
very meaty stuff there I would think. Jewelry. He has a lot of money
coming in because of what the Church does. And perhaps that amount of
money that's coming to him is not significant compared to the Church's
total, but it is in and of itself, significant.

CP: It's a lot of money. It certainly is percentage-wise very small.
But, do I take it that you do say that - is that your real worry, the
piercing of the corporate veil so that other litigants could pursue
him directly?

AW: I think that is the concern, yeah.

The reason we are structuring it this way is to keep the green box and
the red boxes as far away from each other as possible. We're trying to
at least confuse people who are trying to figure out exactly what it
is we're <inaudible>.

CP: Now I fully understand that. I'm just trying to see what we're -
if we say, don't give him anything at all for making the films. Other
way around. Sorry. If we say the inurement problem is a very real
problem. Any connection between him and the Church or substantial
connection between him and the Church is a real problem to him rather
than to the Church.

AW: I was dealing from his point of view.

CP: Yeah. 'Cause I tended to view it from the Church's point of view
and the Church is always fixated on the problem of inurement. From his
point of view I have always thought that there is no problem because,
provided he accounts for sums received, which of course he always
does, he would merely pay his tax and then...

AW: He is not always taxable. He receives <inaudible>
He gets a $35,000 annual consultant fee.

AW: $35,000 is not enough as far as I was concerned to get into
whether or not that's a fair amount and I just suggested that he
forget it. He gets - people work for him. People who are paid by the
Church render their exclusive services to him directly. That's
something that's always bothered me. Standing Order #1 is an area I've
had dealings in which hasn't been followed for ten years; yet there is
advertisement... There's a lot of things going on that really tie him
into the Church. If you get back to Jesus Christ delivering a lecture
to Christians, probably he would do that without being paid, I
guess,... not being Christian.

-5-

CP: I think on the whole, he did give lectures free and furthermore
fed people for nothing while they were there.

AW: My feeling is that if LRH knew up front that he wasn't going to
get paid for doing the films, he would have done them anyway.
female- Yes.

JM: If I may interject something here, the reason, I think, that
inurement is a problem on both sides of any congression is that an
actual finding of inurement which would jeopardize the Church's tax
exempt status presupposes a control relationship in addition to a
transfer of personal or extraordinary personal financial gain. And
that control relationship is a control relationship that we have been
primarily concerned with because that could be basis for suits by
private litigants whose main complaint against the Church from going
through the Church and looking at our client or any other organization
which was receiving money via the Church and has arguably some control
relationship with the Church. So that when Allen is referring to
inurement, we really - our concern is primarily this control
relationship aspect rather than the direct financial gain. And getting
back to what you indicated before, yes, if it were just a matter of
pure dollars and if you never had to look beyond those dollars, then
we would not be concerned. In fact, we would be quite happy that our
client received 2 million dollars. Allen, is that consistent with
...?

AW: The trade mark area which is next on our agenda has very little
to do with money and everything to do with control.

CP: Right. But it would be true to say then, that your concern about
control essentially is that 3rd party litigants will pursue him for
damages which will cost literally - which will be intolerable for him
in terms of his personal life. That's really the concern.

AW: I think so. I think the people have shown a predisposition to
suing him personally and perhaps this is part of their experience of
getting out of the Church. He seems to be the person, in addition to
the Church, who seems to be an important party.

CP: Oh, yeah, that's true and it is the fashion to sue him as well.

AW: Well, he's not without assets. He's well off and I would assume
would have the money to satisfy a few of these judgments if they
were successful and he certainly would have

-6-

to pay to defend them.

CP: True. That's absolutely right. You did say that he has not always
accounted for sums actually received. That is entirely at variance
with my understanding from Marty Greenburg that he has always
accounted for sums received. I realize that the Church has rendered
certain services to him in the form of personnel.

AW: That's the kind of thing that I was talking about.

CP: You're not talking about actual cash transfers.

AW: I don't know anything about that.

CP: Oh, you don't know about that. Well, as far as I know, he has
always been, through his accountants, entirely scrupulous about
accounting for every cent actually received. Benefits is another
matter entirely.

When we're talking about accounting, we are talking about accounting
from the financial standpoint; for example, tax authorities, as
opposed to accounting to the Church for the goods and services
rendered which would justify cash transfers. That's two separate kinds
of accounting. Are we talking about the same kind of accounting?

CP: Well, the kind of accounting I am talking about is accounting for
the IRS for his income expressed in terms of money.

Allen, when you are talking about accountability, are you referring
to exactly the same thing

AW: Indirectly I am.

CP: Yes.

Those are the only people who are going to raise the
question.

AW: The people I'm worried about are the IRS.

That's what all of this accounts for L. Ron Hubbard's <inaudible>.

CP: Good and that's great.

JM: This structurally a little more allows it. Because there was a
concern to interpose or to put a barrier between direct economic
relationships, between a tax exempt organization and LRH and we're
not for him continuing the economic

-7-

relationship. Some of us would get <inaudible>.

CP: Right.

JM: And that is not generated so much from this office as concern on
the part of the people representing the Church. And a direct economic
relationship, if it can be avoided, should be avoided.

CP: Right. Well I think the Church is always..

AW: And the control at the same time which is how the F & P thing
arose and here we have created - taken the people who in the English
terms really do control the Church, we have taken them out of the
Church and we've given the church its own Board of Directors who are
now supposed to control the Church after consulting with a separate,
separately incorporated body of people who in turn can look to LRH for
advice when they are unable to solve whatever problems they are being
asked to solve <inaudible>. We are trying to remove the man as much as
possible from allegations or <inaudible> control.

CP: Right. That's a very helpful exercise. And also I may say this,
that it is very very helpful for LRH to have his own attorneys, i.e.
yourselves, because for many years we have been missing this essential
service and we have done this exercise of trying to think of the way
it would be on the one side and trying to think of the way it would be
on the other side and it really doesn't work very well to do that. It
doesn't work to represent both parties at the same time. Especially if
you also happen to be a Scientologist and involved in that particular
way as well. So, I'm with relief representing the Church interest and
I certainly invite you to represent Ron's interest as much as you can.
I say that RRF, which is as far as I am concerned part of the Church,
made a mistake when it paid over that 2.1 million. RRF had nothing...
We could say that RRF and CSC are part of the same Church, even though
they are corporately different. I mean if anything was a sham
corporation, it's RRF.

AW: As I understand it, RRF receives monies that would otherwise be
due the California Church for services rendered by the California
Church to people outside of the country who decide to pay the Church
from outside the country.

CP: That's right.

AW: So that's basically right?

CP: That's right. Foreign - non-US Scientologists who wish to pay for
Flag services pay RRF and then go to Flag and take the services. RRF
was originally supposed to hold the money

-8-

until the service was rendered and then pay it to CSC. But in fact, it
has not really done that and so CSC has rendered much service to many
foreign Scientologists and RRF has got the money. Fortunately for us,
RRF wasn't incorporated until 1973 and we are now litigating 1972. So,
I haven't really tried to sort this one out but it obviously is the
classic case (loud laugh) of inurement, if not fraud.

(Several laughs.)

LS: Well, put.

It's all privileged.

DS: The tape recorder is going here, Charles.

CP: However, as you can see, our financial direction is really
weighted to this solution and it is an ongoing battle which I will
eventually win because I am the one who has to litigate the case next
year and we obviously have to handle RRF. The way we will probably
handle it is by simply saying it is part of the same Church, in fact.
Now that, of course, goes directly contrary to what you're doing which
is to split LRH off from the Church and to talk about the corporate
integrity of the different Churches. Unfortunately, the Churches do
not have any corporate integrity. And our efforts to give them
corporate integrity have not hitherto been successful. Now when you
talk around a table like this and there is no Internal Revenue agent
present, (whispered: I hope so), bugged or otherwise, one can work out
solutions. But when you are a few weeks away from a trial and
everything you say is going to be rammed down your throat, then you
have to start looking at what actually happened. And it's very
difficult to assign significances to things other than what was
actually being done at the time. We are trying to say for example that
Flag in 1970 is a part of California Church which is probably true but
there is no documentation to say that and the truth of the matter is
that Marty Greenburg, the accountant, decided to include Flag's
accounts in California accounts some years later for convenience. So
the decision, what is - the IRS can say and are in fact alleging that
Flag in those years, 1970 to 1972, was an unincorporated association
to which CSC's income inured on a grand scale. We cannot point to a
document which says, "Actually Flag was part of CSC during the years
of question" because it doesn't exist because no one really thought of
it. So, we have to have a different theory of the case which is going
to account for all facts and omitted facts which do exist.

Is this the why of efforts to create corporate integrity in 1980?

-9-

CP: Well, I think it certainly affects F & P. Possibly Laurel told you
I have thoughts about F & P. But I think perhaps shouldn't anticipate
ourselves.

What should we do with the 2.1 million dollars? Do you want LRH to
give that back? We'll declare it all a mistake and we'll negotiate it
fresh, or what? What would you like to do on that? What's your
thought?

CP: My thought is that the Church is very willing to pay LRH for all
the work which he did in creating those movies and ought to pay
generously but not excessively having in mind accepted industry
standards. Generously because he was the only person who could have
done it. Generously because he did everything. And generously because
he trained the Church crew from start to finish. And generously
because his name on the credits will ensure an audience and without
his name on the credits, one could be fairly confident that there
would be no Church audience. I think all those facts should be taken
into account in the reaching of a fair price.

Who will own the copyrights <inaudible>? Who will control the
dissemination of the films, how they are used, whether they are used
properly, or how long they will be used? Is that something that the
author can retain? <Inaudible.>

CP: Well___

And can control their uses for Churches, Missions, non-Scientology
organizations, such as WISE. Who knows who is going to use those
films?

LS: <Inaudible> will use the films; WISE will use the films; SMI may
use the films (only 3 of them). Why can't PDK own the copyrights?

CP: Well, who in fact owns the copyright? Normally, as far as I
understand it, the employer owns the copyright. But,

AW: Financier. Usually the financier - he who pays usually owns.

CP: That's right.

AW: Not always.

CP: Not always. In this case, we have a relationship between Ron and
the Church which is not entirely that of film director to film set. It
is also Founder of the Church and for the last 30 years, Ron has
always steadfastly insisted upon owning and retaining the copyrights
to any of his own work product. And I think we could say that in these
circumstances it is

-10-

completely understood without even the necessity of saying it. That
where Ron produces something of this nature, he owns the copyright. I
would have thought that was well defensible.

MC: Is the underlying work already published? What the film is made
from, is that already published in <inaudible> covering the script?
Script?

MC: It's just a script, it's not a book or anything...

CP: No, it's just a script.

-11-



© Gerry Armstrong
http://www.gerryarmstrong.org
 
Last edited:

Caroline

Patron Meritorious
Are the full transcripts available someplace?
FOIA?
I'll put my clerk hat on.

From a July 26, 1982 declaration filed in Tonja Burden v. Scientology, and other litigation. It might have been the "partial transcript" the US v. Zolin cases concern, but Gerry doesn't know. Note that the Scientologists sued Gerry in LA Superior Court (Armstrong 1) one week later.

Affidavit of Gerald Armstrong (July 26 1982) said:
[...]

4) In early 1980 I was also assigned to a mission,
the purpose of which was to work out legal strategies, and get
them implemented, which would allow Mr. Hubbard to still
control all of Scientology via his Commodore's Messenger
Organization while being shielded from any lawsuits or legal
involvements and responsibilities. One of the main problems
which had to be resolved by this mission, and one of the
arguments used in various court cases as proof that
Scientology was not a religion, was the fact that Scientology
was set up so that funds inured to the benefit of L. Ron
Hubbard. For years Mr. Hubbard had had his legal
representatives claim that he was not paid by Scientology,
other than a $35,000.00 annual consultant's fee, and royalties
from sales of his books. Another claim was that he did not
control Scientology monies. The fact is he had absolute
control of all Scientology accounts. As late as 1980 I saw a
despatch from him in which he ordered that unlimited
Scientology funds were approved for a project to get him a
Nobel Prize. Another fact is that he received millions of
Scientology dollars directly from a foreign corporation called
Religious Research Foundation. Payments for auditing or
courses at Flag by non-US Scientologists went into RRF
accounts which Mr. Hubbard controlled absolutely and used

-4-


totally for his own purposes.

5) I have personal knowledge of policies of the Church of
Scientology relating to the following facts, or I have had
possession of documents and tapes relating to the following
facts:

6) On or about September 28, 1980, a meeting took place in
the Cedars Complex at Los Angeles, California, one of the
corporate headquarters of the Church of Scientology of
California, (CSC). The meeting was attended by Charles Parselle,
(C.P.), Deputy Guardian for Legal, (DGL), at WW, who was in
charge of all legal activities for Scientology throughout the
world and Laurel Sullivan, (L.S.), the personal representative of
L. Ron Hubbard, a long term senior executive of Scientology and
then In Charge, I/C, of a special legal Mission, (MCCS), which
mission was seeking to conceal Hubbard's control of Scientology
and develop strategies to effectuate actual control by Mr.
Hubbard without incurring legal responsibility. Dick Sullivan, a
junior executive of the MCCS mission, pursuant to orders, tape
recorded the meeting. The individuals in attendanc at this
meeting are knowledgeable of the fact that Mr. Hubbard has always
controlled all aspects of CSC including its bank accounts,
policies, etc.

-5-


7) At the meeting, the following exchange took place
relating to the corporate structure of the Organization and Mr.
Hubbard's position in the structure. This exchange was tape
recorded with the knowledge and assent of all present:

L.S. "There is no need for them to be the actual Board of
Directors.
C.P. "There's no need at all for them to be the Board of
Directors in order for them to run the Church, but the
authority of the Church has to lie somewhere, and on some
basis. And since the Church has always chosen a corporate
entity, eventually the authority is going to have to vest
with the Board of Directors. The only reason it's worked so
long without that occurring is because everyone has
effectively been bound by the authority of LRH and have
ignored corporate lines."

8) It was common knowledge among senior executives of CSC
that Mr. Hubbard had absolute control of all large corporate bank
accounts and that he, alone, had the authority to order
withdrawal of very large amounts from these accounts. He
controlled these accounts through various people, mainly CMO
members. Neither the "Directors" of CSC nor any other CSC execu-
tives had such authority or control. This policy was practiced
throughout the period of at least 1970 to when I left the Organi-
zation in December, 1981.

9) Mr. Hubbard received millions of dollars through a dummy
corporation (R.R.F.), specifically set up to funnel money to him

-6-


which should have been paid to CSC by foreign customers paying
for "Flag" services. "Flag" is part of CSC. At a strategy
meeting on September 29,1980, held by several high ranking senior
executives of the Church, the purpose of which was to develop
legal strategies to shield Mr. Hubbard but funnel corporate money
to him, the following exchange took place. This exchange was
tape recorded with the knowledge of all present. The following
people were some of those present:

a. Charles Parselle, Deputy Guardian Legal World Wide, (CP)

b. Alan Wertheimer, attorney for L. Ron Hubbard working
with Laurel Sullivan and the MCCS Mission, (AW)

c. Laurel Sullivan, L. Ron Hubbard's Personal
Representative and I/C of MCCS, (LS)

d. Dick Sullivan, husband of Laurel Sullivan and a junior
executive on the MCCS Mission, (DS)

The exchange was as follows:

CP: "Right. That's a very helpful exercise. And also I
may say this, that it is very very helpful for LRH to have
his own attorneys, i.e. yourselves, because for many years
we have been missing this essential service and we have done
this exercise of trying to think of the way it would be on
the one side and trying to think of the way it would be on
the other side and it really doesn't work very well to do
that. It doesn't work to represent both parties at the same
time. Especially if you also happen to be a Scientologist
and involved in that particular way as well. So, I'm with
relief representing the Church interest and I certainly
invite you to represent Ron's interest as much as you can.
I say that RRF, which is as far as I am concerned part of
the Church, made a mistake when it paid over that 2.1
million. RRF had nothing ... We could say that RRF and CSC
are part of the same Church, even through they are
corporately different. I mean if anything was a sham
corporation, it's RRF.

-7-


AW: "As I understand it, RRF receives monies that would
otherwise be due the California Church for services rendered
by the California Church to people outside of the country
who decide to pay the Church from outside the country.
CP: "That's right.
AW: "So that's basically right?
CP: "That's right. Foreign - non-US Scientologists who
wish to pay for Flag services pay RRF and then go to Flag
and take the services. RRF was originally supposed to hold
the money until the service was rendered and then pay it to
CSC. But in fact, it has not really done that and so CSC
has rendered much service to may foreign Scientologists and
RRF has got the money. Fortunately for us, RRF wasn't
incorporated until 1973 and we are now litigating 1972. So,
I haven't really tried to sort this one out but it obviously
is the classic case (loud laugh) of inurement, if not
fraud.
(Several laughs)
LS: "Well put.
Speaker Unidentified: "It's all privileged.
DS: "The tape recorder is going here, Charles
CP: "However, as you can see, our financial direction is
really weighted to this solution and it is an ongoing battle
which I will eventually win because I am the one who has to
litigate the case next year and we obviously have to handle
RRF. The way we will probably handle it is by simply saying
it is party of the same Church, in fact. Now that, of
course, goes directly contrary to what you're doing which is
to split LRH off from the Church and to talk about the
corporate integrity of the different Churches.
Unfortunately, the Churches do not have any corporate
integrity. And our efforts to give them corporate integrity
have not hitherto been successful. Now when you talk around
a table like this and there is no Internal Revenue agent
present, (whispered: I hope so), bugged or otherwise, one
can work out solutions. But when you are a few weeks away
from a trial and everything you say is going to be rammed
down your throat, then you have to start looking at what
actually happened. And it's very difficult to assign significances
to things other than what was actually being done

-8-


at the time. We are trying to say for example that Flag in
1970 is a part of California Church which is probably true
but there is no documentation to say that and the truth of
the matter is that Marty Greenburg, the accountant, decided
to include Flag's accounts in California accounts some years
later for convenience. So the decision, what is - the IRS
can say and are in fact alleging that Flag in those years,
1970 - 1972, was an unincorporated association to which
CSC's income inured on a grand scale. We cannot point to a
document which says, 'Actually Flag was part of CSC during
the years of question' because it doesn't exist because no
one really thought of it. So, we have to have a different
theory of the case, which is going to account for all facts
and omitted facts which do exist.
Speaker Unidentified: "Is this the why of efforts to
create corporate integrity in 1980?"

10) It is common knowledge among senior executives of the
Organization and it is the policy of CSC that Members of the
Boards of Directors of the various Scientology corporations are
mere figureheads, without authority or control, not for internal
corporate reasons, but rather to vest control in Mr. Hubbard. I
have personal knowledge that in order to carry out this corporate
fraud, Organization executives have engaged in various unethical
practices including backdating phony Board Minutes and forging
signatures.

11) I learned through my study of the documentation I
assembled, and from more than ten years of observation of Mr.
Hubbard and the Scientology movement, that Mr. Hubbard has
cruelly deceived his followers to the point where they will
themselves lie and attempt to deceive others about the truth

-9-


concerning him and Scientology. Scientology spokesmen and
witnesses have stated that Mr. Hubbard doesn't control the
organizations. The fact is he has absolute control, including
financial control, and Scientologists know it. Between 1978 and
1980 I participated, along with at least 250 other Scientologists,
in several massive operations to destroy or hide the evidences of
Mr. Hubbard's control. Scientology spokesmen and witnesses have
claimed that throughout 1980 and 1981 Mr. Hubbard could not be
reached through the organization, or that organization executives
did not know where he was. The fact is, the most senior execu-
tives were in continual communication with him throughout this
period. Scientology spokesmen and witnesses have gone to great
lengths to "prove" that Scientology is a valid religion, while
knowing that it was simply a behavior therapy masquerading as a
"church," and making a mockery of actual honest religious prac-
tices. In 1980, Watchdog Committee, the senior CMO body, respon-
sible only to Mr. Hubbard and senior to every Scientology
organization, ordered that every Sea Org member

-10-


had to complete the Minister's Course in two weeks or they
would be assigned to the RPF. The reason given was to make
every Sea Org member a "minister of the church of Scientology"
and so avoid the US Selective Service draft then pending.
What most Scientologists, and especially Sea Org members,
don't know is that Mr. Hubbard had duped them. My knowledge,
based on documentation and observation, is that the major
reason for Mr. Hubbard's calling Scientology a "religion", in
addition to tax evasion, is to hide behind Constitutional
guarantees for religions and so carry out his scheme of mind
control to keep his followers duped. He has systematically
and knowingly lied to and defrauded his followers, kept them
from finding out the truth or becoming free with cruel and
bizarre treatment, as for example with the RPF, and kept them
economically and mentally suppressed, while he made millions
of dollars from their labor.

6) I am personally aware that Mr. Hubbard's policy of
Fair Game is still a practice of Scientology. Since I left
the organization with my wife in December 1981, I have been
declared an enemy, and I believe my life and my wife's life,
are in danger.

Signed under the pains and penalties of perjury this
26th day of July, 1982.

[signed]
Gerry Armstrong
 

Caroline

Patron Meritorious
This declaration was filed in Founding Church of Scientology of Washington D.C., v. Federal Bureau Of Investigation (Case No. 78-0107)
Gerry Armstrong (September 6 1984) said:
DECLARATION OF GERALD ARMSTRONG

1. Set forth below is the text of a document entitled
August 11, 1982 and which was filed in La Venda Van Schaick, et
al.. v. Church of Scientology of California, et al., C. A. No.
79-2491 (D. Mass.). The text of the Supplemental Affidavit has
been slightly modified to clarify certain language of the Supple-
mental Affidavit. This Declaration is being made because copies
of my Supplemental Affidavit are not completely legible.

2. I have personal knowledge of policies of the Church of
Scientology relating to the following facts, and I have had
possession of documents and tapes relating to the matters
described below.

3. On or about September 28, 1980, a meeting was held at
corporate headquarters of the Church of Scientology of
California (CSC). The meeting was attended by Charles Parselle

-1-

(C.P.), Deputy Guardian for Legal Worldwide, who was then in
charge of all legal activities of the Church of Scientology
throughout the world, and Laurel Sullivan (L.S.), the personal
executive of Scientology. Ms. Sullivan was then in charge of a
special mission, called the "Mission Corporate Category Sort-
Out" (MCCS). The purpose of MCCS was to restructure the Church
of Scientology and, by so doing, conceal L. Ron Hubbard's
control of the Church of Scientology and develop strategies to
effectuate actual control of Scientology by Mr. Hubbard without
his incurring legal responsibility for the activities of the
Church of Scientology. Dick Sullivan, a junior executive of the
MCCS mission, pursuant to orders, tape recorded the meeting.
The individuals in attendance at this meeting are knowledgeable
of the fact that Mr. Hubbard has always controlled all aspects
of CSC, including its bank accounts and policies.

4. At the meeting, the following exchange took place
relating to the corporate structure of the Church of Scientology
and Mr. Hubbard's position within the structure. This exchange
was tape recorded with the knowledge and assent of all present.

L.S. "There is no need for them to be the
actual Board of Directors."


C. P. "There's no need at all for them to be
the Board of Directors in order for them to
run the Church, but the authority of the
Church has to lie somewhere, and on some
basis. And since the Church has always
chosen a corporate entity, eventually the
authority is going to have to vest with the
Board of Directors. The only reason it's
worked so long without that occurring is
because everyone has effectively

- 2 -


been bound by the authority of LRH and have
ignored corporate lines."
(Emphasis
supplied)

5. It was common knowledge among senior executives of CSC
that Mr. Hubbard had absolute control of all large corporate
bank accounts and that he, alone, had the authority to order
withdrawal of very large amounts from these accounts. He
controlled these accounts through various people, mainly members
of the Commodore's Messengers Organization. Neither the
"Directors" of CSC nor any other CSC executives had such
authority or control. This policy was practiced throughout the
period from at least 1970 to when I left the Church of
Scientology in December, 1981.

6. Mr. Hubbard received millions of dollars through a dummy
corporation, Religious Research Foundation (R.R.F.),
specifically set up to funnel money to him which should have
been paid to CSC by foreign customers paying for "Flag"
services. "Flag" is part of CSC. At a strategy meeting on
September 29, 1980, held by several high ranking senior
executives of the Church, the purpose of which was to develop
legal strategies to shield Mr. Hubbard from liability for Church
matters but to also funnel corporate money to him, the following
exchange took place. This exchange was tape recorded with the
knowledge of all present. The following people were some of
those present:

a. Charles Parselle, Deputy Guardian Legal
World Wide, (CP)

b. Alan Wertheimer, attorney for L. Ron
Hubbard working with Laurel Sullivan and the

- 3 -


MCCS Mission, (AW)

c. Laurel Sullivan, L. Ron Hubbard's
Personal Representative and in charge of
MCCS, (LS)

d. Dick Sullivan, husband of Laurel Sullivan
and a junior executive of the MCCS Mission,
(DS)

The exchange was as follows:

CP: "Right. That's a very helpful
exercise. And also I may say this, that it
is very helpful for LRH to have his own
attorneys, i.e. yourselves, because for many
years we have been missing this essential
service and we have done this exercise of
trying to think of the way it would be on the
one side and trying to think of the way it
would be on the other side and it really
doesn't work very well to do that. It
doesn't work to represent both parties at the
same time. Especially if you also happen to
be a Scientologist and involved in that
particular way as well. So, I'm with relief
representing the Church interest and I
certainly invite you to represent Ron's
interest as much as you can. I say that PRF,
which is as far as I am concerned part of the
Church, made a mistake when it paid over that
2.1 million RRF had nothing... We could
say that RRL and CSC are part of the same
Church, even though they are corporately
different. I mean if anything was a sham
corporation, it's RRF."


AW: "As I understand it, RRF receives monies
that would otherwise be due the California
Church for services rendered by the
California Church to people outside of the
country who decide to pay the Church from
outside the country."


CP: "That's right."

AW: "So that's basically right?"

CP: "That's right. Foreign - non-US
Scientologists who wish to pay for Flag
services pay RRF and then go to Flag and take
the services. RRF was originally supposed to
hold the money until the service was rendered


- 4 -


and then pay it to CSC. But in fact, it has
not really done that and so CSC has rendered
much service to many foreign Scientologists
and RRF has got the money. Fortunately for
are now litigating 1972. So, I haven't
obviously is the classic case (loud laugh) of
inurement, if not fraud."


(Several laughs.)

LS: "Well, put."

CP: "However, as you can see, our financial
case next year and we
will probably handle it is by simply saying
that, of course, goes directly contrary to
from the Church and to corporate integrity of the different
Churches. Unfortunately, the Churches do not
like this and there is no
Internal Revenue agent present, (whispered:
I hope so), bugged or otherwise, one can work
out solutions. But when you are a few weeks
away from a trial and everything you say is
going to be rammed down your throat, then you
have to start looking at what actually
to assign significances to things other than what was
actually being done at the time. We are
trying to say for example that Flag in 1970
is a part of California Church which is
probably true but there is no documentation
to say that and the truth of the matter is
that Marty Greenburg, the accountant, decided
to include Flag's accounts in California
accounts some years later for
convenience. So the decision, what is - the


-5-


IRS can say and are in fact alleging that
Flag in those years, 1970 to 1972, was an
unincorporated association to which CSC's
income inured on a grand scale. We cannot
point to a document which says, "Actually
Flag was part of CSC during the years of
question" because it doesn't exist because no
one really thought of it. So, we have to
have a different theory of the case which is
going to account for all facts and omitted
facts which do exist."


Speaker Unidentified: "Is this the why of
efforts to create corporate integrity in
1980?"


7. It is common knowledge among senior executives of the
Church, and it is the policy of CSC, that members of the Boards
of Directors of the various Scientology corporations are mere
figureheads, without authority or control, not for internal
corporate reasons, but rather to vest control in Mr. Hubbard. I
have personal knowledge that in order to carry out this
corporate fraud, Church of Scientology executives have engaged
in various questionable practices including backdating Board
Minutes and forging signatures.

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

[signed]
Gerald Armstrong

DATED: September 6, 1984

-6-
Also filed on September 6, 1984 in CSC v. Elmer Linberg, Case No. CV 77-2654-Kn (Mcx)

Earlier in this case, on December 14, 1981, US District Court Judge David Vreeland Kenyon issued the Scientologists (as CSC) a favorable ruling denying the US Government defendants motion to dismiss CSC’s complaint.
https://law.justia.com/cases/federal/district-courts/FSupp/529/945/2355523/

Gerry had escaped Scientology and the Sea Org two days earlier.

The Scientologists’ attorney identified in this order was Howard J. Stechel. He also represented the Scientologists against Tonja Burden. Doubtlessly because of his success for the Scientologists against the Government in front of Kenyon, and against attorney Michael Flynn and his clients, Stechel was hired to prosecute the Armstrong 1 case shortly after it was filed.

 
Last edited:

Caroline

Patron Meritorious
Thanks so much Caroline.

It's breath taking the criminality of this cult.
You're welcome, cakemaker. It takes my breath away too.

I'll now post in parts an unofficial transcript of the September 29, 1980 meeting set up in LA by the Hubbard-ordered Mission Corporate Category Sort-out (MCCS) between the Sea Org missionaires, Scientology attorneys and Hubbard’s attorneys.

Tape 1 said:
Tape No. 1
Side A


CP=Charles Parselle
LS=Laurel Sullivan
*=Inaudible or unintelligible


LS: unintelligible

CP: Not only of no advantage to the church, but a disaster to the church.

LS: Okay what are the disadvantages, as you see it?

CP: The disadvantages for the church?

LS: Yeah. Well apart from the fact that it won't be controlling itself, are there any now after this? Disadvantages?

CP: Well the disadvantage is that it would--is that it can take the whole operation outside the protection of the First Amendment.

LS: Mm.

CP: It shows the church being operated by a commercial company. The IRS agrees.

LS: So it's -- yeah. It feeds the enemy line in terms of -- of them, they're saying that it's a profit activity for the profit of individuals and a individual. That it is really not a religion, It's really not organized for charitable purposes. It is making a profit (auditing)*** on down the line. That's basically it, right?

CP: That's right.

LS: Okay.

CP: (Control story.) I also think that it (clears throat) in its present form it contains no practical advantage for LRH.

LS: That it wouldn't--that he wouldn't otherwise have as Founder of the Church, right?

CP: That's right.

LS: Yeah. I agree with you there.

CP: And the fact it -- it is actually prejudicial to him, if he wants to make input into Church affairs. Because in it -- if he deals directly with the Church even through intermediaries, he's dealing with Church as Founder. If he deals with the Church through this profit outfit --

LS: ...what IS he?

CP: What is he? Advisor?

LS: Right.

CP: It worsens his position.

LS: (Unintelligible)

Male: You want something to drink?

CP: Yeah.

Male: Something cold?

LS:

Male: What would you like?

CP: ...with sugar in it. Tea or coffee.

Male: You want something hot?

CP: Yeah.

Male: How about some uh...how about some...you want a diet soda

LS: Would you-- would you like some herb tea?

Male: --cold to drink?

CP: Herb tea.

LS: Herb tea?

Male: Unintelligible.

LS: I'd like some herb tea too, please.

Male: Herb tea coming up.

LS: Herb tea.

CP: Her- her-

LS: Erb tea.

CP: "erb tea."

Male: But of course.

LS: I sound so terrible on this table. I can't believe it. I try listen to myself * with everyone *certainly rude. tape recorder was awful. It's really lesson in manners listening to it.

CP: Laugh

CP: * pretty strange on tape.

CP: You're a lovely little microphone, you know that.

LS: You just recorded that up on the highest volume.

(laughing) *** oh boy. Get them. Anyhow, so those are the disadvantages. Okay. So, we're now considering F & P as a non-profit entity. Which means that it's -- it's a non-profit but NOT tax exempt entity, correct?

CP: Well! No! It shouldn't.

LS: Should it be tax exempt? Because if it is--is it a charitable organization is it -- is it organized for that purpose? Can it exist without a service organization connected to it?

CP: Well it should ideally be -- you see, I don't think it is viable at all unless it is connected with Trademark Trust. I don't think it is -- I don't think there's any point to it. Because in order to manage the Churches of Scientology it--it should itself be a non-profit religious organization.

LS: Now, does that mean we have to qualify?

CP: Yes, it does.

LS: I'm -- we're planning on qualifying with *?

male: *

CP: *

LS:

male:

LS:

CP:

male:

CP: Well obviously it SHOULD qualify as as a non-profit *

LS: We're -- we're talking about this *

CP: Absolutely. ***(have a little problem.)

LS: Okay.

male: but um --

LS: We're just -- we're just incorporating another Church is what we're doing here, right?

CP: That's right. * You're incorporating a senior hierarchical body.

LS: All right. Now. Do you have any objections to us proceeding with this new Board of Directors *and actually putting it in place as a *?

CP: I have no objection to the selection. The only thing that does not actually been worked out -- and I don't think it needs to be worked out in order to activate a new board is where the Guardian Office fits in. And if it's not where it's at * where the Guardian fits in as a post created by the 1 March (66) policy letter. Now that-- the reli- the authority of that post as --

LS: --

CP: Yeah. The authority of that post is given in policy. It is not actually reflected now in the corporate structure.

LS: Right.

CP: But I think that can be worked out in the subsequent days.

LS: The Guardian could be * the guardian * *** I don't know that-- I don't know that ** being on the board ***early early on ** um before ** showed up.

CP: Sure.

LS: *?

CP:

LS: And um ***

There's no need really-- there's no need for them ** board of directors

CP: Um. There's no need at all for them to be the board of directors in order-- in order to run the Church.

LS: Mm.

CP: But the authority of the Church

--has to * somewhere, on some basis. And ah, since the Church has always chosen a corporate entity, eventually the authority is going to have to * the board of directors because you never -- the only reason it worked so long without that occurring is because everyone is -- in -- effectively been ah, (clears throat) bound by the authority of LRH and have ignored the corporate lines. So...

LS: Well, if they -- if -- if we have an entity as a non-profit * organization which ***Church, um -- canning the existing --

Hi Rhonda!

--**

--so the assistance of the directors would still ** gathering information **

CP: Who are these directors? Are they CMO? (Wherever)

LS: Mm. (negative response) They are the supportive personnel.

CP: And they will be -- they -- where will they be situated?

LS: **

CP: Where they are now?

LS: (positive response)

CP: So you have the assistants for the directors --

LS: Yes. *there are assistants for the directors in CW *** CMO. So they are all going to be assistants to the directors.

CP: --assistants to the directors. So in effect the directors are -- the directors are not going to very much assisted. The assistants of the directors are going to assist F & P. Whatever it's called.

LS: (positive response)

CP: (clears throat) So what we keep trying to do is ah, squeeze a hierarchical ecclesiastical system into a corporate mold. And the corporate mold always gives way. The directors are going to be no more than they've always been. With no actual authority within the organization.

LS: * the organization. * But that's not (what our concern is.)

CP: Yeah, but when you talk about the board of directors, you're talking about the people who have ultimate control within the corporation.

LS: * (outside

If you need to you can ask her.

(another female voice --

(someone clears throat)

male: * recorder right there.

female: What?

male: *

CP: What I'm suggesting is that sooner or later one of those -- your -- those directors might say, "Well, we ARE the board of directors. And we ARE going to control the destiny of our Church."

LS: Right. Then I don't (see the point) *** (an officer.)

CP: Only if you -- if -- if you start looking at the Trademark Trust idea.

LS: Right. And what is the purpose of ***

CP: Well F & P is the enforcement arm of the Trademark Trust, and has a perfectly legitimate reason to exist there.

LS: *

CP: In effect.

LS: Yeah--

CP: --in--in effect Trademark Trust will become um what --how Ron I think always envisioned HCO. HCO is supposed to keep the org there and keep it in line, using the authority of LRH. Trademark Trust could do that. From the very highest position. The directors would then have all their authority -- all their corporate authority except they would be bound by the trademark agreement. And F & P could enforce that managerially. But just not on a day-to-day week-to-week forever basis.

LS: Okay.

CP: But that is the desirable result anyway. I mean that is what you are seeking to do to get this all * there --

LS: In that case then --

CP: --*

LS: -- then the CMO Int, all of CMO Int is just some * should be *
* just they're the enforcement line. They're not really *. I mean why should I go to the trouble *. I mean let's face it they are * operational *.

CP: That's right.

LS: You know? Why should I come along to split them completely in half? * exactly what I'm *
It made them look fine on paper and all but to really enforce it I'm really actually *

CP: You're what?

LS: *

CP: Well! I -- I mean, to me it makes no difference at all if -- I mean I would have thought that since they are going to to have to enforce the integrity of the trademarks on behalf of the Trust, that it would require quite ** it would be part of the --

LS: Then it would all be all -- of CMO.

CP: Why not?

LS: Why not all of CMO then?

CP: Why not?

LS: CMO * CMO Pac, CMO Int.

CP: Why not?

LS: Would it be F & P or whatever F & P becomes.

CP: That's right.

LS: * non-profit * separate church.

CP: That's right. And what --

LS: -- and it's, it's bound to the Trademark Trust to perform its duties. Trademark Trust would not have to really -- would really not have to be more than 2 or 3 people. Because the whole support these guys are there * to them. Final say *. Their data collections, uh, would all be done by missions and debriefings (per their employment.) It's exactly how *. Their data collections, is investigations. Right? It's I mean, * that's where they get it.

CP: *

LS: -- which is * adequate um, to run orgs, so it must be adequate to see if they are infringing the trademarks. Like uh, AVC is right in there too. * We might just take the existing CMO * personal office as it existed * and make it this F & P * and how would you, how would you uh, -- how would you organize

*** Could it be part of the same organization? How would I, how would I run, run it unless you organize it from PAC, organize it CW with PAC, PAC CW and New York and UK * be part of the same corporation? Would they be individually incorporated or would they be part of the whole *?

CP: Well, they would all be part of F & P.

LS: *

CP: But it may be that for ah, reasons of convenience, F & P, instead of establishing branch offices all over the world, would ah, --

LS: * this is really what they do. They are an execution arm in to the Church. But *

CP: --


LS: And they do collect data.

CP: Well you have to dec--. (Clears throat.) No. The corporate -- You have to decide whether is CMO going to be part of Church management or is it going to be an enforcement arm of the Trademark Trust, which is actually different. See, the way I envisioned it is that the churches will manage their own affairs except where they go out of line in terms of ah, the quality and nature of the trademark. In which case, F & P would be entitled to intervene, to ensure that they got back on the road. But they are not envisaged in that system is daya to day management of the church. Because day to day management of the -- if they are going to be day to day to management of the church, they might as well be the church.

LS: That's right.

CP: That's the distinction.

LS: This is the problem we're -- and I can't *

CP: It strikes me that Commodore Messenger Org is a bit like what LRH once envisaged for Hubbard Communications Office. Essentially carry out his intentions vis a vis. But HCO became part of the org, because it was involved in every day, day in day out.

LS: Well then CMO could do -- then CMO should be part of the church but then who could be in charge of the CMO? *

CP: Well, I mean, in that respect, they have exactly the same problem as every network has. Um, this, there is a -- they're half their network is a hierarchical * and that is a problem which has never really been fully worked out. But they are made different from the others in that respect, but ah, that is slightly different from CMO Int managing the whole shooting match. Different operation altogether. And we are really looking at F & P aren't we?

LS: Well, we are looking at F & P but so far * . We're looking at the Trust and we're looking at * people who should go in there are involved in *.

CP: That's right. But I --

LS: I'm looking *.

CP: But don't we have some concept? I thought you said that CMO -- or * to turn over that hat.

LS: They do. Where I go into apathy, is that they don't and havent' and can't turn over their hat. See? There's, there's this continuing existence to filter all that traffic. As described to me (you) yesterday.

CP: That's right. But that would have -- I mean, --

LS: not (that Donna's) in charge of that decision, but she's managing (that watch) and, I mean, she's --

CP: That's right --

LS: And there is an objection because of the * --and to bypass that, * but it is, and we have a danger formula that's going on there, which has been going on for a long, long time.

CP: Well, (clears throat)

LS: You know it can be argued that you know, if you * liability or whatever, you know, * argued that it's a very risky *. So, that, that really makes it difficult for me in terms of being *.

CP: Well, not really. In fact, when you come to think of it, the minute you've got no-one for your, your junior corporation, is that, I mean, there would be noth-- there's nothing whatsoever to stop the board of directors of the mother church from writing Watchdog Committee to continue indefinitely. But! It would be as a church * (profit).

LS: Yep.

CP: Now, while that is, while that is going on, you need a Trademark Trust but you don't need anyone in it *. You don't actually -- does not have to activate, because you-- we're looking at an ideal scene of the Trademark Trust with ultimate authority through the trademarks with an F & P which actually does Danger handlings as needed. At the moment it would have nothing to do because there is a permanent danger condition and in effect Watchdog Committee is running the show on the invitation of the Board of Directors.

LS: Okay, so --

CP: When that's ended, the Watchdog could be -- could go out of operation for the Church and those guys having done the danger formula * and do, you know, they'd actually come off the * here on the * from time * and do their other thing, * which would be mocked when*

LS: Okay, so here you have *. And * what function.* ?

CP: Well, they are responsible for the uh, nature and quality of the goods and services protected by trademarks.

LS: *

CP: protected by the trademarks. They must control that use through supervision, inspections. They can employ training manuals and training schemes. A close corporate relationship is envisaged. But actually not *. A close corporate relationship is, is um, quite acceptable.

LS: Okay, now, how does -- how many people would you need in that * analyze those functions, and * how big a function*?

CP: Well, this trust is going to have, have this --

LS: *

CP: this, this, this, this, this trust is going to have these functions in relationship to all religious organizations using Scientology trade--uh, using Ron's trademarks. That is, CST is another church, all other churches, all missions, --

LS: Um --

CP: Well now, I'm not --what, what now, this is, we get, we get into details now. I would s --, I'd say that the Trademark Trust (clears throat) now needs to create a second trust.

LS: For non-religious--

CP: Yeah, for non-religious. Which is identical in every way, except it's the non-religious, and therefore the separation is made and that might be unre--, unrelated to the business activity, so you don't mix the religious and the non-religious in the same trust, but it can be pretty damn close, it does not make much difference.

LS: Okay --

CP: -- and that's going to look after, um, WISE, um, B6 groups, uh, non-religious Scientology and Dianetic groups, um, Pub --

LS: There are no non-religious Scientology groups **.

CP: I think that's right, yeah.

LS: How can you --

CP: (tape ends)


Side B

CP: * yes, it is. Dianetics --
LS: Dianetics groups --

CP: Um -- um, um, um, um --* Gold, well, Gold, yeah. Yeah, I think it's -- Gold is teaching the initial --. Yes! No worries! That's quite a lot.

LS: Now, F & P is the execution arm for only the, the religious groups. Must be only religious groups.

CP: Well, you see, F & P actually could do both. F & P, under this system --

LS: Could do *, could do CST, Gold, uh, uh...

CP: I think it, you see, F & P under this system would not have to be an eccelesiastical corporation. Because it would merely, it would merely come in from time to time on the express instructions as a Trust. Which is a religious outfit. So --

LS: Well, F & P could be profit.

CP: Yes, it wouldn't, no point in it being profit though, because the --the on-, a profit corporation is a, is a corporation in which profits go to the shareholders. Doesn't need - to be -- it can non-profit, it doesn't have to be an eccesiastical. Then it, therefore --

LS: Non-profit, not *. I must have an MU on this be--, be-- because I have trouble with this, um, non-profit,n-, not tax exempt. Can a non-profit run or manage a profit corporation? This is I think, this is crazy. I can't imagine (how it could be.)
CP: Well, can a non-profit run a profit?

LS: Yeah, it is being done in *(PDK) but it just sort of seems to upset the apple cart for me. It's like inconsistent.

CP: No! Of course not. No, no. Count--, churches. I mean, churches frequently run all kinds of profit corporations.

LS: It's just that they-- its just that if they do make a profit, they get taxed on the profit. Right? Either as a non-, either as a business-related activity, or uh, or if they're a profit corporation *. Is that how it works?

CP: It isn't-- let me explain to you. Just, just pause for a minute and I'll explain * to you. The difference between a profit and a non-profit organization lies in one thing only. And that is the provision that is made is distribution of profits. If it, if it is a distrib--, if its provision for the distribution of (informal) dividends, then it is, to individuals, then it is a profit corporation. If the, if the articles say there shall be no such distribution, and the income is irrevocably dedicated to stated non-profit purpose, then it is non-profit. Whether or not it is tax-exempt depends upon whether the IRS agrees with you. You may have a--, well the Church of Scientology may view this tax-exemption, that still will not entitle the directors to make any distribution by way of dividends.

LS: Right. You can't, just as non-profit, non-tax exempt.

CP: That's right. But that would be an unfortunate event based on some event such as inurement which would deprive it of its exempt status that is still subjected to tax without making it into a profit corporation. Now a non-profit outfit can own profit-making concerns subject to being taxed on that um, business income. That's the whole, that's the whole of it. But if, if, the corollary is NOT true. Profit organization cannot manage a non-profit organization except in a limited circumstances where say, the Presbyterian Church of America, finding itself in financial straits, brings in a team of lawyers to sort it out or brings in a firm of consultants to sort it out. That would be cool. They would be there pursuant to the authority of the managers of the church. That's the difference. So F & P in this setup, provided with not--, provided with only going in from time to time on the instructions of the Trust, does not have to be an eccesiastical corporation but could simply be a management outfit incorporated (not for) profit.

LS: Okay. So * from time to time can these guys continue to run their missions, um, run their programs and so forth that are in fact * programs ? Or would that have to *?

CP: Well, I think it depends on the extent if's going to be a day to day activity forever. Then it has to be a church activity. If they really are going to "Phase II" it, and withdraw and let the church get on to it and only come in from time to time, then I think they can, they can do it.

LS: Well, when you say "from time to time" I was looking at this as -- (Ron) * right now, he's got about (3) missions. *

CP: That's right.

LS: * Board. Except one of them's a -- one of them's the other mission *doing a reissuing of all the CMO missions.

CP: Right.

LS: Okay, and then there's probably some missions ops doing *. And is that justified? Um. Is that a justified activity?

CP: Well. If you are looking at 10 missions distributed amongst all the churches in the world at any one time. I would say * that's absolutely fine. If you're looking at 10 missions in one church all the time, then that would not be okay. But don't forget that if this system goes in, F & P, that is CMO Int, will that, will that, will assume infinitely greater management responsibilities than it ever has before. Because it, it is not taking any notice of missions at the moment, or of WISE or of B6 groups or of Dianetic groups, or any of those things. I mean it's going to be stretched to the absolute limit if it was to take- if it was in fact (to house) the sort of ah, responsibility which is envisaged in this proposal. Think of it. No-one's managing missions, WISE, SMI, and all those things.

LS: Wow.

CP: It's a different concept altogether.

LS: That's right. Um, what we're t *. And.I'm going through, I'm going through my whole BP here simply because I have ask these questions. I,* I basically understand that concept. That's good. But here's *.
...confirmed...so that's why *. I really am concerned about how, what is the direction, *. We have to phase this in somehow. Where do I begin? I begin the formation of, of Trademark Trust, I imagine. That has to given Source.

CP: That's right.

LS: Source of *. Trademark Trust.

CP: That's right.

LS: *

CP: That's right. If it actually, this, although I have his, I'm aware I have, although I have, um, portrayed a very large scenario, it actually doesn't have to be like that at all. F & P could do, could initially do absolutely nothing at all, and simply be um, inactive. And Watchdog Committee could continue to do exactly what it does at the request of the Board of Directors as it currently does. And the Trademark Trust could accept that arrangement. And ah... Except that, could, could could, could accept that the Watchdog Committee is in fact looking after the trademarks as it desires. F & P, uh, the Trust, rather, does not have to require F & P to look after WISE, missions, B6 groups and others, Dianetics groups. Um. The Trust can require that management bodies, but you can't be managing those things to do it. In other words, the Trust can say to WISE: "Get on with it." To SMI: "Get on with it." To MOWW: "Get on with it." To SOCO WW: "Get on with it." And to Watchdog Committee, in relation to the Dianetics groups, I suppose: "Get on with it." So it does not all have to land up on their plates. Uh, this is the authority right here, the Trust, which actually can say which management body shall exercise the supervision function on its behalf. And that could be a very few people, I agree. It could be three people. Mary Sue could be one of those people. In fact, maybe the Guardian Worldwide could be one of those people.

LS: But the Guardian Worldwide *

CP: No, no, but um --

LS: *

CP: That's right. But 1 March 66 is very much along those lines. But that would be a subje--, I mean, that's, that's a subject that can be looked into. Who would, who it would be. And that probably um, LRH would, might very well want to have something to say about that.

LS: *

CP: Well--

LS: Well my order is sorted out, * I'm not trying to *

CP: Fair enough--

LS: *

CP: But you're going to write to MSH about it.

LS: *

CP: Fair enough. But that-- I mean, that seems to me to be the essential. What F -- . Those are its functions and it has to do those. How it exercises, and it can use any of the existing management bodies in Scientology to exercise those functions in relation to these different affairs. And Watchdog Committee can go on doing exactly what it does at the moment. But I don't think that it can be F & P non-eccesiastical if it is going to continue actually running the Church virtually on a minute to minute basis.

LS: * Yeah. * Okay. Here we are. *

CP: (whispers)

LS: Huh?

CP: *

LS: *

CP: Oh Ho Ho! I hope you picked that up on the tape. (Laughs)

LS: What? That I hate Pakis?

CP: That you hate (Pakins) yes.

LS: So you hate them?

CP: Oh, of course I don't.

LS: Oh, come on. You do hate them.

CP: (laugh) Of course I don't. Mind if I --

LS: * in Canada you'd hate them.

CP: Ah, if I lived in Canada. But I lived in India.

LS: You did?

CP: Well I didn't actually. But my family all come from India, on both sides of my family.

LS: Charles loves Pakis. Did you pick that up? (laughs) Did you --

CP: No, but um, both my grandparents and further back than that came from India.

LS: Hm. *

CP: My father was born in India. And whether I have a touch of tar brushing * (I wouldn't like to say.) (laugh)

LS: Okay.

CP: But I do like Pakins. I do like Indians.

LS: Okay. (pause) I suppose that the executions of the nonreligious groups came under the subsidiaries of TM Trust, right? I'm just looking at --

CP: Right. Church--

LS: *

CP: Right.

(pause)

LS: I mean, now let's suppose that we have * Trust that can be *

(pause)

And again under this TM Trust would be -- where would the, the archives fit in? Are they non-religious or what? *

CP: Um, well actually it could be an entirely separate operation.

LS: Okay.

CP: It doesn't necessarily relate.

LS: * This is all:

(tape goes off and then on)

another
male: Ah, yeah, they didn't have any (almonds.) Can you eat peanuts?

CP: Oh, sure. Yeah, lovely. Yeah.

LS: You're not real delicate, huh?

CP: I rather like the look of those almonds, but it doesn't *

male: *

CP: * And I actually pick 25 * or cents, but um,

male: It didn't give you anything?

CP: It kept rejecting my money, even though *

LS: 25 (PTs) (laugh)

CP: Is this going *. Is that *(just a loop)?

LS: *

male: *

LS: *

CP: However, there is another consideration about trustees and that is the trustees may be (liable)
investigation. Because if we go by the * letter, he who controls the trademarks may be liable and therefore he'd probably be wise not to have any of these * (such entity) * actual trustees. But um, *.

LS: I'm looking at who is in control. In real. For real. Who's in control for real. Is Mary Sue * for in her operation.* And although the Guardian policy exists that Jane's * heavy hussar and all that, *

CP: She is potentially in control, cuz she could reactivate that Guardian policy and move into an org. Including Flag.

LS: Yeah.

CP: She could move into any org, activate and on-policy and the -- and that is LRH's policy.

LS: Yeah, I know.

CP: But why don't you, I mean that really was a matter of suggestion. I mean Mary Sue I think is * And I think that the Trustees are going to have some visibility. And I don't know that Jane or Mary Sue want to get involved in litigation again. And I shouldn't think (DeDe) would want to either. So it might be better to have nominee trustees. Hm! Or, hang on, hang on, hang on! Hang on! Hang on. You've got the idea which is expressed by Jim Murphy in his very complicated trust agreement, which is, the trustee, the beneficiary, in* --

LS: *

CP: -- and they act on the behalf of beneficiaries.

LS: You mean a, a blind trust is what you're talking about, right?

CP: Yeah. But um,

LS: It's so, it's so hard to-- I mean, when you're only talking about a small number of people *
you know? Those guys are not really *

CP: Oh, yeah. They would know who they are, but the outside world wouldn't necessarily know who holds the control in the Trust. That's all. In other words. But then, then again, the only reason for *litigation * litigation gets interrogatories.

LS: Yeah, and you have to know what to tell em.

CP: And you have to tell them, so that's not really *.

LS: Yeah. How are you going to enforce that? I mean, whoever's in charge is going to be liable for *. * really in charge. If we're going to call it like it is, may as well call it like it is.

CP: Well, I *, I'm in favor of that. I mean, Ron is being attacked for that reason. And however much he tried to, we've tried all these years to do this thing and that, there's still people know he's in charge.

LS: Right. As far as I -- I *, I *, I mean I know, Jane isn't planned as the Guardian *. Fine. However, Mary Sue has a status here of Controller which is up for reevaluation at the moment *.

CP: Yup.

LS: Aren't *

CP: She doesn't like *.

LS: No. It's too open to misunderstanding *.

CP: Yeah.

LS: *

CP: Uh-hm.

LS: which is not necessarily *. But on the other hand, you see, you see if Mary Sue worked

CP: Uh, huh...

LS: Trustee in the Trademark Trust, she um, she wouldn't have to be Controller.

CP: No. She wouldn't. She'd just be a trustee. Right! And um, ..

LS: * Jane, I can't see how Jane's *

CP: *

LS: * can *. I can't see how Jane

CP: * move out of the church?

LS: *

CP: Well there's nothing--

LS: How can the GO *

CP: Nothing whatsoever to prevent her as the Guardian of Scientology hierarchy being a trustee of the Trademark. Nothing at all. No problem about that.

LS: But is she really in control?

CP: Well! The Guardian Office is being very, very stable, for very many years, has kept the orgs there through thick and thin, has fought the enemy, and is a MAJOR arm of Scientology. And--


LS: *

CP: --and policy says, what it says about 1 March 66 about the Guardian. I mean, obviously its a match to put to Mary Sue. But these, the Trustees would not necessarily, well they WOULDN'T practically speak--, but those who were Trustees, they would not meet weekly, monthly. They might meet yearly. They would get their reports, um, they would act as trustees. They might delegate their power to this body or that, or *, and so on and so forth. Or, they might divide their responsibilities up in whatever way they pleased. Um, but I think -- Jane just needs, apart from Mary Sue and Ron, is the executive who is held *
a post longest of anyone in Scientology, except me actually. I've been on this *.

LS: *

CP: And Nikki has been with Mary Sue *.

LS: *

(recording ends suddenly)
 

Caroline

Patron Meritorious
September 29, 1980 meeting
Part 2

Tape 2 said:
Tape No. 2
Side A

LS: Okay, Charles.

CP: The Trademark Trust would be legally entitled to supervise the nature and quality of the goods and services provided by, and it would maintain probably a small corps of inspectors who would visit various churches, missions and other entities using the trademarks and if it decided that there was some * in the operation, um, it would be entitled by the terms of its, uh, well by virtue of its holding of the trademarks, to do something about corrections. It would be allied with um, what I am now calling F & P Management which would be entitled to exercise ad hoc managerial functions in relation to all Scientology and other entities which use the trademarks in accordance with the instructions of the Trademark Trust. It would not exercise day to day managerial control. It would not be entitled to do so. It would only be entitled to um, intervene in any church or other operation in order to correct a perceived outness by the Trademark Trust. It would therefore not be on a day to day management lines and that is what you envisage as a desirable goal for CMO Int.

LS: *

CP: The Church would manage its own affairs, but if it failed in terms of trademark usage, this management company could step in and make the correction for which um, CSC would pay, -- any church would pay by the terms of its agreement with the Trademark Trust. And LRH could then have his lines as always with that management company which would only really step in to church management to handle danger conditions *.

LS: Okay, and what would-- and how would an outness in Pubs or Gold be *.

CP: Exactly the same way.

LS: * and if * is non-profit, could they *?

CP: No problem at all, because the authority-- In fact I think that under this system what I'm calling F & P Management could easily be a profit corporation because it would be-- it would enter the field pursuant to specific instruc- instructions from the Trademark Trust. And only for that purpose of correcting the tech I--I'm not entirely sure whether it should be profit or non-profit. But I think it could probably be profit without any liability to CSC. Because then it would in fact be a management consultancy operation imposed upon it from above to * exactly the same way that a landlord can enter upon the premises of his tenant in order to effect repairs. Be no difference in the concept. So you have these two entities side by side. One is exercising um, continuing control by virtue of the trademarks, and the other is exercising control ad hoc from time to time on the instructions of the Trademark Trust. That leaves the church interven-, that leaves the church independent in its management but susceptible to intervention when such is required.

male: *

CP: Only um, for convenience, so that the, the people who are in fact most concerned with technical purity would be in the Trust. It would be a relatively small operation. It would have inspectors that would travel around. It wouldn't be into management. It would be into inspections. Um. (Just as a convenient) separation of functions. And it would not then get into-- it would not then start to get into endless management of the churches. It would keep delegating um, its instructions to F & P Management which would step in and step out and step in and step out.

male: * CMO. *

CP: That's right. It satisfies Laurel's considerations about the personnel involved. The only thing that they have to do under this--

LS: --What would *

CP: --system. F & P Management.

male: *LRH was not involved in CMO *. are the Trust * involved in the Trust * .

male2: So really the Trust and LRH could almost be the same.

male: * wouldn't want that because LRH (has given his trademarks to these -- entrusted the people who (are there to) to control. * LRH * Trust to give the control *

CP: That's right. But a trust exercises control. F & P Management acts on the orders of the Trust. Therefore LRH's relationship with F & P Management is not one of control of the Church.

male: *

male2: * control

male: * discuss * discuss this afternoon, in reality.

CP: Uh, any--

male2: If you can break the chain between CMO Int (and missions, what if)*

LS: Yeah --

male2: that's, that's the problem that hasn't * and there's no reason why*

CP: No, that's true. I mean, that--

male2: --except by virtue of separating out the trademarks involved from him you there is less *

CP: That's true. And also um, this system-- neither this, neither the current F & P nor what I'm proposing would make America safe for LRH. No legal maneuver that can be undertaken would do that. What I like--what I, Why I like this * is that it solves a lot of other problems at the same time. Long term control, the act--the, the uh, the necessity really of the churches to manage their own affairs as far as possible without cutting the line from CMO Int * into the churches and making it possible for LRH to be on that line, while the ostensible and in fact actual control line is from the Trademark Trust. So I think it has some benefits.

male: --* worldwide Trademark Trust.* in favor of* We don't know that much about foreign trademarks *

CP: --well--

male: * So--

CP: --Right--

male: Part of -- Would this Trademark Trust be international, or--?

male2: It would have to be * going to *

CP: That's right.

male: *

CP: I think so, yes. It would really be one entity. It may, for the sake of, purely for the sake of convenience have um, separately incorporated subsidiaries in other countries, rather than itself establishing place of business in other countries. But that would be a detail.

male: * Trademark Trust. *

CP: Um. Right--

female: --just putting something above F & P so that in fact a non-profit--or, a profit organization is not in fact controlling the church. You put an ecclesiastical, you put a repository of trust that actually does hold the technology above F & P * corporation * management and takes their orders from the ecclesiastical or religious group who is entrusted with the technology.

LS: You guys that don't have to work out management problems -- (laugh)

CP: (laugh)

female: --have a gorgeous plan here. (laughs)

male: *

LS: I'm not worried about the *

CP: I'd, I'd-- Yes. I would have thought that um, that you could have a, you could have a coincidence of personnel.

male: *

female: * Trust.

male: --of the Trust, could the--

female: *

male: --*repository *--

male2: I don't see any reason that this -- I mean under this (structure) *

CP: *

male2: * reason for it being a profit organization *

CP: Right.

female: Could it just be the enforcement arm of the *?

CP: Could be, yeah. I, I, um, I postulated F & P Management as a second entity in order to cater for Laurel's considerations that CMO Int would continue to run the show, and that LRH would not communicate via the Trust.

LS: Not really. I mean, * we wanted the * investigations of what, how things are being used between *. The thing is, unless they're one and the same thing, where he's, where he's going to go, and where he has gone, where he's going to get the data is from the Investigation Bureau at CMO Int, which is what, what we're talking about is, * but * dissecting it and then dissecting it again. * We've now moved out two bureaus of CMO Int is what we've done * And I'm not really worried about, I'm a little worried about just smashing * the only really effective operation you know, we're talking *

CP: I mean-- I, I, I foresee no objection to the Trademark Trust and F & P Management subsisting side by side in the same building. A given number of people are in the Trust and a given number of people are in the F & P. Uh, it's just that the function, vis a vis the Church is quite important because the trademarks give the authority * ecclesiastical *. F & P I, I think should be non-profit, because there seems to be no advantage * and does the management function. But it does those NOT on the basis of some consultancy agreement, which is terminable at will by the California Church, and really has no effect over other churches, but exercises authority from the authority of the trademarks, which exercise * every corporation, every mission, every entity of any kind that uses those trademarks.

LS: Okay. So let's just, let's just figure out how this structure would go. Can I just see it, how the structure would go. Cuz I, I agree *. Now can, can these guys at the top of F & P be on the Trust?

(background discussion)

You don't have any other engagements?

male: No.

LS: You're stuck with us, Jim.
(discussion)

CP: How are you doing?

female: I'm doing all right. *

LS: *

female: * last night.

male: * does anyone want anything cold to drink?

female: No.

LS: I'll drink something --

CP: Yeah, sure.

male: *

(laughs)

CP: I would drink a *. Do you have one about?

male: No.

LS: I need this *. I don't *

CP: Well, the authority. There you go. Um. Um. Whatever * missions-- this is the whole world of Scientology. F & P is here.

LS: Okay. And who is that. Just in terms of the real world, who is this going to be?

CP: This is the Trademark Trust.

LS: And how many people *?

CP: It has to have enough people to be able to notice that the trademarks are being properly dealt with. Otherwise it's just a --

LS: Okay, and where do they get their information? From CSC? *

CP: Well

LS: Where is the data flow coming from?

CP: They, they, they, they, yeah. The data flow comes from the church *. These people. They require them to make reports to them.

LS: Okay.

CP: --by virtue of the fact that they are holding the trademarks.

LS: Right.

CP: They're entitled to exercise supervision, inspections, training and some other word which I wrote but I can't understand. Um, (laugh)

Let's go through it *

Their manuals. They prepare manuals which they require to be followed. And those manuals would of course be the technical bulletins. They're entitled to maintain a close corporate relationship and they do so. They therefore get all this information and they are entitled to act on it by the terms of their trademark holding.

LS: Can these people be employees *

CP: Well, these people at the top--

LS: Right, are they employees of (the church)?

CP: Um. I don't think so. No. I think probably* I think if anything, the other way around, which is probably a management-- an agreement between TT and F & P that F & P will on instruction act as the troubleshooting * (arm) of TT.

LS: (Isn't that) what we're doing?

female: * We made F & P the existing F & P people the Trademark Trust, and we *

male:

female: I don't know at this point. I mean, that's what we've done. How's Joe? Sitting on a mushroom?

Gone home?

male: *

CP: Well, I, I'm capable of being here on Wednesday. Although I, I had other things planned for Wednesday. But, if, I mean this is obviously of critical importance. If you would like to think about it for the next 24 hours and meet again on Wednesday --

LS: *

CP: -- I would be certainly very willing.

male: * alot of questions.

CP: I think so.

LS: Well, I'm, I have to put the actual operation into this outfit, and it's great to theorize and all, but I feel that we sort of reached a point where now I have to figure out how this is going to actually work.

CP: Right.

LS: And I'm not at all for just throwing (it into some paper)* you know? Not really having it work.

male: My only question is why F & P just can't be * arm of the Trust. Just have it be--

LS: And when you say "an arm" how close an arm? * Division

male: What you have here is you have a, a body which, which has a number of functions *. Uh, Inspections * uh, the middle ground * perceives a problem. So you've got inspections, problem, troubleshooting and if things really get hairy you've got some kind of legal * trademarks any more, and so forth. That's at least three things. And I would imagine * Trust, so--

LS: Yeah. Now on--the way--on the 7 division org board, you know the 7 divisions that every org has. * Every organization* The Trademark Trust controls * and you could extend that and you could say that all * of an organization. The rest of F & P is only the other 6 divisions. So * you could actually create a 7 division org board and stick in Div 7 as Trademark Trust, which is really when we come down to it, Department 21 is LRH's department. The first department in Div 7, right there, which is who is doing it anyhow! At the moment. So if we replaced him with the Trademark Trust, stick it in Department 21. Really. Because right now we -- you know what I've got in there. What I've got in there is shareholders, and boards of directors and officers in a Department 21. Well I'm just, I just take that out and stick in Trademark Trust and all those powers and, and put a hefty Department 21 there * AVC and all that stuff, AVC would actually move -- AVC * . We're actually expanding this operation. We were * And the rest of the division*

male: *like about * LRH would be * body outside the Trademark Trust. This could be held from above. And --

LS: Okay.

male: --you know. Maybe that's a reason to have it--

CP: Yeah. That is the, that is the one advantage to having F & P separate. It's not-- LRH is not then right on the control line, which he is right now. That's the advantage.

LS: Okay.

female: See and the Trademark Trust would use F & P similarly to how LRH would use F & P, in other words, to get data, and then to shoot out orders.

male: * LRH * instructions. *LRH * enforcement was troubleshooting *

female: You're talking about AVC.

male: What is really needed is the analyzing of the information and the troubleshooting was-- this would be, this would be that organization.

LS: Okay. Can we meet on Wednesday?

male: We're talking about the runners of Scientology here, *

CP: What?

male: The runners of Scientology.

CP: No, I'm not talking about the runners of Scientology. I'm talking about the controllers. Not management. I'm, I * this is management being there. Ultimate controllers (is what I'm talking about.)

But they should not-- they wouldn't get into management. Well, not day to day. So they might get into--

Anyway, (that's what I'm talking about.)

female: *

male: --this, this is, this really has been all the time, LRH. * move it and put it there.

(more than one conversation going on at once.)

male: We'll assume he always had that control. * legal control as well.

CP: * enforce the trademarks.

male: right.

CP: I think we're done!

LS: Okay. Um, how do I stop this thing?

CP: Push, uh...

(end recording)

(Side B is blank)
 

Caroline

Patron Meritorious
September 29, 1980 meeting
Part 3
Tape 3 said:
Tape No. 3
Side A

R: B-O-I-N C-I-A-N-A Boinciana Boulevard, at Miami Springs and the phone number is 885 dash 1941.

J: Are they a motel? Miami Springs 1111 South Royal Boinciana Boulevard.

R: Brother? Now hear me. Kima Douglas, Holiday Inn, and that is very secret. She doesn't even know about it. Kima Douglas, Holiday Inn 1111 South Royal (Boinciana) Boulevard, Miami Springs, and the telephone number. Did you get it?

J: 885 dash 1941.

R: That is right. And you will leave her your address and phone number. All right. Now that gets the thing. Now the reason why. (pause) and that's all. Now this merely permits you *. And there's no other copies, and it doesn't tell anybody anything. You understand?

J: Yessir.

R: Now that hers, so that, that'll let you draw the money on your air fare. Now you'll have to listen carefully because all this is trouble.

(rest of this side is blank)

Side B

male: Oh, you gotta move the thing back.

R: Okay, now one of the various tools * to name

J: Make sure *

R: What? Yeah. One of the various * to name are a name of that character if you want to take it, so this, uh, do it for initials. And use her middle name. Something of that sort. That is a soft spot. Then the security aligns.

J: I see. She's actually Apollo somethin' or other. Her passport says Carol - I don't remember her last name. Carol Kima whatever it was back a few years ago. It was, but it's actually Carol is her real name. Jason.

R: That's right.

J: Carol Jason is her passport name.

R: Well you can make it fairly upstage.

J: Well, I could even make it someone else. I could find someone--

R: No, you don't want anybody riding on the same airplane.

J: Right. No, I mean someone else maybe in the US or something like that. Some name.

R: Yeah. Whatever it is. Now I've got to know where I can by phone when I get into the airport. And you're going to send that down by telex, telegram or by telephone. You can leave a telephone message.

J: To that hotel.

R: To that Holiday Inn. You can leave a telephone message there. Now you can just say you'll be checking in shortly and you can leave your telephone. Or, you can send a telegram. Or you can do it a couple of different ways. There (ought to) be an advance reservation.

What are you looking for?

female: *

R: There it is. Take it away.

So. This is your --. I'd put it on two different channels.

J: Right. Telegram and --

R: Yeah.

J: --and, well then I'll call up to make sure--

R: That's right--

J: ah,

R: Also.

J: Right.

R: Now you can expect action on this within maybe 48 hours after you send your telex. Probably the outside, uh, because then I, the second I receive your telex, well, I'll just get on the next plane, with the * (party).

J: You just mentioned something about there would be no fast reservation.

R: Not at the Holiday Inn. I won't be making a reservation at the Holiday Inn.

J: Oh, I see. Okay. Right.

R: You could make a reservation.

J: Uh-huh.

R: The second you got it, why, just make a reservation, and say he'll be here tonight or tomorrow. Or she'll be here tonight or tomorrow with party.

J: Right.

R: You see? You can make the reservation, I mean make the call. Now what?

J: Yessir?

R: There will be about four in that party. Couple rooms. And there will be two coming in the next day. All under the same reservation arrangements.

J: Right. Three rooms.

R: Mm Mm. (yes) There would be smarter to make the reservation at that hotel and so forth. Get a different name. I mean, doesn't, the one you're making the reservation at the hotel with.

J: Right. You make it under Rick Sheehy.

female: *

R: Oh, you did.

female: Yes.

R: All right. Put that down.

Now you leave a note for right away tomorrow to go out and get the battery cases of the 2c, TC55, to get a couple of extra battery cases and the HU purchaser and it's without fail and the TC55 Sony recorder *.

So, there's your recorder.

J: Fine. Thank you sir.

R: They might be much smarter. It would foul things up. The ho-, rather the apartment is in one name of the party, but the reservations are in another name.

J: Uh,hm.

R: Right?

J: Right.

R: But now I've got to know who to call so you make sure that your name and your phone number, see, is on that.

J: Yes.

R: Now, if worse came to worst, uh, if worse came to worst and there's a total breakdown on the thing, uh, you short circuit it the second that you call the base, or the second you call RONY.

The, the base at the *. You short circuit everything if you, You see you'd want to send this down to this hotel--

J: Right.

R: -- that might up in the air. There might be, that, that message might go adrift.

J: Right.

R: See?

J: You mean it might not reach Kima?

R: Yeah.

J: Right.

R: Something might happen with regard to that.

J: Right.

R: So, if worse came to worst, if worse came to worst, why you could call the base. And leave a phone number. And say, "I'm here on leave. My parents' phone number is so and so." And then give the phone number where you can really be reached. But don't give the area number because I will know (if) it's Daytona.

J: Right.

R: You could leave it at the base. You could also leave it at RONY. But you could also leave it at the GO. So you get the GO phone number and you could get it to Hank. Get Henning's personal phone number. Right?

J: Right.

R: Now, I think you can get that from Nikki. So your alternate communication line is Henning. Yeah, I got your alternate communication lines. And just give him the name you would be reached by and the telephone number and if worse comes to worst, I don't have any message at the Holiday Inn, or the place is burned down or something has happened, tell what, I'll call Henning and (they will) call him. But that's if I don't contact you within about 36, 48 hours after you *.

J: Ah, so I wouldn't call Henning until --

R: * play well, there, he'll be in here 48 hours after.

J: Right.

R: You can call him any old time. Perfectly all right. But it's not all that secure.

J: Right.

R: Telephone lines into the GO are not all that secure. I usually go outside and use a pay phone. So, ah, therefore if you start to worry about a connection, or something like that, why you call me, okay?

J: Yeah. I could always call there 36 hours--

R: You could call the hotel and find out if we were there.

J: Right.

R: See? We have to know what name you're going to, call it in to the hotel. What is that?

J: Frank Morris. Cuz,

R: No, no, no! Who are you going to call at the Holiday Inn? What name do I ask for at the Holiday Inn?

J: Rick Sheehy. I'll set it up under, You mean the reservations?

R: Yeah.

J: It would be Rick Sheehy. Because we wouldn't want to use Kima.

R: All right. Very good. Very good. So the name, a message for Rick Sheehy, and, and,

J: Actually, I'd rather put the, the apartment itself under Rick Sheehy, and --

R: All right.

Yes! Yes!

female: * messenger *.

R: All right. Good. Thank you.

J: So the motel itself, the motel in Miami would be Kima. But the apartment I think should be a male. It would be more understandable.

R: Kima Douglas.

J: That's right. Kima Douglas.

R: And the apartment?

J: It would be Rick Sheehy.

R: Okay?

J: Right.

R: All right.

J: And I would use Frank Morris if I needed a reference for the others.

R: Got it?

J: Right.

R: So that's, we've decided on that. She'll register at the hotel.

J: Right.

R: Kima Douglas. Therefore your message phone to the hotel will be to Kima Douglas. Ah, take the apartment under Rick Sheehy. And ah, the name that will be called to you will be Frank Morris.

J: Right.

R: We'll have to have Frank Morris and a phone number, see? Now, the question arises: Should you go in, to, should you move in to the apartment or otherwise?

J: Well, I'd have to be there, if I'm going to be waiting for this telephone call.

R: That's right. Now you should pick up the schedule of planes when they come in and then you will know within a couple or three hours after the arrival of the plane, you should expect that telephone call. So that doesn't keep you waiting for 24 hours. So when do these ALM (sit to). It's only ALM, ah, it's Antilles Airlines that go in there, and they only arrive twice a day. So you get what that schedule is.

All right?

J: Right.

R: Now, and --

J: How many hours do you think after receiving the telex that it would be --

R: There's the possibility of breakdown if no reservation or something of this sort, although we don't seem to be having that trouble. Ah, I don't know whether we are or not. But, it would probably be at the near end a day, and at the far end, 48.

J: Right.

R: But it takes an overnight to relay that telex.

J: Ah-hah.

R: (Listen.) So, for the moment you send that, you've got an overnight. You've got an overnight and then you've got a day to get there. Maybe a day to pack up and get on a plane, so it's an overnight and 48 hours is when you can really expect it.

J: Right.

R: And then if you know when your planes arrive from here, why you will know it will be 2, 3 hours after that. So it will at the other end of the (telephone.) Now you may have to turn on lights. You may have to turn on water, or get a telephone connected up or installed. And you may have to, ah, stock the icebox or something like this. Odds and ends. But, ah, this I think we can preserve some security on the line. It's not from our own people after the base is all established that we're being secure. It's, wasn't sure they were calling people if they're questioned about *. That's a tourist location. It's almost impossible to spot specific people in a tourist area.

J: Yes.

R: And, ah, that would seem to be about the way to (catch in.) But that gets Mary Sue and me into the US.

J: Right.

R: And housed smoothly. And no *.

MESSENGER! Get me my wallet.

female: (runs)

R: Any questions now?

J: No. Can't think of any.

R: All right.

J: I don't know Daytona at all.

R: Hm?

J: I don't know Daytona, how wide it'd look like. I don't know wide it is.

R: It's narrow.

J: If there are apartments or whatever.

R: Oh, I'm its *. The last time I was there, was * bustling little towns.

J: Hm-hm.

R: Ah, all right. Play it back to me.

J: All right. I go to Miami. Switch planes. Go over to Daytona. Ah, at Daytona, I want to find an apartment, condominium, something like that, close to the Neptune. Within walking distance, or close bicycle distance. Ah, good place. Three apartments. The, ah, for yourself we'll have a room and one for Mary Sue and then decide another place so we can cook and the rest of it later. Be seven people. Ah, telephone there --

(snaps fingers)

R: All right. Thank you.


Go on.

J: Oh, okay. So once I've had the place, then I send a telex to you. Got it? To R. Got it. And ah, make a reservation. Call the Holiday Inn, Miami Springs. Make a reservation. Be three rooms under the name Kima Douglas. The Rick, the apartment will be gotten under Rick Sheehy. Uh, make the reservation, and leave the message, mine, or, and, my name that I'm using, and telephone, the telephone number that I can be reached at. Might not be the apartment. * Whatever. And then 48 hours max.

R: An overnight plus 48 hours.

J: Right. Overnight and 48. If not, I call Henning, ah, I'd call the hotel. But then you might not have had reservations. Might be full. Uh, I don't think (that's a problem) have a reservations two days in advance. But if not, if there's any kind of trouble like that, then I'd call Henning.

R: You don't also make a reservation the same moment you send the telex.

J: Right. And that's, that's right. Okay. So everything goes at this, all my comm goes out at the same time.

R: That's right.

J: And I also send a telegram down--

R: That's right.

J: --to that place.

R: People might pay more attention to the telegram than they would pay to a phone message.

J: Right.

R: All right?

J: Posh place. Two months. We have to put money, you know, * month in advance and the last month.

R: You have, you can handle all of that.

J: Yeah, that's fine. No hassle.

R: You, ah, keep account of your expense money, cuz it has to go on my pass records.

J: Okay.

R: And ah, with receipts. And ah, your ticket is from External Comm. You're not held down to an apartment.

J: No, could be a house. Anything to live in.

R: Good.

J: The least desirable would be a hotel, motel.

R: Oh, boy.

J: But, if it would have a kitchen.

R: Yeah, all right. But ah,

J: It's not--

R: Yeah, but the actual truth of the matter is ah, motel will, all that sort of thing, they might not be so good. That might add up to all sorts of difficulties.

J: Right.

R: Security angle on a motel is terrible. Anybody can walk into any room in a motel with-- there's never any desk or anything to stop, or

J: Right. All right, let's say then, just possibility that there isn't a condominium or house or, it's very narrow and it doesn't have anything but motels on both sides.

R: Oh, it's not that small.

J: Oh, okay.

R: It's not that small.

J: All right. Then, maybe on, across the bridge, finding another place, let's say further than walking distance.

R: Oh, there's lots of places. It's a buyer's market right now. It's a renter's market too.

J: Mm.

R: Most of these places however, are motels. Motel-types. Yeah. Then nobody was looking for anything posh, so I can't tell you what the market is there.

J: Right.

R: * Look around. Realtors might be jumping down your throat. You probably have to pay a real estate commission if you use a realtor. I don't think you'll have any trouble.

J: Right.

R: I don't think you'll have to rent a whole motel. All right.

J: Yes sir.

R: You all set on it now?

J: Yup. Think so, let me just scan over this here.

Okay.

R: All right. There is a point, if you've got any choice in the matter. If somebody has to go past a desk, ah, or it's a single entrance to the place, or something like that, it is much more preferable, than a multiple super entrance perimeter.

J: Hm. Okay. Like The Executive that we lived in, where it's one single entrance.

R: Yeah, yeah.

J: * that'd be preferable to all of them opening up like a motel opens up.

R: Yeah.

J: Yeah. Right. Condominiums, well, that's okay.

R: Just possible you may find a tourist home. Somewhat posh tourist home or something that people rent out. They've got a lot of beds in them, or something, something, something.

J: Yes.

R: Who knows? But get something that's decent.

J: Rental is quite easy. As I remember Florida, rental is quite easy. There wasn't that much problem. People always rented. Way to make money.

R: All right?

J: Yes sir?

R: You got it?

J: Yeah.

R: All right. I'd advocate that you got out of here as soon as possible and execute it.

J: Right-o.

R: We're not running on too tight a time table. Ah, but ah, I would certainly like to get out of here by Monday. I don't know what today is. Today is Monday. But that's an extreme length. I don't like arriving on a Friday, a Saturday or a Sunday, because all legal areas are closed and ah, if anybody is trying to wait for you to be analyzed for drugs or something stupid and so forth like that, why there's never anybody available *.

J: Right.

R: So forth. So,

J: Today is --

R: Monday.

J: Monday.

R: That's a, that's a wide line.

J: It's not, it's Tuesday now.

R: If you're very, very clever, why you would have a, you would get in there by Wednesday.

J: * get the apartment by Wednesday.

R: No. No, you'd be in there getting an apartment.

J: Oh, by Wednesday.

R: By Wednesday.

J: Oh, yes.

R: Cuz otherwise you run into the weekend.

J: Right.

R: But, we'll actually try to make my departure Monday.

J: Okay. So it would be either Thursday. No, it would need to be--

R: Yeah, it would either depart Thursday or Monday.

J: Depart. That means that I would have to have the telex out by Wednesday night.

R: Uh, huh. And you possibly might be able to get one out by Wednesday night. I would prefer that if you could do it.

J: Yeah.

R: That means awful fast scramble.

J: Right.

R: That means you have to get out of here on a plane tomorrow. You'll be up there, I mean today, ah, you be up there Wednesday.

J: Wednesday morning.

R: And ah, have all your business transacted over with and done. You might find it very easy.

J: That would be preferable.

R: What we're looking for is difficult. People have been throwing property, small properties and all this sort of thing, this is endless.

J: Uh-hm.

R: Don't, no further questions?

J: No sir.

R: All right. Here's your tape. Good luck.

J: Thank you sir.

(Tape ends.)
 

Caroline

Patron Meritorious
September 29, 1980 meeting
Part 4
Tape 4 said:
Tape 4
(Side A is blank)

Side B

male: * and the copyrighting any underlying material * works, which belongs who was *

CP: Absolutely.

male2: basic question * based on justifying * as much as possible * a lot of transactions.

male3: As far as you're concerned, * explore undoing the 2.1 *

CP: Well, if I had to, I, I ought to make an apology, because I can tell you that I'm head of the legal department. (laugh) And I ought to know about this. But the abiters -- I mean all I can say is that I have been doing other things and I have left all these problems to the people who work under me. And um, that is how it is being investigated. It's been a very busy year for you on this topic. It's been an incredibly busy year for me on other topics. Now I do come to this impression and it seems to me that we start with something that's wrong. And everything that we do hereafter would be wrong unless we got that right. I understand that you * brilliant in terms of the original instructions. And it obviously is nothing * but I'm not -- I think the stable datum is wrong. And you can't really get around that. He shouldn't have been paid 2.1 million. He shouldn't have been paid 2.1 million.

male: * 2.1 million * as I understand* verification that it is not possible to pay the technical staff *. How we deal with *.

CP: Well, once the, * actions, *uh, * part of that money can be designated as a royalty payment. * main payer of royalty. * business that uh, * a chunk of it could be an advance payment on future license *. So

male: So, * combination of an advance * licenses for the films.

CP: Yeah.

male: * in effect an advance payment of royalties from *.

CP: Right.

male2: And this is paid by whom?

male: *

female: *

male2: * first started projecting, * (we started this at dinner,) uh, the license fees were barely enough * allow PDK to pay interest on * for the * PDK basically reimburses our * to LRH. * I don't see license fees given * paid back and given the Church a payback *. I don't see money going to LRH *.

CP: Because the films are not going to make all that much money. They're going to be a loss.

male: * People like to get paid back their investment plus interest. * 2.1 million dollars (no matter) what * problem is justifying that * look out for myself (coming around the corner)*.

CP: Well, I added his, I took his top figure of 15,000 multiplied by 33. My little computer said (four ninety-five five) I feel we could add another couple of hundred thousand onto that easily. Probably make it three quarters of a million.

male: Let me ask you a question. Is it possible that somebody else (leading IRS) 2.1 * leave that payment out and maybe * PDK * 2.1 * paid by the IRS * at least have one transaction which looks totally good and then we've got another transaction which looks totally bad * and we need to figure out how to undo.

CP: Mm! Right. * at the moment, PFC has made the *. It has-- it's incurred liabilities. One of which payments was in (*).

All right. What is PFC going to do? Well, it could -- You're suggesting * to PDK.

male: * what I'm suggesting is that uh, the church has invested this money based on * PDK, based upon what was in turn * memorialize to * the church *. * early 78. PDK then asked the church to start financing *. to release them to these orgs and you know basically we have every, we have six and three and five, we have all that going on, we just leave * out of the (equation) and worry about our (justifying) 2.1 * not characterize * .

We really want to get rid of all the dirty water, just--

CP: I fully understand what you're saying. You took *. In that case, my only question is why pretend that PDK was involved as of 1978? Why doesn't PDK just buy it now?

male: * relationship to be *. Would just rather not do that. *

female: *

CP: *

male: * Is it possible for the IRS to find out about that?

CP: Oh, of course. He would have to report that on his return.

female: *

CP: Yes. It's * income. What he needs, or what needs to be done is for, that he, he's getting royalties from PDK in very substantial sums. That, if that was characterized as a royalty payment, I don't know if it would be a year's royalties, two years, I just don't know how much *. I know it's a lot. And, ah, it could be characterized as royalty payments. * And um, it could be expressed as a loan from PDK to RRF. (In other words) RRF paid on behalf of PDK. And is now endebted to RRF. Quite possible to do that way. And then instead of RRF-- instead of PDK paying the royalties to Ron for the next couple of years, * pay to RRF.

male: *

male2: * might be some problem with * can not understand, but uh, *

female: *

CP: Well, I'm there is, there are exchange control regulations in Denmark. But, I'm also sure that there is some Danish people who transact business *, and there are regulations *.

Well, I, I like that. The only thing that I'm a bit concerned about is memorializing an agreement which *
(substantially aimed to really think and see to the minds of attorneys' tears later.) That's a little bit worrying. I've had those things come back to haunt and I don't myself see um, that there is any liability to LRH having contracted with the Church to make those *. Because um, I'm neither * from the point, from the point of Founder/Church relationship *. Which I'm full of at the moment, because that is what we are going to be litigating in seven weeks' time. What I feel is * there are always certain liabilities to memorializing agreement which never occurred. Um, probably fewer than the liability to which might occur to -- fewer than the liabilities which will, which occur to the way it actually happened, which was * the Church made themselves on behalf of the Church, Church *. Which is a true statement. I think that is a First Amendment protected, protected transaction. Unfortunately we can't prove that until we've litigated it. But we're coming up to *, and I must say it does look very strong.

male: *

CP: It does look very strong. It may be of interest to you, to, to get a copy of the brief that we filed. Um.

male: * relationship between * and the Church *

CP: * Very much so. Um, there are, there are, there are a lot of * number of pages which say that the, the structure of the church, the way it functions * hierarchy, is not subject to judicial scrutiny and control. And all to that First Amendment law, well not on to it...entirely separate from those First Amendment considerations, one has the tax * 501(c)3. Or the impact of the First Amendment on 501(c)3 is nowhere being strenuously *. It has been considered in relation to little garage churches: "The Bubbling World Church of Universal of Love" and the "Church of the *". (laughs)

Sorry about that, *. We're being looked at in relation to you know, major churches with several millions of members, and uh, it's *. So we're dealing with *. And these things were not looked at when we litigated the founding church * in 1957, or whenever it was. Which we probably * that. Lost on the grounds of inurement. The various First Amendment questions were never raised and argued. In fact, the whole thing was very badly done. Well, we're now into a completely different scene, and we are putting this forward very strongly. The church, the hierarchy of the church cannot be inquired into. The relationship between the Founder and his religion are sacrosanct. The church is fully entitled to keep him in a very grand style if it wishes to. And it's perfectly entitled to pay for all kinds of benefits from *.

(tape ends, then starts again)

CP: (...always a tall.) I think we ought to take that into consideration, * considering these questions. That's why I'm less concerned by the fact that he made * to the church, which is what did happen, and about demoralizing * Pubs DK. Seems to me * pointless exercise, and also one which would require his signature on a *. No, and it requires a signature on a document in present time. Memorializing an agreement which never actually occurred. Someone from Pubs DK will have to sign this agreement. Now, we rely on that person 100%, or are they one day going to turn up on the wrong side of the witness box and say the church lawyers put their screws on me to sign this. I would be much more embarrassed--

male: *You've got to, it's always easier to service *free.* Even in this case we'd have (rights *) services which very well could be rendered *. *

CP: What, that was the-- what, distribution rights. It's not the whole copyrights.

male: distribution*.

male2: It was, it was contemplated on initially that the copyright would transfer as well to PDK.

CP: Right.

male3? That, and because they hadn't paid so much to * RRF. That was how they had *

CP: That was how it was originally contemplated, (and we're now looking at it) on the basis, ignoring the RRF transaction altogether. * dealing with that part of that.

But, all, all I can say is that the church is willing to pay Ron for his time and effort. And * I think the proper way of looking at it is that he owns the copyrights. Now. You're his lawyers. If you want to say he waives payment for the services, and wants to give the copyrights or sell them to someone else--

male: --the reason I wanted to know (how to do the)copyrights is to, to the extent something happens within the church, * control the films, * controls his books.

CP: Right. Right!

male: Good. Good. That's my question.

CP: But I think perhaps we ought to, perhaps we as the church should write to you, as Ron's attorney, (later) setting out that we, we consider that * (the form of the debt payment)* and that having considered the copyright position, we recognize that he owns the copyright, um is the way to *.


male: * wouldn't make that right. You could negotiate with that right separately perhaps, but *.
CP: It would. But on the other hand, it might, might suddenly arise that the church * paid out several million in order to make *.

female: *

male: * the advertising money they spend to, to uh, promote his product, which is copywritten in his name, which * his words.

CP: That's right. I think * have to be understood though that he made those films in order that they would be used by (all the) churches of Scientology.

male: Which is the same* his book*

male2: You know, the church will be, will be making money *. I think its a good deal for the church because ah, after they recoup all of what they charged the orgs, after they recoup their, their investment, they'd still be taking the lion's share of the money, * and they ultimately, ultimately be making a lot more money than LRH would.

CP: Yes. Yes. But I don't think *. Ron sells * the copyrights end up with PDK or if the agreement between the church and PDK which guarantees the church its share of the profits.

male: With respect to what?

male2: With respect to the uh, copyright ownership?

CP: With respect to the money made off the films.

male3: *be the joint venture agreement itself is what --

male: yeah, yeah. Right now *between the two, between the two companies is *(is that each of them is contract)*

male2: * (divide profits)*

CP: That's right. So if, (if the file) is wrong (continues *) it's really to protect the good usage of the (venu.) It doesn't cut the church out of, of exporting * advantage.

male: * share *.

female: No.

male: * ?

female: No, I, I don't, but I don't think that on the issue of the copyrights will um-- I think that the right to * that's not included in the rights given to the copyright owner. You own a * and you sell it to someone, and they decide that they want to put it on their floor * people walk on it, * copyright owner can't get it back because you don't approve of that usage.

male: *

female: Right. No I was just * that right.

male: *

male: * problem is * church is * how to position * would if *

CP: * I think the reason that there's now so much concern is entirely due to the church's crying wolf in so many years and making a fuss about its own problems with the IRS. We are the ones who've said for year after year," We can't do this, can't do that, can't pay this, can't pay for that." Um, he is not (raised) any of these problems. So if I'm properly withdrawing the church's objections at least to some extent --

male: *

CP: * complication.

male: * because if you're not too successful in that, then (all of these, all of these complications are also obviated by virtue the church) *.

CP: *Right. (laughs)

male: * so if you tease me that the less you have, * a lot of what has gone on has been possibly a phony use *

CP: Yeah, that's true. That's true. *

male: * suppose you can always try again * strenghten uh, your new tax exempt arguments for the period of 80 and on.

CP: Right. Oh, if we lose, we will try again. And if they lose, they may try again. So it obviously * legal matters * end of the rainbow. (laugh)

male: * argue if you wanted to the fact that * 1980, means that we had a * had a concern about * their, their opinion. * admissable.

male2: *

female: *

CP: *

female: * Well, * the two reasons for doing it that you know * the tax * controllers, is *

male: *

female: *

LS: * know why we're trying to * What is the advantage, what advantage (is what LRH wishes) *.

male: *I'm looking at* really interesting question is (the whole) to the extent they can be, we make * we may be winners in terms of duration * these things could be negotiated * pass to his heirs * copyright is something of value * not ours to give it away * to the extent (they can't go obtaining a) list of all the reasons why we should keep it * I wouldn't want * something to come up later *

LS: Yeah, you're talking * When we first brought this up, um, there were * issue first came up, um, * it was a problem * LRH copyright position. * now, with all that profit *

female: * LRH is now going to retain the copyrights.

male: It's because of, I mean the church is still paying for them, he's still receiving * the church paid for them, but apparently, based on a new, fresh viewpoint, it's perfectly okay for that to have occurred because of the * relationship with the church to its (donor.) Which we hadn't had. That's a totally different viewpoint.

male2: When (Well) we're talking about 2.1 million dollars, I was having problems justifying * so high.

LS: Right.

male2: --you know. * Seemed to me with that amount of money he should be transfering all the *

male: --throughout the universe, forever.

LS: *

male: *(whether now know) after discovering all the past debt which is 2.1 million dollars *.

(laughs)

LS: * had pictured that for the summer. How they, Okay.

male: (ready?)

CP: Sorry, *.

female: That's fine. I just wanted to know what agreements (we are at) on this so that we can get it rolling.

male: *

CP: (I, I really can't --)

male: * viewpoint on the trademarks, which is * --what I just *. Because I can see the disadvantage of * trademarks *.

LS: I know.

male: --other than perhaps, you know, * somebody uh, * invasion of privacy or something like that * copyright. Assume we have insurance, (assuming that) the church indemnifies uh, him for the use of the films, um, * current disadvantages *.

LS: * (Do we have a, do we have an issue here on copyright) * Whether or not ha-, just having or owning the copyright * advantage.

male: Um, there was some consideration * since the church financed * neutral.

CP: *

male: It's something that will have to be dealt with * long range plans.

LS: Right.

male: *

LS: I shouldn't be worried?

male: Um, you shouldn't be worried. I should be worried.

LS: Okay.

male: The corp- What copyright notices is going to appear on the movies that are currently in the can?

male: Well, they aren't shot -- they've been shot and they were shot as a * Productions.

female: * (they were shot) *

male: Right.

female: They also were shot * reshoot.

male: Can you go over there and --

female: We also have to reshoot * . I think, I think *.

male: What? Do you have a problem with LRH owning the copyright to the script, but basically licensing it to Gold or to PDK copyright ownership * the movies.

female: * have to give it --

male2: * tell me, can you tell me *

male: You can't just license one derivative --

female: Well, * copyright the movie. But * copyright everything that you do. * the script is already copyrighted, * copyrighted what's visual. But whoever owns that will own all the rights. * can't really license bits and pieces of, of the copyrights. You, you have to assign the whole rights as an owner of the copyright * all the copyright ownership right-- the right to, you know, to distribute it, the right to make *, --

male: Hm.

CP: Right. Well, I see the *. I see that ah, the normal circumstance would be that the church own the copyright. But you said * that could be changed by agreement. I then said the agreement subsisting from time immemorial between Ron and the church is that he owns the copyright on what he produces. But, if it's slightly different * really quite different * because he, he -- the church does not-- the church's investment in his books is minimal. And when they're in manuscript form. Whereas the church's investment in the these movies of course is enormous. So, the church would not be willing obviously to grant him or to, to say he has the entire copyright for exp- for commercial exportation purposes in those movies. It would need to protect its investment. And in those circumstances I think it might justly say that he has, that once it's recovered its investment with interest and some profit, well, however it's expressed, he gets to be, as it were, the *. He gets what's left (for the total copyright years) *.

male: Um, I'd be, I'd be happy to negotiate a deal whereby the church * is guaranteed the right to exploit the films for a, for a period of time. * require * investment *.

CP: Yeah.

male: * copyright, you know * copyright

male2:

CP: Good. I * --

male: * C with a circle L. Ron Hubbard.

CP: I think that would be a good way of doing it then. Good. And then, Pubs DK may or may not come into the picture. If the advantage of being Pubs Int is simply that Pubs would then be the distrib- the distributor as it, (now the distributor) of all the books and so on * to manage* convenience.

male: * PDK

CP: Good.

male: *

CP: Good. So, (it's actually) PDK would have to buy out the church.

male: PDK (would) buy the rights from the author to (the pictures) PDK and CC will * (measure) agreement whereby CSC provides financing and PDK provides the distribution services *.

CP: It doesn't. Doesn't PDK have to get rights * distinguish between Ron and the church?

male: *

female: RRF

CP: * there is (kind of an) agreement between Ron and the church.

male: The author has agreed to provide consulting services * to PDK. Uh, PDK has assigned (Ron's distribution services to a third party.) * LRH * services.

CP: * (chuckles)

LS: No. *

male: As far as the agreement between PDK and the author,

CP: --yeah

male: --PDK (acquires) the rights.

(end of tape)
 

Caroline

Patron Meritorious
September 29, 1980 meeting
Part 5

Tape 5 said:
Tape 5
Side A

CP: * is Gold.

male: Is, ah, is that *?

CP: Well I think trademarks would be a good thing to do because I think we can reach rapid agreement *.

LS: Okay.

CP: Um. Should I --

male: --you could, well, you could respond to what *.

CP: Ah, you wrote a very long letter, ah, detailing the trademark situation and raising certain problems, and offering certain solutions. One. The final solution which you offered was to incorporate a new entity to which all trademark interests would be assigned.
male: *

CP: Right. I entirely agree with that since the church and LRH would assign to this new entity whatever interest they may currently have in any trademarks, that may obvious--obviate the necessity of deciding who owns exactly what in the trademark field. And the only other thing that I would say is that I can't remember whether you suggested what form this new entity should take.
male: * another trust or foundation.

CP: I agree. I entirely agree with *. Non-profit trust. And um, so as far as your proposed solutions (in this end) we have absolutely no disagreements. I am in full agreement. I'd like to go one step further. Um, that one step further would be taken when we discuss F & P. So that's what I have to say on the subject of trademarks *. (Terrific.)

male: * I understand I can see where you're going since the (innovation rule) the charged with the obligation (in fact the duty) * exercise control about how service -- goods and services are being sold (and/or) rendered that ah, will have to be agreed with very trusted individuals * type of accommodation * selection trade * preservation.

CP: Right. *

male: Which your principal, ah, * I don't have any objection to our reason for forming F & P (was to ) remove by two places LRH from a position of control of the church. So certain people would, who worked directly for him whose word were the same as his, ah, they were in his absence essentially controlling the church. * Get those people into a consultant status and then have LRH in turn be the consultant to their position.

CP: Right. Good! Well, I'd like, I'd like to, to ah, discuss F & P as a separate topic on this agenda.

male: Fine.

CP: --but as far as trademarks are concerned, um, I'm in full agreement with what you've suggested, and I'm just looking over the agenda to see if there's anything on it that we haven't covered.

male2: * --So, this trust, this, this -- we're still on trademarks.

CP: Yes, right.

male2: So this trust will license out the right to use the marks to whatever entity, whether it be a, a Narconon, or a * WISE, or a (SMI org) *?

CP: That's right. The-- the, the --

male2: --the control people * for example, or negotiate license agreements, will maintain quality control--

male3: So * have a staff to you know, carry out his purposes, which is to ensure the integrity of the marks.

male2: Conceivably be a fairly large staff *.

male: Well not necessarily, since there are people * who (we'd say ) supervise conditions. (Cuz) that person could either be an employee of the foundation or it could be someone who somebody from the foundation would go to. * there are different ways you can cut off the --

male3: So I see -- so it does align with the F & P purposes, which is to ensure the integrity of Scientology and Dianetics and marks.

male: Well F & P was really, well,

male2: what you know as the purpose * may not be the purposes of F & P *

CP: Right.

LS: Right. The purpose is --

male: --more of a control I thought * F & P was troubleshooting ah, *.

female: Strategic planning.

male: Right.

female: Well--

male: * that may not be totally consistent with preserv- preserving um the trademarks.

female: The purpose of the --

male: -- * maintain quality control.

LS: Sorry. The purpose of the, the trust for, for * trademarks is the insurance that Scientology will be around for a long, long time. And that's it. And, and then the ah, active insurance of that * we play an active role in that. Purpose of F & P was originally to remove LRH from the church and give, give him the communication lines that he would then use to get done whatever he planned to do, which was, you know, the films, the books, the, the um, advices (for) the church and so forth would all go through F & P. F & P was going to be composed of that top echelon of CMO who were running around saying that they were emissaries of L. Ron Hubbard. While now again, in present time, re-looking at it, we have CMO being restructured, we have new definitions for them. Um, they are involved in management. They have not turned it over. They are um, probably not going to turn it over for awhile. And deep down in my soul I say to myself, "Are these guys ever really going to turn over management?" And I am worried about it. And, ah, we went over all that yesterday. So... um, I'm sort of willing to, even though all this work has been done, I'm willing to now say, in a new unit of time, "Is F & P really an answer?" And also when Charles arrived with this -- an aggressive and, and positive strategy on the IRS case, and changed that around, we became, we came off the defensive. I came off of defensive. And I, in my estimation feel that LRH was backed into a defensive position to the point where he couldn't really even be around.

Even wouldn't ar--able to be around EVEN with the existence of F & P. And so I'm against all that much, and I'm worried that an F & P will be just one more solution to *, which will then become a problem in future years. And, um, you know, my idea right now is to look at this in terms of longevity. What's it going to be going to like-- what's F & P going to do in a hundred years? What's it going to do in 50 years? What's it going to do in ten? And let's look at it in terms of longevity. And also look at this trademark entity, or, and these two purposes in terms of longevity. See if we can't arrive at something that you know, um, maybe (even be) better. That was, that's sort of the idea I, as I see it at the moment. If it turns out that F & P should not be scrubbed, that it should go right forward, and it should carry on and activate tomorrow, I'm all for that too. So.

male: Yeah. * First amendment * Charles * (succeed/conceived). * F & P

male2: *** Those members of the church *

male: *

LS: Right.

male: Is it a true fact that, that he who owns the trademarks controls Scientology and Dianetics?

male: If, if you * the trademarks you must * ways in which you own it is you control the tapes.

(laugh)

male: Right.

female: Yeah. Yeah.

male: Absolutely.

LS: There is one thing though, guys, which I don't think we've ever discussed and that is that in Mexico and the Spanish countries, it is, the Church of Scientology is not church. *organization * Are you familiar with that?

(background discussion)

LS: In a nutshell. So there's the, there's, there's the operation of, of Dianetics or Dianetica in ah, these foreign countries. We never even touched on.

female: *

male: * lot of food *

female: Who did all this? (laugh) what? (laugh)

LS: I can see Dick standing down there with the tab right now. (laugh) *

CP: I must say, * thought we were just going to have a quick sandwich.

LS: That's what I thought too.

male: *

female: These are roast beef and mashed potatoes. This is um, a, hamburger.

LS: I think we must have * dinner, here. *

male: That would be an operation. (laughs)

LS: Well chow down Charles. *

CP: Good. What do they own.

female: *

LS: Hope you're not on a special diet, Lynn.

male: Think that's, that's a hamburger in there.

female: (Portugee)

male: * roast beef--*

CP: Well I'd the corned beef. Anything but a hamburger.

(laughs)

female: --Yeah and this is--

LS: This is all going on tape, Charles.

(laughs)

LS: I'll send you your transcript.

female: That's grilled cheese and a hamburger.

LS: Do you want one of these?

male: sure

(background conversation)

female: mustard and ketchup and forks.

LS: Boy, if this had been my mother's dining room table, she would have had something to say about all this. (laugh)

CP: Well, I have no idea when I suggested a sandwich that it was going to be like this! I thought it was going to be the sort of sandwiches we get cross the Atlantic. Little, just a sandwich!

(laughs)

(discussion about coffee, more discussion about lunch)

CP: This is extraordinary. It's a whole huge plate of beef.

LS: Yeah.

CP: Right there.

LS: You want a napkin, Charles?

CP: *

LS: When Barbara transcribes this, she say, "Yeah, now I know what you're going to do down there."
(laugh)

female: Hello Barbara.

(more lunch comments)

LS: Are you going to help me out with this? Or not?

male:

CP: Could I suggest we keep trademarks separate from F & P? Cuz it, wholly different considerations arise in relation to F & P. F & P as its currently set up has nothing to do * the trademarks.

male: That's correct.

LS: Right.

CP: So, it, the, trade- point 8 on the agenda says salient points of trademark research done with description of precisely what functions that propose third entit-, that the third proposed entity would perform. SO, I, I don't know if someone's done research other than the letter that you wrote.

LS: *

male: *points of trademark * Well, we didn't want to start doing a lot of research on what kind of proposed entity, what kind of entity a third entity would be until we had some agreement that would be a third entity. Which is, uh,

male2: --the other area that --

male: --* that one, #8 is, is in conflict with ten, do you see? So to do a lot of research on eight while --

CP: Mm!

male: -- the suggestion was made that maybe LRH assign all his marks to the church, well that was still a possibility. At least when he discussed it. So that's really where that's at.

male2: Nothing really has been done since the writing of the letter. The letter raised a number of points, and, and that's what * we discussed.

CP: Right. Would it, it would seem clear that um, your letter disposes of the idea LRH keeping his own trademarks. One, it puts him, it, it, ah, opens him up to potential liability. Two, it means that the, any trademark infringement is virtually unenforceable since he won't come into the legal arena in order to sue. So, that's that. As far as the church owning the trademarks, I mean, that's LRH is signing his, his rights to the church, that doesn't seem to be a very good idea.

LS: This is on the service marks clause.

CP: Service marks, trademarks, yeah.

male: * We're not, we're not really sure you can distinguish trademarks uh, you know which are used in both goods and service, and have separate people owning the same mark * to--* services. We have no authority if that ever happen. * I think it creates a lot of confusion *.

LS: All right.

CP: Yeah. There are obvious disadvantages to the church owning the trademarks. All those disadvantages are obviated as soon as you bring a third entity into the picture. And that third entity can perform the immensely valuable function um, the solution to which we've been looking for for a very long time, which is "How does the operation of Scientology get controlled once LRH is off the line?" At the moment, the whole outfit is held together, not really by any legal lines drawn, but by the force of his personal authority. Now that it seems to me can be translated-- the closest way that that can be translated into legal enforcebility is through these trademarks and the, the Registrar to the trademarks will have the duties you set out in your letter, as supervision, inspections, training, and so on. Tremendous! That's exactly what we want. So in effect, we have at the very top of the pile a small or large, probably fairly small corps of inspectors who will ensure the, that the act- that Scientology as a-- is applied as was originally intended by L. Ron Hubbard.

male: Uh, hum.

CP: --that is the, that is the problem we've been wrestling with for many years, actually. And it pops out of your letter. And that's why I'm so delighted with it.

(laugh)

LS: (can you bow now?)

(laughs)

CP: What type --

male: * (laughs)

LS: * and Jim. I think of * and all that promo I sent her is really why I said that.

male: *

CP: What type of entity? Now this is a tricky one, because the trademarks go into the religious and the non-religious field. Um, But I think that probably that a single trust could control all trademarks, religious and non-religious. The trademarks themselves are not religious and non-religious, but the usage is different.

male: A lot of it has to do with, in my mind, this is, this is where, it sort of goes beyond my particular field of expertise, a lot of it has to do with what uh, LRH intentions are. Does he want his children to benefit economically from these trademarks? Are these items, these assets which economic significance for him which he wants to pass along? Or, ah, are these things that he * wants to donate to the church * not concerned about his heirs and so forth. I mean, I'm --

CP: Well, I think one can, if the, if the history of the matter is any guide, one can--

female: *

LS: * wants a * bag. (laugh) Just struck me that we, we're sitting here for hours.

CP: If the history of the matter is any guide, he has always been insistent on registration of his trademarks. He has never taken a penny for them. There is no--doesn't seem to be any reason to suppose that in the future he will suddenly want to start making money from those marks.

male: Well not personally. But I'm wondering about what his feelings are toward his, ah, his kids and certain other people. I mean, I can't -- this is, this is something we can all speculate on. I'm not sure how we dispose of it. I'm not sure how WE as his law firm * anything without asking the man directly. This is ah,

LS: Well (I ask you that for someone else) *. Um

male: *

LS: *question *

CP: Well it is clear that nothing can be decided until he has given the word since he would have to assign his interests and he couldn't do that without being consulted. But whether the assign- whether he wishes, if he wishes to assign them at all to a third entity, which I think would be a very good solution, whether that is to some heir or assign of his personally or whether it is to a non-profit entity, obviously will be up to him. But it is clear that in order to keep those marks alive, they will have to be supervision, inspections, training and so on. And that the body that has that function will be the most important body in the hierarchy of the church and indeed in the entire Scientology operation whether religious or non-religious.

male: *wouldn't be actually within the hierarchy of the church. * It can't be within the hierarchy of the church. It would be outside the church and outside *. Independent --

male2: --would be outside * in terms of *

male: --it could be, it could be--

(several people talking at once)

male: -- you could have a * international trust, which is * integrity of Scientology * which would in effect have ultimate control over 100 or 200 * That's how I envisioned it.

CP: Right.

female: Who finances it? Where do they get their money?

male: Presumably they will get money because these trademarks will be valuable.*

female: In other words, they license, they would, they would license the various churches, WISE, and SMI. * use the trademarks and make their money that way.

male: Couldn't be wearing a *

male2: * manufacture, sale

CP: Could be quick -- it would have to be in, insofar as it supervises the church trademarks, it would have to be religious in some way. I think. And certainly it would be regarded by all the churches as the controlling religious body, because that is exactly what it would be. So this actually solves the problem of whose, is in charge. And the beauty of this is that whereas copyrights are for a term of years, trademarks go on forever. So who holds the trademarks and enforces that ownership can, well WILL control the churches and can en, ensure the continued integrity of the tech.
male: In perpetuity?

CP: In perpetuity. I mean this is, actually this is a huge breakthrough. Compared to which the discussion of who owns Gold is a, really very, very
minor significance. (laughs) * immensely important.

Um, I think it is, I mean, the third, the third entity is an, is an excellent idea, and I think we have to-- when, when we can get in touch with Ron, or when you can get in touch with Ron, one ought to put that to him as persuasively as possible, as well-worked out as possible, and there would be no problem at all in suggesting the type of entity were it not for the fact that the, the marks cover both religious and non-religious usages. That doesn't really matter, I think for the non-religious point of view. But it does matter to the church that it is not controlled by some profit outfit which owns a bunch of trademarks. That would not go down well at all.

LS: No.

male: We're talking foundation * archives and so forth * means of preserving the artifacts themselves and perhaps a means of financing the operation *

CP: Hm!

LS: Yeah.

female: Yeah.

LS: Yeah, that's--

CP: The archives, the museum, the ah, the trademarks. Call it the Trademark Trust, could wholly own a subsidiary which would be responsible for the supervision of the non-religious trademarks. That would be an unrelated business income which would be absolutely fine. The church would have nothing to do with that as such. And ah, that gives you a single unified corporate structure well, I don't know if it's a corporate struct-- a single unified structure embracing religion and non-religion usages of Scientology and Dianetics. It could also include all the B6 groups, ah, WISE, SMI, you name it. And I think when we come on to discuss that well, * we won't discuss F & P until we discuss this. I mean there it is! It's really something for act, you know, immediate and active consideration, because it is the best solution that has ever been devised.

male: I don't know whether you see *

LS: (laugh)

female: Probably should be.

CP: Why?

LS: Why would it?

female: Well is it, if it's going to be the actual controlling factor, and if anyone, you know, wanted to trace the actual people (holding the) strings in Scientology, it would be that corporation there. It would seem to me that on a litigation front, that organization may be targeted quite a bit, rather than LRH. You know?

male: * raising is a good point, which is * organization exerts too much control * and it may be liable for *

CP: Yeah, true.

LS: --wouldn't have to--

male: *

LS: Well, the, each church exerts its own control over and it's own quality control on its own * it's actually been set up that way. So it doesn't, you don't have to have real strings *.

male: Well we need to determine what are some of the areas that we should be talking about at this point.

CP: No, not tonight. We just need to agree that we need to determine that.

male: It's a subject for research.

male: *

male: * big problem * finally decided to get * this entity *

CP: Great, great idea. Probably.

LS: Charles you're missing something here. It did hit a bomb, like a bombshell. But only in that we had everything at loose ends. We had F & P starting. We didn't want to have to start up another entity which was now going to have control, which, um, it did, it * as another entity. And Mary Sue did say that I really don't, I really would not like to have set up another one of these things * actually sort of said well, what are we getting into here? And that was the point when we started to reflect a little bit.

male: *

LS: But I'm glad you're excited. And I think that it probably will go forward. It's just a matter of sorting out the *.

CP: Right.

male: This is the ultimate organization * problems choosing * who's going to be * very trusted people *

I mean how many trusted people do you have to go around*

male: Except we may *

CP: F & P, yes. Ah, do you want to, should we do B6 groups because it's on the agenda next?

female: No.

LS: We were going to do that on our own. * going to write some her questions down. I will then somehow see you Wednesday * if there's any question that I can't handle, I might ask you then. Otherwise it's not *.

CP: Right. Okay, well that's fine. Well that handled. So, F & P then.

female: *

CP: Um, I am not excite by F & P because it places a profit-making management consultancy corporation in the highest position in the Church of Scientology hierarchy, and I cannot see any reason for doing that and I think it would be a disaster PR-wise and legally to do it. I am putting this, ra-- much more strongly than I would have done if I'd started the afternoon off on F & P, but as I've been so complimentary about the Trademark solution (laughs) I feel I can be briefly frank about my feelings on F & P.

female: Right. I want to go home now. (laughs) Yeah, I had an engagement. I'll just leave on a good part and (laughs). Anyway, nice * you.

male: *

female: * all the good news. Okay, I'll talk to you tomorrow. Bye bye.

LS: Bye. We'll be in touch.

male: *

female: * my husband? (laughs) (Female leaves)

CP: If you, if you, apart from um, the, a buffer between Ron and the church, * that consideration, it appears to me to be no advantage of any kind for F & P as currently envisaged.

male: *

male2: I've never seen, seen any * idea originated* basically devise * buffer and reason and a lot of consideration was given to whether it should be a for-profit or non-profit. * And the reason we came out, * was set up * staffed specifically and entirely * responsible *.

CP: Right.

male: And PR considerations were *

male2: *

(laughs)

CP: Oh, yes, well that day has now arrived. (laughs) Well, we are in full agreement, and we perhaps we should now consider considerations relating to this corporation as a buffer between Ron and the church.

Um. My understanding is that Ron, having resigned from his managerial position in 1966, was never able in fact to turn over that hat to the churches for one reason or another, and in fact exercised in a very large measure, managerial responsibility throughout the following fourteen years. To a greater or lesser extent. But when he chose to go on the line, he went on the line, and it was as if he was in charge. We developed elaborate legal and corporate PR defenses in order to try to explain this away and say Boards of Directors were really in charge, but the truth is that the boards of directors have never been in charge and they have scarcely operated even in a nominal sense and the hierarchy of the church has always been all-important. And those people who were closest to LRH at any given time were the ones who gave the orders with his authority. And the, the reason that they are able to do that is that every Scientologist in the world does recognize the authority of L. Ron Hubbard as the Founder of the religion. And even if you created 50 buffer corporations, if he chose to exercise that authority, then the world of Scientology would jump because that is the nature of the exercise we're involved in. Every Scientologist is by definition a follower of L. Ron Hubbard. So, it's pointless, no, that's not... so the last fourteen years has been one of Ron at least from time to time whenever the situation warranted, exercising de facto control over the entire operations of the church. Now, it looks as though he really has decided that he does not want to do that any more, and is not willing to do that any more and has other things which he regards as more important. My opinion is that if he did want to exercise control over the church, he should do so as Founder. That relationship has been attacked consistently for the last ten years at least by the Internal Revenue Service. But we are about to front up to that. And say to them, the Founder is the Founder and Scientologists are the followers. And you can make a point about his control of the church. It's ridiculous to litigate on the basis that that he doesn't control the church, because it is simply not believable. We are going to say in the Internal Revenue Service case that he is the Founder of the church. He's potentially in control because every Scientologist is his follower and there's a long line of cases which say that relationship is not amenable to governmental scrutiny. End of scene. So! My position now is that if Ron is going to take himself off the line, F & P is unnecessary. And that F & P should in fact be, I mean, the individuals who are going to be F & P are now managing the church should really be the Board of Directors and exercise legally what they are currently exercising surreptitiously by virtue of their relationship with Ron. And if Ron wants to um, if Ron wants to come to the line again, then the church should provide him with every facility to permit him to do so. Um, such as setting up a house, space for him to be, providing him with secretaries and all necessary assistance, and ah, do it like that. Now that may be a little bit too extreme a position to take, since we have so- for so many years been nervous about this relationship. But I do think * correct. I do think however it may be a smart--, I think that Ron ought to have a couple- a group of people who in their own * and related who deal with his non-church business. Because one of the problems has always been that his church business and non-church business have tend to become intermingled. The same people have done the same tasks, the money has become entangled, it's been awkward to, to sort it out, and um, inurement is a very tricky concept. The IRS deliberately keep it tricky, in my opinion, and say that even where a type of compensation package for one year is reasonable, by splitting it up and say * the expense in mind, if it is being paid in cash, would have been reasonable but the way it was paid constitutes inurement. That's something to be guarded against. Um,
male: * my understanding that one of the things that happens to these people who are WDC, * Board of Directors * that gives them the authority to order people around. * So our whole plan was to give him his information about what is going on in the church from a non-church body. And * relate to this kind of * interplay with L. Ron Hubbard in a non-religious organization. The way you have it structured is that even though he's may only be -- all he has to do is really, uh, just continue to get information * what it really means, but--

CP: Well, that's what it does mean.

male: Onlines is getting the information.

CP: Getting the information and ah, (cough)

LS: If he gets the information, he acts. He doesn't just hear about *

male: If, if he's totally isolated from the church, we don't need F & P. *

CP: Right.

male: But if he's not, Allen, and if he's going to be exerting what I would call control, merely by virtue of who he talks to * people orders, I would think that, that he needs that buffer.

CP: But if that, if you see, if he is on the line, then F & P doesn't, as far as I can see, make things better. If anything, it makes them worse, because all that, all that a litigant has to do, say, Internal Revenue Service, is subpoena the Board of Directors of CSC and say, "Who do you get your orders from?" Answer: "Oh, we have this, * agreement with F & P. And they give us management and maintenance * day to day conduct of our operations." And so they then go and subpoena-- having made a big fuss about the fact that he is a profit-making management consultancy company which won't *, they then subpoena the, the people in charge of F & P. And they will say, "When did you last write to L. Ron Hubbard?" And unless the person is going to perjure himself, it's all going to come out in the wash.

male: * If F & P as we designed it is * responsible, * Board of Directors is, runs the church.

CP: Right--

male: -- * they have problems, and need help, uh, they go to F & P. F & P has lines so that they know what's going on within the church to the extent they perceive the problem, they will go to the Board and say, "We see this problem here." And nothing gets initiated directly by F & P.

CP: I, I, I -- yes, I think that can be got out of the agreement. We have dropped it. But in fact F & P will run the church completely. And all you need is somebody to blow. Do you know what I mean by that?

male: *

CP: And go to the newspapers and say, "This is, the whole thing is a sham! Every particle, everything that's seen by the Board of Directors is actually okayed or not-okayed by F & P." Then we have a problem.

male: Given the fact of his control in practice, the least I think we can do is provide some kind of form that's running * maybe distract * and certain facts, like these SO1s, the SO1, * that's more or less a fraud* that's going to have to change. * There are certain facts that you can restructure to make them fit in something *. I was hoping that this would be *. try and give him some protection because you and I both know that any time he says something, people are going to accept that as an order.

CP: That's right.

male: On the other hand, if the Board of Directors is charged with responsibility, at least on paper, * taking his bulletins and his policy letters and including them or not, is this, is there something going on there?

CP: That's true, that they do have that responsibility at this very day. And furthermore, that is exactly what they do. Every three months or so, they have a little meeting or they fail to meet, but the minute is drawn up * we've now passed *. It would be the same sort of rubber stamp operation * same liabilities. But I would like to suggest that if we get a the Trademark Trust going effectively, that the trustees of that trust to have no managerial responsibilities within the church could keep LRH informed. That would be the correct line. Cuz they would be, they would not have, they would not in fact be in charge of the churches. They would only be in charge of the supervision of the trademarks. That would be their function. They could keep him informed as much as they like. And he could advise them any time he wished. And I'd think that would be, I think the same buffer would be there.

male: The problem is that whoever is near him * say its okay with the Trust. But it's not okay with F & P and the only difference between the two is that right now, people who are in F & P are * and * set up the Trust, the people who administer the Trust would be (at his side.) So * it seems illogical to say, "It's okay when it's the Trust, but it's not okay when it's F & P." You know, I don't mind having to be the Trust when the Trust is set up because if you don't have the Trust right now, you do get people who are at his side who are controlling * what is the problem with setting up F & P as an interim measure with that function being filled by the Trust when it's set up.

CP: Well, I, I agree with you there. It is, what I, it is illogical for me to say that it would be okay for the Trademark Trust to * and not for F & P.

male: Given the premise that whoever *

CP: Yeah. Given that premise, what you say is correct. My continuing objection to F & P is that it is, it is a profit-making management consultancy *.

male: * feel better if I told you that it won't make any money?

CP: Absolutely no difference at all.

male: We never intended for it to make a profit. Only reason we set it up that day

(end of Side A)

Side B

male: * consultant services.

male2: *

male: *

LS: Right.

CP: So. So.

male: I mean, you're just really talking PR right now.

CP: No! Legal. Inurement. Disaster. Control by corporate profit-making entity. I think it is completely out of the question that a profit-making management consultancy firm should be de facto and very nearly de jurie the chief mucky muck of the entire church of Scientology *. I just don't think it's *

male: Well that's not really what it's designed to be. You were talking about what it is in fact. And if with what you're saying in effect is that, that this organization is control of the church, then it's really by implication, (really means that it continues to admit) that LRH controls the church. And I'm really uncomfortable with that. And it might be a reality that you as, as the attorney for the church want to go into court and confess to. * that has implications for * his liability for what it is the church does. And I, you know, the origination of my doing anything other than motion picture work for LRH was the init-, the initiation of investigation into how we could protect LRH from the torts * the church. So, I mean, you're going right to the very, right to the quick.

CP: Yes. That's right. I um, I don't obviously see for the moment that LRH is liable for the torts of the church. I don't think that follows, and I think that the reason that it doesn't follow lies in First Amendment considerations.

male: Are you being objective? Or are you being-- see I'm being totally conservative as person who has to protect him in all possible arguments. Even though I might agree with you objectively.

CP: Right.

male: --ah, if you're trying to protect him totally, then you assume that ah, whatever the worst can happen will happen--

CP: Right.

male: -- and you assume that, that he who controls something, admitting to controlling is charged with any liability which arised from that control.

CP: Right. But we would not concede that he controls the church. I think we would put it on the basis, you cannot inquire into the relationship between the church and its founder.

male: Then how were you harmed by having an F & P? It's, if it can't be inquired into, then at the very -- if you're correct that it can't be inquired into, then it's irrelevant whether it's there or not.

CP: The relationship between the church and F & P can be inquired into.
female: That's not a religious, it's not a religious or ecclesiastical arrangement. Pure business arrangement.

CP: That's what's, that's what's wrong with F & P. It's --

male: Yes, but that's, that, that argument *.

CP: That's true. It's business *

male: * business. It's a business module.

LS: That's what will be used.

female: Yeah, it is *. (rebuttable). They stipulated Scientology is a religion. * court decisions. There can be no doubt whatsoever that he is the Founder of the religion. It follows that there is a religious relationship between them. That has never in fact been litigated in the way it's going to be now. But now we're trying to interpose between that, into that ecclesiastical relationship a straightforward profit corporation. * I don't see how it can help him * It certainly will harm the church.

male: Well, what you are saying, then, I think, is that as a practical matter *. He will the option to control the church *.

CP: That's right.

male: Whether or not he wants to *.

CP: I would say further if that he chooses to do this, then he, he is bound to be to that degree at risk. If he wants to remove all risk, then he has to retire completely. But it's not the nature of the man.

male: The design of F & P is really, is not based on *. It is based on the idea that at least for those periods and those actions during which he was not in control *do not choose to be in control, he would not have a risk *. However you assess the likelihood of such liability being charged *.
And that was the reason *.

CP: That's right. Well, I'd like, I mean, I, I love the Trademark Trust. And although I agree with you it is somewhat illogical to suggest that * to that Trust it will be different than * communicates to the F & P. Least he would be communicating with a prof- a non-profit ecclesiastical entity which is at the top of the hierarchy. He would be entitled to do that as Founder. If he contributes, if he communicates to F & P Inc., to the profit-making business corporation, what capacity does he communicate -- as founder of the church? * Founder relationship is the one which at last announces his * protection. He's protected by the First Amendment.

male: What if F & P were non-profit? *organization is set up while we're setting up, expressly set up while the Trademark sort out is going on?

CP: Yes, but if it was a non-profit, if it were non-profit, it is better than if it is profit. But it is entirely as * constituted. I've decided that an ecclesiastical hierarchical consideration um, --

male: --just you know, * part of the idea of all of this was to really set up LRH as advisor as opposed to --

LS: Manager.

male: * controller.

CP: That has been tried for the past ten years hes been called consultant.

male: Well if you set up--

CP: What's the difference between consultant and advisor.

male: You set up a company which advises the church, and then LRH as an advisor to the advising company, really, kind of, you've got a double advising going on rather than a direct control *. *

LS: Let's look at it in terms of operation. I think that, just in terms of what really happens in the real world and what he would do, he would never communicate to anybody by going through the same line. So you just know right there that that's the way the communication lines are. Okay? On any subject. And that will be the case if they're F & P. I don't think that in terms of the way we've been talking in the Trust, that the trademarks that they would be the same people at all. And I really think about, and I think about the Trademark Trust. Just give me a moment. When I think about the Trademark Trust, I'm talking David Mayo, I'm talking you know, just two or three guys. Melanie, maybe Doreen, maybe me, maybe a couple other people. And that's it. And maybe some managerial staff to go out and, and do their, do these, do, do these sort of correction actions or supervisory actions on a trademark. I'm talking maybe an AVC person. I'm not talking CMO. CMO is totally into management and this is not going to *. And so these comm lines will never go through Trademark, a Trademark Trust to him. It just won't happen.
male: What you're saying is he--

LS: Not an operation.

male: -- he won't have the Trademark Trust people at his side.

LS: No way. He won't go through them for information on the church. Where he'll go for information on the church is straight to Dede.

male: Why couldn't she be in the Trademark Trust?

LS: Because she's managing the church. She's running it.

male: --huge distinction between managing a church and, and *

LS: That's true.

male: --distinction in my mind.

LS: That's true, and that's what I'm having trouble with. As we're talking back and forth, I'm trying to see how this fits in the real world. And because this is really our basic problem with F & P I think is that, is that what's really happening ah, with CMO Int is that they are not able to turn their hats over completely, including to a Board of Directors. The solution therefore being that they should be the board of directors. However, I don't agree that they should be the board of directors because if LRH wants them in Timbuktu, they will go.

male: --to do is resign from the board.

LS: All right. But you can't continue to have people resigning from the board. You know, *to do that.

CP: We're only, yeah, we're only, we're only talking, *.

LS: And also, it's just going to, it's going to land right into the Board of Directors works for him. Because they end up being sane individuals. You see? And they, they have over the last how many years they've been doing this since 70. Ten years. They've been saying I work for LRH and nobody else and I'm not answerable to anybody else but LRH. And it's built right into their own policies and issues. We're about to, we're about to about-face that. And change that. You know, and water it down and, and give them a new purpose and a new definition and all that sort of thing. But I'm really worried in terms of operations. Because the real guys that are doing the controlling, there's really only about twelve. But the guys who are doing the activities that would be ah, activities clearly as a Trust, you know, are guys like AVC, David Mayo, Melanie. And those guys are really the guys taking care of the integrity of the technology, and that's those, AVC goes, is everything in terms of who approves what. Doesn't matter who okays it after AVC. Once AVC has gone through it, they've done their thing. Authorization and Verification and Correction. Bang. And that, that's what AVC is. It's an insurance. And it's got that IA hat. Anyway, not to lecture but I'm really having a hard time um, wrapping my wits around this. You see? Because if LRH wants data, he won't go to AVC. He won't go to the Trust. He'll go straight to DeDe and the guys who run the data files and the uh, the data inflow and the communication lines. And that's right now CMO Int, CMO BF & P. You see? That's where he'll go.

CP: What we're talking about then are two entirely different things.

LS: Yeah?

CP: One, we're talking about what would, how to set up lines so that Ron can exercise control * advisor*.

LS: Yeah.

CP: Two. The day to day operations in F & P Inc. which is entirely separate. What you're s--, you said, on the one hand, CMO running the church--

LS: Right.

CP: But on the other hand, we have this * really rather separate function. Being available when LRH needs that.

LS: Right. Well that, that we can handle because we don't have a situation at the moment where he need them. And so whatever happens, whoever has to go to Timbucktoo, we will handle then, at that future date. Because we don't even know if anybody's going to go at this point. It's all, it's all to be reevaluated at the time. But what, in the actual operations of how LRH does his *, you're, you're talking about what makes him write a book? What makes him write a book, which is his own hat is knowing and hearing about what's going on, and what's needed. You see? And where he finds out about that is largely on management lines. I mean, he, of course he watches movies, he sees TV, he sees what the latest marketing technology is, and he analyzes all these things, with, on his own info lines. But where he usually gets it is from management. And what he, what will dictate what he will then do or choose to do will be because of that information provided. So. While we were splitting off these other corporations having under F & P, Pubs US, Pubs DK, Gold, um, possibly WISE, possibly SMI, all with lines to F & P, being supervised by F & P, you see? This is where he would get his data. As to where he, whether he would write a book for Narconon, or develop some new tech like Purif, or whatever. You see? And that, it sort of is a double flow. Where-- depending upon the accuracy of the data and where he gets his data, it largely dictates what functions he will perform. And um, his whole, his whole thing is he's just going to continue to develop technologies in fields where there isn't any. You see? And that's, that's his, that's what he will continue to do. So he will get data from CMO and his regular inflow lines, and I'm concerned that he will end up with all these communication lines with, from which to draw on, because the performance of his actual hat, as Founder, and as author, is, is relied upon that. And I don't see these things um, coming together in terms of who the actual people are, are in terms of operation.

CP: So, really, you are looking at a managerial system * set up to commit to him to go on doing what he has been doing.

LS: Right. And that is why, that is why, um F & P is seen as though it would be a very good idea. Because they can and they've proved they can independently take care of things. Now we want to put a Board of Directors there so they can if necessary take care of things. And if F & P dissolved, there would still be a Board of Directors intact and they would still run the church and the way it would go and that would be it, and F & P or the people in it could be took off someone later or set up else, well that would be fine. You see? So, in the back of my mind, I've had a certain amount of flexibility, um, kind of as underlying purpose. But it's, it's got to be, whatever it is, it has to be such a setup so that it's flexible. Because we don't know what he wants to do when he gets, when he comes back or whatever, or when he gets in comm with us. And the only way we will know-- the first thing he'll say is, "Well what have you guys been up to all year?" And we'll tell him, and then he'll say, "Well, this is this and this." And, "Why don't we do this?" And, "Hey that's a great idea!" "Hey give me that thing." "Get me those statistics." "Get me that evaluation." And it will all start coming in. And depending upon what has been done right or wrong, he will then allocate his time. That's what he will do.

CP: Good. Well, why not keep things exactly as they are now?

LS: Well, that could be done. And, and, what really was the shocker for me was that we don't need this buffer. Because we've been on this defensive move away from, split it up tactic and strategy through the whole corporate plan. To move him away from. Was to protect him. Or to create a buffer, was to protect him. You see? And to take him away from the battle front, basically.

male: * taking him away does protect him. Take him away from the battlefield does protect him.

LS: Right.

male: Until he says, "I don't want to be protected." Then that's up to him as his, as his own business decision. All we can do as his attorneys are say well if we structure it this way, he's more insulated, to the extent he's more insulated he's more protected.

LS: Right.

male: --and, it's up to him to say, "I'll take this risk, or I won't."

LS: Right. And in practice, and I'm , and being practical, we don't want him to have to take any more hikes.

female: Yeah, didn't he leave simply because he feel very unprotected?

LS: Absolutely.

female: So if we just leave things the way they are, why should he ever want to come back? I mean,we're not facilitating him coming back.

LS: That's right.

male: --this doesn't really solve his coming back.

CP: *

male: * puts a few legal entities in there. We can't, no one can prevent someone from suing somebody else. And ah, all we hope to do is make it a little bit more difficult and try to, to, ah, keep things structured on paper very correct. And hope that that, hope people get impatient by the time they have to go through three layers of, of organizations and subpoena all kinds of records and discover what it is we're doing, maybe they'll get bored.

LS: *

CP: You see, he wouldn't, they wouldn't' do that. If he was dis-, if he was, we're talking about his location now. If he went back to a given location, and he was known, a litigant would simply sue the church and L. Ron Hubbard. And the existence of F & P would not make the slightest bit of difference. He would be sued as founder of the church which is a post which he cannot relinquish no matter what. F & P would be wholly irrelevant and it * in terms of the church relationship would just make things more difficult for the church.

male: Well, let's, let's think of this

male: We have a specific incidence * The church undertakes a specific* based on advices * LRH-- someone who is * damaged by nature of his programs, sues the church and sues Mr. Hubbard. Assume that they can get hold of Mr. Hubbard, they then have to show first that he controls F & P, and that F & P * controls the church. Which you are saying as a practical matter they may be able to do. But it does take some time, and it does take some effort *.

CP: I'm saying that * safety lies in *. If they manage to serve him, * then take his deposition, he's then into the litigation process. What he manages to prove or not prove, what they can prove against him or not is completely and utterly irrelevant.

male: There's only two ways. There's really only one way I can think of, is to be totally un-serveable.

CP: *

LS: *

male: * to be dead is the only can be done, to be 100% un-serveable.

CP: Well, he is currently um, * prevented a number of suits. He has not been served *. Between, I mean that obviously *. But if he locates in the current climate of the United States he is at risk and it doesn't matter if there are 500 buffer corporations. It doesn't matter if he's living peacefully in retirement *. He will get sued. If he gets sued, he will have to fight. And that's how it is. And I don't see how F & P is the slightest bearing on the situation.

male: *If * if what you're saying is, is what it seems to be is that the damage occurs by virtue of just getting involved in the litigation process regardless of judgments or anything like that.

CP: I think so, because I don't think he is any more at risk * Church.

male: --he's not coming back. And I don't see how even a pronouncement by the Supreme Court that ah, and what you're hoping for I guess is something that, ah, would be a ruling specifically in a Supreme Court judgment saying that L. Ron Hubbard is, is unusable. I don't--

CP: No, I don't think so. I, my opinion is that America is not safe for him. And whether, whether it will in the future become safe, I do not know. But at the moment, he cannot live openly in the United States. And indeed has not done so for a number of years, because of the risk.
male: Does he have assets here?

LS: Yes.

male: --in the United States?

LS: *

CP: I'm, I'm not -- *.

male: * you can be * not a litigator, but you can be served by, by publication, certain formalities have -- you don't have to physically get something to be, to be, ah, sued, and if he's, he has property, maybe that subject to, ah, ah, to confiscation or something. I would agree that all of this is moot if we can find a country for him to, to buy and, and set up shop in. This is all, this all moot.

CP: Right. But in this respect, *

male: Lots of people don't like (right now). * IBM gets sued every day.

CP: Right.

male: IBM has a legal department which takes care of their *. IBM operates a lot of subsidiaries. * corporate integrity has subsidiaries * preserved sufficiently so that the the creditors of the subsidiaries cannot go against the IBM *.
male2: Well except for what, what Charles is concerned about is--

LRH sitting in a room like this, with a court reporter and they're asking * and all that good stuff, and even if we could protect him adequately against any (possibilities) of that sort, it's just the mere inconvenience of having him come up to a law office, and ah, --

CP: once a week * beginning to get this much.

male: --well then, I don't know if we're talking once a week, maybe once a year is too much.

CP: Agreed. Once a year is much too much.

male: I don't know how we or anybody solves that. And I don't know how you make it safe enough to tell him it's okay to come back under those circumstances. I don't think you ever can. That's, that's like way without, without the scope of anything that, that ah, * has to come up with. I, I just, I mean, I would like to, I'd like to meet the guy sometime.

LS: You will, honey. Let's just get the plane to land, and then we'll meet him at the airport.
male: He's not going to land here. I mean, we can, we can, uh, play with that

LS: You've got a passport, don't you? (laugh)

male: --* but I mean part of, part of ah, this, the reason for F & P was to try and make (this) I mean, why, why reorganize the structure of the churches in the US and and develop F & P (if he never come back.) I think-- I mean that's just not practical. I--

LS: Well an ideal scene would be that he (wouldn't be part of that.) Just in terms of logistics. The ideal scene would be really similar to what we had a year ago.

male: Well, the US has a lot of treaties, okay, with other countries which are not really *. I assume that there's some reciprocal service of process, ah, treaties, so --

CP: I am *

male: --are there?

CP: Um, very difficult. Very difficult. Service of a civil process, very *. I don't purport to be an expert in that.

male: In the UK can somebody be served in the, in a UK lawsuit?

CP: Um. No.

male: We've done it in France. * sue people for divorce, or ah, --

male2: Yeah, * marriage* jurisdiction*

male: And you can therefore serve --

male2: You don't have to be, you have to give them notice but you don't have to, you don't have to have to serve them * .

CP: I think it is (rooted) international law * jurisdictions *. (Maybe there's ) an exception to that which would have to be checked out. * I think *.

male2: --well, let's just, can we, can create something like we had * a year ago.

male: * it was a year ago.

male3: He's operate -- it's unknown where he is.

LS: A year ago we were all at Gilman Hot springs. We-- shooting films. He was not further than 20 - 30 minutes away. Um, he, WDC took care of Scientology. It, it started a little earlier than that when it, whereby the girls, messengers would go with him, show him the statistics, show him the data and he would then say, "Well there's what you do in this situation." And gradually they took more and more away from him, so that he didn't have to do it. So there was an apprenticeship period where as um, during the period where, when we had CMO watches, you know, and they were on with him and on a sort of duty for a period of hours every day. They would go through all his traffic and all of his mail with him. And they knew how to handle it. And gradually as they took it away from him, because he didn't want to have to handle it, didn't want to have to manage organizations. He's only been doing that for thirty years, it's time somebody else got with it and did it, and so forth. And as they took these duties and corrective actions for other areas away from him, and they, they did it because they would prefer it was them than him, to have to ah, exert any control or correction on the church or the management area. Um, gradually messengers became management and a sort of higher bureaucracy to the management bureaucracy. And because they were WDC or Watchdog Committee and was the final say, um, and they * were the final say, they, it became sort of the buck stops here. And everybody respected that. So over a -- over a period of a year now WDC has formed for itself uh, a lot of respect. And it's been quite (long.) They've done very well statistically. So there's no need for him to uh, jump onto the management lines or to do anything which would bypass WDC. They are taking care of it. What is unfortunate is that who is taking care of it were the personnel who were most trained and most efficient and also assisted him in his projects. So some of the guys were with him on a rotating basis. Um, sometimes they would go and stay there for two or three days and whatever he did during that period of time, whether it was write music, record music, arrange music, um, write articles or issues or anything else, they assisted him with that. And the reason you have these rotational people is because over the years each one has developed a special, and I can just sort of name em off you know? If he was going to record a record, he'd take DeDe and Annie. If he was going to shoot a color brochure, it'd be Doreen and DR. If he was going to edit films, it'd be Cliff. You see? Whoever the messenger is that has that specialty, that's who it would be. And so these people have been sort of flexible and they have gathered around him, and, and provided a facility differential for him in terms of personnel. And the only time it gets difficult at all is where they're also involved in, in, um, areas where it serves him personal, his personal income and, and up until recently, until we discussed this it was any form of income-producing action, including books or films or anything else. You see? And so you've got this, this group, which is expanded but really only, there's only that, that nucleus of guys who are really the long-term die-hard senior messengers that know how to handle all that stuff. And it's about 15 or 20. And they are flexible. The idea was that they would form up as F & P and then if he needed messengers later on, then he could just take those he needed. And they would then become personal employees and F & P would carry on, doing WDC's job and the church would carry on, and he wouldn't have to get onto management lines. They could advise him, he could advise them * sort of on an informal basis. So if it came to it, these people working an 8 hour day in F & P could put in 4 hours with him, or rotate. You see? They could just sort of clock out and it's perfectly all right for somebody to just go over to somebody else's house and help them with whatever he needs. And um, the relationship between LRH and messengers is pretty intimate one. You know? It might be uh, going for awhile. If he wants to take a walk. It might be, you know, cooking his breakfast if the chef isn't there. It could be a lot of things. So it's really an assistance for an intimate assistant. All the time. Usually with two or three. He apparently is doing just fine with just two at the moment. It sort of became an outpoint that, that later on he realized that sixteen people were taking care of him. And they weren't all taking care of him. They were taking care of each other. But it was an ideal relationship. He could, he could even remotely direct by video or by direct conference with DR he could direct films. He could write a book. He could have all the assistance. He could have all the statistics for every church in the world once a week if he wanted them. Was really a good scene. And, it kind of got blown.

male: --problems * nobody knows what he basically wants to do * in terms of coming back, in terms of --

LS: Right.

male: --back to do what--

LS: Well, one thing, one thing, there are some things we know he wouldn't want to do. He wouldn't want to have to go on a set and direct films if he didn't' have to. He's trained up a director and that director is doing just great. He's trained up editors. He's trained, all those people to handle films. Okay. So they're on their own. He has trained up managers so he doesn't have to get into management. But he does need an interchange of information so that he can decide what is needed. Because he will do whatever is needed. He will continue to create anything which he feels will create a boom for Scientology or attract, you know, millions of people, or whatever.

male: What price is he willing to pay (to do that)?

LS: Well I think that, um, he's not willing to be completely isolated for very long. And the longest I've ever seen him be isolated is eleven months. And he just couldn't stand it.

male: Is he willing to * go to a deposition * six months *

LS: No.

male: *

LS: No. Why not? Because I don't know why. Because he shouldn't have to.

male: --* I mean I -- cost of doing business

LS: Because if one once a year, it will, you will then, soon be doing one every week.

male: I'm not sure that's true. Especially if you have a very good success ratio, we, we got (lady) to * because the church, it's coming out of the church's pocket, not his. Uh, you know, I'm not sure it's that horrible a thing, if he knew what was involved. I'm sure he * --

LS: Well, I think that the circumstances say that, that, uh, that he would rather not.

male: Well, if his assets were, were protected --

LS: Which they are, pretty much, right?

male: *

male: *

LS: Knock on wood. Right, Jim?

CP: Just that we have criminal problems as well. Or maybe actual criminal problems. * just wouldn't be a deposition. The government's been trying to go after him for years, trying to * connect him into criminal acts for IRS fraud, whatever. There's real liability there.

male: --(guys suing *

male: We have the only personal IRS * criminal.

male: * negligible.

male: --He could leave again, --

CP: *

LS: Getting a little heavy in here. (laugh)

female: Listen, couldn't we reduce a lot of his liability if things weren't done in his name that weren't his? For instance, its the Commodore's Messenger Org which by implication in policy right now everything done in his name, since they are the senior body it is you know, it transfers onto the CMO that anything they do comes from him. --

LS: Yeah but the main, the main authority is coming from WDC. What is not known except around this table and at SU is that, is who WDC is and that they're part of the CMO. That is really not broadly known. So it's, it actually is being done in WDC and for the last, for the last six months, you know, the, the messengers on duty handling his mail for him which was addressed to him for because somebody addresses it, they've answered as WDC, or they have answered M on D for R. That's all they've done. They haven't tried to represent themselves as LRH. And that's been-- . Of course then you get, then you get room-- huh?

male: How long has that, has that been since we--

male2: *

LS: Six months. Yeah. Well since then, and since we started this with the sort-out and it became apparent that it wasn't wise for them to be representing themselves as * (phone rings). But then, you see, now I have another problem.

male: Yes?

LS: When this happens, you get rumors in Europe that LRH is dead. You see? Because he's not on the line. Well that's a PR problem, and I wipe that out in about two seconds flat. But the point is, it does occur. It's a lack of communication. And ah, so there's a certain dependence upon his being there that it, it for some people need that reassurance. They need it, they need to know that he's there. They need to know that, that he knows what's going on. Because people will write in. They'll write in to WDC and they'll say, you know, or they'll write in to him, and they say, you know I don't think these guys are telling you what's going on.

CP: That's true. But then if we are going to look at it in that light, we also ought to look at the longer term, which is. There will be a time when he will not be on the line.

LS: Right.

CP: When that time occurs, it would be very desirable if there was within the church a body which could command the authority of the Scientology world. Because if that does not occur, you are likely to have all kinds of schisms and power struggles --

LS: Right.

CP: What is very desirable is somebody is established now to hat- is given the reins and said "You must do that."

LS: Right.

CP: And therefore if he then needs to intervene, it would be very much on an ad hoc * time basis. * not want to continue *.

LS: Right.

CP: * consideration*

female: And I think that that body has to have the power to enforce whatever decisions they do. And I think the trademark thing is the perfect vehicle for that. Because if--

CP: -what--

female: --if the church abuses it, you know, then they can their rights to the trademarks removed. They can't continue mucking up, whereas a purely management, a business body should really have no say over a non-profit.

LS: That's why we're discussing this, the whole thing *

CP: That's right, and don't forget this. Watchdog Committee um, whether its part of CSC or whether it's a separate corporate entity, cannot have any form of corporate control over any other church of Scientology. The churches of Scientology all over the world. They are legally independent. If they choose to throw the ecclesiastical yoke or agreement then there's absolutely nothing we can do about it except enforce the trademarks. Her point is well, very, very well taken. That-- Trademark Trust for want of a better term is really the only solution to that problem. Unless you have some other leader who is overwhelmingly popular. Now, I think Mary Sue Hubbard would certainly fulfill that role. But um, well it has to look to a longer term. And ah, one has to look to who can exercise control legally in the years to come.

LS: Only reason Mary Sue would do it would be by default. You know, or in the event of his death. That's the only reason she, she would ever step in. Or, the only other way she will ever exercise that kind of control is if she must do so within the church in order to protect him.

CP: Right.

LS: Which is her real purpose.

CP: I wasn't looking at her viewpoint. I was only saying who in the world of Scientology --

LS: --right

CP: --is known enough, respected enough, loved enough, to be able to assume that mantle.

LS: Right.

CP: She is the only one, um,

LS: But you see, that's just, I mean, you can assign it. You can assign it to individuals who are trusted. I mean, let's just for, for example. Supposing LRH says, um, "This person, David Mayo has been trusted with the technical perfection. Or he's a trusted. * exercise his control. Because who else does? Nobody.

CP: Well, you may well be right. But it would not be um, his own juice. It would be--

LS: No, it would be--

CP: --the fact that *

LS: --that LRH said that.

CP: That's right. *

LS: Well, I mean, whoever it is, that what LRH will say.

CP: Yeah.

LS: He will say, you know, "My rights to control," or whatever, in so many words, "are passed to this entity." And that entity happens to be so-and-so, and so-and-so. And, "I trust in him, and therefore you should."

CP: Right. Yeah, that, I think that would be very *.

LS: I'm not even saying it should be male. I'm not. I'm just saying that he's that, he's that intimately connected with technical perfection and I don't know anyone else that is.

CP: Right.

LS: Anyhow,

CP: It's getting late.

LS: We're over our hour.

male: Hold on. * resolved anything.

male2: * resolved certain things.

male: I, I am unwilling to, I'm, I'm not committed to F & P as, as *.

male2: I am unwilling to relinquish the idea *.

male: --I guess on the basis that * that is not useful.

CP: To him.

male: To you *.

male2: Well, to, to LRH, because you're --. It's like, if someone says the risks of this to the church here are not worth the benefits to LRH, let that somebody * representing by, representing the church --

male: We are, we are--

male2: Yeah.

male: --* this hearing, in fact in this particular matter * in fact. *

CP: I just completely misunderstood. I, I suggested F & P would be very bad for the church and would not help LRH. I don't say that there should be no buffer at all. I think it may, very well be an excellent idea. But not, um, a profit-making management consultancy company which exercises de facto day to day control over the mother church. That couldn't be worse for Scientology. And I don't see how it really is going to assist him very much. Because all they've got to do is * one way or another.

male: And there has been a * independent thrust * to put in a real board of directors * which will not be * by F & P or * CMO *. So assuming that is done, then uh, then we *

CP: I think that the reality is that Watchdog Committee which is CMO Int will continue to manage the church. Um, I think it would be desirable if it was therefore some kind of ecclesiastical organized-- ecclesiastical entity, i.e., organized for some kind of Scientology ecclesiastical purposes. Those circumstances are obviously *

LS: And what about, and

male: Would your, would your, the ideal scene I think that you, that you're putting forward is let the buffer, there has to be one, let that buffer be the Trademark Trust, rather than--consultancy.

male: * that's not going to happen. * however CMO Int * (affiliated) with the Trademark Trust

male: yeah

male: --* therefore the relation, the existing relationship between CMO and LRH could be preserved, and * non-profit character * My original concern in making it non-profit is that the way it was proposed to * basically CSC controls, CSC would name the personnel, CSC, the personnel would report to someone in CSC, * that obviated any purpose to F & P altogether. But we have another body which is an international sort of * design * express purpose of, of controlling in perpetuity the use of Scientology * religious * And they control F & P or the CMO *

CP: Can I go on from there?

male: Sure

CP: Uh, I have um, tentatively envisaged the Trademark Trust which will be the legal authority

(tape ends)
 

Caroline

Patron Meritorious
September 29, 1980 meeting
Part 6

Tape 6 said:
Tape 6
Side A

male: director * that agreement could be * with LRH's permission to be a third party* PDK, as part of its agreement with the church would then have to go back to the church * services and PDK * is it okay * services to the church * render those services directly to the church, and he will say yes.

male2: He's got to memorialize it. Is that right?

female: * agreement

CP: Are you talking about memorializing an agreement which is * between Ron and PDK?

male: That's right.

CP: Ah. I think that's where we, we're still not finding agreement. I don't particularly like that, because it requires a Pubs org staff member to agree that there was an agreement some time ago, and there wasn't an agreement some time ago. * decides otherwise, could be very embarrassing for Ron. It also put his name to that agreement which did not in fact exist.

male: If LRH were not to be paid for these non-writer's fee type activity, there would be no problem with memor--, there'd be no need to memorialize anything, right?

male: * well he'd have to memorialize something * give LRH the right to get *.

male: by virtue of having written a script, he gets a royalty payment, right?

male: * well we're still, we're talking about, the agreement is, if the, if your problem is memorializing * not yet taken place, you've got a real problem, because the church is * spend a lot of money based on some understanding.

CP: Yeah. If, we agree that there's an agreement between Ron and the church. No question about that whatsoever. The terms of it may not be entirely clear.

male: Why is there, why * LRH and the church *

CP: Because,

male: Because in my mind there really * agreement between LRH *

CP: Between Ron and the church?

male: What's the definite agreement?

CP: * There's certainly agreement that he would make movies, and that they would finance them. The only term that's not decided, determined is One how much he should get for it, and Two, who should own the copyrighting. Its clear there was an agreement that he should make the movies, because he did make the movies and they did finance it. (laugh) It couldn't have been done without some sort of agreement.

male: (that's clear)

male: I, I have no objections to having a direct relationship *. Or *

female: * why can't the church

male: * problem of setting what amount LRH gets paid *

male: Well except that if the churches *

male: * prepared

CP: I think we are prepared to *. I think we should retain an attorney who is familiar with things and he should write, or that you should write, I think there should be a negotiation which is, that is the memorialization. A negotiation between the attorneys.

I think it can be, I think it is agreed that some compensation is due Ron for making those movies if he desires it. I mean, * his and his attorneys' decision.*

We would (not/now) agree *(to a fair) price. Um which would stand up. The I, I don't thing the Internal Revenue Service is going to be able to, to challenge it, provi--, especially if two sets of lawyers get together and agree * industry standards, and so forth. Now, it's not going to be 2.1 million, we know. But uh, I think * generous sum, given his particular circumstances.

male: * scripts * how long he spent *

male: We have a fair amount of that information.

male: *

LS: count on 10 hours for *

CP: * he, he took people who had never seen a camera in their lives. He built, he built the entire studio. He trained everyone from scratch. * quite a major undertaking. It wasn't bringing in a professional onto a professional set, here we go, $3000 see you later. It was ah, you know, the thing was built from square one upwards.

male: I was under the impression that uh, a lot of people * PDK were also * very high up in the church *getting somebody from PDK to sign ah, an agreement and memorialize something *.

CP: Well, if I, I, if someone asked me to put my name to an agreement, that an agreement had taken place, and it hadn't, with someone else, there aren't many people that I would choose to sign that agreement with me in the full confidence that I could rely on them in future years. And Ron does not even know I think people in PDK who would be signing that agreement. So we would have to have a very high degree of trust to ask him to do that.

female: *

CP: *

male: *

CP: No.

male: *church is part of the problem of the * PDK and relationship *

CP: No, no, no. I may be wrong. I, I won't say. * may well be right.

male: *

LS: * We haven't seen them yet, but they *

male: *

(laughs)

male: Well, I, I, you know, I frankly am not sure where we, where we are in terms of, of proceeding with the uh, with the financing * distribution of these pictures. Um, I mean it's clear to me now that, that things have changed and I am flexible, and *

female: *

male: --I can certainly (adapt) * they have changed

(female laughs)

male: * the church decided they wanted PDK to distribute these --

male: Yeah, I mean, am I, am I hearing --

male: * some of the agreements * I think some of your, some of the agreements you, you * put to use. Certainly, if, if PDK is going to be a distribution arm in all of this * still be a joint venture, I guess, and there'll still be license agreements.

male: Good. Can we kind of recap what the new plan is now? I mean I know that this is no *

male: * red box? * red box or the green box.

male: Directly to the green box. Which is something that is * because we didn't think we wanted to do anything like that.

male: *

female: All right. What are the (agreements)?

male: * Ah, the church should be less happy with it than I am, I would think, but the church is not, not happy * risk of doing it in a, in a way which someone could characterize as fictional. That risk outweighs the possible benefit of avoiding scrutiny into whether he was there and so forth.

male: Well, wait, wait a minute. If we, if we're going to do this, we're going to do the simplest thing, and we're going to go straight from here to here.

male: --yes

male: -- and if we make any terms fair, by very ah, justifiable industry standards,

male: --yes

male: --then why are we now going to be concerned about these license fee payments, if they're also going to be, be made very standard and justifiable in the industry?

male: I don't know if the church * corporate area, but ah, * help me on this, because the church starts self-distributing * charging the orgs an amount for doing that * recoup its investment, ah, and some point it'd all start making a profit. You know, what do you do if when that starts happening? And don't you set up a PDK to handle distribution so you avoid that, from, that happening?

male: * ah, that's a good question. First of all, if we have a direct relationship between Mr. Hubbard and the church, which is essentially what happened, in one way or another *.

male: *

male: Um, you don't need the * unless you want *

male: In which event, all PDK would be entitled to is a 30% distribution *.

female: * PDK *

female: I think *

male: *

male: The, in terms of the church being the distributor internally, uh, and making a profit as a result of its distribution activities, there may be some risk to the church's tax-exempt status, but ah, a number of other large international * organizations do have a publishing arm, which is basically *. Ah, and they make a profit. So far they they don't have any problems.

male: (That's unrelated business.)

male: It's all related.

male: Is that right?

male: Well, I'm assuming we have a related--

male: This would certainly be a related business *.

male: *

male: I think we, we can proceed on that assumption, subject to making, making plans if necessary *.

male: * safest course for the church * make sure it gets back * plus interest, and then (that'd be it?)*--

male: The church, if the church, however the church *

male: Once we've eliminating, eliminated any kind of profit-making organization, uh, *.

male: charge these people? *?

male: Well, we don't care if PDK makes a profit.

male: I don't care.

male: Is that a, is that a, something that --

CP: Ah, the church cannot make a profit, because its articles prohibit it from so doing. But it can always does and hopefully always will make *. Pub DK is a profit organization and is intended to make a profit, and we think that it would. Um, the church will not be taxed on its services, provided it is considered service. If it's considered unrelated business income, then of course it will be taxed at a normal rate. But it is very unlikely that these movies could be considered unrelated business income because they are church educational films. Unrelated business income as I understand it would have tried to laundries, restaurants, and you know, re- literally, wholly unrelated business conducted by churches.

male: *

CP: Yeah, if it was Revolt in the Stars, I would entirely agree. But these educational films used in church -- In that sense they are educational aids, no different really from ah, the * books. And also, they would only be distributed to other church. That's going to be, it's very much an internal transaction.

male: Even if it were unrelated business income, it won't amount to much, and what the church is going to make overall and, * they just pay taxes, as I understand it, on the unrelated business income. It doesn't necessarily affect the tax-exempt status.

CP: That's right. *

male: Unless, unless it's significant.

male: * a very significant part of the overall income, in which case you are no longer operated exclusively for charitable *.

CP: That's true. *

male: * limited understanding of the numbers that would be involved. *

(laugh)

CP: This may be the movies which have to have the combined success of Star Wars, Jaws and several others in order for it to be * movie business.

(laughs)

LS: Well, where are we at in our (advantage) here? I'm, I'm sort of lost *.

CP: Well, *

male: My * is of the civil cases. * Right now we have a church contract with LRH to make the movies. A year from now the movies come out, and somebody who looks at movies, they see how the TRs, they do TRs, * they're training routines. A religious, ah, ah, practice. * they're going to show people how to do a religious practice. They look at it, they look at it, they do it, something * will happen to them if they say. * delivered in church, they saw the movie in church, and gets the * on it.* Church gets sued, LRH gets sued. * church. The opposing side then files notice of deposition on the church for LRH. All right, you guys work together, you own each other, whatever. * Notice. * LRH. * What I want to be able to do, from the church view, is to be able to successfully argue that we do not have to produce LRH. * nothing to do with him. * So I tend to agree with the view for whatever purposes he might have for the profit of PDK, the contract, contract * PDK and LRH, * incorrect. It didn't seem to be right, sitting here. * PDK's the one that has the relationship with LRH, not us.

female: *

male: * (They can deal with this.)

CP: And what she said, (that's certainly right) but of course, we have, we take, we're taking this in two stages. One is the agreement between Ron and the church, which I think is what actually happened, and should be stated. And the agreement with how much to pay. The agreement as to how much to pay him. The second step is the church transaction. The church would then, um, let PDK in on the action for administrative purposes. It would also have that ancilliary effect to further insulating LRH from the action. But, I think that the notion of someone suuing after this, after seeing a movie, is, is fairly unlikely. And if that really was the case, you could say, I mean, you could say exactly the same thing about all the books, all the bulletins, all of everything that goes on in the Scientology church. He's intimately involved. * with everything that he does get. So then, they do notice his deposition and we do say we can't produce him, and we actually can't produce him. So that really ends the matter. Uh, if you are a plaintiff and you don't produce someone, you can have the case dismissed *. If you're a defendant and you actually cannot produce someone, we can't produce them. (laugh) The IRS has just tried this off, and ah, we can't produce him. So that's that. * great problem at the time. But, ah, there was alot of to-ing and fro-ing as to whether we should produce him. * Purely academic. We cannot produce him. (laugh) So I don't think this, this, this problem needs really concerns all that much. I agree it would have been better if he'd never written anything at all. If he'd been a successful naval captain (laughs)

The fact is he has made the movie, has written the books, and there's some slight risk in being alive.*

(laughs) to the greatest extent possible. We can't --, I think, he owns, I, I would say he's entitled to compensation *. I think he's entitled to own the
copyright. That really is the burden of all agreements * church. The church will then assign its, the church will then certainly let PDK in on the action. Probably wholly, provided PDK can pay. * difficulty in so doing. But all we're really concerned about right now is Step One. And that is how to get this agreement between Ron and the church worked out. And I would have thought we could do it by an exchange of letters between you, representing Ron and attorneys which we will now appoint here in LA representing the church. Because otherwise *. I think in the first instance, you could write for (Paul) who represents CSC here. He will get hold of an attorney. It will all be done from that basis, three, four, five letters will, will sort this out. That will then handle that step of it. Step Two is between the church CSC and (Pub DK). That's really up to us to do, isn't it? But obviously --

male: * negotiations, uh, some kind of controller, * (LRH will be discharging the churches) *. Or maybe * follow where the church assigns its rights *. I suppose to make a profit* like LRH. *

CP: Fine.

male: --much as I can involve.

CP: Terrific. That will be great. So you'll be, you will include considerations about PDK.

male: --* third party distributor.

CP: Right. But it would --, that's fixed because that would bring them in, and then we as the church would have to involve Pubs DK and work out in essence how they're going to pay for it.

male: Pay for what?

CP: Pay for the church's interest.

male: Well, they would buy the church's interest *.

male: * they would only be paying the church based on what PD, * percentage of what PDK actually receives. So *

male: * PDK * become a distributor.

male: Well, yeah, --

female: *

male: * it's not possible for PDK to buy * money.

male: *

male: There are other ways to do it.

male: There are other ways of doing it?

male: By the, in exchange for ah, uh, perpetual royalty-free * license. *

LS: PDK madness. *

male: * interest of * million dollars? What are we talking about them buying? If there's not going to be--

male: * 400,000 down plus, whatever.

male: Why do we want --

male: I don't know.

male: Why do we want them to buy it?

CP: Well, we don't, no-one knows what PDK wants to do. We're speculating.

male: Well I know why we wanted to originally to be involved, to buy the rights from RRF, was to get RRF out of the picture.

CP: Right.

male: Now, we wanted them to enter in a joint venture with the church so that they could provide these rights, handle the money, handle the distribution, but the church was always intended to finance this. So I don't see why now we want PDK to finance the films, and have, solely * production of the films. But they don't have that kind of money.

CP: Right.

male: I thought PDK's overriding concern was to get royalties to LRH.

male: Yeah.

female: what I thought too. I thought it was because, *

male: -- I think it's * PDK to be the profit-making enterprise of the church.

male: * is correct in that it is a question for the church and PDK to determine what *. My only other *

female: *

male: *

CP: For that I think we ought to consider that. Well, perhaps, Yes! We ought to because you're his attorney, and ah, you've got 2.1 million (laugh) of our money. (laughs)

female: *

male: What's the law on finders, keepers? (laughs) I think we have the money and you may have *

(laugh)

female: * What was the, what was, what was the reason our accountants asked RRF for the money? *

LS: * LRH asked our accountants to see that somehow he was recompensed for his *.

female: *

male: That's good.

LS: *

male: At that time, that, that amount was, the actual invoice says that it was for 8 musical scores and * (scripts in the amount of 2. 1.) The original amount was *.

LS: * 3.8. (laughs)

male: * negotiations.

LS: Yes. (laughs)

male: Um. We did sit on that. *

LS: So you don't know.

male: No.

LS: All these great places (we won't go.)

CP: Well why doesn't the church now write to you and say we want the 2.1 million back. And we can then write back and we'll take it from there until we resolve the problem.

male: *

CP: * recreate history.

male: * (laughs)

CP: That's right. You, you'll, you will explain why you can't give it back. And we'll go on corresponding for quite awhile, and I think we'll probably come to some --

male: * There was an invoice. And there was * in requesting it.

female: *

male: *

female: Alan's going to --

(laughs)

female: Alan's going to write you.

CP: No. We must write--

female: You write him. He then replies. You then *.

CP: No, it's going to go to court.

male: For RRF.

female: Who's going, who's *

CP: Sorry, you're right.

female: * to your

CP: No. I am going to write to him. * If not me, he will get a letter from somebody representing RRF.

female: Okay.

CP: What we might do is retain an attorney, probably *, represent RRF to engage in this correspondence with you. We will supply him with all the information (on our side) and you *.

male: *

(laugh)

female: *

(laughs)

LS: He may not even receive it. (laughs)

male: * that's ah,

female: *. Well that's *.

male: Well it does, except for I want to make sure I know what the hell we're canning. I mean what we're putting in place of it. Author and LRH, I mean author and church have an agreement and this, the, ah, substance of the agreement is that the church, you're going to provide some services to the church and he's going to provide some film scripts for the use. And they can, they start producing them. However, he's going to retain the copyright. When it comes to distribution time, PDK and the church can enter into some arrangements together and distribute it. And we're going to take off from the tack of clean slate. This is all in PT?

male: *

male: There won't be a memorialization of the author, church agreement because it in fact occurred, so there's no problem with that.

CP: Oh sure. (There will, will be) something that he will have to sign though. * exchange between attorney will handle.

male: So we do have a situation though where he is going to be paid for those, or is not going to be paid for his technical services?

female: No he will.

male: He can be.

male: He will be. At fair market value for them.

male: * directly * church for anything, he might as well *.

male: All right.

male: We had the church compensate LRH. half a million dollars. Something like that. *

male: *

male: * at some point an offset ah, against * 2.1 * . I'm not sure, I guess it's your problem because I don't know to what extent ah, obligations of the church offset against * by RRF *.

male: * we got a blue box and a green box *.

male: I think we will leave them entirely separate *.

male: (There are not even any pictures, I understood it, right now.)

male: Well, except for LRH *.

male: now--

male: * directly from the church * consideration for the scripts and services, scores and (now what.)

Then you still have the,

male: him having received 2.1 for this, from another corporation. Virtually the same thing.

male: Yeah, well the church discovered that that was incorrect except uh,

(recording ends)

Side B

female: This is a test.

This is a test.

(pauses in tape)

(nothing further recorded on this side)
 

Caroline

Patron Meritorious
Since the "Church of Scientology of California" ceased to exist decades ago, do you know if the court records that were sealed are now public?
Although we don't know exactly what is sealed or unsealed, I think the sealing of the subject court records is probably not related to the end of CSC operations.

Note that although CSC sued Gerry, and he was never "employed" by CSI, the 1986 "settlement agreement" is with CSI, and the subsequent future litigation Armstrong 2 through 7 is with CSI.
 

Caroline

Patron Meritorious
Gerry's attorney Michael Flynn wrote a declaration regarding MCCS, C.I.D., the Armstrong case, and related matters.

Declaration of Michael Flynn (September 24 1985) said:
DECLARATION OF MICHAEL J. FLYNN

I, MICHAEL J. FLYNN, swear under the pains and
penalties of perjury that the following is true and correct.

1) I am the attorney for Gerald Armstrong. In
April-June 1984, I appeared for Mr. Armstrong as trial counsel
in the case of Church of Scientology and Mary Sue Hubbard v.
Gerald Armstrong, Los Angeles Superior Court.

2) During the Armstrong trial, extensive evidence
was introduced, both documentary and testimonial, relating to
the fraudulent and criminal conduct of L. Ron Hubbard in
connection with his relationship with the Church of
Scientology. This conduct began in the 1950's and continued
at least up until November 1982 as established by the evidence
in the trial.

3) There was also extensive evidence in the
Armstrong trial relating to L. Ron Hubbard's background, which
"pathological liar" as eventually ruled by the Trial Court,
and that he had in fact, manipulated and absconded with Church
funds.

4) During the trial, specific issues arose relating
to the "MCCS Mission" which was a Scientology/Hubbard program
to conceal Hubbard's control of Scientology, shield him from
liability, shield him from the fact that millions of dollars
of Church funds had been funnelled to him, and to perpetuate
this fraud in the future without Hubbard incurring liability
for it. Although the Court actually sealed the "MCCS" tapes
containing such evidence, there was evidence relating to
Hubbard's control of Church funds in the trial itself and in
an affidavit of Gerald Armstrong that had previously been
filed in the case of Burden v. Church of Scientology. This
affidavit specifically relates to the MCCS Mission. The
affidavit is not under seal and has never been under seal.
This affidavit specifically quotes from the MCCS tapes which
are under seal. In one of the tapes as set forth in the
Armstrong affidavit, the highest legal official of the Church
of Scientology is quoted as saying that Hubbard's taking 2.1
million dollars of Church funds "was a classic case of
inurement, if not fraud." The tapes also reveal, as set forth
in the Armstrong affidavit, that throughout the history of the
Church, while it was holding itself out as an entirely
legitimate, separate and distinct religious corporate entity,

-2-


not under the control of L. Ron Hubbard, this in fact was a
fraud, the Church corporations were "shams" and Hubbard had
control of everything.

5) As a result of the foregoing evidence and an
abundance of additional extremely detailed evidence, for the
most part supported by documents including cancelled checks,
Swiss bank account numbers, correspondence and miscellaneous
other documents, it became obvious that Hubbard had in fact,
engaged in criminal and fraudulent conduct with respect to his
control of the Church of Scientology. Much of this evidence
and the conclusions about Hubbard's conduct were reported
extensively in the media in the New York Times, the Los
Angeles Times, the St. Petersburg Times, the Clearwater Sun
and additional publications. It is my assumption that as a
result of this extensive media coverage, at some time after
the Armstrong trial, and after the Court had issued its
findings of fact, the Criminal Investigation Division of the
IRS began an investigation. After the Armstrong trial, I was
contacted by several investigators from the Criminal
Investigation Division of the Los Angeles office of the
Internal Revenue Service.

6) I was first contacted by Mr. Al Lipkin, Mr.
Daniel Rocha, and Mr. Al Restuccia of the C.I.D. These
gentlemen informed me that they were conducting an

-3-


investigation in connection with the Church of Scientology and
L. Ron Hubbard and they sought my cooperation. I told them
that I would give them my full cooperation and provide copies
of any documents, affidavits, exhibits, etc. which were not
under seal and which related to the Church of Scientology and
L. Ron Hubbard. I also told them that my clients, which
included numerous former high level Scientologists, including
Gerald Armstrong, William Franks, Laurel Sullivan, Howard
Schomer, and others would give their full cooperation in
connection with the investigation of the C.I.D. Mr. Lipkin
and either Mr. Restuccia or Mr. Rocha came to my office and
spent several days examining documents relative to this
subject. They thereafter contacted many of my clients.

7) At no time did Mr. Restuccia, Mr. Lipkin, Mr.
Rocha or any other member of the C.I.D., or for that matter
any other state or federal agency ever provide any information
to me as to the course of their investigation, the evidence
that they had collected, their conclusions, or anything else.
In fact, Mr. Restuccia, Mr. Rocha and Mr. Lipkin conducted
themselves with the utmost professional courtesy and
discretion, and never disclosed any information to me of any
nature or description during the course of their
investigation.

8) Subsequently, pursuant to its written policies,

-4-


including the "Fair Game Doctrine," "Attack the Attacker" and
its "Black Propaganda" policies, the Church of Scientology
engaged in a world-wide smear campaign, through press
conferences, news releases, and publication of its Freedom
magazine claiming that myself and several of my clients
including Gerald Armstrong were in a massive conspiracy with
the IRS, the FBI, the United States Government, the Canadian
Government, the United States Attorney's Office, and sundry
others to destroy freedom of religion in America. These
claims are absurd on their face. Among the more specific and
ridiculous allegations of Hubbard and Scientology are that
C.I.D. agents offered or promised various benefits to myself
and my clients in exchange for manufacturing evidence and in
effect framing L. Ron Hubbard and his Church. Suffice it to
say that these allegations are completely unfounded, totally
false and have no basis in fact or reality. Indeed, the
allegations themselves reflect the paranoid condition of both
Hubbard and the Church which was noted by the trial judge in
the Armstrong. The judge specifically ruled that the Church
and Hubbard were "paranoid and schizophrenic," were actually
utilizing the "Fair Game Doctrine" right up to the time of the
trial to "destroy" Hubbard's perceived enemies, and that it
had engaged in forms of blackmail and extortion.

9) Upon information and belief, the present campaign
of the Church of Scientology alleging the conspiracy between

-5-


myself and various governmental agencies, is simply an effort
to divert the ever-increasing compendium of legal decisions
which have reached the same conclusions as the court in the
Armstrong case with regard to the background and activities of
Hubbard and his Church. In order to avoid civil and criminal
sanctions for their past conduct, Hubbard is now engaging in
his classic Black propaganda campaign to attack and discredit
those who are engaged in litigation against him. In fact,
there is no truth in the absurd claims of him and his agents.

Signed under the pains and penalties of perjury this
24th day of September, 1985 under the laws of California,
Massachusetts, and Florida.

[signed]
MICHAEL J. FLYNN
 

ILove2Lurk

Lisbeth Salander
Can do. I agree with you about document redundancy.
Quick question.

In looking through the http://legal.gerryarmstrong.ca website, I've noticed
that many of the links lead to pages with no content. Example would be this link
to the deposition of TonJa Burden.

Am I missing something?
There's so many links with intriguing titles but no content. :questions:

I'll tell you that some of my favorite materials that I've ever encountered are the
audio files of talks by Michael Flynn. He was really a force of nature and a very
smart guy. High confront. I admire him much.
 

Caroline

Patron Meritorious
Quick question.

In looking through the http://legal.gerryarmstrong.ca website, I've noticed
that many of the links lead to pages with no content. Example would be this link
to the deposition of TonJa Burden.

Am I missing something?
There's so many links with intriguing titles but no content. :questions:

I'll tell you that some of my favorite materials that I've ever encountered are the
audio files of talks by Michael Flynn. He was really a force of nature and a very
smart guy. High confront. I admire him much.
Ach, I apologize. A glitch seems to have developed very recently, which involves Wordpress and how it displays custom fields (in this case, the field is a link to the PDF file). Here is the Tonja Burden depo: https://mega.nz/#!O3xA2CYa!kqUgGdTo6gMGuwUr4NfpRLLwhQRj-5oqPobXSbbWdH0

The Armstrong legal library is currently archived on mega.nz, and indexed from legal.gerryarmstrong.ca. I have been thinking of sending up a copy of the PDF library to archive.org, for redundancy, reindexing, and hopefully easier access. (Praying for bandwidth, time, resources, etc.)

I will try to be responsive to specific document requests in the meantime...
 
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