Deposition of Lynn R. Farny (Volume 1 of 4)

Armstrong 4

IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF MARIN

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

AND RELATED CROSS-ACTION.

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NO.157-680

DEPOSITION OF:

LYNN R. FARNY

Monday, July 11, 1994

VOLUME I

Reported by:
PENNY L. GILMORE
CSR NO. 4724

PENNY L. GILMORE & ASSOCIATES
DEPOSITION REPORTERS
P.O. BOX 862
ROSS, CALIFORNIA 94957
(415) 457-7899

INDEX

Witness: LYNN R. FARNY

Examination by:
Mr. Walton
Mr. Greene

PAGE
4
110

E X H I B I T S

DEFENDANT'S

1 Five-page document entitled Who Is Gerald Armstrong

PAGE

37

BE IT REMEMBERED that pursuant to Notice and on Monday, the 1lth day of July 1994, commencing at the hour of 10:15 o'clock a.m. thereof, at the conference room of 900 Larkspur Landing Circle, Larkspur, California, before me, PENNY L. GILMORE, a Certified Shorthand Reporter licensed by the State of California, personally appeared:

LYNN R. FARNY a witness herein, who, being by me first duly sworn, was thereupon examined and interrogated as is hereinafter set forth.

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KENDRICK L. MOXON, Esq. and LAURIE J. BARTILSON, Esq., representing the Law Offices of Bowles & Moxon, 6255 Sunset Boulevard, Suite 2000, Hollywood, California 90028, 15 appeared as counsel on behalf of Plaintiff.

MICHAEL L. WALTON, Esq., representing the Law Offices of Michael L. Walton, 700 Larkspur Landing Circle, Suite 120, Larkspur, California 94939, a defendant, appeared in pro per.

FORD GREENE, Esq., representing the Law Offices 23 of Ford Greene, 711 Sir Francis Drake Boulevard, San Anselmo, California 94960, appeared as counsel on behalf of Defendant Gerald Armstrong.

WILLIAM R. BENZ, Esq., 900 Larkspur Landing Circle, Suite 185, Larkspur, California 94939, appeared as the referee in said action.

ALSO PRESENT: Gerald Armstrong, Defendant.

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EXAMINATION BY: MR. WALTON:

Q. Please state your name for the record and spell it, please.

A. Lynn Robert Farny: L-Y-N-N; Robert, usual spelling; F-A-R-N-Y.

Q. Mr. Farny, what's your address?

A. 6331 Hollywood Boulevard.

Q: And you are here on behalf of Scientology; is that right?

A. I'm here on behalf of the Church of Scientology International, the plaintiff.

Q. What's their address?

A. 6331 Hollywood Boulevard. I use that as my mailing address.

Q. How long have you been a member of the Church?

A. A parishioner of the Scientology religion or an employee of the Scientology Church?

Q. A member of the Church. Are you a member of the Church?

A. Yes, I am.

Q. How long have you been a member?

MR. MOXON: Objection. Would you please clarify your question? The witness asked for clarification.

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

A. I do now. You want to know how long I have been

a parishioner of the Scientology religion.

Q. How long have you been a member of the Church of Scientology? Do you understand my question?

A. The interpretation I put on it, since late 1976.

Q. What's the difference between your interpretation and my question?

MR. MOXON: Objection.

MR. WALTON: Q. Member of the church and a parishioner, is there a difference in your mind?

A. No, if you are not implying a difference, not at all. No.

MR. MOXON: He simply asked for a clarification.

There's obviously a difference between the corporate entity, the Church of Scientology International that's a party in the case, and the Scientology religion. You can say how long have you been a Catholic and how long have you been a member of the Catholic Church, how long have you been a member of St. Michael's Diocese. That's a distinction we are asking you to clarify. If you ask a clear question, no problem.

MR. WALTON: Q. Are you part of the corporation? Are you an employee of the corporation?

A. Yes, I am.

Q. What's your title?

A. Secretary.

Q. How long have you been secretary?

A. June 1988.

Q. Have you held any other position in the organization? When I say "the organization," I'm talking about the organization that filed the lawsuit in this litigation. Do you understand that?

A. Yes, I do.

Prior to my becoming secretary of the corporation for the Church of Scientology International I was an employee for approximately four years.

Q. Did your position as an employee involve you having any kind of title?

A. Yes.

Q. What were your titles starting from the first and progressing until the last?

A. The entire time I'm been with the Church of Scientology International I've worked in the legal department. I've had various job titles, some of which I don't remember, but they're all in the area of litigation working in either a paralegal capacity or as an executive over the department in which the paralegals work.

Q. How big is that department?

MR. MOXON: Objection. Which department?

MR. WALTON: The legal department.

MR. MOXON: Objection as to time. Now?

MR. WALTON: Q. What's the biggest it has been since you have worked in it? What's the maximum number of people in that department from the time you worked in it until now?

A. Approximately 50.

Q. Does that include lawyers?

A. No.

Q. What's the smallest that it's been?

MR. MOXON: I object to relevance. Is there some point as to how large or small the department is?

MR. WALTON: I think it may relate to the amount of experience that this witness has. This witness is here on behalf of the plaintiff and I'm going to be asking a lot of questions. I need to know if he's qualified. I'm looking at what his qualifications are.

MR. MOXON: Is there a particular qualification you are interested in?

MR. WALTON: I want to know what his experience is.

MR. MOXON: How large or how small the department is is irrelevant to how much experience he has.

MR. WALTON: I don't think so. I think if he's been working with 50 people, for example, he's been number two in charge of 50 people, that would indicate a lot of experience than if he's been working with one person and

he's been the second in command.

Can we have a ruling?

MR. BENZ: I'm going to allow the question as to background.

THE WITNESS: Four.

MR. WALTON: Q. At the present time how large is it, just approximately?

A. Approximately 25 to 30.

Q. Do you have direct control, management control over any of these people?

A. Yes.

Q. How many?

A. Three.

Q. To whom do you answer? Who is your supervisor?

A. You want his name, is that what you are asking?

Q. Yes.

A. Ed Parkin, P-A-R-K-I-N.

Q. What is Mr. Parkin's title?

A. Legal activities chief.

Q. Mr. Farny, how many times have you had your deposition taken?

A. At least a dozen, but I'm not certain how many times.

Q. How many of those times in relationship to some Scientology litigation?

A. All of them.

Q. How many depositions have you attended?

A. Lots. I wouldn't be able to say how many.

Q. Dozens?

A. Yeah.

Q. Hundreds?

A. Probably not.

Q. Under a hundred?

A. I'd have to guess, but I don't think so.

Q. We don't want you to guess. You have attended enough depositions to know that.

Could you tell me just briefly what your formal education is?

A. Four years of college but I didn't graduate.

Q. What was your major?

A. Political science.

Q. Other than your experience with the Scientology legal department -- and I refer to it because I'm not sure what you do call it -- what is that department called?

A. Legal Bureau.

Q. Legal Bureau. Other than your experience with the Legal Bureau have you had any other training either formal or informal in the law in California: paralegal courses, that's the sort of thing I'm looking at.

A. I had some undergraduate courses on different

aspects of the law, but other than that, no.

Q. Could you give me some examples of the kinds of things that you do in the legal department currently?

MR. MOXON: Objection. This is irrelevant to the action.

MR. BENZ: Can I ask a question for my clarification? Was this witness subpoenaed or noticed by name or is he represented by representative capacity?

MR. MOXON: Representative capacity.

MR. BENZ: I think you are entitled to go into what his connection to the plaintiff is.

THE WITNESS: Generally I supervise litigation involving Church of Scientology International. By that I mean making sure any cases we have have counsel to litigate and that counsel is provided with the assistance required, coordinate activities for one case to the next.

I keep the board books for the corporat1on; ratify contracts; enter into contracts at the direction of the board; open bank accounts, that sort of thing.

MR. WALTON: Q. Do you know who supervises Mr. Partkin?

A. Yes, I do.

Q. Could you tell me?

A. Neil Levin, L-E-V-I-N.

Q. What does Mr. Levin do?

A. He's the head of the Legal Bureau.

Q. In these times that you have represented, being an employee of Scientology -- again, I recognize that Scientology has a lot of meanings and we'll get into that in a little while -- for now when I say Scientology or the organization I'm talking about the entity that's brought suit here. Do you understand that?

A. I do. It's fine with me if it's fine with the lawyers.

MR. MOXON: Any time you say "Scientology" or "Church" you are talking about the Church of Scientology International?

MR. WALTON: Until I find out who the rest of the folks are ,and what their relationships are, but at this point because I am such a novice in this area I can only --

MR. MOXON: Neophyte.

MR. WALTON: I am indeed. I'm working towards expertise.

Q. In these times that you represented the Church in these litigations, and what I'm talking about is in deposition.

A. You mean testified on behalf?

Q. In deposition only.

A. Okay, fine.

Q. Are you in the position that you have selected yourself to attend a deposition or does someone tell you to go to a deposition?

MR. MOXON: Objection, it's compound. Question calls for -- it's impossible to answer that.

MR. WALTON: Q. You find it impossible, sir?

MR. MOXON: I do.

THE WITNESS: If I answer it yes or no you have no idea which half of the question I have answered.

MR. WALTON: Q. These can go on for days and days if we get real technical. I don't mean to make it real technical. We can certainly do it that way. All I want to know is how you came to be here as opposed to any of the other people who could have come.

A. I do not mean to be hypertechnical. Once it gets put on a piece of paper on a transcript any ambiguities are difficult to interpret.

In any event, I think I understand your question. If you want to ask it again, otherwise I'm prepared to answer.

Q. Please do.

A. Usually I have been the one to recommend that I testify. However, it's always counsel's decision who represents the Church in a given proceeding. But I don't recall a time when someone has said that I would be the

witness unless, of course, it's one of the lawyers who said we have a corporate representative deposition notice and I assume you will be the witness. Generally I would be the one to make the decision.

Q. In your position in the legal department, then -- and we'll talk specifically about this case rather than for purposes of this question -- have you read the pleadings and the discovery in this case?

A. I've read the Complaint, Answer and Cross-complaint. Most of the discovery; perhaps not all of it.

Q. In general when discovery comes in in one of the Scientology cases is someone assigned to respond to the discovery?

A. What do you mean?

Q. I mean, for example, say you get, not you, but say Scientology gets a Request for Production of Documents; the attorney then gives it to someone in 19 Scientology. Who would they give it to, the legal department?

A. Yes.

Q. From the legal department who would get it initially?

A. Generally I would.

Q. What would you do with it?

A. Depending on its scope, how large it is --well, this step doesn't depend --I would sit down with the lawyer and go over what the parameters are of it and decide on a course of action I would take in order to gather up the materials to respond to it, then either myself or one of the staff, one of the paralegal staff would go about finding the documents, or whatever, give them to the lawyer, sit down, go over, determine what's responsive, and the lawyer would draft the response.

Q. Would you assign the next person if it were to be assigned?

A. Yes.

Q. I'm not asking you who, but do you recall assigning in this particular action, assigning any of your staff to respond to any of the litigation requests, the discovery requests?

A. I may have had them assist in gathering up things or xeroxing or whatever, but I worked out the response with counsel. Responses, actually.

Q. As a sort of an aside, did you bring any documents today for me?

A. No, sir, I didn't. None were asked for in the Notice.

Q. No, there were no requests in the Notice, but as I indicated to both your counsel last week I've never been

served with any documents pursuant to --I'm not sure if it's Mr. Armstrong's request or Mr. Armstrong's corporation's request, but I understand there were some documents pursuant to that request. And as I understand from the letter I received I believe last week, week before last, there were either some supplemental responses that were served or some supplemental responses that were I to be served. Do you know anything about those supplemental responses?

A. Wow. I was waiting for a question somewhere.

Supplemental responses to document requests in this case?

There's one in preparation, yes.

Q. That hasn't been served?

A. No.

Q. Do you know if there's been an initial service of documents which responded to a document request?

A. I believe there has, yes.

Q. Do you know to whom that was served?

A. The other defendant.

Q. Which other defendant?

A. Gerry Armstrong through his counsel.

MS. BARTILSON: We sent it. After I got your letter I sent them out. Take a look, you should have gotten them.

MR. MOXON: Have you been in your office?

MR. WALTON: You use three addresses for me. Which one did you send it to?

MS. BARTILSON: That I'II have to check.

THE WITNESS: Which one is the right one? We wouldn't want you to get the --

MR. MOXON: Which one is it?

MR. WALTON: If you send it to the 700 Larkspur Landing address. Here, let me give you my card.

MS. BARTILSON: Service was done initially when they were originally responded to. They were sent to an address for you. Obviously you didn't get them. I don't know where they were. We served everything on this office.

MR. WALTON: If you served everything to my office -address I think it would be a lot clearer because there have been a lot of things I haven't gotten.

MS. BARTILSON: You have different addresses.

MR. WALTON: Sometimes I get things by fax and sometimes I don't, although the proofs of service say I have been faxed sometimes I don't get them. In this case I am going to need whatever documents have been served.

MS. BARTILSON: Sure.

MR. MOXON: Did Mr. Greene tell you there have been some documents that have come in?

MR. WALTON: With respect to what?

MR. GREENE: I'm going to object to any -- number one, it's not your deposition. Number two, that would fall within the joint defense privilege and I object to any response to that question.

MR. MOXON: Object to the --

MR. WALTON: I became aware --I can tell you I got a letter recently and it indicates from Mrs. Bartilson some supplemental documents were being sent out and I've not gotten anything, so...

Q. If you have read the Complaint and you have read the Cross-complaint then you know who I am with respect to this lawsuit?

A. Yes.

Q. Who am I with respect to this lawsuit?

A. You are a defendant.

Q. Do you know who I am with respect to any other Scientology-related lawsuits?

A. I don't believe you are a party to any other suits that we're involved in.

Q. Do you know anything else about me with respect to any other Scientology-related lawsuits?

MR. MOXON: Are you referring to the other Armstrong cases?

MR. WALTON: Q. Any Scientology-related lawsuit.

A. You have been deposed here, perhaps in the breach case in Los Angeles. I'm not certain of that, but we saw each other at a hearing at a trial involving Church of Scientology International in the spring of 1990 wherein Mr. Armstrong sought to appear voluntarily. Well, there was a subpoena served and there was a hearing on the matter, and to my knowledge we have never run across each other beyond that.

Q. Do you know if I ever represented Mr. Armstrong as his counsel in any Scientology-related litigation?

A. To my recollection Gerry testified that you were representing him during the settlement negotiations in 1986 providing advice to him in addition to the advice he was receiving from Mr. Flynn.

Q. Do you know of any other, any other specific cases where I have represented Mr. Armstrong as his counsel in Scientology-related litigation?

A. None that presently come to mind, but if I have forgotten something perhaps you can reacquaint me with it.

Q. Were you with the Scientology organization during the time that Mr. Armstrong appeared in his appeal?

Actually it was Scientology's appeal in what this group commonly refers to as Armstrong I.

A. Yes.

Q. What were you doing for Scientology during that

time period?

A. That was a long appeal. I was working in the legal department.

Q. What were you doing in the legal department at the time that the appeal was finally decided?

A. Refresh me. When was that?

Q. Do you recall?

MR. MOXON: Mr. Benz, I object on relevance.

We've spent a lot of time on background. I don't know specifically what he was doing at a specific time. If he would state the relevance to any of the allegations.

MR. BENZ: Mr. Walton?

MR. WALTON: Mr. Benz, I'm in a very peculiar position here. Scientology has sued me for three or four million dollars and they're basing that number on some litigation that's been ongoing for a dozen years, and I have not been a party to any of the prior lawsuits, Armstrong I, II, III and IV, with the exception of having represented Gerry in an appeal on Armstrong I. I'm going to want to know what it is, if I lose on this thing, if I'm a defendant I'm entitled to know what I'm defending against, and to begin with, I want to understand a little bit about this organization that's suing me. Gerry Armstrong and Scientology have a long

history. I have virtually no history with this organization. And to properly defend myself I'm going to have to find out some very basic facts.

MR. MOXON: Such as what this witness was doing?

MS. BARTILSON: It's a fraudulent conveyance action. He's a party to the lawsuit because Gerry committed property to him, that's why he's a party. The background information as to what this witness was doing at the time Gerry was appealing something else has absolutely no relevance to anything that's at issue in this case. This is a small and simple case. It's about property that was conveyed in 1990, that's how we eliminated the other discovery that's been done in this case.

MR. BENZ: From the standpoint that it alleges a conspiracy between the two, I think it would be relevant to go on to see what the witness knows about the association between Mr. Walton and Mr. Armstrong, since that's one of the allegations. To that extent, on that basis I'll allow that line of questioning.

MR. MOXON: We've not precluded that at all.

What he was asking was what particularly was the witness doing at a certain point in time.

MR. BENZ: As I understand it -- and correct me if I'm wrong and we can redirect your question -- but I

thought he was attempting to find out whether the witness was involved in the appeal and what the relationship was with Mr. Walton.

MR. MOXON: That question is fine. If the witness wants to answer that question, I have no problem.

THE WITNESS: I think the only question pending is mine which is when was the oral argument.

MR. WALTON: Q. But you are not asking the questions. If you don't remember, that's fine.

A. I remember generally. Early '91?

(Directed to Mr. Greene) Do you remember? It will help answer the question. If you don't want to answer, that's fine.

MR. GREENE: The opinion came out in October of '91. I was not involved in the litigation. The oral argument was in February.

THE WITNESS: That helps. Your question was what was I doing then?

MR. WALTON: Q. Generally.

A. I was working in the legal department.

Q. Did you do anything on the Armstrong appeal?

A. Yes.

Q. Can you tell just generally what you did?

A. Generally I worked with the lawyers and provided them with what information they needed in order to produce

the briefs and get ready for oral argument.

Q. Having said that, do you recall ever seeing my name on any of the pleadings that issued from Gerry's camp as his counsel on the appeal?

A. Now that you brought it up I believe that's correct.

Q. Do you know if Michael Douglas is a defendant in this lawsuit?

A. He's not a named defendant at this point.

Q. Do you know if Michael Douglas ever represented Gerald Armstrong in Scientology-related litigation?

A. Douglas is not a lawyer. I don't believe he represented him as a lawyer since he is not.

MR. MOXON: Are you referring to Michael Douglas, the former Scientologist?

MR. WALTON: Yes. I think the deponent had no problem recognizing which Michael Douglas I was referring to.

Q. Do you know if Kima Douglas is a defendant in this lawsuit?

A. Not at present.

Q. Do you know if Kima Douglas had represented Mr. Armstrong in any Scientology-related litigation?

A. I don't believe she's an attorney, so the answer would be no.

Q. Do you know who Andrew Armstrong is?

A. No, I do not.

Q. Have you ever seen the name Andrew Armstrong in connection with testimony that Mr. Armstrong, Gerry, has given in this litigation?

A. Perhaps as someone who received some of Mr. Armstrong's money, I have a vague recollection of that; otherwise, no.

Q. Is Andrew Armstrong a named defendant in this litigation?

A. Not at present.

Q. Do you know if Andrew Armstrong ever represented Gerry Armstrong in any Scientology-related litigation?

A. I don't think.

Q. Do you know who Gerry Solfvin is, S-O-L-F-V-I-N?

A. I may have seen the name, but otherwise I don't know.

Q. Would that have been in connection with one of the names that Mr. Armstrong testified that he had given property to?

A. I'm not certain.

Q. Do you know if Mr. Solfvin has ever represented Mr. Armstrong in any Scientology-related litigation?

A. No, I don't.

Q. Do you know who Laurie Eaton is, E-A-T-O-N?

A. Is that Laurie Phippeny?

Q. I don't know.

A. No. If they're different people, then no, I don't.

Q. Do you know if there's a Laurie Eaton, if a Laurie Eaton has been named as a defendant in the current litigation?

A. No, she hasn't.

MR. MOXON: Do you want to review the Complaint?

MR. WALTON: Q. Do you know who Nancy Rhodes is?

A. I've seen that name in this litigation. I believe it's Nancy Dincalci.

Q. Do you know who Nancy Dincalci is?

A. Yes.

Q. Has Ms. Dincalci been named as a defendant in this litigation?

A. No, not at present.

Q. Do you know if Ms. Dincalci has ever represented Gerald Armstrong in any Scientology-related litigation?

A. No, she's not a lawyer.

Q. And Bambi Sparks aka Laurie Phippeny, do you know who that is?

A. Yes, I do.

Q. Has Ms. Phippeny been named in this action?

A. You just reminded me of something. Laurie Ann as well as the Douglases, I believe it's come up through discovery, are the directors of Gerry Armstrong's corporation. So to that degree they would be defendants because the corporation is a defendant. I want to clarify that. But as individuals they may not be.

Anyway, Bambi, I believe, has been named as a defendant.

Q. Has she been served?

A. I actually don't know.

Q. During the time that Mr. Armstrong testified that he divested --of the people that he's testified that he divested to who were beneficiaries of his divestment, Michael Walton, that is me, is the only person who's been named and served in this lawsuit?

MR. MOXON: I object. The question is vague and ambiguous. I don't understand what you are asking. It's also compound.

MR. WALTON: Q. Do you understand my question?

THE WITNESS: I think she said something.

MS. BARTILSON: Misstates the witness's testimony.

MR. WALTON: Q. Do you understand my question?

A. Not really because it didn't seem to match what I said.

Q. I'm asking do you understand that Mr. Armstrong released his interest in certain property in 1991, 1990, 1991 and that's what gave rise to this lawsuit?

MR. MOXON: Again I object to the term "understand." I don't know if you are asking for his personal knowledge or allegations he has read based on Mr. Armstrong's testimony or a conclusion you may have drawn.

MR .WALTON: Let me try to make it more clear.

We'll get it clear.

MR. MOXON: I want a clear question, clear record.

MR. WALTON: What I'm trying to find out, of course, is why there's only one named and served defendant.

MR. MOXON: Why you are being sued?

MR. WALTON: Q. I understand why I'm being sued. I don't understand why no one else is being sued.

What I'm trying to get at is why Scientology selected me and if they did only select me because I represented Gerry on a prior lawsuit I want to get --

A. That's a question I can answer.

Q. Why don't I start with this, because Scientology has had information, specific testimony from Mr. Armstrong regarding other beneficiaries, I'm going to call those

people, who received property from Mr. Armstrong at the same time I did. Why has Scientology not filed a lawsuit against them?

A. At the time we filed the suit I believe the evidence we had is that you got the lion's share. You got the house, which was worth nearly half a million dollars and a substantial amount of cash. I'm not certain we knew of the extent to which any of these other individuals received property or money.

Some of the names, as we discussed them, I seem to recall the evidence in this case is they got small amounts. When we filed the suit that's the best evidence we had.

Now since then, as I said, I believe we've added Bambi as a defendant and perhaps, you know... Beyond that I don't know the answer to your question. If it was the government I would say prosecutorial discretion. We're not.

Q. I'm not sure that exists in civil law anyway.

Since the time of filing of the lawsuit, however, you have had an opportunity to take Mr. Armstrong's deposition; is that correct?

A. When you use "you," are you talking about Scientology?

Q. I'm talking about Scientology.

A. Sorry, I was talking through counsel.

MR. MOXON: It is confusing when you say Scientology. Maybe if you say plaintiff or CSI, identify it that way.

MR. WALTON: I thought we agreed in the beginning I could use it that way, but if it's confusing I'll certainly use "plaintiff."

Q. So plaintiff has taken Mr. Armstrong's deposition?

A. Yes.

Q. And plaintiff has found out, pursuant to a direct order I believe from the referee in this case, exactly what the property in general terms, the property was that Mr .Armstrong gave away?

MR. MOXON: I object. That calls for a conclusion that all the property that Mr. Armstrong gave away has been revealed. You are asking for a conclusion of the witness whether or not there's been a full disclosure.

MR. WALTON: Let's break it up.

MR. MOXON: You may have given away property, too, and I don't know what you have done.

MR. WALTON: I'm talking about the stuff he's testifying to.

MR. MOXON: Just what Mr. Armstrong testified

to?

MR .WALTON: Right.

MR. MOXON: Your question is did he read Mr. Armstrong's deposition?

MR .WALTON: Q. Did you read Mr .Armstrong's deposition?

A. Perhaps some of it, yes.

Q. Do you know or does Scientology know -- Do you know, let's start with that, do you know what Mr. Armstrong's testimony is as to what he gave away?

A. I'm aware he has testified to having given away money to various individuals, forgiven debts; he gave you the house; substantial amount of cash. As far as a specific memory quiz on how much, as I sit here I wouldn't be able to remember it. The deposition record would be a better reflection of that. But I do remember testimony to that effect, yes.

Q. Because I received the lion's share I was a named defendant. What about Ms. Phippeny, was she named as a defendant for the same reason?

MR. MOXON: I object to asking the witness what the reason was why someone was sued. I don't know what the relevance is. As to why you were sued, you got that information and it's, again, asking for a conclusion.

It's also potentially asking for attorney/client

privileged information. Obviously he is a representative of the parties and has had communications from counsel suing or not suing particular individuals, the relative strengths and weaknesses, and whatnot. So I also object on attorney-client basis.

MR. WALTON: I'm certainly not trying to invade the attorney-client privilege. However, to the extent that I may have been singled out for inclusion in this lawsuit because I represented Gerald Armstrong in a prior litigation, and to the extent that Scientology may understand that this lawsuit has little or no merit, to the extent that this may be an attempt to destroy pursuant to what the courts have called black PR --

MR. MOXON: Mr. Walton --

MR. WALTON: Please let me finish.

MR. MOXON: I understand what you are saying now. The witness already testified that you received the lion's share. In fact, I think the testimony was you received something in the neighborhood of 70 to 80 percent of the proceeds of the settlement. Now if you consider that's an inconsequential amount of money, that you received no benefit from it whatsoever, it was just given to you, that it wasn't a fraudulent transfer to you of virtually all of his property, well, if you consider that black PR you can have any conclusion you want.

MR. BENZ: May I suggest that we're departing from asking the witness questions and I'm not quite clear what the question was or what its purpose was. If you want to rephrase it and make it direct so he can have a direct objection perhaps I can rule on it.

(Record read back.)

MR. BENZ: I think it's unclear. I don't know what a lion's share is in any given meal. If you want to rephrase it.

MR. WALTON: Maybe I'll come back to that. Let me establish a couple more things here.

Q. Scientology, in its lawsuit, and your counsel just now indicated that Mr. Armstrong gave me a house that had a worth of $397,000.

MR. MOXON: I made no such statement as to value of the house. The witness testified earlier what he thought it might be worth. It's in the record.

THE WITNESS: What's your question, whether I was paying attention to what he said and heard the number or whether I have any knowledge of the value of the house he gave you for no consideration?

MR. BENZ: There isn't a question.

MR. WALTON: Q. I'm about to pose a question.

A. I thought you had asked it, I'm sorry. Go ahead.

Q. How did Scientology arrive at the sum of $397,000?

A. I'm not certain we did. My recollection is the value of the house is somewhere in the area of $400,000, give or take whatever.

Q. How do you have that figure in your mind?

A. I read it in a document.

Q. Do you remember which document?

A. I believe either a deposition transcript or property record. We do have the property records concerning the house.

Q. What would the property record have reflected that would have given you the idea it was around 400,000?

A. That's why I'm not certain. Whether there was testimony as to the value or whether that was indicated in any of the property records, I'm just not certain. I remember reading in a document that that was the approximate value of the house, as far as I know, that no one is disputing that.

Q. Could you have read -- could that have been in a loan document?

A. I don't think so.

Q. Would that $397,000 have included -- would credit for a mortgage owed have been included in that 397,000?

A. have no idea and I haven't adopted your 397,000. I said around 400,000. Your question is would that have included a mortgage? Is that the equity in the house or is that the overall value of the house, whatever?

Q. I'm trying to find out --

A. I'm not certain but my understanding is -- and it's approaching its limit -- is that Armstrong owned it free and clear -- but I'm not certain of that fact -- at the time it was conveyed to you.

Q. What's a dead agent pack?

MR. MOXON: Objection, relevance. Does this have something to do with the transfer?

MR. WALTON: Has to do with documents that I understand Scientology produced pursuant to a document request in this litigation.

MR. MOXON: Relevance?

THE WITNESS: Which you didn't receive.

MR. WALTON: I didn't receive, no. And I did receive this document; it was brought to my attention. I want to find out now if in fact it was a document Scientology produced and what it is.

MR. MOXON: Again, I object.

MR. WALTON: Q. Do you recognize --

MR. MOXON: Again, I object as to relevance.

The relevance is that it was produced?

MR. WALTON: It was produced, as I understand it, it was produced in a document request by Scientology.
Mr .Armstrong and Mr .Armstrong' s corporation requested certain documents responsive to this litigation and this was one of the documents that was produced. If it wasn't relevant, why did Scientology produce it?

MS. BARTILSON: They produced a lot of --

MR. MOXON: Can I ask the relevance other than you think someone else thought it might be relevant?

MR. WALTON: I want to find out --

MR. MOXON: If you don't know if it's relevant or not then I object to the relevance without a proper ruling.

MR. WALTON: Let's find out if Scientology produced it.

MR. MOXON: I'm sorry, I'm asking what the relevance is other than you think someone else may have produced it.

MR. WALTON: This is an allegation concerning me. I would like to find out about them.

MS. BARTILSON: In this document there's allegations concerning you?

MR. WALTON: That's correct.

MR. BENZ: I think Mr. Walton is entitled to find out whether or not this witness knows it was produced

in the document production in this litigation.

THE WITNESS: Your question, sir?

MR. WALTON: Q. Was this document produced in response to a document request in this litigation?

MR. MOXON: Hold on a second, let me take a look at it.

THE WITNESS: It appears to be a document produced in this litigation, yes.

MR. WALTON: Q. Could you tell me the origin of this document?

A. How's that?

Q. The origin, can you tell me the origin, where the document came from?

A. It came from us.

Q. Who prepared it? "From us," you mean the plaintiff?

A. Yes, the plaintiff. Various staff of CSI. This looks like my writing in terms of content. It's a typewritten document.

Q. Who would have directed this document to be produced?

MR. MOXON: Who would have?

MR. WALTON: Q. Who did, if you know?

MS. BARTILSON: Objection, assumes facts not in evidence that someone directed it to be written.

THE WITNESS: I don't remember. Save you a second question, I don't remember.

MR. GREENE: Why don't we mark this as an exhibit since you are asking questions about it?

(Whereupon Defendant's Exhibit number 1 was marked for identification.)

MR. WALTON: Q. What part of this appears to be your writing?

A. Or was in an earlier incarnation. The material from the Griffith Park tapes, the material discussing the breaches. The material concerning Ford Greene does not appear to be originated from something I wrote. And, again, as to the earlier portions of it it was either -- there was an earlier incarnation of this that this material came from a draft, if you will.

Q. This is a document entitled Who Is Gerald Armstrong. That's, I believe, your document number 200298
on page one. Is that Scientology-marked numeration?

A. If we produced it, which I believe we did, it would have been our Bates stamp. It goes, for clarity,
through 200302. Ford is happy with that.

Q. I understand that the section representations referred to attachments that were produced when this
original document was produced.

A. I don't remember. I see references to sections

but I don't remember.

Q. So this, when you did that production aspect of this document that you did, was that within the Legal Bureau?

MR. MOXON: Objection.

THE WITNESS: Try again.

MR. MOXON: It's vague and ambiguous.

THE WITNESS: I'm sorry, try again. I don't understand.

MR. WALTON: Q. I'm trying to find out if you don't really know where it was generated but you did some work on it and you don't know who directed it to be done, I'm striving to sort of figure out, narrow down where it came from.

A. I'm not tracking with you at all. Let's rewind and start over.

Q. Let's start over. If I repeat a question, forgive me.

Do you have any idea why this document was produced?

MS. BARTILSON: Objection, vague and ambiguous.

You mean produced to Ford Greene in this litigation?

MR. WALTON: Produced originally.

Q. Why did Scientology put together a document like this? Can you explain to me so I understand why?

A. It was compiled so we would have a concise statement so as to respond to Gerald Armstrong's many media appearances and other statements he was uttering in violation of his settlement agreement. So it was prepared so we would have a response to communicate the truth, things which Gerry tends to leave out of the things he says.

Q. This is a press release?

A. Where did you get that? Is the question is this a press release? No.

Q. What would you characterize this document as?

A. A pack of information.

Q. What is a dead agent pack?

A. I was wondering if you were going to get an answer to that. I assume that was part of the overruled
objection earlier, was the objection to your second question that you to before that? Is there one?

MR. MOXON: I object as to relevance. What's the relevance to this case what this term is?

MR. WALTON: I suspect that a Scientologist can speak for a long period of time without me understanding
anything that's going on because of the sort of sub-language that exist in Scientology, some of which I read and don't understand. I need to understand some of the basic things that go on, some of the basic language. I

just want to know what it is. If this is it, I want to know that, too.

First of all, I want to know what a dead agent pack is.

MR. MOXON: Again, I object. What's the relevance to this lawsuit? What does this term have to do
with this lawsuit? I don't understand.

MR. BENZ: I don't know what a dead agent pack is so I can't really rule on this except does it appear in here? Does it appear someplace? From whence does it come?

MR. ARMSTRONG: I would be happy to answer that.

THE WITNESS: As would I on the record. Gerry, you're not in deposition.

MR. BENZ: I need Mr. Walton to explain to me why he needs it defined.

MR. WALTON: From my understanding, but then, again, I'm not sure about this, a dead agent pack and
black propaganda are two ways that I'm told that Scientology attacks its perceived enemies, and there is an attack on me in this document that was produced as a response to a document production in this litigation. I'm trying to find out what this document is and why there's an attack on me in it.

MR. MOXON: There's no attack of you in this

document, for one.

MR. BENZ: If you want to ask something was this produced as part of a dead agent pack plan or something, fine. Without more on what dead agent pack means I can't --

MR. MOXON: Why don't we let the witness give a definition so we can get back to the deposition.

THE WITNESS: The phrase "dead agent pack" is slang. It refers to a pack which compiles the truth about
someone who's been telling lies, and the term springs from Sun Tsu's book on war and wherein he describes various different types of agents and one which he describes as dead agent is one who's been feeding lies whose lies have been exposed; and as an information source he is dead in the eyes of the individuals to whom he has been spreading false information.

That book was written several centuries ago. In those days he was dead more that just as an information
source. But today it's slang for information pack which, I if you will, communicates the truth about the individual in such a way that their credibility with the source to whom they have been spreading false information no longer exists.

MR. BENZ: Can I ask one question in case this comes up again? You are talking a pack?

THE WITNESS: P-A-C-K, package. This is a several page memo which would have documentation attached.

MR. BENZ: I wasn't sure about the word pack or pact, whatever.

MR. WALTON: Q. Is this a dead agent pack?

A. No, it's a cover write-up but there's no package of information with it.

Q. I'm sort of at a disadvantage because I haven't been served with these documents. It's my understanding there were a number of documents such as four, five, six, seven, eight, nine, number of sections that are referred to that Ford --

A. Ford doesn't indicate it's attached; just says "video available."

Q. In the original that was produced to Mr. Armstrong' s attorney, would you consider the original as a
dead agent' s pack?

A. As I testified, I don't remember if we produced the package of information that goes with it. If we did, I would have, yes.

Q. Is that the same thing as black propaganda?

A. No.

Q. Could you tell me what black propaganda is?

A. Black propaganda is what one is trying to correct when one compiles a dead agent pack. It's when

someone is spreading lies about someone to destroy their reputation. The way you deal with that is document the truth, and then the people to whom the black propaganda has been spread hopefully no longer believe the lies.

Q. Do you have any knowledge of the entities to whom this document was disseminated?

A. Not really.

Q. Are there any records to show what entities to whom this document would have been disseminated?

A. No, it no longer would have been kept. It would have been disseminated where needful to correct false reports. I don't remember to whom it was disseminated.

Q. On page Bates-stamped 200301, the last line of the fifth full paragraph, it says "Walton also knew of Armstrong's intention to breach the agreement and was thus fully aware of the fraudulent nature of the conveyance."

Do you see that line?

A. Yes.

Q. Is that a line that you wrote?

A. Possibly.

Q. Could you briefly outline what facts Scientology has in their possession that would support this statement?

A. There's a statement in the first half of the sentence and a conclusion in the second half. I assume
you want the first half. The second half of the sentence

flows from the first half; the basis for the second half of the sentence is the first half of the sentence. You want the basis for you knew his intention to breach the agreement?

Q. That's correct.

A. I saw you stand up in court when he tried to appear in the RTC v. YANNY trial of March '90 where we
outlined the entire argument of Armstrong striving to breach the settlement agreement. This was prior to him divesting himself of his assets to you.

There's also been deposition testimony from your co-defendant that you were aware of his breaches of the settlement agreement, at least some of them. So that's the basis for that. As I said, the second half of the sentence is a conclusion based on the facts underlined in the first half.

Q. Let's read the first half: "One of the recipients of Armstrong's assets was an attorney named Walton."

A. No, no, no, first half of this sentence:

"Walton also knew of Armstrong's intention to breach the agreement," that's what I'm talking about. Then the conclusion that flows from that is, "...was thus fully aware of the fraudulent nature of the conveyance."

That was a conclusion based on your knowledge of

his breaches of the settlement agreement.

Q. I'm sorry, I didn't quite understand your response. The initial part of the response had to do with
some incident where I stood up at a Yanny --

A. When Armstrong appeared, or sought to appear as a witness at the Yanny trial, you were there with him. I don't remember if you made an appearance but you were there in the courtroom with him. I believe you did introduce yourself. The entire argument of why he should not be permitted to testify was laid out and the fact that it violated his settlement agreement, et cetera. So...

Q. Who made that argument?

A. Counsel for the Church. I believe it was either Earl Grew or Bill Gresham, counsel for the Church, who was was trying that case.

Q. What did that indicate to the Church with respect to me in this litigation?

A. It indicated that you were aware of our position as regards Armstrong's breaches of the settlement
agreement. That's all I indicated at that time.

You asked what my foundation was for Walton also knew of Armstrong's intention to breach. I listed that as one of the issues because I happened to be there that day and saw you receive the information --

Q. Excuse me, let me --

A. -- of deposition question.

Q. You are confusing me. I don't mean to interrupt you, but I'm not sure how that indicia of that set of circumstances that you just testified to, is indicia of Armstrong's --

A. Intention to breach.

Q. -- intention to breach.

MR. MOXON: Do you have a question?

MR. WALTON: He's going to explain to me how it is.

MR. MOXON: If you want to ask a specific question... You are asking for a legal conclusion. You
asked for a fact. He gave you reasons why he believed that. It's been asked and answered. I object on that basis. If you have a specific question, go ahead.

MR. BENZ: I'II sustain the objection.

MR. WALTON: Q. Are there any other facts that Scientology has that indicate that I knew of, that I was
fully aware of the fraudulent nature of the conveyance?

A. Without limitations, because there's been discovery exchanged back and forth in this case and
there's been deposition testimony by your co-defendant that you knew of his breaches of the settlement agreement.

So I don't want to limit the evidence available in the case that's already on the record by way of this memory

quiz, but certainly there was that day in, I believe, March '90 that indicated his intention to breach and we argued that there was an active breach by his participation in that proceeding because of the sham nature in which he had arranged to be served with the subpoena. There was no valid reason for him to be there.

The judge, for whatever reason, saw fit to exclude him.

There has been deposition testimony from Mr. Armstrong of your knowledge of the breaches of the agreement. There has been --

Q. Can you be specific about that?

A. Page and line? Of course not.

Q. Not page and line, just generally what breaches was I aware of? We're talking about before the fact here.

A. I understand. As I sit here what I recall is his testimony that you were aware that he had no intention of abiding by the settlement agreement for his own reasons which he stated specifically. I don't remember, but it's in his deposition.

Q. As you sit here can you give me an example of one breach that you accused Mr. Armstrong of doing that I knew about in advance? I'm talking about specific breaches here.

MS. BARTILSON: Objection, relevance.

MR. MOXON: Asked and answered, also.

MR. WALTON: It hasn't been asked and answered.

The relevance is that every time Mr .Armstrong allegedly breached an agreement Scientology is looking to me for $150,000.

THE WITNESS: That's not true at all. No, what we're looking for from you, sir, I don't want you to --

MR. WALTON: If I am wrong --

(Whereupon a four-way conversation ensues.)

MR. BENZ: I don't think that question was clear, so if you can rephrase the question. I'm not going
to foreclose the area, but that particular question isn't clear and the reason it isn't clear to me, if I remember back that far, is you are not saying -- is the point in time and you are not making clear, you are not connecting up whether or not the knowledge -- when the knowledge of the breach was supposed to be.

MR. WALTON: Let's do that.

THE WITNESS: While you are looking through your notes might this be a good time for a break?

MR. GREENE: All agreed off the record?

(Brief recess.)

MR. WALTON: Back on the record.

Can I ask you, Mr. Benz, to direct one or the other attorneys to make objections instead of this double
tag deal?

MR. MOXON: I'm representing, Mr. Farny which he is entitled to individual counsel. She's representing the plaintiff, okay?

MR. WALTON: I'd also like a directive that when one person starts to talk he or she be allowed to finish what they are saying before there's any interruption. If it's inaccurate or there's some objections, certainly it may be appropriate to make it, but I'm not sure in the middle of someone speaking it's appropriate to jump in and interrupt.

MR. MOXON: I think that's a great idea.

THE WITNESS: Can we agree to the same thing with respect to my answers? A couple of times you jumped in
a bit early.

MR. MOXON: If you refrain from that we will appreciate it a lot.

THE WITNESS: I will only say I will do the best I can.

MR. WALTON: That's all I ask.

A. Mr. Farny, do you know when the Church of Scientology International was formed?

A. November 1981.

Q. Do you know if it operates under any other names?

A. Yes, one of our divisions is Golden Era

Productions, a registered dba for CSI.

Q. Any other dba?

A. I don't believe so. Wait, yes, perhaps there is one other called the Uniform Exchange. It's a division that acquires our uniforms and such. I think they have a registered dba. Other than that I don't think so.

Q. It acquires the uniforms?

A. Uniforms. We wear uniforms and it acquires it for staff in bulk, contracts with tailors to make them, such as that.

Q. When we first started this deposition there was some question as to what Scientology, when I used
"Scientology," what that meant. How many, if you know, how many Scientology-related organizations are there?

MR. MOXON: Object. The question itself is ambiguous. Related organizations? You mean other religions like any church of any religion is related in the sense there's churches? There are churches of
Scientology.

MR. WALTON: That's what I'm trying to find out.

I have Religious Technology Center, Church of Scientology International, Church of Scientology California. I don't know if there are any others. This is on a face sheet on an Appellate District Division. I'm just wondering. I'm trying to get an idea in my mind if CSI has some related

entity and where it is in the scheme of things.

THE WITNESS: Okay, now I understand. Your question is how many?

MR. WALTON: Q. How many are there, just approximately?

A. Approximately 1400.

Q. Are these described as separate churches or separate organizations? Could you explain to me?

A. Yes.

Q. Separate organizations?

A. Separate churches, separate organizations.

Q. Is there a sort of a mother organization, sort of one that controls all the others?

MR. MOXON: Objection, compound question.

THE WITNESS: And calls for a legal conclusion but I'll answer it anyway.

There is a Mother Church in the hierarchy that performs the function of the Mother Church regarding the
entire religion and its individual component churches, missions and groups. That organization is Church of Scientology International.

MR. WALTON: Q. The plaintiff in this action?

A. You got it.

Q. So CSI does not answer to any other organization?

MR. MOXON: Objection.

THE WITNESS: I don't understand your question.

MR. WALTON: Q. It is not controlled by any other organization?

A. No, it's not controlled by any other organization.

Q. It's a non-profit organization?

A. Yes, a non-profit religious organization.

Q. Do you know what Religious Technology Center is?

A. Yes.

Q. Does it have any relationship at all to CSI?

A. Yes.

Q. Was is its relationship?

A. Religious Technology Center owns the trademarks and service marks of Scientology. It licenses us to use those marks and is responsible for the purity of the technology of our religion.

Q. Could it for any reason withhold any of the service marks on any of the technology?

A. Yes. It's never done so with respect to CSI.

Q. With respect to CSI's sort of internal management is there a Board of Directors?

A. Yes.

Q. How many people on the Board of Directors?

A. Five.

Q. Do you know the names of those individuals?

A. Yes.

Q. Could you tell me, please?

A. Maybe six. Marc Yager, M-A-R-C, Y-A-G-E-R; Michael Rinder, R-I-N-D-E-R; Kirk Weilend, W-E-I-L-E-N-D;
Guillaume Lesevre, G-U-I-L-L-A-U-M-E, L-E-S-E-V-R-E; and Katherine Rinder.

Q. This is the current board?

A. There may be a sixth but I'm pretty certain that's all of them.

Q. Do you know if the board meets with any sort of pre-determined regularity?

MR. MOXON: I object to relevance. I don't know what the point is in a fraudulent conveyance case what the activities are of the board. We gave you their identity and the fact there is one, what further relevance is there?

MR. WALTON: Again, I'm striving to understand how the inner workings of this organization, plaintiff
organization, how it works in order to try to put together some defense. I don't have the facts, and if I specifically ask something and can't get an answer from the person that Scientology has provided, then I would like to know who to go to who may have the answer.

MR. MOXON: You have that question answered, so

would you move along?

MR .WALTON: We have?

MR. MOXON: You got their identities.

MR. BENZ: What you are asking is how often the board meets. Explain to me what the relevance is.

MR. WALTON: What I would like to know is how often they meet and if there are minutes of any of these
meetings that reflect the fact that the board has decided that these lawsuits should be filed. If this is not a board-sanctioned activity, then it's probably not a proper activity.

MR. MOXON: Completely irrelevant whether it's a proper or improper activity according to the board.

MR. WALTON: If the board has not approved it they may not -- whoever has done this may not represent the Church of Scientology International.

MR. BENZ: It may be relevant but I don't see it at this point in what's been said. I will say I do not
appear to have and do not know the contents of the Cross-complaint, if any. So I don't know whose
Cross-complaint it is and what it alleges. So I have no idea if there's any relevance on that and I have not attempted to memorize the affirmative defense here, but from what you have given me I'll sustain the objection.

MR. WALTON: Q. Do you know if the board keeps

minutes of its meetings?

A. Yes, I do.

Q. Do you know where the board meets, the physical address, the location of the board?

A. Did you say where the board minutes are or meets?

Q. Meets.

MR. MOXON: Objection, relevance.

MR. WALTON: Q. Do you know where the minutes are kept?

A. Of course I do.

Q. Where are they kept?

A. Kept in my file cabinet. I testified in the beginning that's one of my functions, to keep them,
maintain custody of them in my file cabinet.

Q. Do you know who the officers are of CSI?

A. Yes.

Q. Can you tell me?

A. President is Heber Jentzsch, J-E-N-T-Z-S-C-H; vice-president is Liesa Goodman; and Janet Weiland,
W-E-I-L-A-N-D. Liesa is spelled L-I-E-S-A.

Q. That's the same lady that's on the board?

A. No, there's no Liesa on the board. There's a Kirk Weiland on the board. That's Janet's ex-husband.

It's not relevant to this.

I'm the secretary. I have an assistant whose name is Leslie Browning. And the treasurer is Jonathan Epstein.

Q. I'd like to go over the specific allegations in the underlying lawsuit in this matter.

A. You mean the Complaint as opposed to the counter-claim?

Q. We don't even have to use the Complaint. I just need to know what the allegations are.

A. In this case?

Q. No, the underlying.

A. Underlying? I guess I'm not understanding you.

Q. Does Scientology, does the plaintiff claim to be a creditor of Gerald Armstrong?

MR. MOXON: Objection, calls for a legal conclusion.

MR. WALTON: I'm not talking about in the legal sense, but if they are a creditor I'm entitled to get that information. You see what's happened here is that plaintiff, Scientology, as I've said, has sued me for seven million dollars based upon, as far as I can tell, upon Mr. Armstrong's alleged breach of a settlement agreement in a lawsuit that's titled Armstrong I out in Los Angeles Superior Court, a case that was settled in 1985 or '86, something like that.

Again, as I understand it, based upon those breaches Scientology is claiming that Mr .Armstrong deposed of money. Using that, they say that they are a creditor.

What I want to do is I want to find out exactly what it is that Mr. Armstrong allegedly did with my participation according to parts of the allegation of the current Complaint that make me allegedly responsible for a seven-million-dollar debt. Is that clear? Does that answer your question?

MR. MOXON: No, you misunderstand the Complaint.

You don't understand.

MR. WALTON: I'm not understanding exactly what Mr. Armstrong has done that gives rise to a seven-million-dollar liability.

MR. MOXON: It's in the Complaint.

MR. WALTON: Which Complaint?

MR. MOXON: If there's some ambiguity about it you should file a demurrer.

MR. WALTON: In which Complaint?

MS. BARTILSON: He did, in fact. It was overruled.

MR. WALTON: In which Complaint?

MR. MOXON: In this case.

MR. WALTON: It's not set out, as far as I can

tell, in this Complaint.

MR. BENZ: Excuse me, if I can step in I think you are arguing with each other. If you have a question to ask, go ahead and ask it, then we can figure it out from there.

MR. WALTON: Q. Can you specifically delineate the alleged breaches of the contract that Scientology is
relying on in order to collect damages in this case that either Gerry or some entity related to Gerry has done?

MS. BARTILSON: Can I object? I'm going to object to this question, Your Honor, on the basis that the
breaches form the basis, as Mr. Walton has said in his roundabout way, for a lawsuit that is ongoing in Los Angeles. All those breaches are delineated in the Complaint in this action that have been provided to Mr. Walton and provided to Mr. Greene and Mr. Armstrong, and those breaches are all delineated there at great length, all the facts that are being litigated there.

I'm going to object to this action being used for discovery as to facts relevant to that action. This
is an action for declaratory relief based on the concept that once judgment is obtained in that case, we want to be able to obtain property that Mr. Armstrong fraudulently conveyed.

MR. BENZ: Is Mr. Walton a party to that Los

Angeles suit?

MS. BARTILSON: He is not.

MR. BENZ: I think Mr. Walton is entitled to go into the allegations of this Complaint. Included in the
allegations of this Complaint are the so-called, at least the general allegation of breaches in the other action. I understand it's not necessary that plaintiff try the case and become a judgment creditor in order to sustain this, but I think Mr. Walton is entitled to know the background upon which you are asserting an indebtedness, whether it's correct or not, and from that standpoint I would rule that he can go into what is the basis upon which you are pleading an indebtedness from Armstrong to the plaintiff.

MR. MOXON: The only point, Mr. Benz, is it's irrelevant at this point because we're only asserting in
this case there was a fraudulent transfer of money to Mr. Walton. That's what's relevant in this case. Whether or not there is ultimately prevailing in the other case or not is not relevant here at this point in time.

MR. WALTON: Mr. Benz, if I may?

I'm not sure that's what the Code says. It's a new Code. I'm trying to find cases that flush it out.
However, I would concede that counsel may be true, he may be correct if there were not the conspiracy allegation.

What the allegation is is that I conspired with

Mr. Armstrong to do these things that they allege in some lawsuit to which I am not a party, and based upon my conspiracy with him I'm brought in to the tune of 2.8 or 3.8 million dollars, which is substantially more than what the transfer was worth.

Now if you are talking about just an interpretation of the uniform fraudulent transfer act, that's one thing. What I'm trying to figure out is what exactly did I conspire to do. What I am being accused of
conspiring to do I don't know.

MR. BENZ: I will agree with counsel that we do not need to go into all the facts into which the LA suit
is based, but why don't you direct your question, then, to the allegation of conspiracy and the fraudulent transfer.

To the extent there's an overlap you are certainly entitled to go into it, but I will revise my current -- my previous ruling that you can go into the whole area, but just keep it in connection with this Complaint and the conspiracy complaint and get some nexus from this of what you are going into.

MR. WALTON: Okay.

Q. Let's look at this Complaint, Verified Complaint to Set Aside Fraudulent Transfers.

A. Do you have one for me?

Q. I don't. I'd rather you not look at the

Complaint. I'm just going to ask you questions regarding the Complaint.

A. A memory quiz.

Q. Does Scientology know why you sued me?

A. Of course I do.

(Whereupon a two-way conversation ensued.)

MR. BENZ: Stop, stop. You are both talking at once.

THE WITNESS: Sorry.

MR. BENZ: It's been my policy to try to wait and keep out of this until asked, but I am going to start
asserting when we start getting off the track. So Mr. Walton is entitled to go ahead and ask general questions and ask your recollection, if that need be, if that's the approach he wants to use.

So why don't you go ahead to the extent you want to ask questions with reference to the Complaint, that's fine.

THE WITNESS: Fine with me. I was wondering which way he was intending to proceed.

MR. WALTON: Q. With respect to conspiracy, Scientology has filed a Complaint and alleged a conspiracy
between Gerald Armstrong and Michael Walton, correct?

A. Yes.

Q. As you sit here, without benefit of looking at

the Complaint, I understand, do you have any facts or any information to support that allegation, only the conspiracy allegation? We're not taking about damages or breach of contract or any conveyance.

MR. MOXON: I object. Mr. Benz, I suppose we can do it this way, as Mr. Farny characterized it as a I
memory quiz. He can give whatever information he recalls.

He's here as a representative of the party. If we want to do that and not allow him to look at the Complaint and see what he knows, give him a grade, we can do that. I don't know what the point is if you want to get his best testimony. So I object to the procedure.

MR. BENZ: The question is unclear, anyway, and it's too broad. What supports the conspiracy. A
conspiracy is made up of various parts. You will have to go through each part.

MR. WALTON: Let's go back to the Complaint.

THE WITNESS: I can look at it now?

MR. GREENE: For the record, would you mind, Mr. Farny, specifying what Complaint you are looking at? I
believe there have been a couple of Complaints in LA.

MR. WALTON: We're looking at the Marin.

THE WITNESS: I don't know what Mr. Walton is looking at. I'm looking at the Verified Complaint To Set
Aside Fraudulent Transfers and For Damages; Conspiracy,

filed July 23, 1993.

MR. GREENE: That's fine. I just wanted to make sure the record is clear.

MR. WALTON: Q. Let's start with page two line number two:

"In or about February of 1990, Armstrong
began to take a series of actions which directly violated provisions of the agreement."

Will you tell me what those actions were?

A. Assistance to adverse litigants.

Q. Can you tell me which litigants?

A. Ones that immediately come to mind were Bent Corydon, Joseph Yanny. There are a few others. Vicky and Richard Aznaran; Malcolm Nothling; Denise Cantin and Sam Ochi. The latter two aren't actually litigants. Those are the ones I recall as I sit here.

Q. These are all in or about February of 1990?

A. No, some are later.

Q. Can you tell me about the ones just in or about February of 1990?

A. Prior to February 1990 he began with Corydon and Yanny and I believe Aznaran, but I'm not certain about that.

Q. What did he do to assist in Corydon, if you know?

A. Arranged for the voluntary acceptance of a

subpoena for deposition and gave testimony beyond that which was directly called for by the questions asked so as to actively and voluntarily support that litigant in violation of the agreement settlement. He may also have done other things.

In other words, he actively assisted him rather than just merely honoring whatever legal obligation he
would have had with respect to that litigation.

Q. What facts do you have to support that claim?

A. I've read the deposition transcript, Armstrong's deposition transcript. I was there the day we had the hearing concerning his motion --sorry, concerning his deposition. He came in with Corydon and his lawyer and appeared to be actively assisting them in preparation for the argument.

Q. Did you ever hear anything that was said between those parties?

MR. MOXON: Ever?

MR. WALTON: Q. At that time.

A. I did. Several times they were close enough to hear and I got the general sense that he was helping them.

He appeared to be like saying things along the nature of "they're going to claim this; they're going to claim that," but I don't remember the specifics of it as I sit here.

Q. What about with respect to Yanny?

A. That same day as that I remember waiting for the hearing; up comes one of Yanny's co-defendants and comes up to the group that was standing there, which was Gerry and Bent Corydon. And his lawyer shakes everybody's hand and it was apparent to me, because I was standing fairly close, maybe 20, 30 feet away, that they had been expecting this gentleman. And the gentlemen then handed Mr. Armstrong a subpoena. I could hear words to the effect: Here's your subpoena, Gerry. And they all burst out laughing having a great old time about the subpoena. It had arranged for him to be there to receive that. About a month or so later, if my time sense is correct, we had the hearing at the trial.

This incident I'm referring to was I believe earlier than February. My recollection is it was earlier
than February. It may have been February, I'm not certain of that, but just to be fair. In fact, I seem to recall in the fall of '89; it wasn't until the fall of '89, but I don't remember.

Q. With respect to Aznaran can you give me any specifics regarding Gerry's breach of the contract that
gave rise to this Complaint?

A. He worked as a paralegal on their lawsuit against us for quite a long time.

Q. Against "us"? You mean against Scientology?

What specifically, which cases or what matters?

MS. BARTILSON: Can I raise an objection?

I'm going to object, Your Honor, because Aznaran is specifically part of the Los Angeles action and is
being dealt with in detail there. We can ask the witness to do a synopsis, perhaps.

MR. BENZ: Glancing through the Complaint I think paragraph 45, plaintiff's request for punitive damages, states that defendants Walton, Armstrong and the corporation knew of Armstrong's obligation to plaintiff and knew that plaintiff's claim could only be satisfied out of the property.

So the fact that it alleges that defendant knew of Armstrong's actions, I think he's entitled to go into what the action and intended actions are.

MS. BARTILSON: These are all actions that took place after the transfer of the property, that' s why I'm having a little bit of a difficult time with it.

MR. BENZ: I'm having a little bit of a difficult time with the breath of the allegations here and
with the dates. So if you want to make it a cutoff date then I can rule on that. But the allegation for punitive damages does state knowledge of Armstrong's actions and intended actions, so he's certainly entitled to go into

that, what those actions are.

THE WITNESS: I'm a bit confused because what is being talked about is what acts he took. I think you used the word "actions" in relation to the lawsuit asking about the Aznaran action, so if we can get a clarification on that when you get back to your question I would appreciate it.

MR. BENZ: If Mr. Walton wants to inquire what

acts the plaintiff is referring to that Mr. Armstrong did, you may pursue that under the allegation -- because of the allegations in paragraph 45.

THE WITNESS: I understand.

MR. WALTON: Q. That's what we're doing now, just to make it clear. I'm trying to find out what it is that Scientology has alleged that Gerry has done and that I conspired with him to do. So I'm trying to start with the beginning which, according to this Complaint, was in February of 1990. And after I determine what it is that he's alleged to have done I'm going to try to find out how it is I conspired with him, just so you know where we're going.

A. All right. And your question was?

Q. I think we're up to Aznaran. We talked about Corydon and two incidents there, and Yanny. And I took it as one incident which was Gerry working for him as a

paralegal. And I think when we get these individual incidents out of the way maybe we can break them down.

MR. MOXON: I'm entirely confused. Do you have a question?

MR. WALTON: I'm trying to make it clear for your witness who seemed to be confused.

Q. Now we're at Aznaran. Anything other than his working for him as a paralegal?

A. How is that?

Q. You testified that Gerry breached the -- allegedly breached the contract by working as a paralegal
in the Aznaran case. Did I miss that?

A. I said that. That's correct.

Q. Is there anything else about the Aznaran case that Gerry allegedly did that allegedly breaches the
agreement?

A. As I said, he filed one or more declarations in that case as well.

Q. In determining damages, just so I understand it, in determining damages Scientology is sort of charging -- how does Scientology arrive at the damages number?

A. In which case?

Q. In the instant case.

MS. BARTILSON: Objection, calls for a legal conclusion.

MR. MOXON: Also attorney-client privileged communications.

MR. BENZ: You can clarify the question, Mr. Walton. Mr. Walton is entitled to know what the basis of
the damages is and if it's being computed at X dollars per Offense.

MR. MOXON: I agree. It's the way he's asking the questions.

MR. WALTON: Q. So how is it computed? Are the damages computed by offense?

MR. MOXON: Same objection.

THE WITNESS: Here's my understanding: We set forth in this Complaint the damages amount that we had calculated at the time we filed the most recent incarnation of the breach action in Los Angeles as it constituted itself at that time. That was based upon an amount set forth for violation of the liquidated damages provision to the settlement agreement, which was $50,000 per breach plus damages according to proof and punitive damages.

My understanding of the way the law works -- and I'm not a lawyer so it's going to be incomplete, I'm
sure -- but that each person to whom assets were transferred in a fraudulent manner would only be liable to the extent that they received assets. Now if I'm wrong

then I'm sure my counsel can correct me, but that's my understanding of one of the positions here as regards purely the fraudulent conveyance of it.

Now in regards to the conspiracy aspect we would have raised the issue of whatever fraud, pressure or malice was engaged upon on your part that gave rise to punitive damages in that aspect of it.

Now I probably misstated the law several times, but that's my understanding of the basis of damages in this case.

Q. So it's a 50,000-dollar-per-occurrence liquidated damage clause, that's the original underlying contract; is that correct?

A. That's one of the provisions. There is injunctive relief sought as well as damages according to
proof for violation of the provisions of the agreement that aren't pinned to the liquidated damages clause.

Q. Let's just talk about those damages that are pursuant to the liquidated damages clause. Can you do that?

A. Sure.

Q. Can you carve out those allegations that reflect occurrences which generated $50,000 in liquidated damages?

MS. BARTILSON: I'll object at this point Because he's asking him to enumerate what's in the Second

Amended Complaint in the Los Angeles action which is set forth there in each separate breach and which ones are connected with the damages and provisions and which ones aren't.

We can go through this exercise with this witness but I think it's a waste of time and I don't think it's particularly relevant at this point. Mr. Farny outlined the basis for damages in this action against this witness and it doesn't include the details of any of those breaches.

MR. BENZ: Mr. Walton, can you connect this up?

Why is it relevant here?

MR. WALTON: It's relevant, Your Honor, because again I'm trying to determine what it is. It's sort of like a two-part thing here. We have this underlying lawsuit to which I am not a party; I have no idea what's going on in that lawsuit. But based upon that lawsuit Scientology is claiming some three or four million dollars in damages all of which, not just a little bit of which but all of which they're claiming that I'm equally liable for. I don't know what they are. I don't know what it is that Scientology claims Gerry Armstrong has done, but whatever it is they're claiming he's done they're claiming that I have conspired with him to do it. I cannot even come close to defending unless I know what it is I'm

accused of conspiring to do.

MR. BENZ: Then will you tie your questions into the conspiracy?

MR. MOXON: I think he is misunderstanding the scope of conspiracy.

MS. BARTILSON: He conspired with Mr. Armstrong to enable to fraudulently divest himself of the assets. That's what's complained of in this action.

If you look at the Second Cause of Action, paragraph 42: "The defendant conspired and agreed to hide any and all future assets by Armstrong and his corporation. They agreed that Walton could take ownership of his assets of value." So long as Armstrong is breaching the agreement, that's the conspiracy alleged and it's alleged pretty clearly. It's not that he conspired with Gerry to breach the agreement. If it were that he would be a party to the Los Angeles action.

MR. BENZ: You have a conspiracy and a conspirator can be held liable for the whole thing and you
also have your punitive damage claim where you are alleging that Walton knew of the actions and intended actions against plaintiff.

What I'm asking -- and you are asking three million in punitive damages now. As far as the actions are
concerned I already said that those are relevant and

you can go into that. I'm still not clear as to why, what the relevance of each particular item of damage is.

MR. WALTON: I'm not sure either, Your Honor.

I'm sure what the relevance to me is is I'm trying to be able to address each of these allegations and sort of in order of what I consider of importance, and one of the things that is important to me is their value. As an example, it's my understanding -- and I'm trying to elicit that testimony -- Mr. Armstrong wrote a letter subsequent to this 19 --

MR. BENZ: Don't tell me that. Okay, go ahead, he wrote the letter but...

MR. WALTON: One letter that was copied to a number of people and I'm trying to find out if each of those copies was worth $50,000 or just the letter was worth $50,000. I'm trying to see how this figure of $3,800,000, $1,800,000 plus the sanctions that are set forth there and exemplary -- general damages of 1.8 million, exemplary and punitive damages in the sum of three million, I would like to find out what this 1.8 million dollars in damages is.

MR. BENZ: Okay, now that is alleged against you under this conspiracy clause and you are entitled to go into that. Okay.

MR. GREENE: Maybe it's a good time for lunch.

MR. BENZ: Do you want to take a lunch break?

MR. WALTON: Yes, please.

(Whereupon the deposition was adjourned for lunch.)

---o0o---

AFTERNOON SESSION

1:45 P.M.

---o0o---

MR. MOXON: Back on the record.

I just want to clarify one scheduling matter. I understand you haven't served Mr. Miscavige with a
subpoena so his deposition is not on.

MR. WALTON: Unless you are voluntarily providing him.

MR. MOXON: I don't have the ability to do that.

---o0o---

EXAMINATION RESUMED BY: MR. WALTON:

Q. So we were going to attempt to figure out what this 1.8 million dollars in general damages is enumerated in the Complaint. Do you know if the 1.8 million is a factor of multiplying $50,000 by the number of alleged breaches?

A. I believe it is.

Q. So could we go through the breaches in order sequentially from the very first one in terms of time until the last one?

A. Might be easier if we go through it working from the breach complaint in the order it appears there.

That's the easiest way for me to do it and I see another copy over there. We can do it chronologically but I think I'd be flipping back and forth in the document, although

it appears chronologically in the Complaint.

MR. MOXON: It's easier to work from the Complaint.

MR. WALTON: Q. Although perhaps we could, even through we wouldn't progress chronologically, we could make sure we have dates of each of these alleged breaches.

MR. MOXON: Do you have a copy of the Complaint?

MR. WALTON: This is the Verified Second Amended Complaint.

THE WITNESS: That's what I have.

MR. GREENE: For clarification, that's the combined, essentially the two Complaints, right, in LA?

THE WITNESS: That's right.

MS. BARTILSON: Are we going to make one an exhibit to make it part of this record?

MR. WALTON: Isn't it already part of record?

MR. GREENE: No.

MR. MOXON: Maybe you can adopt it and say here are what the basic allegations are and basic testimony and utilize that.

MS. BARTILSON: We'll stipulate that's what it is.

MR. MOXON: Cut a couple of hours going through it. If you have any specific questions about any allegations you can consider flushing them out.

MR. WALTON: What I want to get away from is relying on the allegations in the Complaint.

MR. MOXON: It's a Verified Complaint.

MR. WALTON: I know, but just as the allegations in this action were verified by the attorney in the office it's legalese, we know how they're produced. It doesn't give me enough factual information to intelligently respond. I have no idea what a lot of this stuff is and certainly those of you who have been in the Scientology business for a long time now –-

MR. MOXON: There is no Scientology legalese, as you coined the term earlier. This is just a legal complaint. Having an understanding of Scientology isn't required. If you have specific questions, why don't you ask the witness, that's what he's here for. Otherwise, it's pointless to have him read the Complaint.

MR. GREENE: Just ask the questions.

MR. WALTON: Q. I would like to know if you can give me the very first – in this case I think we're going to have to do it in chronological order – the very first breach of contract Mr. Armstrong allegedly did that gave rise to 50,000-dollar liquidated damages.

A. The first one he did and the first one we're suing on aren't necessarily the same thing.

Q. The first one I'm looking for, the 1.8

million –

A. The first one in the Complaint is assistance in the Aznaran case beginning in June of 1991. This is alleged in the First Cause of Action.

Wait a minute, wait a minute, hang on. It's the assistance to the Aznaran as alleged not in the First Cause of Action but the Second Cause of Action which encompasses his assistance to Aznaran and Yanny beginning on page seven.

Q. What kinds of assistance did he lend?

A. He filed a declaration in support of Yanny in the RTC v YANNY case.

Q. What is RTC?

A. Religious Technology Center versus Josheph Yanny.

MR. MOXON: Cited on page eight of the Complaint you have in front of you, Mr. Walton.

MR. WALTON: Q. Did he do anything else in this Yanny case?

A. He filed a second injunction -- I'm sorry, a second declaration and formed paralegal services for Mr. Yanny around that time in the summer of '91.

Q. So there are two declarations and paralegal services?

A. Yes.

Q. Is that one 50,000-dollar breach or three

50,000 breaches.

A. Second Cause of Action has one 50,000-dollar breach for the two declarations.

Q. Is there any 50,000-dollar damage claim for the paralegal services?

A. It appears to be included within this Cause of Action, but I'm just not certain it appears. So, yes,
although it's vague it specifically references the two declarations and references the paragraphs 7G and 10 of the agreement which concerned liquidated damages for disclosures.

Q. I'm sorry, I didn't quite get your testimony.

A. If you look at paragraph 32, that's the paragraph of the Complaint which alleges what paragraphs
of the settlement agreement were violated by the conduct alleged in this Cause of Action and that conduct is referred to in paragraphs 30 and 31.

Q. I don't mean to be rough about this, but this document was filed on behalf of Scientology by Scientology attorneys, and if you are finding it hard to understand what it represents you can certainly sympathize with me.

A. I came here to be deposed in the case in which you are sued in which we have alleged that you have conspired with Gerry Armstrong to receive his money for no

fair compensation. Nowhere do we ever allege that you conspired with him to breach the settlement agreement. He was doing that. What you conspired with him to do is make him judment proof, to stash his assets with you, survive the litigation and take it back or not at the end. So I'm having a little difficulty talking about another case I wasn't necessarily prepared to discuss today. I am more than happy to because I understand your reasoning for wanting to have the information, but if I have to refer to the Complaint which, including exhibits, stands nearly a half inch tall, excuse me if I have to do that. Do you see what I'm saying?

Q. I don't mind, but what I'm suggesting, I don't understand your answer.

MR. MOXON: Mr. Walton, your question was unclear also. You are asking him to combine both the liquidated and other damages in here. Obviously the liquidated damages, according to the Complaint --

THE WITNESS: If I can interrupt for a second?

Here's where I think I sent you off the rail is you asked me what Armstrong did with regard to Yanny and I answered it independent of a reference to this Cause of Action. Then we came back to finding that conduct within this Cause of Action, and two of the three instances I gave are expressed here; the third isn't.

So, one, I was asking what did he do, I was answering the third one. I saw what's reflected on the documents and I think that's why I threw you off with my original answer.

MR. WALTON: Q. As I recall in this morning's deposition I asked you – Let me ask you again. If I repeat, please forgive me.

Is it fair to say that this 1.8 million dollars is a factor of multiplying $50,000 by the number of alleged breaches that Mr. Armstrong committed?

A. I believe that is fair to say, although the numbers are expressed here and we can total them up. There are different types of damages alleged in the underlying Armstrong breach case. One is for disclosures of information, which is liquidated damages connected to that; one is for aid, and that's consequential damages according to proof. We're just talking about the liquidated damages here. I believe you are correct, although we can just take a calculator out and take what's expressed on pages 29 onward and add it up.

Q. Or we can go through each of the alleged breaches and multiply those by 50,000?

A. We just said the same thing.

Q. Let's find out what the alleged breaches are.

A. Fine.

MS. BARTILSON: I'm going to object. This is really harassing and unnecessary for this witness. All the
breaches are laid out in the Complaint. They are all there and you can take out a calculator and we'll take five minutes or we can sit this witness down for hours and hours of testimony for what? I think it's harassment at this point. We can do it; we'll sit here and do it.

MR. BENZ: I haven't seen the Complaint. Are there any specific questions that aren't covered in the
Complaint? If you want to test an allegation or something, fine; but if it's just listing them, if they're already there. . . I don't want to interrupt your taking of the deposition, but at the same time if you are just -- you say is this in the Complaint and the answer is yes, I
see that in the Complaint, we're not getting anywhere.

MR. WALTON: After we identify the allegation I would like to be able to ask questions about these
individual allegations. Simply reading a Complaint that some lawyer has prepared doesn't really tell me what happened.

MR. BENZ: I understand that, but you are not telling me what more you want. You are asking him, first
of all, to list it. If it's already listed then you can go ahead and read it out of the Complaint if you want it read into the deposition, but I don't know what you are

doing. I don't have the Complaint; I don't know where you are going and there's been an objection. Lead me or direct me.

MR. MOXON: If you want some clarification of further points in there why don't you ask rather than go
through --

MR. WALTON: I'll go through each of the Causes of Action and ask specific questions about specific
paragraphs.

THE WITNESS: That would nbe much more helpful to me, and I don't mean to be obstreperous.

MR. WALTON: Q. On page seven at line 13 -- we'll be talking about the Verified Second Amended
Complaint, Damages for Preliminary and Permanent Injunctive Relief for Breach of Contract in Superior Court, State of California, County of Los Angeles, BC 052395.

A. I'm on page seven.

Q. Line 13 says: "Armstrong's acceptance of employment by Yanny to work on the Aznaran's litigation is
a direct violation of paragraphs 7G and 10 of the Agreement."

Is this part and parcel of the alleged breach that gives rise to a claim of $50,000?

A. No, that's a claim concerning aid and

assistance. That's consequential damages according to proof and that was the third part of what I was talking about. The declarations are in the next Cause of Action.

Q. What was it that Mr. Armstrong did on this occasion that caused the breach?

A. He was hired by Yanny to help him put together a response to a TRO, preliminary injunction application we sought in a second suit we had in regard to Julian who worked in his office and helped prepare papers.

Q. Do you have any documents to support that?

A. The declarations that resulted from it as well as Yanny and Armstrong both admitted it.

Q. In the declarations specifically, do you know what declaration that is?

A. July 16th. I don't think they're attached.

Maybe they start later in the attachments, declarations of Gerald Armstrong, July 16th, 1991.

Q. Do you know what those declarations were in support of?

A. Mr. Yanny's opposition to our effort to seek preliminary injunctive relief against him representing the Aznarans because Mr. Yanny had been our former lawyer and to do so violated his duties as our attorney. He was subsequently disqualified from the Aznaran cases as their lawyer, in any event.

Q. Would you recognize the Superior Court case number if I showed it to you?

A. I'd recognize the case caption if you showed it to me, certainly.

Q. I'll show it to you. I'll show it to your lawyers first.

A. This isn't the one I'm referring to. This is the previous case.

Q. Anything else about this first Cause of Action other than the declarations in Yanny? Anything else he did, Mr. Armstrong did that Scientology was aware of?

A. You only gave a part of my answer in that question. Anything other than what I've said, that's what
I recall here.

Q. Let's move to the Second Cause of Action. The Second Cause of Action references two declarations filed by Yanny, executed by Armstrong filed by Yanny, paragraph 31.

Are these the same two declarations that you referenced in the First Cause of Action?

A. First Cause of Action doesn't reference the declarations per se. This one references an aid he gave in working as a paralegal in the preparation of them. This Cause of Action concerns -- let me finish -- the declarations, the disclosures in the declarations that resulted. So to the degree, yeah, they're the same

declarations we're talking about.

Q. So if I understand, it's these same two declarations that Mr. Armstrong gave Mr. Yanny, Mr.
Armstrong executed and that Mr. Yanny submitted to the court, those same two declarations give rise to the breaches that are claimed in the First Cause of Action and the Second Cause of Action; is that right?

A. Not precisely. The First Cause of Action concerns Armstrong's work for Yanny as a paralegal in
defense of that phase of the RTC v YANNY litigation. That work not only encompassed the preparation of the declarations, it's that assistance.

The declarations themselves, the disclosures of information in the declarations themselves give rise to the Second Cause of Action. We may be saying the same thing.

I want to make sure we're talking about different types of conduct in the First and Second and there are actually different claims for damages in the two Causes of Action.

Q. Let me ask you, other than the two declarations what other specific breaches is Scientology alleging that Mr. Armstrong committed in the First Cause of Action?

MS. BARTILSON: Objection, asked and answered.

He already listed them for you. The declarations were part of his answer.

MR. WALTON: I'm trying to find out specifically.

MS. BARTILSON: He already answered. I object.

THE WITNESS: What Mr. Yanny said was he was working in Yanny's office helping Yanny prepare papers to
resist our effort to get him disqualified from representing the Aznarans by way of an injunctive relief
in this case or through a disqualification motion in the Aznaran case.

MR. WALTON: Q. Scientology considers that a breach of the contract?

A. Yeah.

Q. Anything else specifically that you can think of?

A. That's what I recall sitting here.

Q. Before I move on to number three, the Third Cause of Action, in the Second Cause of Action is it fair to say this 50,000-dollar liquidated damages refers to the two declarations, result because of the two declarations that Mr. Armstrong executed?

A. Yes, it's one breach for that sphere of activity at that point.

Q. The Third Cause of Action, could you tell me what the alleged breach is in the Third Cause of Action?

A. Yes.

Q. Please do.

A. This concerns Armstrong -- excuse me, the noise is -- thanks, I was a little distracted.

MR. GREENE: My apologies. I will try to whisper more softly.

THE WITNESS: This is when he hired on with Ford Greene as a paralegal to work on the Aznaran case as a paralegal, both Ford Greene and another lawyer, John Elstead. These are the services he provided for them at that time.

MR. WALTON: Q. What services did he provide?

A. Paralegal services, assisting in the preparation of the case, that's how he has described it. That seems a pretty ample description.

Q. "He" who?

A. Gerry.

Q. I don't mean to be light about this but things like -- I'm still not sure exactly what it would be.

A. My understanding of it based on things Gerry has said in his deposition and such is that a compilation of documents for the case, assisting the lawyer, I would imagine helping to prepare drafts because I know he did that with Michael Flynn before the '86 settlement. I couldn't imagine he wouldn't be. That isn't necessarily something I know.

Q. You refer to the Aznaran case. Do you know what case that was? Is there a way to reference it so I can find it?

MR. MOXON: It's cited in the Complaint. I can point that out to you.

MS. BARTILSON: I would also add that part of our document production included deposition transcripts from the other action.

MR. WALTON: I didn't get a document production.

MS. BARTILSON: I understand that was your claim. I checked and it was sent to your office. I will
be sure you get it again. It's a document production that Mr. Armstrong testified to. At least perhaps a fairer thing to do, a more fruitful way to gain the information would be to depose Mr. Armstrong again, ask him what it was.

MR. MOXON: Mr. Walton, the card you just gave us is different from the address than what you put on the
Notice of Deposition. What is the formal address that you wish to have documents served to you in this case? We got a P.O. box on the Notice; you have an address on your card. We have been sending things to what you have designated.

MR. WALTON: I have never designated 707 Fawn Drive and I have continually gotten service things there;

in the middle of the night some guy on a motorcycle came by, all kinds of things. Either the Post Office box or Larkspur Landing will work.

MR. MOXON: We can't deliver to the Post Office.

MR. WALTON: The 700, everything to 700. It will keep it clean.

MR. MOXON: Why don't you file it in the record?

MR. WALTON: If it does any good I will.

MR. MOXON: You are required to do that.

MR. WALTON: I have. It doesn't seem to have helped so far. I don't want to argue about this. Let's move on.

MR. MOXON: You have been served with that material. We'll make another copy.

MR. WALTON: Where did you serve it? Do you have a Proof of Service?

MS. BARTILSON: Not with me.

MR. MOXON: I'll get it. Obviously you got some documents from Mr. Greene.

MR. WALTON: I did. I notice that there was a document entitled Lis Pendens, was the last lis pendens
that indicated a service not only to myself and Mr. Greene but a number of other attorneys, and, again, I didn't receive anything nor did the declarations indicate that any of the other attorneys did. All I'm suggesting, even

though you are sending things that maybe they're getting lost, not only with me but other people, as well.

MR. MOXON: I dispute that, just for the record.

Go ahead with the deposition, we'll make sure you're covered.

MR. WALTON: Q. So what was the last question?

A. What is the Aznaran case.

Q. You don't know the title?

A. Sure, page six lines 20 through 22 – actually 20 through 23, although it was subsequently transferred to Texas and had a different case number.

MR. MOXON: The paragraph you just questioned the witness about, Mr. Walton --

THE WITNESS: That's the title there.

MR. WALTON: Q. So all that other stuff aside, is there anything else specifically that you know about
that Mr. Armstrong did for Mr. Greene, specific stuff that he did?

A. That's covered in the Third Cause of Action, the one you are asking me about?

Q. Yes.

A. My answer encompasses quite a lot. There are specific acts that are complained of in subsequent Causes of Action that concern this. Beyond that, that's what I recall right now.

Q. The Fourth Cause of Action.

A. Speaking of the devil, here's one of them.

Q. On page nine paragraph 40 it says:

"In addition to the paralegal services which Armstrong has provided to Ford Greene and John Elstead on the Aznaran litigation, Armstrong also provided Aznaran with a declaration dated August 26, 1991 and filed in the Aznaran case."

Is the execution and filing of that declaration what Scientology alleges gave rise to a 50,000 liquidated damages?

A. Yes.

(Discussion off the record between witness and his counsel.)

MR. MOXON: Mr. Benz, can we take a break for a couple of seconds? I want to grab a copy of this
Complaint. I have a copy out in my car.

(Brief recess.)

MR. WALTON: Q. Let me just back track a second. On the First Cause of Action the date is alleged
to be June 1991 and July 1991.

A. That's right.

Q. When was the actual breach?

A. Beginning in June 1991, or thereabouts. Probably if you wanted to put a bright line on it, it was when Gerry traveled to LA with Yanny, but that seems to be

as good a bright line as any.

Q. Certainly traveling with somebody doesn't --

A. To LA to sign on as his paralegal and for the reasons set forth in the Complaint.

Q. When was that?

A. July.

Q. July 1991?

A. Mm-hmm.

Q. The Second Cause of Action seems to indicate the date July 16th, 1991, no?

A. No, that's the date of the declaration; doesn't say exactly when the hearings were that are referred to in paragraph 31, but they were in the summer of '91.

Q. So that breach occurred in the summer of '91?

The Third Cause of Action?

A. And continuing for as long as he worked there with Yanny, which I believe wasn't very long.

Q. Do you have any idea how long?

A. I think just the summer, but I'm not sure.

Q. The Third Cause of Action says on or about August of 1991 Armstrong began work for Greene's offices as a paralegal. That's the time that this Cause of Action accrued?

A. That's when it began. It continued up through the dismissal of the Aznaran case.

Q. The Fourth Cause of Action, the date is August 26, 1991; is that right?

A. Yes, and its subsequent filing, which was at or about that time, but it's the act of providing the
declaration that bears that date that was filed in the case.

Q. So that's one breach?

A. That is correct.

Q. It says at paragraph 40:

"In addition to the paralegal services which Armstrong has provided Ford Greene and John Elstead on the Aznaran litigation, Armstrong also provided the Aznarans with a declaration dated August 26, 1991 and filed in the Aznaran case."

So Scientology is considering that outside the paralegal services sort of definition as a separate
breach?

A. That being the declaration he filed?

Q. He didn't file it.

A. You are correct, executed it. Yes, the execution of the declaration is separate from the activity of
providing paralegal services but aren't necessarily exclusive of each other, but it's a separate activity.

Q. That gave rise to the 50,000-dollar liquidated damages?

A. "That" being the declaration?

Q. That filing of the declaration or execution of the declaration?

A. Yes.

Q. Do you have any knowledge about what was contained in that declaration, what kind of information?

A. I read it but as I sit here today, beyond the description that's contained in this Complaint, I just
don't remember. I haven't read it recently.

Q. Continuing in the Fourth Cause of Action, page ten line 20, it says: "In that declaration…" – referring to the same declaration we were discussing the last three or four minutes – " … Armstrong describes some of his alleged experiences with an concerning plaintiff and purports to authenticate copies of certain documents.

These actions and disclosures are violations of paragraph 7(G), 7(H), and 10 of the Agreement requiring Armstrong pay to CSI 50,000 in liquidated damages."

A. That's an accurate reading.

Q. Do you have any idea what documents Mr. Armstrong purported to authenticate?

A. I don't really remember as I sit here, but they're attached to the declaration, so it's easy to look
at them.

Q. Do you know if the declaration was an attachment to the Complaint?

A. It was not. The exhibits pick up with the next Cause of Action. First one is the Settlement Agreement itself, and the next exhibit picks up with the Fifth Cause of Action.

Q. Page ten, Fifth Cause of Action, shows that the Cause of Action accrued on or about March 19th, 1992.

A. Yes, that's what is says.

Q. Is that accurate?

MR. MOXON: Is the Complaint accurate?

MR. WALTON: Yes.

THE WITNESS: Seems to be, give or take a day or so.

MR. WALTON: Q. It indicates that

"On or about March 19th, 1993, Armstrong, acting through Ford Greene as his agent, transmitted a press release to various members of the media including Cable News Network, San Francisco Chronicle, San Francisco Examiner, and the Marin County Independent Journal."

Is there any documentation as to the alleged fact that Mr. Greene was Armstrong's agent at that time? Do you know of any?

A. He appeared for him as an attorney. This concerns the case we originally filed here in Marin County which became the breach case in LA, and that was filed about three weeks before that. In any event, by the next

day we knew because both of them were on CNN.

Q. Let me read further one more sentence, it might be easier:

"Said press release violated the Agreement in that it constituted disclosures by Armstrong, through Ford Greene as his agent, of his experiences with Scientology as prohibited by paragraph two."

When I asked you about the agency aspect, I think your response was at this time Ford Greene was his lawyer; am I correct?

A. That's what I believe I said, yeah.

Q. So this is a document that was disseminated after Mr. Armstrong was represented by Mr. Greene?

A. That's correct.

Q. And it was disseminated by Mr. Greene?

A. He's listed as one of the contact points on the press release, and I saw that he did give an interview to CNN. He wasn't really shying away from the media.

Q. This lawsuit you referenced is what lawsuit?

A. What became this one. If I can explain? On that date -- well, I think it was the beginning of March, around the first week of March we filed the breach action up here because we had attempted to enforce the settlement agreement in Los Angeles where the underlying case was originally pending, and the judge who took Judge Breckenridge's place was of the opinion that Marin County

had the jurisdiction over the dispute because that's where Armstrong lives.

We came up here in March and filed the action up here; got a TRO and then there was a motion to transfer the case. It then got transferred down to LA. While the litigation was pending Armstrong continued the course of conduct he had embarked upon, which is basically ignoring the Settlement Agreement which he didn't believe he was bound by, for whatever reason. We won't go into that now.

Moving forward to April of this year, we consolidated two lawsuits and that concerned all the
breaches into one Complaint which alleged them chronologically so we have one clean package that will be tried by the trial court. So even though we're now in the fifth of 20 Causes of Action, it happened during the course of this litigation.

Q. I'm sorry, when was that lawsuit filed, the first one?

A. The first week of March, something like that, March fourth.

MR. GREENE: February.

THE WITNESS: February '92.

THE WITNESS: All right, that makes sense, February.

MR. WALTON: Q. February '92?

A. Mm-hmm.

Q. So February '92 Scientology filed a lawsuit against Armstrong in Marin County?

A. That's right.

Q. In about March of '92, his lawyer disseminated a press release?

A. It was the day before the hearing.

Q. And Scientology is asking $50,000 liquidated damages for the dissemination of that press release?

A. For Armstrong's role in that, yeah.

Q. Moving on to the Sixth Cause of Action at page 12 paragraph 47, the dates of these allegations of March 19th and 20th --

A. Yes, that's what is says.

Q. Is it accurate?

A. To the best of my recollection, yes.

Q. So this is the same day and the day following the issuance of the press release?

A. That's right.

Q. As it says: "On or about March 19th or 20th, 1992, Armstrong and Greene, acting as Armstrong's agent, granted the media additional interviews which also violated paragraph two to the Agreement."

A. That's what is says. It goes on to give a quote from Armstrong in one of the interviews.

Q. It says: "Armstrong stated: I'm an expert in the misrepresentations Hubbard has made about himself
since the beginning of Dianetics until the day he died."

Is that the quote?

A. That's the quote.

Q. Is this quote part of the additional interviews that the Church found actionable?

A. Certainly one of them. The entire interview, the entire broadcast, the CNN broadcast which contains the interviews is attached as Exhibit C.

Q. Does the Church -- I'm not asking you to draw legal conclusions; if you can answer it, I would appreciate it -- this is the second time I've seen

"Armstrong and Greene, acting as Armstrong's agent, granted the media additional interviews which also violated paragraph two."

Is the Church taking the position that something that Mr: Armstrong's attorney might do is a breach of the contract?

MR. MOXON: Objection, misstates what's indicated.

MS. BARTILSON: And calls for a legal conclusion.

THE WITNESS: Do I wait or do I answer?

Not necessarily, no.

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MR. WALTON: Q. I haven't seen anything in here so far about Mr. Greene being Armstrong's lawyer. It may
be there.

A. He's not a defendant on this.

Q. What indication does the Church have that Mr. Greene is Armstrong's agent other than being his attorney?

A. Assumes the two exclude each other.

Q. Does it?

A. Not necessarily.

MS. BARTILSON: I'm going to object. Again, he's asking the witness to draw a legal conclusion about
what's agency and what's not.

MR. WALTON: I'm not asking about agency law.

MS. BARTILSON: Yes, you are, that's exactly what you're asking about. I'm going to instruct him not
to answer unless I get some kind of cross-order on that one.

MR. WALTON: He's already answered it. Let's go on.

Q. So it's not, with respect to this Sixth Cause of Action, it's not just the quote that Scientology finds actionable, it's the entire process of granting media additional interviews of which the quote was part; is that fair?

MR. MOXON: I would like to raise a general

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objection. If we're going to go through the Complaint line by line just reading the Complaint, it seems pointless and it's wasting everybody's time.

MR. WALTON: It's not wasting time as far as I'm concerned.

MR. MOXON: You can read the Complaint but everybody is paying for it.

MR. WALTON: But I want to ask questions about it. I'm trying to find out if there's anything else going
on here.

MR. MOXON: If you want to ask that, fine.

MR. WALTON: Q. Is there anything else going on here

A. You're asking me?

MR. MOXON: It says what it says. If you want to ask if there's anything outside what's stated in the
Complaint why not ask that rather than reading the Complaint. You are literally just wasting all our time. I have been sitting here patiently; I'm not patient anymore.

MR. BENZ: Let's go ahead with the questions.

MR. WALTON: Q. This action of Armstrong and Greene granting additional interviews, that's a 50,000 dollar liquidated damages?

A. It's Armstrong granting the interview, doing it.

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Whether Greene facilitated in helping to set it up, or whatever, I think that's what the lawyers intended when they wrote paragraph seven. Greene didn't settle this, Gerry did. That's the interview we objected to.

Q. What else did Mr. Armstrong say in this interview that you're objecting to?

A. Everything is set forth in Exhibit C. We don't have the outtakes from the interviews.

Q. I don't have Exhibit C, do I?

A. It looks thick enough that you probably should.

Q. Exhibit C is a copy of the interview?

A. Transcript of the interview, yes.

Q. This was considered one breach, $50,000. Okay.

Seventh Cause of Action on or about February 1992, how many dates do we have in here?

A. Several.

Q. We have a 50,000-dollar liquidated damages claim for?

A. Seventh is 250 for each of five disclosures which violated the agreement, 50 for each of the five.

Q. The first alleged in this Seventh Cause of Action is that in February Mr. Armstrong agreed to appear as an expert witness in some litigation; is that accurate?

A. Yes.

MR. MOXON: I object. If you want to read the

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Complaint -- my objection is we're doing exactly what you said you weren't going to do; you are reading the Complaint, asking what is said in the Complaint is what is said in the Complaint. It's been verified. If you want to ask him anything other than what's in it, that's fine. I want to move along. There's no point in sitting here while you read the Complaint.

MR. WALTON: Is there an objection that needs to be addressed?

MR. MOXON: Yes, I object. It's irrelevant.

MS. BARTILSON: And harassing.

MR. WALTON: What part is irrelevant? I'm going through the Complaint like I was sort of --

MR. BENZ: You are also asking him "is that right" as you read it. It's obviously right, it's there. If you mean is that there, it is there.

MR. WALTON: Meaning if it is there is it correct information.

THE WITNESS: Meaning did that happen or not? I believe.

MR. MOXON: Maybe I can handle all this with one question.

Mr. Farny, is there any part of that Complaint that isn't correct to your knowledge? Is there any part of the Complaint that isn't right?

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THE WITNESS: Subject to anything that might have been amplified through the discovery in the case for
which we have more precision now where we had just a generality then, I would say no. I am still satisfied with the Complaint as I was when I verified it. There's been no discovery taken since April. Yes, I'm satisfied with it.

MR. BENZ: If you want to use the Complaint as a takeoff for further questions, that's fine.

MR. WALTON: I would like to find out which 50,000-dollar liquidated claims go with which alleged
breaches.

THE WITNESS: That's easily set up. If I can be of help to you, beginning on page 29 it states which
Causes of Action we are seeking liquidated damages for, which Causes of Action we're seeking some other form of relief for. They are pretty succinctly set out here if you understand the difference in the types of aid and assistance to litigants, and there's disclosure of information. The liquidated damages comes from disclosure of information. So where you see a paragraph that alleges disclosure of information, that is going to translate over to page 29 and over into a liquidated damages claim. It's really simple.

MR. WALTON: Q. Bear with me for one more Cause

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of Action and maybe I'll become more clear, and if I don't then certainly I'll try another tact.

MR. MOXON: I'm certainly not trying to turn off any questions. At the same time, your reading something in the Complaint is unnecessary.

MR. WALTON: Q. Could you look at the Fourteenth Cause of Action, and it starts on page 20 and it describes a letter.

A. Yes.

Q. The sending of this letter Scientology has alleged entitles it to $950,000 in liquidated damages.

Can you explain that to me?

A. Yes, I can. The letter which is attached to the Complaint as an Exhibit E is nine pages long and
provides an extensive amount of information. Now each of the individuals designated in paragraph 87 received a copy of this letter, so it's the disclosure of information to those individuals at $50,000 a pop which totals 950,000.

Q. Do you know if that is attached to this Complaint?

A. It's Exhibit E.

Q. This is a letter dated December 22nd, 1992 addressed to David Miscavige care of Laurie Bartilson,
addressed to David Miscavige and all other individuals who participate in the control of Scientology in care of

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Laurie Bartilson. Is that the letter?

A. Yes. Essentially, yes, that is the letter.

Q. I see there's an extensive cc list.

A. So do I.

Q. Is adding up those names and multiplying by 50,000, is that how Scientology got to 950,000?

MR. MOXON: Objection, asked and answered.

THE WITNESS: Yes, with allowances for arithmetic inaccuracies, but I just looked through it and it looked correct.

MR. WALTON: Q. Do you know if Mr. Armstrong was represented by Mr. Greene on December 22, 1992?

A. I have no reason to doubt that he wasn't.

Did I do it right?

MS. BARTILSON: No. Try again.

THE WITNESS: Yes, I assume so.

MR. WALTON: Q. Scientology claims $50,000 in damages from Mr. Armstrong for copying his attorney a letter?

A. No, nor do we claim it for any of the cc's to us, either.

MS. BARTILSON: The agreement talks about aid to adverse litigants and their attorneys. Those disclosures made to those individuals form the bulk of the cc list are listed in paragraph 87, I believe it is, that Mr. Farny

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testified about. They're listed in the Complaint.

MR. WALTON: Q. Mr. Greene's name appears in paragraph 87?

A. Sure does.

Q. Maybe you can just tell me which names on this list does Scientology claim there's a 50,000-dollar breach?

A. I would like to have a short conference with my attorney before I answer that.

Q. Please.

(Discussion off the record between the witness and his counsel.)

THE WITNESS: I counted it three times. I can only come up with 850. I think Greene and Morantz
were on there in error because they were counsel of record, so there appears to be a typo.

MR. ARMSTRONG: You are doing good, Michael. Try those two names.

MR. WALTON: Q. How about Ms. Plevin?

A. No way. She was Corydon's lawyer and it was a breach to disclose it to her.

Q. She didn't represent Mr. Armstrong, to your knowledge?

A. From time to time. She has on a couple of occasions, but yeah.

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Q. Who's Mr. Elstead?

A. Aznaran's lawyer.

Q. Did he ever represent Mr. Armstrong?

A. Not to my knowledge. He represented the Aznarans and we're alleging Armstrong having worked for him was a breach. So disclosures of information certainly helped us out by putting the disclosures in writing, made it easier to prove.

Got any other notes, Gerry?

Q. I'm going to ask you to look again. This may be asked and answered. If it is, forgive me and we will go right past it. But look very carefully at the dates of this Complaint in terms of allegations and just confirm them for me that they're all accurate.

A. All the dates of all the allegations in this Complaint for this Cause of Action?

Q. The entire Complaint.

A. Very well. I believe we covered through seven.

MR. MOXON: Do you want to take a break while we do that?

(Discussion off the record.)

MR. BENZ: Back on the record.

MR. GREENE: Just for the record, what Mr. Farny, what you are going to do is first Mr. Walton is going to withdraw the last question and you are going to

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review the Complaint tonight and advise him tomorrow if there are any dated on the Second Amended Verified Complaint in LA that is inaccurate; is that right?

THE WITNESS: That's right.

MR. MOXON: And you are going to continue the deposition and you are going to conclude your part before Mr. Walton continues?

MR. GREENE: Sounds fine to me. No, this is not a tag-team deposition.

---o0o---

EXAMINATION BY: MR. GREENE:

Q. My name is Ford Greene. As you know, I represent Gerald Armstrong and The Gerald Armstrong Corporation who are defendants in this matter.

Notwithstanding the fact that your deposition has been taken dozens of times before and you have sat in on many more than that, I would like to clarify with you that if you don't understand the question that I ask you tell me because if you answer it I'm going to assume you understood the question that I'm asking. That sounds good to you, doesn't it?

A. Sounds good to me, although I don't think I've been deposed dozens of times. At least a dozen.

Q. It's Armstrong who's been deposed dozens of times.

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How old are you?

A. Thirty-eight.

Q. What is your birth date?

A. September 6th, 1955.

Q. When did you first become affiliated with any organization related to the Scientology religion?

A. December 1976.

Q. Where?

A. Church of Scientology, Mission of Riverside.

Q. From that point on was your affiliation -- and also, just for the record, I'm not going to adopt Mr. Walton's use of the term "Scientology." I'm going to use Scientology generically to refer to the Scientology religion at large and have that be distinct and separate from CSI or plaintiff, which is the actual litigant in these proceedings. Does that work for you?

A. That works for me.

Q. So, then, starting in December '76 was your affiliation with Scientology more or less continuous from that point?

A. Yes.

Q. When you first became involved with Scientology was that in consequence of taking a personality test?

MR. MOXON: Objection. Mr. Farny's religious practices are not relevant. For the purposes for which

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Mr. Farny is capable and competent to represent CSI in this deposition is relevant, but his personal religious practices, what courses he's taken, about any religious practice he's been involved in is not only irrelevant it's protected.

MS. BARTILSON: By privacy.

MR. GREENE: I disagree with you.

MR. MOXON: Just as Mr. Walton's religious beliefs wouldn't be an issue in this case.

MR. GREENE: I'm not asking Mr. Walton any questions, Mr. Moxon, I'm asking Mr. Farny questions with
respect to the depth and extent of his involvement with Scientology.

The reason -- please don't interrupt me; I didn't interrupt you -- the reason that is relevant is that it goes to his qualifications to serve, one, on the board as an officer of CSI; and, two, it goes to his knowledge and understanding of Scientology practices as certain matters with respect to the Scientology practices of fair game and other types of things have been alleged as being involved
in Armstrong's affirmative defense.

So for those reasons they're relevant. I'm not seeking to inquire into the truth or validity of whatever it is that Mr. Farny believes; that is clearly an area that is impermissible. I'm not asking him about that. I

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just want to know what he's done.

MR. MOXON: Sorry, Mr. Greene, but Mr. Farny's specific religious practices which is exactly what you asked are in fact protected. The issues you raised are not issues in this lawsuit. There's no practice of fair game in Scientology, nothwithstanding your allegations or what Mr. Armstrong has alleged. You can't just allege and turn this into a trial of the Scientology religion. This is a fraudulent conveyance case. Whether or not Mr. Farny has a belief or practice in Scientology doesn't matter.

It's completely irrelevant. And the extent to which he has practiced Scientology is protected. So whether or not you think it's relevant doesn't matter because it's protected. So I object on constitutional grounds and privacy grounds.

MR. BENZ: Can you tie it in?

MR. GREENE: I can and the offer is this:

Number one, the practice of fair game is alleged under the unclean hands affirmative defense of Armstrong's Verified Answer. The practice of fair game as ruled by the California Court of Appeal in WOLLERSHEIM versus SCIENTOLOGY is not a protected religious practice.

The information I am seeking to attain from this witness is foundational with respect to what it is that he understands about Scientology and what the basis is for

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his understanding and it's tied directly to the --

MR. MOXON: Cross-complaint?

MR. GREENE: Answer.

MS. BARTILSON: I'm going to object.

MR. GREENE: Wait, wait, wait, I'm sorry. I'm not going to go with what Mr. Walton did. There is one witness here that's been designated by the Church of Scientology International and I'm going to have one lawyer, not two lawyers. --

MS. BARTILSON: Excuse me, you interrupted me.

MR. GREENE: And I would like a ruling, Mr. Benz, because I believe that it's absolutely improper for two lawyers to be representing one witness who in response to Mr. Walton's generic "give me a witness for CSI" has been produced. I want one lawyer objecting. I don't want to get double-teamed and tag-teamed. It's improper and it's not fair.

MR. BENZ: Let me rule on the lawyer situation first. This is a designated witness and as such he is not appearing personally, and as such --

MR. MOXON: May I respond before you rule?

MR. BENZ: That's my opinion. Then you may go ahead and respond.

MR. MOXON: He does have personal rights here.

I am here representing him personally and as an agent for

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the Church. Mrs. Bartilson is representing the Church itself and the Church's interests per se.

MR. BENZ: The Church has no interest per se. It's not a party.

MS. BARTILSON: Yes, it is, Your Honor.

MR. BENZ: That is not the Church, that's the corporation, CSI.

MS. BARTILSON: Church of Scientology International is the --

MR. BENZ: It's the corporation.

MR. MOXON: We have not been double-teaming. This is an important issue. There's no reason why we can't both --

MR. BENZ: Let me ask this, then. One lawyer is going to be representing CSI, the plaintiff. Now if there's something that goes personally to the witness outside the scope of that, then the other lawyer is representing him in that; is that correct?

MR. MOXON: The objection here was of a privacy claim.

MR. BENZ: Privacy objection would be proper for his personal appearance attorney, but any objections that the corporation plaintiff has are party objections and will be handled by that party's lawyer; is that correct?

MR. GREENE: There's a problem here.

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MR. BENZ: There's been a very mixed bag as to who's objecting to what here.

MR. GREENE: Absolutely right, and I just know that both of these lawyers are from Bowles & Moxon. It's
not like they're separate counsel. Both these people are from the same law firm. And this witness was designated by them to speak on behalf of the corporation and that's what he's here to testify about.

There are matters that have been specifically alleged in affirmative defenses which stand and that's what I want to ask him about. I want to get from him what his understanding and background is with respect to his knowledge of the beliefs and practices of Scientology.

MS. BARTILSON: I would like to respond to that on behalf of CSI. Mr. Greene filed a Second Amended
Cross-complaint on behalf of Mr. Armstrong on which he made the allegations concerning fair game, and so on and so forth, referring specifically to paragraph 70. That and most of the other paragraphs in this Cross-complaint were stricken by the court as irrelevant and not necessary to the action on June 17th. I have a copy with the stricken paragraphs marked for Your Honor.

MR. MOXON: One other thing. With respect to the alleged double representation is Mr. Armstrong has sued individuals as well simply because they are

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Scientologists, so he has no compunction whatsoever as to suing individual members of the Church because of their affiliation. Mr. Farny certainly has some rights here not to be sued and not to be attacked by Mr. Armstrong.

MR. BENZ: We'll rule on that. Mr. Farny is not a party to this suit; is that right?

MR. MOXON: That's right.

MR. BENZ: I'm ruling that he may have a personal attorney and the plaintiff may have an attorney and the objections will be made appropriately: If it's a personal objection, it will be made by the personal attorney; if it's a party objection, it will be made by the attorney for the party.

MR. GREENE: Mr. Moxon is the personal attorney, right?

MR. BENZ: That's my understanding.

MR. MOXON: That's correct.

MR. BENZ: Then on the question itself, you are saying, Mr. Greene, that this has some basis in the unclean hands defense?

MR. GREENE: Unclean hands as well, which is the Sixth Affirmative Defense and also the Eleventh Affirmative Defense of duress and undue influence.

MS. BARTILSON: It's the same issue. It has been stricken, absolutely stricken by the judge. It's out

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of there.

MR. GREENE: I am talking about the Answer, Your Honor. You have a copy of the Answer there. I have a copy of the Answer here. The Answer stands.

MS. BARTILSON: Unclean hands can't be a defense for fraudulent conveyance of property. I don't see it.

Anybody can allege it but that doesn't make it --

MR. MOXON: Maybe we can cut through this. The question that gave rise to this whole debacle was asking
about what kind of Scientology tests Mr. Farny has taken.

That has absolutely nothing to do with these issues. That is a personal matter of Mr. Farny and has nothing remotely to do with even his allegation as to fair game.

MR. GREENE: Wrong. My position is, as I said it was before, that Mr. Farny's breath and extent of
involvement with Scientology is directly relevant to his knowledge of its practices as has been alleged in the Eleventh Affirmative Defense of duress and undue influence. The practice of fair game is an issue in this lawsuit. One who becomes affiliated with Scientology does not become aware of fair game right away; one becomes aware of fair game only after a certain amount of involvement and I want to emphasize this individual also is here as an official of CSI, and CSI claims to be the Mother Church.

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MR. BENZ: To the extent that you are going into the religious beliefs, et cetera, I don't think that's too relevant. I'm not ruling out fair play.

MR. GREENE: Fair game.

MR. BENZ: Fair game.

MR. GREENE: All the difference in the world.

MR. BENZ: I just thought of that having figured out what fair game is supposed to be. I'm not ruling that out. I don't think it's necessary to go into the detail on the joining and the membership in the Church, and the interest in that does not outweigh the right to privacy.

That's the ruling on that question.

MR. GREENE: Sorry, the interest in that?

MR. BENZ: The interest you may have in pursuing his knowledge of Scientology does not outweigh the right of privacy involved in that as to that particular question when he joined and that type of thing.

If you want to get into the activities of fair game, then we will look at that when we get there.

MR. GREENE: One thing I would request would be that your ruling would be without prejudice subject to me providing you with some written authorities and argument on that.

MR. BENZ: That's fair enough.

MR. GREENE: Q. Let me ask you this, Mr. Farny:

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How long was it from December of 1976 until the point that you first became active in wearing some sort of legal hat for Scientology?

MS. BARTILSON: Objection, vague and ambiguous.

THE WITNESS: For any organization of Scientology?

MR. GREENE: Q. Right.

A. Around 1977 I was doing analysis of FOIA documents, Freedom of Information Act. I think that's my
first involvement in legal affairs with the Church.

Q. Approximately when in 1977, first half or second half?

A. Latter half of the year.

Q. What was the name of the entity for which you were rendering those services?

A. Church of Scientology of California.

Q. How long did you do that analysis of Freedom of Information Act documents on behalf of CSI?

A. Few months maybe, if that long.

Q. From that point forward have you consistently been involved in one sort of legal capacity or another for an entity, whatever its name may be, that's affiliated with the Scientology religion?

A. No.

Q. Are you familiar with the particular meaning

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ascribed to the term, quote, "hat," close quote, by Scientology?

A. I'm aware of a couple of different meanings.

Q. Would you define those for me?

A. One is a description of job duties, the duties themselves or a compilation of material necessary to translate those duties.

Q. What's the other?

A. I gave you both: It's the duties themselves, one; and, two, the materials that train the person to do those duties.

Q. So to put it in my language, is it fair for me to say that one is basically a job description, one definition of the term hat; and the other definition of the term hat refers to the materials that are used to train the person to do the job?

A. That's accurate, yes.

Q. After the few months during which you worked in a legal capacity for CSI did you then move to a different legal capacity in your affiliation with Scientology?

MR. MOXON: I object to the relevance and privacy as to this.

THE WITNESS: I'm not sure I track, sorry.

MR. MOXON: What's the relevance? You've gotten all the background. With respect to his role, what he did

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and what his entire history is in the Church is not relevant to the fraudulent conveyance in this case.

What's relevant is he's been proffered as a person who's testified. He's been corporate secretary for a number of years.

MR. BENZ: I'm going to overrule the objection as being improper. I think if the objection is going to be brought it's going to have to be brought by the party plaintiff. You are not protecting him personally; you are protecting or objecting to something in connection with the party.

MR. MOXON: I object as to privacy. You are getting into his whole background in the Church.

MR. BENZ: The question wasn't his connection with his background with the Church; he is entitled to go into this since it is this witness that verified the underlying complaint in Los Angeles, or was it this one?

He verified one of these complaints.

MR. GREENE: He verified the Second Amended Verified Complaint in Los Angeles.

MR. MOXON: My objection is as to privacy. This is a period of over ten years prior to any incidents in this case.

MR. BENZ: The objection is overruled.

THE WITNESS: I'm not sure I understand your

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question because you said -- you talked about some legal capacity. Do you mean when is the next time I worked in a legal area?

MR. GREENE: Q. Let me rephrase it and back up.

What was your hat, in the first sense of the word, when you were doing the FOIA analysis?

A. Just that I was a volunteer. I was analyzing FOIA documents.

Q. There was no special designation or hat given to the services you performed at that time?

A. No, just working on that project. I was not an employee of the Church or any Church at that time; I was volunteering.

Q. What was the next job, whether you were a volunteer or otherwise, that you performed in connection with legal matters having to do with Scientology?

A. In 1979, the spring, I worked briefly for a few weeks assisting the lawyers on a case involving some individuals affiliated with the Church in collating and analyzing documents.

Q. What type of case was it?

A. What do you mean?

Q. What kind of case?

A. What kind of case?

Q. Yes.

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A. It was a criminal case.

Q. At this time were you -- Strike that.

Are you aware of a component that used to be part of Scientology that was known as the Guardian's Office?

A. Yes.

Q. Was the litigation on which you were working you just made a reference to your second job, as it were, involved with the criminal prosecution in Washington, D.C. of Mary Sue Hubbard and Ann Kello (phonetic) and Duke Synder and the rest of those people?

A. Yes.

Q. Now you worked with Mr. Moxon at that time, too, didn't you?

A. No, he was in D.C. The lawyers I worked with were out in LA.

MS. BARTILSON: Your Honor, I am going to raise an objection for CSI. References to the Guardian's
Office, and so forth, were all made in the Second Complaint and were all stricken by the court. We're very, very far afield and it was long ago. The corporation, that plaintiff, was not formed until 1981. None of the action that is alleged in this Complaint occurred before that. We're talking about what jobs Mr. Farny did as a volunteer on other cases in 1979. I think it's

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irrelevant.

MR. BENZ: Mr. Greene?

MR. GREENE: Again, this witness has been proffered by CSI to speak on behalf of the corporation. This witness verified the Complaint. I'm entitled to inquire of this witness what his knowledge is of what in the Answer we have alleged to be the practice of fair game.

Fair game I can go into and will go into. The relevance of Mr. Farny's Guardian Office activities is his knowledge of practices engaged in by Scientology that know no limit in terms of legal constraints or ethical constraints that the rest of the country lives by, and I am entitled to inquire of this witness specifically what his knowledge of those matters is and that's what I'm doing.

The particular litigation about which I am asking him questions and regarding which he worked resulted in guilty pleas to felony charges of obstruction of justice, of burglarization of federal governmental
offices, and the stealing of documents, and for these people to say that that kind of knowledge is not relevant when one another affirmative defense asserted by Armstrong is that the agreement that Armstrong is alleged to have violated constitutes a violation of public policy because

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it's an obstruction of justice and seeks to suppress evidence is all relevant to the approach of Scientology to suppressing any kind of information that may be damaging to it. And this witness has that kind of information and as Armstrong's lawyer I'm entitled to get it.

MR. BENZ: You are going to have to tie it in more closely to this lawsuit. I can see where it may be relevant in LA, but whether or not there may be a --

MR. GREENE: But you see, the thing here is the exact defenses that have been asserted in LA are asserted here and that defense primarily is that that agreement or 44 affirmative defenses worth is a piece of garbage, and one of the reasons why it's a piece of garbage is because of the reasons I just stated. So the tie-in is already there. If that agreement does not stand up, that constitutes a complete defense for Armstrong here and now.

So it is relevant and it is not at all to be truncated on the basis that Gee, that's in Los Angeles. What's in Los Angeles is also in Marin County.

We sought to coordinate this action with the LA action. That was opposed and CSI prevailed in this opposition.

MR. BENZ: It's my understanding that the court here ruled -- and maybe this can be clarified for me -- that the allegation of the indebtedness, the question of

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the indebtedness is being tried in LA. And this here is a question of fraudulent conveyance, not the question of the indebtedness or potential indebtedness; is that correct?

MR. GREENE: That's wrong. I'll get you the Answer in Los Angeles and the Answer here. I drafted them. They're the same Answers. The defense here is the defense to the contract. There is no question that the house was conveyed. The entitlement that CSI asserts to even bring the fraudulent conveyance action is predicated on having a claim. We say they don't have any claim because the instrument upon which CSI relies to assert such claim itself is void: That's what we're talking about.

MS. BARTILSON: The Court of Appeals has already discussed the very same issues about the validity of this agreement. Mr. Greene raised all 44 defenses when he appealed the injunction that we got in Los Angeles. The Court of Appeals, second district, said the agreement did not violate public policy and it upheld the injunction.

So to the extent he's driving in on this, he's chasing a fairy tale. However, Judge Thomas said this is a fraudulent conveyance action. You yourself limited my discovery when I was asking for financial records with Mr. Armstrong to 1990. That was the cutoff date, the bright red letter line you imposed on my discovery. Now

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he's trying to go back to 1977 to ask questions that are about things that are in a Cross-complaint that Judge Thomas has stricken.

MR. BENZ: The whole Complaint?

MR. GREENE: Absolutely not.

MS. BARTILSON: There are two sentences that he included and they have nothing to do with anything he
alleged. What he included are the first sentence of paragraph 69 and paragraph -- first part of 73. Here's the order.

MR. MOXON: We made a copy of this for you in case this certain thing came up with the parts of the Complaint that were stricken.

MS. BARTILSON: All that remains are allegations of a single declaration and discovery in this action and that's it.

(Brief recess.)

MR. GREENE: Mr. Benz, we've talked and what we've been talking about, and I'll run it by you, is maybe call it a day for today, give you a chance to look at this a little bit more because whatever your decision is is a very important one.

MR. BENZ: I understand.

MR. GREENE: I know you understood.

MR. BENZ: Can I ask a question on this?

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Looking at this Cross-complaint, which has been redacted or crossed out, et cetera, it appears that paragraph 55 that says that Cross-defendants, who I assume are CSI, have abused the process of this court in a wrongful manner to accomplish purposes, tah-dah, tah-dah, suppression of evidence, retaliation, etc. 55 is still in, as I understand it. 56 is in?

THE WITNESS: Is out.

MS. BARTILSON: I think nine through 58 was stricken.

MR. MOXON: 55 has not been stricken.

MS. BARTILSON: The motion to strike was granted as well as the demurrer. Nine through 54, those are
introductory allegations concerning abuse of process then go to the specifics.

MR. BENZ: As I understand it, 55 is still in, 56 is still in, 57, 58 are still in. Then we go up --

MS. BARTILSON: That's my understandings, yes.

MR. BENZ: And 63, but that just recites -- 63 says Judge Thomas on March 25, 1994 issued an order in
Armstrong Corp. Is that us?

MR. GREENE: That's us.

MR. BENZ: Sustaining Plaintiff's demurrer. Armstrong, that's this order here that we have?

MS. BARTILSON: A portion of 69 and a portion of

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73 is also stricken.

MR. MOXON: The error is on page 24. Half of 69 is in, half is out.

MR. BENZ: Which half is in?

MS. BARTILSON: The first half.

MR. MOXON: Page 24, part of paragraph on 69 page 24 is still in.

MR. BENZ: Which part?

MS. BARTILSON: Alleging the filing in the district court action.

(Discussion off the record.)

MR. GREENE: While you are taking a look at it, what I'm relying on is not limited, again, to the Cross-complaint. It's a little diverted looking at the Cross-complaint. What I'm relying on is the Answer and the affirmative defenses as well as Judge Thomas's ruling of March 25th, '94 wherein he indicates that with respect to granting the demurrer as to the Cause of Action for declaratory relief on the Cross-complaint he says that the issues that we were seeking a declaration on would be resolved in the underlying Complaint or in Los Angeles. So he has not by any stretch of the imagination excluded from his pervue the issues which we are raising here today.

MR. BENZ: When you say "today" --

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MR. GREENE: That's a different Minute Order.

The one I'm talking about is March 25, '94. And the one you are looking at is 6-17-94.

MR. BENZ: Is that a writ proceeding on preliminary?

MR. GREENE: Statutory appeal on preliminary injunction.

MR. BENZ: You want me to read the whole thing or see it?

MS. BARTILSON: Concerns an earlier Cross-complaint to which a demurrer was sustained which included a cause of action for declaratory relief.

MR. GREENE: Wanting to get a ruling from Judge Thomas on the legality of the so-called --

MS. BARTILSON: Fraudulent conveyance action.

MR. MOXON: So-called?

MR. GREENE: So-called.

(Discussion off the record.)

MR. BENZ: Anything else I should be thinking about?

MR. GREENE: No.

We're going to close for today. This deposition is not over. We'll resume tomorrow morning at ten.

MR. BENZ: Sounds good to me.

///

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(Whereupon the deposition was adjourned at 4:58 p.m.)

---o0o---

___________________

LYNN ROBERT FARNY

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CERTIFICATE OF DEPOSITION OFFICER

I, PENNY L. GILMORE, duly authorized to administer oaths pursuant to Section 8211 of the California Code of Civil Procedure, do hereby certify that LYNN ROBERT FARNY, the witness in the foregoing deposition, was by me duly sworn to testify the truth, the whole truth and nothing but the truth in the within-entitled cause; that said deposition was taken at the time and place herein stated, that the testimony of said witness was reported by me, a Certified Shorthand Reporter and a disinterested person, and was thereafter transcribed into computer-assisted transcription under my direction.

I futher certify that I am not of counsel or attorney for either or any of the parties in the foregoing depositon and caption named, nor in any way interested in the outcome of-the cause named in said caption.

IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of August 1994.

_______________________________
DEPOSITION OFFICER, CSR NO. 4724

I hereby certify this copy is a true and exact copy of the Original.

[signed Penny L. Gilmore]
DEPOSITION OFFICER, CSR NO. 4724

133

Scientology v. Armstrong

Deposition of Lynn R. Farny (Volume 1 of 4)

Search Armstrong's legal archive:

Armstrong 8

Armstrong 7

Armstrong 6

Armstrong 5

* On October 6, 1993, Armstrong 2 and 3 were consolidated. On September 12, 1994, Armstrong 2 and 3 were consolidated with Armstrong 4 under Marin SC No. 157680. All are now called Armstrong 4. On April 9, 2008, Armstrong 4 was consolidated with Armstrong 7.

Armstrong 4 *

Armstrong 3 *

Armstrong 2 *

Armstrong 1

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