Gerry Armstrong--Declaration of Gerald Armstrong 09-06-1984

§ What's New || Search || Legal Archive || Wog Media || Cult Media || CoW ^® || Writings || Fun || Disclaimer || Contact §

ROBERT C. BONNER
United States Attorney
FREDERICK M. BROSIO, JR.
Assistant United States Attorney
Chief, Civil Division
     1100 U.S. Courthouse
     312 North Spring Street
     Los Angeles, CA 90012
     (Tel: 213) 688-2449 or 688-2445)
J. CHARLES KRUSE
Special Litigation Counsel
     Civil Division
     Department of Justice
     Post Office Box 68
     Benjamin Franklin Station
     Washington, D. C. 20044
     (Tel: (202) 724-7216)
THOMAS E. DOUGHTY
Special Assistant United States Attorney
Legal Counsel Division
     Federal Bureau of Investigation
     10th Street and Pennsylvania Avenue, N.W.
     Washington, D. C. 20535
     (Tel: (202) 324-4532)

Attorneys for Defendants

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CHURCH OF SCIENTOLOGY
OF CALIFORNIA,

Plaintiff,

v.

ELMER F. LINGERG, et al.,

Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)

No. CV 77-2 654-Kn (Mcx )

DECLARATION OF GERALD ARMSTRONG

1. Set forth below is the text of a document entitled

Supplemental Affidavit of Gerry Armstrong that I executed on

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

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 Wordwide, who was then in

charge of all legal activities of the Church of Scientology

throughout the world, and Laurel Sullivan (L.S.), the personal

representative of L. Ron Hubbard and a long-term senior

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.

- 2 -

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 is because everyone has effectively

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

- 3 -

" 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

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)

- 4 -

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 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."

- 5 -

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 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."

Speaker Unidentified: "It's all privileged."

DS: "The tape recorder is going here,

Charles."

- 6 -

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

- 7 -

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."

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

- 8 -

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.

______________________
GERALD ARMSTRONG

DATED: [September 6, 1984]

- 9 -