8 Sept 95 - Colorado Hearing Part2

201

1 IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

2

Civil Action No. 95-B-2143

3

RELIGIOUS TECHNOLOGY CENTER,

4

Plaintiff,

5

vs.

6

F.A.C.T.NET, INC., et al.,

7

Defendants.

8

9

REPORTER'S TRANSCRIPT

10 MOTION FOR PRELIMINARY INJUNCTION

11

12

13 Proceedings before the HONORABLE JOHN L. KANE, JR.,

14 Judge, United States District Court for the District of

15 Colorado, commencing at 9:30 p.m., on the 11th day of

16 September, 1995, in Courtroom C-401, United States Courthouse,

17 Denver, Colorado.

18

19

20

21

22

DEBORAH A. STAFFORD, Official Reporter

23 P.O. Box 3592

Denver, Colorado, 80294

24 (303) 571-0530

25 Proceedings Reported by Mechanical Stenography

Transcription Produced via Computer

202

1

APPEARANCES

2

For the Plaintiff: EARLE C. COOLEY, ESQ.

3 Cooley, Manion, Moore & Jones

21 Custom House Street

4 Boston, MA 02110

5 TODD P. BLAKELY, ESQ.

Sheridan Ross & McIntosh

6 1700 Lincoln Street, 3500

Denver, CO 80203

7

ERIC M. LIEBERMAN, ESQ.

8 Rabinowitz, Boudin, Standard

Krinsky & Lieberman, P.C.

9 740 Broadway at Astor Place

New York, New York 10003

10

HELENA K. KOBRIN, ESQ.

11 7629 Fulton Avenue

North Hollywood, CA 91605

12

For the Defendants: THOMAS B. KELLEY, ESQ.

13 NATALIE HANLON-LEH, ESQ.

Faegre & Benson

14 2500 Republic Plaza

370 17th Street

15 Denver, CO 80202

16 KEN LIEBMAN, ESQ.

Faegre & Benson

17 90 South Seventh Street

Minneapolis, MN 55402

18

19 * * * * *

20 P R O C E E D I N G S

21 THE COURT: This morning a couple of documents were

22 filed entitled Nonparty Galactic Production's Motion to

23 Intervene and for an order to strike certain documents in the

24 District Court file together with the declaration of Ryland

25 Hawkins in support of the Motion to Intervene and for an order

203

1 to strike certain documents. I am not going to interrupt

2 these proceedings. We'll set that matter down at a later

3 time.

4 Are you ready to proceed with your witnesses?

5 MR. ABELSON: When Your Honor says a later time, do

6 you mean sometime today?

7 THE COURT: No, I don't mean sometime today. You

8 need a local counsel to enter an appearance here. Thank you,

9 sir.

10 MR. COOLEY: Your Honor, before we proceed I would

11 like to bring a matter to the Court's attention. We have been

12 unable to complete the search ordered by the court and allowed

13 by the court because Mr. Wollersheim refuses to provide us

14 with the password to five tapes which contain up to a gigabyte

15 or one billion bytes on each. We can't tell because we can't

16 access these tapes. We found an additional 335 or 336

17 infringements by continuing the search. We could continue

18 over the weekend. We have asked Mr. Wollersheim to allow the

19 search of these tapes with Mr. Kelley present and only counsel

20 present. And if no hits come up, they don't come up. If they

21 do, then we can find any infringing material. He refused to

22 do that. Even after the court was asked to permit counsel to

23 be present at all of the searches, they didn't take advantage

24 of that. Mr. Wollersheim didn't want Mr. Kelley to do that,

25 apparently, so he wouldn't have any restraint on making the

204

1 accusation against the integrity of the search.

2 MR. KELLEY: Your Honor, I object to this -- to that

3 at this point --

4 MR. COOLEY: I am not saying that about you at all.

5 MR. KELLEY: -- to that dispersion.

6 THE COURT: I am not going to get into that now. I

7 want to complete the testimony. If we need to follow up on

8 that to interrupt this proceeding to go into a question

9 whether Mr. Wollersheim is in contempt for not complying with

10 the order, I will go into it at that time, if I need it before

11 reaching a decision in that case, but I don't know. I want to

12 complete the testimony this morning. Did you want to resume

13 the examination of Mr. McShane?

14 MR. KELLEY: I think that's where we are, Your Honor,

15 if that's okay with the court.

16 THE COURT: Yes, it's fine with me.

17 Would you come back and you are still under oath.

18 MR. KELLEY: Before we do, because I am likely to

19 forget, we would like to offer the exhibits that were

20 identified by Professor Cleek last Friday, V, W, X, Y, Z,

21 double A, double B, double C, double E and double F.

22 MR. COOLEY: I had assumed once we invited the

23 Court's attention to exhibits, they were in unless some

24 objection had been made.

25 THE COURT: Okay. They are admitted. We'll check

205

1 with your exhibits, too, and they are in no objection.

2 MR. COOLEY: The confidential ones we are still

3 asking remain under seal.

4 THE COURT: Right.

5 CROSS-EXAMINATION

6 BY MR. KELLEY:

7 Q Mr. McShane, as I understand it, you contend that all of

8 the works that are in issue in this case are secret, and there

9 isn't a portion of them that is more secret than any other; is

10 that right?

11 A Well, as I explained earlier, all of the O.T. levels that

12 are relevant to the case at this time, O.T. I through VII, are

13 all trade secret, yes.

14 Q They are secret from start to finish, there is no

15 particular portion of them that you considered secret?

16 A There is no particular portion that we consider secret.

17 Q No particular portion that you consider more secret than

18 any other portion?

19 A No, I don't believe so.

20 Q Likewise, there isn't anything about the copyrighted works

21 that are in issue in this case that you consider to be the

22 heart of the works?

23 A Well, there are concepts within the individual O.T. levels

24 that I would consider our works, yes.

25 Q What do you consider to be the heart of the O.T. III

206

1 level?

2 A The actual technology on how to undo what was done to

3 every spiritual man.

4 Q Sir, let me ask you to take a look at your deposition.

5 A Certainly.

6 MR. KELLEY: Your Honor, the last time I checked, the

7 originals were not on file with the court.

8 THE COURT: No. You can publish the deposition

9 later. Going over this with the witness.

10 BY MR. KELLEY:

11 Q Mr. McShane, do you remember having your deposition taken

12 in this case last Thursday?

13 A Yes.

14 Q At that time you were under the same oath that you are

15 under now?

16 A Of course.

17 Q At that time did I ask you the following question and did

18 you give the following answer at page 20, beginning at line

19 19: "In terms of these materials is there any part of it you

20 would consider to be the heart of it, the most significant

21 part?" Your counsel said, "Part of what." I said, Part of

22 each O.T. level consisting of three basic categories which he

23 has described -- which you described yesterday?

24 A Right.

25 Q Answer: No. I mean -- see, I can't categorize them.

207

1 It's not like three different parts. It's all together which

2 makes up the level. You can't take one and not the other.

3 What Mr. Hubbard discovered is just as important as to how he

4 discovered to alleviate because you can't do one without the

5 other, true and correct?

6 A Yes, it is. My explanation to that --

7 Q Sir, I will ask you to answer my questions.

8 A Can I explain, Your Honor?

9 THE COURT: Your counsel will ask you on redirect.

10 THE WITNESS: Okay.

11 BY MR. KELLEY:

12 Q Now, it's true that R.T.C -- neither R.T.C. or the church

13 ever intends to publish these materials; is that right?

14 A That's correct.

15 Q Don't you think that if these teachings had substance and

16 were beneficial that they would survive the light of day and

17 in fact do better as far as the credibility of the Scientology

18 religion?

19 A If what? I am not following your question.

20 Q Don't you think that the credibility of the Scientology

21 religion would be improved rather than deprecated if these

22 materials were to see the light of day?

23 A No, not at all.

24 Q You have seen postings of various forms of the O.T.s on

25 the Internet, have you not, over the course of 1995?

208

1 A I have seen snippets and alterations, yes.

2 Q And you heard Professor Cleek state that he had seen all

3 of the O.T.s attached to the Fishman affidavit on the Internet

4 over the course of the year, did you not?

5 A I heard him say that, yes.

6 Q He brought with him exhibits that he downloaded just

7 before trial which contained most of the them, did they not?

8 A I haven't seen them, but he brought them.

9 Q Exhibit A -- could I ask that the witness be handed

10 Exhibit A?

11 A I have it, Mr. Kelley.

12 Q And that exhibit, sir, is the letter by your counsel to me

13 setting forth the key word list that you used to search my

14 clients' hard drive and other electronic materials?

15 A Yes, it is.

16 Q And it's true that no less than half a dozen names on that

17 list were selected because these were persons posting the

18 O.T.s on the Internet?

19 A I believe I testified in my deposition that they had

20 something to do with posting snippets or parts of the

21 materials, yes.

22 Q In fact Ray Ward had posted all or substantially all of

23 some of the materials; isn't that right?

24 A Well, I believe that from what I remember Ray Ward posted

25 one of the NOTS bulletins.

209

1 Q Once these are posted on the Internet, they can be

2 downloaded in seconds; isn't that right?

3 A I guess that's possible.

4 Q Has it come to your attention that there have been

5 reposting of O.T. I through VII in the last 48 hours?

6 A No.

7 Q Now, I think you testified that you thought someone could

8 do a knockoff or competitive Scientology operation using the

9 Fishman-Geertz materials, did you not?

10 A I think I said that somebody could try that, yes.

11 Q But nobody is doing it now?

12 A Not that I am aware of. That's not saying nobody is not,

13 but I am not aware of it.

14 Q And don't you think that putting aside for a minute all of

15 the postings on the Internet, that someone who had access to

16 all the books and newspaper articles that have been written

17 concerning the O.T. material could do the same thing?

18 A Like I said, I think they could try to do that,

19 Mr. Kelley. I don't know if they would succeed or not. They

20 could try it.

21 Q And one of the things that would enable people like that

22 to be successful would be their ability to declare that they

23 have the actual O.T. materials; is that one of the things that

24 you have said on direct examination?

25 A Well, I think what I said was that in order to succeed at

210

1 all they would want to have Mr. Hubbard's works.

2 Q They would want to be able to declare that they actually

3 had them and what they were doing was the real thing; is that

4 right?

5 A Yes, that's the reason they steal the materials because

6 they want to have the real thing.

7 Q If they declare to have the real thing, it's easy for you

8 to identify who was out there doing that, is it not?

9 A Well, they claim they have the real thing, and we

10 investigate and find they do, then we usually take action and

11 we usually end up in litigation unless they agree to stop.

12 Q And there is nobody out there claiming that now?

13 A Not that I am aware.

14 Q Notwithstanding the postings on the Internet over 1995,

15 there hasn't been a new operation in 1995, has there?

16 A Not that I am aware. What I think they are probably

17 waiting for is to see if these materials are going to become

18 public.

19 Q I would rather not have you speculate on what people might

20 be waiting for and answer my questions.

21 A All I am saying is it's possible though that they --

22 Q Sir, please just answer my questions.

23 A Okay.

24 Q Now, you testified concerning Exhibit 28 which purports to

25 contain all materials that are unpublished and in which the

211

1 R.T.C. claims copyright; is that correct?

2 A I am not sure which Exhibit 28 that is.

3 Q That is your exhibit. I will ask Mr. Case to hand that to

4 you, if he wouldn't mind.

5 A Okay, I have it. Now, what's your question, Mr. Kelley?

6 Q The question is isn't it true that that exhibit contains

7 every piece of material you contend is infringing regardless

8 of -- regardless of source?

9 A Yes, we contend this is the materials that we found from

10 the seizure that were infringing, yes, not all of it but it's

11 most of it.

12 Q Some of those include items that contain a very small

13 portion of the work that's in issue; isn't that right?

14 A Yes, there are some -- we found certain bits on the hard

15 drive because the hard drive was formatted, yes, just a little

16 bit of that.

17 Q Some of those contained things like newspaper articles

18 that have small snippets and quotes from the works, do they

19 not?

20 A No, I don't believe so.

21 Q Would you be surprised if among those there is the

22 Milwaukee Journal article?

23 A I wouldn't be surprised, no.

24 Q And from that exhibit you are not able to tell the source

25 of the materials, are you?

212

1 A From looking at what was in his hard drive?

2 Q Yes.

3 A No, I don't believe so.

4 Q Excuse me.

5 A Unless there was something before it or after it that

6 would identify where it came from.

7 Q You can't tell whether it's an anonymous upload from

8 someone outside the system?

9 A I don't think so.

10 Q Nor can you tell whether or not it's an E-mail from

11 someone outside the system?

12 A You can't tell, but I don't know what difference it would

13 make. We still consider it an infringement as he is under a

14 confidentiality agreement.

15 Q You don't know how it came onto the system and it could

16 have come in any of these ways?

17 A All we know he would have to put it into the system.

18 Q You know it was on the system and could have come from any

19 of those means; isn't that right?

20 A Many different means, it could be.

21 Q Now, the R.T.C. and the church has been itself outspoken

22 on issues involving Scientology, has it not?

23 A I am not sure what issues you are referring to.

24 Q Well, for example, the church's position on the validity

25 of the world of psychiatry.

213

1 A We are very outspoken on psychiatry -- the abuses of

2 psychiatry, yes.

3 Q You have been outspoken on what you call apostates such as

4 my clients, have you not?

5 A From time to time, yes.

6 MR. KELLEY: Mr. Case, could I ask you to hand the

7 witness Exhibit JJ. Mr. Case, it's the big folder. The one

8 that wouldn't go in a book. Sort of the tabloid newspaper

9 size.

10 A I have it.

11 Q What is this?

12 A This is a copy of the KSW News. A publication that R.T.C.

13 puts out.

14 Q When did that publication come out?

15 A There is no date on it. I think it was earlier this year.

16 Q What's the audience of that publication?

17 A Scientologists, parishioners, usually people who have

18 taken some form of training or processes within the church.

19 Q And that is prepared in consultation with the Church of

20 Scientology?

21 A I don't mean --

22 Q By the Church of Scientology International?

23 A Not necessarily.

24 Q Well, that basically details the raid that was done on

25 Mr. Erlich's premises back in February, does it not?

214

1 A There is an article here regarding that, yes.

2 Q And Mr. Miscavige, your chairman, appeared on Nightline in

3 1992, did he not?

4 A He appeared on Nightline.

5 Q One of the reasons he appeared was to respond to publicity

6 concerning the church which the R.T.C. felt held it up to

7 ridicule; isn't that right?

8 A I think there were a lot of issues that he want to do

9 respond to.

10 Q Including the fact that some amount of quoting of the

11 O.T.s out of context subjected the church to ridicule; isn't

12 that one of the reasons?

13 A I don't believe so.

14 Q In any event, he wanted to respond to what was considered

15 negative publicity about the church; isn't that right?

16 A He wanted the truth to be known to the public.

17 Q Let me ask you to take a look at Exhibit U.

18 A Okay.

19 Q And that is a magazine called Freedom?

20 A Yes, that's published by the Church of Scientology

21 International.

22 Q Yes, that's correct. It's done pursuant -- insofar as it

23 uses the name Scientology pursuant to the license by R.T.C.

24 A Yes, the Church of Scientology International is licensed

25 to use the trademark, yes.

215

1 Q And that has a very large mailing list, does it not?

2 A Yes, it does.

3 Q Incidentally, was it mailed to members of my law firm

4 after we appeared in this case?

5 A I have no idea.

6 Q This addresses various issues concerning Scientology,

7 including the psychiatric profession, the issue of apostates

8 and so forth?

9 A Freedom traditionally reported on various things of social

10 interest and public interests.

11 Q And the Church of Scientology, including the mother church

12 and the others, regularly published advertisements and

13 promotion seeking to proselytize, do they not?

14 A All religions do.

15 Q Could I ask you to take a quick look at Exhibit Q.

16 A Yes, sir.

17 Q And that is the article published in The Washington Post

18 on August 19, 1995?

19 A It is.

20 Q Now, in connection with the continuation of the Fishman

21 litigation after the church dismissed its claims that we have

22 talked about yesterday, did you come become familiar with the

23 document known as the Berger declaration?

24 A I am familiar with the Berger declaration, yes.

25 Q You made a study in that declaration earlier?

216

1 A I didn't consider it a study. I read it.

2 MR. KELLEY: Could I ask that the witness be handed

3 Exhibit N2.

4 A Okay, I have it.

5 Q Does that appear to you to be the Berger declaration that

6 was part of the record in the Fishman case that went up to the

7 Ninth Circuit and was referred to by the Ninth Circuit in its

8 opinion?

9 A Yes, it appears to be the same one.

10 Q The Ninth Circuit also refers to something called the

11 Calhoun declaration. Are you familiar with that?

12 A I have heard of it. I didn't see it to be familiar with

13 it.

14 Q You have never seen it before?

15 A I think I have. I just don't remember.

16 Q I will ask you, Mr. Case, to hand to the witness Exhibit O

17 which is bound like a deposition and see if you can confirm

18 that appears to be the Calhoun declaration.

19 A It appears so, Mr. Kelley.

20 Q Now, referring to Exhibit 28 and all of your review of

21 material seized from my clients' homes -- I want you to sum up

22 if you can the things we have been over already.

23 First, all of the O.T. material you found is the

24 attachments to the Fishman affidavit plus several pages of

25 O.T. II?

217

1 A Are you talking about during the seizure what we found in

2 Mr. Wollersheim's residence?

3 Q Yes, I am talking about the O.T. material in issue in this

4 case.

5 A Yes.

6 Q And to the extent you found other unpublished materials in

7 which you claim copyright, they are listed on Exhibit double

8 I, the letter from Mr. Blakely to me. If you want to take a

9 look at that to refresh your memory?

10 A I remember him writing that to you, and I remember reading

11 that. That that was true at the time although the search is

12 continuing every day.

13 Q As far as you know, that letter is still up to date?

14 A It was up to date as of the day it was written.

15 Q Have you found any additional materials in which copyright

16 is claimed that are unpublished?

17 A I haven't reviewed the 300 plus infringements that were

18 found over the weekend.

19 Q And as to these materials, you are not in a position to

20 say how my clients got them; is that right?

21 A Well, I can only say that they did not get them from the

22 church, and they were stolen at some point in time.

23 Q Beyond that, you are not in a position -- you don't have

24 any personal knowledge about how my clients --

25 A I think I had to have some personal knowledge, yes.

218

1 Q That's based upon the fact that they didn't get them from

2 the church and they were stolen from the church?

3 A It's also based upon my experience in litigating this

4 issue since 1985, and the fact that Mr. Wollersheim's

5 attorneys who represented him in California got them from

6 David Mayo, who got them from the thieves who stole them from

7 the company.

8 MR. KELLEY: Your Honor, I would ask to strike that

9 because it's clearly not personal knowledge.

10 THE COURT: All right. Motion is granted.

11 BY MR. KELLEY:

12 Q Now, just to further sum up, as to all of this material

13 you have no knowledge of -- no knowledge that my clients,

14 other than through Mr. Lerma at the beginning of August,

15 posted any of these materials to the Internet; is that so?

16 A Yes, Mr. Lerma did so, yes, as a director of F.A.C.T.Net.

17 Q You have no knowledge of any other postings to the

18 Internet by my client?

19 A I believe he did post some things earlier and got a cease

20 and desist letter from one of R.T.C.'s lawyers.

21 Q Who did?

22 A Mr. Wollersheim.

23 Q Posted O.T. materials?

24 A I don't recall. I don't think it was O.T. materials. It

25 was some copyright materials.

219

1 Q And you have no evidence of any other transmissions or

2 releases outbound of any of these materials other than the

3 Lerma posting; isn't that right?

4 A Other than I guess what he has testified to in his

5 deposition -- as to what Mr. Penny has testified to.

6 Q You say -- I am talking about the O.T. materials in this

7 case.

8 A I am not aware of any, as I said here, no.

9 Q As to those particular materials, you are not aware of any

10 outbound transmissions other than the Lerma posting?

11 A Only that they were contained in his databases. From what

12 I understand, his databases were given and sold to people.

13 Q And you have that understanding from, what, depositions of

14 my client?

15 A Yes, and I believe he testified and Mr. Penny testified to

16 the fact -- I don't have the transcripts -- I believe that

17 they sold the materials or gave the materials to other people

18 to either hold or to use.

19 Q I have read those depositions, and I want to know if you

20 are telling the court that you read them and understood them

21 to mean that the O.T. I through VII materials were subject to

22 what you just said?

23 A My understanding is that they were in his databases which

24 were given to people and contained within the databases what

25 we found were the O.T. materials.

220

1 Q Now, you have testified that you believe in the teachings

2 of Mr. Hubbard?

3 A Yes, I do.

4 Q You believe that in every respect the teachings of

5 Mr. Hubbard should be followed?

6 A Sure.

7 Q And you have heard Mr. Hubbard counsel Scientologists to

8 lie, if necessary, for the benefit of their religion?

9 A I have never heard that, sir.

10 Q You have heard Mr. Hubbard counsel that the purpose of a

11 lawsuit is to harass and discourage rather than win or words

12 to that effect?

13 A Yes, we discussed that in my deposition.

14 Q Sir, yes or no.

15 A Yes, I heard words to that effect.

16 Q You also heard counsel in words to this effect, "don't

17 ever defend, always attack" in the same context as that prior

18 statement, have you not?

19 A I have heard that, yes.

20 MR. KELLEY: If I could have just one moment, Your

21 Honor? No further questions at this time. Thank you.

22 THE COURT: Redirect, please.

23 REDIRECT EXAMINATION

24 BY MR. COOLEY:

25 Q Mr. McShane, you have been asked a number of questions

221

1 about the totality of the material on the O.T. levels and

2 whether any portion of it is considered not to be secret.

3 Let me ask you this. Are you aware that the

4 defendants are in this case making a claim that your upper

5 level materials cannot be treated as trade secrets because of

6 what has been in the media?

7 A I am aware that that's their claim.

8 Q And do you consider that the secret of the upper level

9 materials has at any time been exposed in the media?

10 A No, I do not.

11 Q Why is that?

12 A Well, as I earlier testified to previously, there have

13 been snippets here and there but never the trade secret.

14 There are bits of it that are not trade secret that are known.

15 Q To the extent that there has been a crossover on the

16 lines, have you gone after in litigation anyone who has

17 attempted to publish the actual trade secret?

18 A Yes.

19 MR. KELLEY: Asked and answered, Your Honor.

20 BY MR. COOLEY:

21 Q And what has been the result of that?

22 MR. KELLEY: Asked and answered.

23 MR. COOLEY: I didn't hear the answer. Maybe I am

24 deaf.

25 MR. KELLEY: We went through all that on direct.

222

1 THE COURT: You did cover this on direct examination.

2 MR. COOLEY: Now, there has been a whole reopening of

3 this issue.

4 THE COURT: He is saying that you asked on direct and

5 he answered on direct, so there is no reason to be coming back

6 into it now. If you want a little leeway, go ahead.

7 MR. COOLEY: I appreciate that, Your Honor.

8 THE COURT: All right.

9 BY MR. COOLEY:

10 Q Isn't some of the information that Mr. Hubbard discovered

11 about the upper level materials public knowledge?

12 A Yes.

13 Q And is that any part of the secret, the part that is

14 public knowledge?

15 A No, of course not.

16 Q When Mr. Hubbard made the discovery in 1967 of what became

17 O.T. III, did he announce it to Scientologists around the

18 world?

19 A Yes, in a recorded message that went out to all

20 Scientologists.

21 Q What did he say?

22 A Well, Mr. Hubbard explained that there was a great

23 catastrophe that occurred 75 million years ago that left this

24 planet a desert and that he had found the way out to undo

25 that. The fact that -- he even said that not to worry, that

223

1 the people who caused that great catastrophe were no longer

2 around. And that he had discovered a way to unravel the

3 harmful effects that were done at that time period.

4 Q That has always been broad knowledge?

5 A Of course.

6 Q Has that information ever been confidential that you have

7 just recounted?

8 A No.

9 Q And do the uniforms of the Sea Organization itself reflect

10 that information?

11 A Yes, they do.

12 Q In what way?

13 A Well, the uniforms are designed to reflect the Galactic

14 confederation, which we believe existed many, many years ago.

15 In fact on our hat that we wear have a emblem on it which is

16 published in our technical dictionary. It has a lower wreath

17 with 26 leaves on it and those stand for the 26 planets that

18 existed in this sector of the universe. The star itself

19 that's on the emblem reflects the spirit and we wear those as

20 a symbol of what we stand for, who we are.

21 Q When Mr. Hubbard mentioned in 1967 that this concerned, an

22 event that happened 75 million years ago, was there any

23 concern that this would turn off Scientologists or people

24 because it concerned something that would seem like

25 scientific?

224

1 A No, not at all.

2 Q Why not?

3 A Because it was an event that occurred that he wanted the

4 public to know about. People always asked questions about

5 what happened to man and how man was created and how this

6 planet was created. And talking about that in the past has

7 always been of interest to many, many people.

8 Q Well, now, does any of that tell the actual secret of O.T.

9 III?

10 A No, not at all.

11 Q And do you have in front of you the -- well, we'll come to

12 that in a moment. Is there any inhibition about talking

13 freely to a Scientologist about the fact that this incident

14 happened 75 million years ago which destroyed this planet

15 without divulging the secret of O.T. III?

16 A No, not at all. It's general knowledge.

17 Q In fact, is there a novel called Revolt in the Stars that

18 was written by Mr. Hubbard as a screen play?

19 A There is a script that's written by Mr. Hubbard, yes.

20 Q And does it talk about events in bringing people to earth

21 and so forth 75 million years ago?

22 A Yes, absolutely.

23 Q Is that a copyrighted unpublished work of Mr. Hubbard?

24 A Yes, it is.

25 Q R.T.C. doesn't own that copyright, I take it?

225

1 A No, we don't.

2 Q And is that the reference -- and that is that

3 fictionalized version of the events of 75 years ago?

4 A Yes, it is. Mr. Hubbard took the events that occurred

5 and developed a story around it as many novels and movies have

6 done in the past.

7 Q And is that what is set forth in that screen play, O.T.

8 III?

9 A No, absolutely not.

10 Q Could you audit or receive all the auditing or deliver the

11 auditing of O.T. III from that script?

12 A No.

13 Q Could you receive, audit, organize, deliver the auditing

14 on O.T. III from anything that has been published in the

15 newspapers?

16 A No. Like I think I said, I could try, but I wouldn't be

17 very successful.

18 Q Is O.T. III the section O.T. III course itself?

19 A The O.T. III stands for section O.T. III. That is one of

20 the levels, one of the O.T. levels in the church.

21 Q And is it the trade secret in the technology?

22 A Yes, it is.

23 Q And is the reference in the -- is the recounting in Revolt

24 in the Stars the screen play the exact incident?

25 A No, it's not the exact incident at all.

226

1 Q And is it as I say a fictionalized account?

2 A Yes, it has some names and obviously the events that

3 occurred. Everything else is fiction.

4 Q It has a lot of names of Hubbard?

5 A Absolutely.

6 Q Is it similar to the burning of Atlanta being real with

7 Gone With the Wind, but Rhett Butler and Scarlet O'Hara --

8 A Like movies based upon the Bible, The Ten Commandments,

9 the movie The Robe. They were based on actual events that

10 occurred and then fictionalized around it.

11 Q But it doesn't give away the secret?

12 A No, absolutely not.

13 Q Does it cover O.T. III?

14 A No.

15 Q That play?

16 A Not at all.

17 Q Does the public information cover at all what happened to

18 people as spiritual beings at that time?

19 A No. It's fictionalized. That was designated to be a

20 movie at one point and maybe a book and talks about events

21 that occurred, and there is no -- I don't believe -- I read it

22 several times. I don't believe even the word spirit is

23 mentioned.

24 Q Is the secret of O.T. III in what happened to you and how

25 to handle it?

227

1 A Not at all.

2 Q It's not in that play?

3 A Not in the book.

4 Q Is that the secret of O.T. III however?

5 A Yes, of course.

6 Q Is that -- and is that in the material that deals with how

7 to handle it and what happened to you?

8 A That's what O.T. III materials consist of.

9 Q Now, you were asked on direct examination whether you

10 consider all of the materials to be secret and every word to

11 be secret, and then you gave an answer and you wanted to give

12 explanation. Have you now given the explanation or is there

13 something else you would like to explain?

14 A I think there was a little misinterpretation in my

15 deposition. What I testified to was that the O.T. levels vary

16 in size and some of them have instructional material as a

17 separate package. And a person would study that material

18 first and then he would get the second page which was the

19 actual process and what to do with himself. Some of that like

20 the O.T. I is just one package. So I can't say this the heart

21 of the work in there because it's the whole thing. There are

22 other -- O.T. III, for instance, where there is a -- or a

23 description for instance in the first paragraph that describes

24 this incident that occurred 75 million years ago. There is a

25 lot more to it but when it gets down to a certain point where

228

1 Mr. Hubbard describes what occurred to the actual person

2 himself, that's where the trade secret is. Then obviously how

3 to undo that -- the processes on how to do undo that is his

4 major break through. That's of course secret.

5 Q Could you take Exhibit 79 and point out to the court by

6 indicating the portions of O.T. III where the secret is?

7 A I could easily.

8 Q Would do you that, please? Does the court have Exhibit 79

9 there, Your Honor? I think it's in a separate notebook, Your

10 Honor.

11 THE WITNESS: It's a long binder.

12 MR. COOLEY: It's that long binder?

13 THE WITNESS: The one that has "confidential" on it,

14 Your Honor.

15 THE COURT: Okay.

16 BY MR. COOLEY:

17 Q Starting with the opening paragraph and going on, the

18 portions of the opening paragraph and subsequent materials

19 that are contained are secret.

20 BY MR. COOLEY:

21 Q As you go through it, just make sure you specifically

22 inform the court where to turn and what page to look at, so

23 you will both be on the same track.

24 A The very first tab under Tab No. 1. You can see there are

25 references to the Galactic confederation, 76 planets, but

229

1 within that there is information on what are called incidents

2 that you see there, Your Honor, in parentheses. Those itself

3 are trade secret. Any descriptions in that first page which

4 actually described what happened to the individual himself is

5 a trade secret.

6 But it may be easier to explain what's not. The

7 discussion of the -- of the volcanoes, the explosions, the

8 Galactic confederation 75 million years ago, and a gentleman

9 by the name Xemu there. Those are not trade secrets. The

10 officers mentioned there are not. But the -- the parts in

11 there that actually described what happened to the individual

12 and how to handle it, especially when it goes onto page 2 from

13 that point forward, that is trade secret.

14 Q Everything thereafter?

15 A Yes.

16 MR. KELLEY: Is page 2 Tab 2?

17 THE WITNESS: Tab 2, I'm sorry.

18 BY MR. COOLEY:

19 Q Mr. McShane, you were asked some questions on

20 cross-examination and the court struck the answer. And it

21 dealt with the O.T. I through VII materials that

22 Mr. Wollersheim says he got from his lawyer, Charles O'Reilly,

23 in the Wollersheim case against Church of Scientology of

24 California back in 19 -- in the mid 1980s. Those O.T. I

25 through VII materials, do you know for a fact that those never

230

1 came in as exhibits at the Wollersheim trial?

2 A No, they never did.

3 Q And did they surface as deposition exhibits at one point?

4 A Yes.

5 Q And were they placed under protective order?

6 A Yes, I believe Judge Margolis --

7 MR. KELLEY: I object to his testifying to court

8 records.

9 THE COURT: Overruled.

10 BY MR. COOLEY:

11 Q And was there a brief period of time, a matter of hours,

12 on November 4, 1985, when the protection was vacated and then

13 reinstated, vacated the morning and reinstated at noon?

14 A I believe -- I believe it came -- the sealed order was

15 released I believe like 9:00 in the morning allegedly and

16 resealed at noon.

17 Q During that interim were there 1,500 Scientologists in

18 line to obtain those materials so that they couldn't be

19 released to the public?

20 A Yes, there was.

21 Q Now, sir, have you had the opportunity to compare what

22 Mr. Wollersheim has described as the O.T. I through O.T. VII

23 materials that he got from his lawyer with the materials that

24 were stolen in England and in Denmark?

25 A Yes, I have.

231

1 Q And are they identical?

2 MR. KELLEY: Your Honor, I object. There is no

3 foundation that he knows what the materials are that are

4 claimed by Mr. Wollersheim to be from this case.

5 THE COURT: Sustained for lack of foundation. Go

6 ahead, please.

7 BY MR. COOLEY:

8 Q Are you aware of the O.T. I through O.T. VII materials

9 that Mr. Wollersheim claims he got from his lawyer?

10 A Yes, sir, I am.

11 Q Were you aware of them back in 1985 and in 1986?

12 A Those O.T. materials, yes.

13 Q Were you aware of what Mr. Wollersheim -- what was

14 involved in the Wollersheim case as to those materials?

15 A Absolutely.

16 Q And did you at that time and subsequently compare those

17 materials with the materials that were stolen in England and

18 in Denmark?

19 A Yes.

20 Q Are they identical?

21 A Substantially identical.

22 Q And in that case, did those materials surface in the

23 Wollersheim case after the materials had been stolen and

24 transported to the United States?

25 A Yes.

232

1 Q And at about the same time was suit brought against David

2 Mayo and the Competing Church of the New Civilization for the

3 possession and use of those materials?

4 A Yes, an injunction issued.

5 Q Now, have you had a -- have you had an opportunity to

6 compare the materials that Graham Berry, the attorney in

7 California, put into the Fishman affidavit as O.T. I through

8 VII?

9 MR. KELLEY: Assumes facts not in the record.

10 THE COURT: Overruled.

11 A Yes, sir.

12 BY MR. COOLEY:

13 Q So there is no misunderstanding. The Fishman case -- in

14 the Fishman case, Graham Berry was an attorney for Dr. Geertz,

15 was he not?

16 A That's correct.

17 Q And it was Mr. Berry after the case was dismissed who

18 filed the Fishman affidavit, did he not?

19 A Yes.

20 Q And it was put in ostensibly in support of a post trial

21 motion for cost and fees; is that your understanding?

22 A Yes, as the Berger declaration was.

23 Q Did the court refuse to consider it on those issues?

24 A Yes.

25 Q Were you involved in that litigation?

233

1 A Very much so.

2 Q Did you monitor that litigation from beginning to end?

3 A I did, sir.

4 Q Now, when that material went into the Fishman case, was

5 there a protective order in place?

6 A When the materials came in, the Magistrate put a

7 protective order in place.

8 Q Originally?

9 A Yes.

10 Q And then after the case was dismissed and the protective

11 order disappeared by virtue of the dismissal, was it then that

12 the material was dumped into the record?

13 A Yes.

14 MR. KELLEY: Your Honor, we have gone through this on

15 both direct and cross-examination.

16 THE COURT: All right. Your objection is noted.

17 Overruled. Go ahead.

18 BY MR. COOLEY:

19 Q Was that material the same as the material that

20 Wollersheim was claiming he got from O'Reilly?

21 A Substantially the same, yes.

22 Q Have you examined Mr. Wollersheim's deposition and learned

23 that he acted as a consultant for pay to Mr. Graham Berry in

24 the Fishman case?

25 A That's my understanding, yes.

234

1 Q Have you examined -- are you aware that Mr. Vaughn Young,

2 who is here as a witness for Mr. Wollersheim, acted as a

3 consultant for pay for Mr. Berry in the Fishman case?

4 A That's correct.

5 Q Now, sir, let me deal, if I may, for a few moments with

6 some other matter that came up. The Fishman file at the court

7 from which this affidavit came, from the time that it was in

8 there unsealed until the present time, has under your

9 supervision and control a daily watch on that file taken

10 place?

11 A Yes, sir, I set up a daily watch.

12 Q Was that until the file was sealed, correct?

13 A Correct.

14 Q And in setting up that daily watch, tell the court what it

15 was that you set up.

16 A Well, when the judge would not seal the record, even

17 though he said he did not rely on any of the affidavits or the

18 attachments, for whatever reason he chose not to, I had

19 Scientologists who were at the correct spiritual level go to

20 the courthouse every morning when it opened. They checked out

21 the file. They went into the viewing room in the court and

22 sat with the file all day. The reason was we didn't want

23 anybody going in taking out the file and copying it. I didn't

24 know what else to do to protect my materials other than to do

25 that. And this was kept up for a little over a year. And it

235

1 was every day, every hour the court was open we had checked

2 out the file. We also were in very good communication with

3 the clerk to ensure that nobody else had requested the file or

4 mailed in requests or anything like that. Because you had to

5 sign in the log every time you went in and showed your ID,

6 your driver's license and that continued on through the time

7 period up until the point where the judge sealed the case --

8 sealed the file.

9 Q And during that entire period of time did anyone ever get

10 a copy except the Washington Post?

11 A Not at all.

12 Q Did the court seal it up the day after he learned that the

13 Washington Post got it?

14 A That's correct, sir.

15 Q Was that sealed up before the Washington Post article

16 appeared?

17 A Yes.

18 Q Now, sir, with respect to Fishman, did Fishman ever do the

19 O.T. levels at the Church of Scientology or any Church of

20 Scientology?

21 A No, I think Mr. Fishman was in the church for

22 approximately maybe a month.

23 Q He never received any auditing on O.T. levels?

24 A No, not at all.

25 Q And was in fact Mr. Fishman convicted in San Francisco of

From bobpenny@delphi.comSun Oct 1 09:50:17 1995

Date: Sun, 01 Oct 1995 03:10:40 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: 9-11-95 #2

236

1 crimes, including obstruction of justice in attempting to

2 frame the Church of Scientology for his own crimes?

3 A Correct, he was imprisoned, yes.

4 Q For that obstruction of justice?

5 A Yes.

6 Q As well as the substantive underlying crime?

7 A Yes.

8 Q Now, with respect to the O.T. levels you were asked on

9 cross-examination whether in the religion of Scientology and

10 beliefs of Scientology and yourself personally the recount of

11 that incident 75 mill years ago was historical fact, and I

12 believe you said that it was?

13 A Yes.

14 Q In dealing with the effects of that on individuals and how

15 to handle those effects, does the O.T. III level and all O.T.

16 levels for that matter contain the expression of Mr. Hubbard?

17 A His discovery and expression, yes.

18 Q Now, where the O.T. levels -- because I think on

19 cross-examination there was some discussion about the single

20 copyright number on some of these series on O.T. level

21 containing this series. Is each series listed and is the work

22 issue copyrighted as a series each of which is listed?

23 A Yes, the O.T. levels -- some of the O.T. levels like O.T.

24 II and O.T. III, there are -- the level itself is made up of

25 different series of issues. And when we worked this out with

237

1 the copyright office, the copyright office wanted one

2 registration certificate for the level, and as long as we

3 listed out every issue that was contained in there that each

4 of those issues would have protection itself.

5 Q And did the -- and did the copyrights -- and were each

6 issue was infringed by material found in Mr. Wollersheim's

7 possession either on his computer or in hard copy?

8 A It varied from level to level but there were infringements

9 on each level, yes.

10 Q Yes. Was the totality of the issue that we claim to be

11 infringed set forth for the court in that book that you have

12 got?

13 A Yes, I believe so.

14 Q Now, how many pages are there, because you were asked

15 this, I think Mr. Kelley wanted to find the masked copy that

16 you gave to show the masked copy from the copyright office.

17 How many pages of trade secret unpublished copyrighted

18 material on O.T. III is there?

19 A There is 67 pages that were filed with the copyright

20 office deposited masked.

21 Q Masked?

22 A Yes.

23 Q I take it that nonconfidential portions of O.T. III were

24 copyrighted as published material -- strike that -- as just

25 copyrighted without the claim of --

238

1 A There are other materials that are included in the level

2 that are not confidential protected under normal copyright.

3 Q So they were under unmasked normal copyright?

4 A Right, R.T.C. is not the exclusive licensee for that.

5 Q But as to the confidential portions of O.T. III they were

6 copyrighted on a masked basis and consisted of how many pages?

7 A 67 pages for O.T. III.

8 Q How many of those pages are included in the infringing

9 material found in Mr. Wollersheim's computer and in the

10 Fishman affidavit?

11 A In the Fishman affidavit there is a total of I believe 63

12 pages. It might be 69. I am not totally sure. Between 60

13 and 70 pages total.

14 Q Incidentally I don't mean to confine it to Wollersheim's

15 computer. Penny's computer as well and maybe even more so.

16 A Yes.

17 Q So out of the total number of pages copyrighted, how many

18 are included in the infringing material?

19 A Well, we found I think it's 63 or 69 pages.

20 Q Out of?

21 A I don't know the total. The total pages that were

22 dispositive of all the levels.

23 Q No, O.T. III is what I am talking about.

24 A O.T. III.

25 Q Because you were asked specifically about O.T. III last

239

1 week and that's what I am trying to clarify.

2 A Right. What we found on the computer I think it was about

3 40 pages or 44 pages. I am not totally sure on that.

4 Q Out of a total of how many masked and copyrighted?

5 A 67.

6 Q Have you made that count for the other levels O.T. I, II

7 IV?

8 A I haven't, no, sir. I was asked specifically about III.

9 I went back and counted those.

10 Q Where other series have been infringed, each individual

11 series we have claimed to be infringed, you have set forth in

12 its totally for the court?

13 A That's true, yes.

14 MR. COOLEY: May I consult for a moment, Your Honor.

15 THE COURT: Yes.

16 MR. COOLEY: Your Honor, in the light of the

17 cross-examination and the redirect, we have got a couple of

18 additional exhibits I would like to offer. I have copies for

19 everybody. May I approach?

20 THE COURT: All right.

21 BY MR. COOLEY:

22 Q Mr. McShane, you have before you what have now been marked

23 as Exhibits 82 and 94. What is 82?

24 A 82 is a dictionary produced by the church which contains

25 many of the terminology that we used in the administration

240

1 aspect of the church, not the technical aspect.

2 Q Specifically does that exhibit embrace page 467 of the

3 dictionary?

4 A Yes.

5 Q What is there -- what definition do you want to invite the

6 court's attention to from that?

7 A As you can see, there is the Sea Org symbol on the

8 exhibit. This is what I was referring to before about the 26

9 leaves representing the 26 planets and the star of course

10 representing the spirit. And it says under the definition

11 No. 1 that the Sea Org symbol was adopted and used as the

12 symbol of the Galactic confederation far back in the history.

13 The sector derives much of its power and so forth from that

14 association. The laurel wreath represents victory.

15 Q Is that in any way the secret of O.T. III?

16 A No, sir, it's not.

17 Q Now, Exhibit 94 is Ron's Journal 67, a lecture given on 20

18 September, 1967. Can you tell the court the portion of that

19 you would like to invite the court's attention to?

20 A Certainly. On page 6 I hand wrote in on a page on the

21 bottom there, page 6, the fourth paragraph down from the top

22 of the page it says. "And it's very true that a great

23 catastrophe occurred on this planet and another 75 planets

24 which formed this confederation 75 million years ago, and

25 since that time it has been desert and has been a lot of --

241

1 just a handful to try to push its technology to a -- to a

2 level where someone might venture forward, penetrate the

3 catastrophe and undo it.

4 Q Does that in any way reveal the secrets of O.T. III?

5 A Absolutely not.

6 Q Is the dictionary from which Exhibit 82 is taken a

7 copyrighted publicly available dictionary that anyone can buy

8 at any Scientology book store?

9 A Absolutely.

10 Q And is Ron's Journal 67 also available at any Scientology

11 book store?

12 A Yes, the tapes are available to anyone.

13 MR. COOLEY: That's all, sir.

14 THE COURT: Okay.

15 RECROSS-EXAMINATION

16 BY MR. KELLEY:

17 Q On Exhibit 94 could I ask you to turn to page 4.

18 A Okay.

19 Q Let me ask you to look at the last sentence of the third

20 paragraph from the bottom where Mr. Hubbard writes, the

21 material involved in this sector is so vicious that it's

22 carefully arranged to kill anyone if he discovers the exact

23 truth of it?

24 A That's what it says, yes.

25 Q Do you think that was a truthful statement?

242

1 A Absolutely.

2 Q So you are dealing with a fairly dangerous instrumentality

3 here; is that your testimony?

4 A Not at all. It was dangerous to Mr. Hubbard when he

5 discovered it.

6 Q He has taken the danger out of that, so it's benign for

7 those of us that come in contact with it now?

8 A No. I wouldn't call it benign. There is spiritual harm

9 if someone is exposed to it before they are ready to be.

10 Q Now, I recited some of the story of Xemu and the body

11 Thetans from memory of newspaper articles in my opening

12 statements. Is it your testimony that none of that is part of

13 the trade secret that you are seeking to protect here?

14 A When you referred to Xemu 75 million years ago, the

15 volcanoes, that's not the trade secret.

16 Q And body of Thetans and so forth?

17 A Right.

18 Q So you have no idea why your counsel stood up to my

19 disclosing a trade secret here in the courtroom?

20 A Oh, I absolutely do.

21 Q Now, yesterday I asked you the number of pages in each

22 work as set forth in your declaration following the Erlich

23 case?

24 A Yes.

25 Q I asked you if in the case each of the O.T.s that number

243

1 of pages represented what you considered to be the entire work

2 and you said yes; is that your memory?

3 A I believe so, yes.

4 Q And those are the works in their entirety whether masked

5 or unmasked have been registered with the copyright office;

6 isn't that true?

7 A Yes.

8 Q So that the section of the O.T. which you consider not

9 confidential is nonetheless part of the copyright office

10 deposit?

11 A No, it's not. I only deposited what the confidential

12 materials were. I didn't deposit the nonconfidential works

13 because R.T.C. has no exclusive license to that.

14 Q Does it claim copyright in the entirety of the work or

15 not?

16 A We claim a copyright in what has been registered.

17 Q In any event, the entire work consists of the total

18 numbers of pages that you recited yesterday?

19 A It's the entire O.T -- O.T. III consists of the 67 pages

20 which we registered as unpublished confidential work and

21 other -- a bunch of other issues on that level.

22 Q The entirety of the work consists of 200 pages?

23 A Yes.

24 Q You considered that the work should be delivered to a

25 parishioner as a whole and not let him take parts of that?

244

1 A Yes, that is right.

2 MR. KELLEY: That's all I have at this time, Your

3 Honor.

4 RECROSS-EXAMINATION

5 BY MR. COOLEY:

6 Q Did I stand up and object at a point at which you and I

7 conferred?

8 A Yes, you did.

9 Q And did that -- I did not object while he was talking

10 about the Xemu and 75 million years ago and the catastrophe,

11 did I?

12 A No, you did not.

13 Q Did my objection come at the point when we considered that

14 he had crossed over the line?

15 A Yes.

16 Q Into materials in that opening paragraph of O.T. III that

17 are secret?

18 A Yes, sir.

19 THE COURT: You may stand down.

20 THE WITNESS: Thank you, sir.

21 THE COURT: Next witness, please.

22 MR. COOLEY: The next thing that I wish to offer,

23 Your Honor, are the depositions of Mr. Lerma, Mr. Wollersheim,

24 and Mr. Penny. I have taken excerpts of those and those are

25 Exhibits 72, 73 and 74 in Your Honor's exhibit book. I want

245

1 to just point out a couple of items. I want to start with the

2 Lerma deposition. I am not going -- while I am offering all

3 of it, I am only going to deal with a few portions that I want

4 to invite the court's attention to. Page 18, of Exhibit 73,

5 MR. KELLEY: Your Honor, Mr. Lerma's deposition we

6 are raising an objection to. The others I have no objection

7 to but I don't think -- maybe he ought to go into Mr. Lerma's

8 until that's resolved.

9 Under Rule 30 it was taken in a different case in

10 which none of my clients are parties. I did not have notice.

11 I wasn't there. I think the court can appreciate under the

12 constraints of getting ready for this case, I could not

13 possibly have had a chance to meaningful participate.

14 MR. COOLEY: Let me respond to that as follows. Mr.

15 Lerma is a director of F.A.C.T.Net, having been made a

16 director in mid July 1995. We brought the suit against him

17 because he is the one who posted the materials to the

18 Internet. And after he did that and after we brought the

19 suit, Mr. Wollersheim went on the Internet, claimed that he

20 was acting as director of the F.A.C.T.Net and that his actions

21 were consistent with the policies of F.A.C.T.Net. We took his

22 deposition in that proceeding, asked him where he got the

23 materials, he said he got them from Mr. Wollersheim.

24 Mr. Wollersheim has denied that under oath. He testified when

25 he got them he knew he was expected to scan them and post them

246

1 to the Internet. Mr. Wollersheim has denied that under oath.

2 Mr. Wollersheim has likely denied that he received these

3 materials from Mr. Lerma after they were scanned in and

4 Mr. Wollersheim had sent them to him. But he said he didn't

5 receive them by E-mail until after they had been posted to the

6 Internet.

7 Our search of Mr. Wollersheim's computer and

8 Mr. Penny's computer reveals that the materials were sent to

9 Mr. Wollersheim ear by Mr. Lerma via E-mail. The first

10 two-fifth of it being sent to Mr. Wollersheim on the 30th of

11 July and the second three-fifths being sent to Mr. Wollersheim

12 on E-mail from Mr. Lerma on the 31st of July. Mr. Lerma

13 posted these documents to the Internet on the 1st and on the

14 2nd of August. What we have done is -- incidentally, the same

15 insurance company that is affording a defense to

16 Mr. Wollersheim and Mr. Penny and F.A.C.T.Net is affording a

17 defense to Mr. Lerma in the Eastern District of Virginia.

18 Mr. Lerma is represented by counsel assigned by that company

19 down here. Also, Mr. Wollersheim, F.A.C.T.Net and Mr. Penny

20 are being represented by Mr. Kelley who has been assigned

21 here. It seems to me that under the circumstances all of the

22 safeguards of protection are there. And that the effort --

23 any effort to conceal from this court the testimony that

24 Mr. Lerma gave simply because it's violently at odds with the

25 testimony that Mr. Wollersheim gave, I think is inappropriate.

247

1 These are at a minimum also admissions against interest as to

2 F.A.C.T.Net and Wollersheim under the federal rules of

3 evidence and ought to come in on that basis alone. Since

4 Mr. Wollersheim has claimed Mr. Penny as his own -- as his

5 director and as his agent and has admitted in both his

6 deposition by amendment to his response for request for

7 admissions that Mr. Lerma was acting as the agent of

8 F.A.C.T.Net when he posted these materials to the Internet.

9 THE COURT: Mr. Kelley.

10 MR. KELLEY: Your Honor, use of this deposition is

11 governed by Rule 32, and it provides that a deposition so far

12 as otherwise admissible may be used against any party who is

13 present or represented at the taking of the deposition or who

14 had reasonable notice thereof in accordance with any of the

15 following provisions.

16 We were not there. We were not represented. It's

17 true there is one insurance company, but they have these

18 parties represented by separate law firms for a reason. The

19 rule simply hasn't been complied with. That's the only basis

20 for the objection.

21 THE COURT: I think the objection under the rule is

22 valid but I think these are also admissions -- prior

23 admissions under oath, so I am going to admit them for that

24 reason. Go ahead.

25 MR. COOLEY: Thank you, Your Honor.

248

1 At page 18 of the Lerma deposition he is asked: Are

2 you a director of F.A.C.T.Net? Answer: Yes, sir. Are you

3 being represented in this action by assignment from an

4 insurance career for F.A.C.T.Net? Yes, sir. And what is the

5 name of that carrier? Answer: I don't know the name of the

6 carrier. When did you become a director. Answer: In the

7 first half of July 1995.

8 On pages 19 and 20, starting at line 20 on page 19

9 the testimony asks him his duties as director. He says to

10 further the goals of F.A.C.T.Net. What are those? To make

11 available to the public information concerning groups engaged

12 in coercive mind control. Then he is asked when did he post

13 the Fishman affidavit from the Fishman case to the Internet or

14 did he. He says, yes. He is asked how many times did you do

15 that? He says two. To what points did you post it? He says

16 Alt Religion Scientology. That's the name of the news group

17 on the Internet, and we refer to that as ARS. Did you post it

18 to any FTPs. FTP is an abbreviation for file transfer

19 protocols. These are locations on the Internet where you can

20 put documents that will be picked up later. He says he didn't

21 post them to any FTPs. And he just posted it to Alt Religion

22 Scientology. I asked him whether that Fishman affidavit that

23 he posted included all of the exhibits to the affidavit. He

24 said it did. Do those exhibits include O.T. I, II, III, IV,

25 V, VI, VII? He said, yes, it did. I asked him from whom did

249

1 you obtain that affidavit? He says, to be very frank, I am

2 not quite sure who I got it from. I know where it originated.

3 Then I asked him how did it come to you. He said in the

4 United States mail. I asked him if there was a return

5 address. He says he can't remember, but he said that he knew

6 where it came from. And I asked him what he knew about it.

7 He said, well, I was told that it originated from the

8 F.A.C.T.Net optical archives. I said, Who told you that. He

9 said, Mr. Wollersheim. I asked him how he knew he had

10 received that document. He said that he didn't know

11 specifically, but he knew what Wollersheim told him, and that

12 Wollersheim told him it came from the optical archive of

13 F.A.C.T.Net. And then I asked him over on page -- I asked him

14 over on page 35, Didn't you testify before that he told you,

15 meaning Wollersheim, told you they came from F.A.C.T.Net

16 optical archive? He says, yes, that's correct. Right.

17 Question: Were there any printouts from F.A.C.T.Net optical

18 archives? He says -- and were they printouts from F.A.C.T.Net

19 optical archives? He said, that's what I was told.

20 Question: By Mr. Wollersheim. Answer: Yes. I asked him

21 over on page 146, in your statement of position that I read

22 that you posted on August 29, Lerma posted to the Internet.

23 You say, quote: "I acted as a F.A.C.T.Net director when I

24 posted the Fishman-Geertz public record from the F.A.C.T.Net

25 archives. Isn't that what you told your fellow netters?

250

1 Answer: That is right. And that's the truth, isn't it?

2 Answer: That's the true. Wollersheim got you to do that

3 posting, didn't he, as a director of F.A.C.T.Net? Answer:

4 No. Question: He didn't? You did it as a director of

5 F.A.C.T.Net? Answer: That's true. But he didn't ask you to

6 do it? I don't recall him specifically asking me to do it.

7 Question: When that came to you, you knew your job was to

8 scan it into your hard drive and post it to the Internet,

9 didn't you? Answer: Yes.

10 MR. COOLEY: Mr. Penny's deposition, Your Honor, we

11 establish at page 6 that his position with F.A.C.T.Net as a

12 member of the board of directors and technical director,

13 describing his function, describes Mr. Wollersheim as the

14 executive director and so that establishes his role.

15 At page 8 we establish that F.A.C.T.Net had a prior

16 name of F.A.C.T. and it's now known as F.A.C.T.Net. I asked

17 him -- I didn't. He was asked what percentage of

18 F.A.C.T.Net's materials -- this is at page 10 -- concern

19 Scientology. He said a majority. But I can't put a number on

20 it. Question: It's probably over 80 percent, wouldn't you

21 say? Wouldn't you estimate it to be over 80 percent? He said

22 that's likely, but I have no actual information about that

23 percentage. And he's asked the purpose of F.A.C.T.Net. He

24 says victim assistance and education. And he says, in my

25 opinion, that isn't the most important function. Well, is

251

1 that what it is he is asked. He says it's a library and

2 archive. We publish newsletters. We respond to queries. And

3 he's asked again, I am trying to put it in a category of what

4 category of organization it is. He says it's a library and

5 the question is it's a library? Yes, and libraries have an

6 educational purpose and so do we.

7 MR. KELLEY: Your Honor, I am going to interpose an

8 objection. These are being offered as an exhibit. The court

9 can read them. I think it's inappropriate for counsel to go

10 through the whole thing and at the same time offer them as an

11 exhibit and ask the court to read them.

12 MR. COOLEY: I don't intend to go through the whole

13 thing.

14 MR. KELLEY: Please don't interrupt. I think that we

15 are going to have a tough time getting through this evidence

16 today. I would ask the court to limit this procedure simply

17 because it's duplicative.

18 MR. COOLEY: I am got going to go through it all,

19 Your Honor.

20 THE COURT: All right. Go ahead. I can read. So

21 that is the presumption any way.

22 MR. COOLEY: Of that I have no doubt. Any way, Your

23 Honor, Mr. Penny goes onto testify to prices charged for what

24 they call library cards and also he testifies to the cost of

25 tapes that are sold, and he talks about the preparation of

252

1 CDs, page 13, that he gave to Mr. Wollersheim, ten of them,

2 and never saw them again and doesn't know what was done with

3 them.

4 He testifies Mr. Wollersheim gave testimony in his

5 deposition concerning his activities as a consultant for

6 lawyers engaged in Scientology litigation, including lawyers

7 for Mr. Fishman and Mr. Geertz, that is, Mr. Graham Berry and

8 others, as well as lawyers for Time Magazine and testified

9 that the amount that he was paid he gave -- paid over 50

10 percent of it to F.A.C.T.Net because he used their database

11 and that F.A.C.T.Net itself consulted for lawyers for Time

12 Magazine using its database on a project-by-project basis,

13 that is, consulting for lawyers for Time. That they were

14 being paid. Mr. Penny testified that as to the amounts

15 Mr. Wollersheim owed to F.A.C.T.Net for the use of the

16 database -- what he was really doing was building up

17 liabilities not paying them cash. The testimony of Mr. Penny

18 was that he and Mr. Wollersheim intended not at all to ever

19 violate any copyrights or ever to publish the upper level

20 materials but -- and at one point they were going through a

21 file or series of files where they had material parked, when

22 it backed up, what their real intention was was to purge it

23 and delete those files from the base, the database because

24 they did not want to use them and they didn't want to infringe

25 copyrights. Mr. Penny testified that he was a party to

253

1 confidentiality agreements in the church when he was in the

2 church, never to disclose these materials, and testified that

3 he did not, and that he did not violate those agreements.

4 Mr. Wollersheim likewise testified that they were --

5 it was the policy of F.A.C.T.Net not to publish these

6 materials. They had no intention of publishing these

7 materials. That he was merely trying to archive them, and

8 that he was claiming status as an archive.

9 MR. KELLEY: This is summary. He's going from one

10 deposition to the other now.

11 THE COURT: Sustained.

12 MR. COOLEY: I am trying to summarize the testimony.

13 THE COURT: I will read it.

14 MR. COOLEY: In any event, those are the highlights

15 from those two depositions, but there is that and a lot more,

16 particularly the part that pertains to this 501(c)(3) status

17 that Mr. Wollersheim claims for his corporation. And the

18 evidence that reflects commercial activity as a support

19 service for lawyers.

20 I would like to have these exhibits marked.

21 Exhibit 70 is in Your Honor's book is Wollersheim posting to

22 the Internet on 15 August 1995. Do we have a blowup of the

23 portions I want to focus on?

24 MR. KELLEY: We are getting a summation now or

25 closing argument.

254

1 MR. COOLEY: I am going to focus on portions of this

2 exhibit for you, Your Honor, that I want to invite your

3 attention to, so that you can focus. If Mr. Kelley wants to

4 refer to other portions, he can.

5 THE COURT: I think you should do that in closing not

6 do that now. In your closing argument. The main thing is to

7 get the exhibits into evidence or get rulings on them and then

8 we'll proceed from there. Mr. Kelley is right. I don't want

9 to be having you tell me what to read right now. I want to

10 get the evidence in.

11 MR. COOLEY: Then let's put in Exhibit 69 which is a

12 posting of July 31.

13 MR. KELLEY: I don't have any objection.

14 THE COURT: It's admitted.

15 MR. COOLEY: And I believe it's a posting of the

16 following day as well, but I am not sure. In any event, that

17 one and Exhibit 70, which is the posting of August 15, 1995 by

18 Mr. Wollershiem.

19 THE COURT: Any objection?

20 MR. KELLEY: No, objection.

21 THE COURT: It's admitted.

22 MR. COOLEY: And Exhibit 88, which we filed this

23 morning, furnished a copy to counsel which is a posting by

24 Mr. Wollersheim while he was under a temporary restraining

25 order here and on the date of August 30, 1995. We offer that.

255

1 THE COURT: Any objection?

2 MR. KELLEY: No. I don't think it's relevant.

3 THE COURT: It's admitted.

4 MR. COOLEY: Exhibit 81 which we offered this morning

5 which was a posting relating -- by a director of F.A.C.T.Net

6 purporting to pass along a message from Mr. Wollersheim that

7 was posted on the 8th of September 1995 by Kim Baker, a

8 director of F.A.C.T.Net.

9 THE COURT: Any objection?

10 MR. KELLEY: I have never seen the exhibit, Your

11 Honor.

12 THE COURT: Show it to Mr. Kelley, please.

13 MR. KELLEY: No objection, Your Honor.

14 THE COURT: It's admitted.

15 MR. COOLEY: If I may now, all of the exhibits in our

16 book, we have now referred to all of them, and I move them all

17 into evidence before the court in this preliminary injunction

18 hearing, subject to any sealing order on confidential

19 material.

20 THE COURT: They are admitted.

21 MR. KELLEY: Your Honor, I haven't had a chance to

22 look at the whole list and see whether that statement is true,

23 but subject to that, no problem with -- if there is an

24 objection, I will raise it later.

25 THE COURT: All right. That's fine. They are

256

1 admitted. If you want me to reconsider, you move to have me

2 reconsider.

3 MR. COOLEY: I guess I haven't referred to all of

4 them. Mr. Blakely has filed a declaration pertaining to the

5 security conditions at his firm with respect to the search,

6 and there is a Anderson declaration that was submitted and

7 there was a Kobrin declaration. Anderson is 71, and there was

8 a Kobrin declaration related to notice. So I am offering all

9 of the exhibits that are -- that are on our list and in the

10 court's book subject to confidentiality.

11 MR. KELLEY: Right now I object to the hearsay

12 declaration being filed.

13 THE COURT: We'll look at them first and specify the

14 objection, okay.

15 MR. KELLEY: They are affidavits and they are

16 hearsay, that's all.

17 THE COURT: I don't know which ones you are referring

18 to. You said all of them. So you have the opportunity to

19 reconsider. Is that your evidence now?

20 MR. COOLEY: That's it, Your Honor.

21 THE COURT: Let's take a five minute -- dare I say

22 potty break?

23 (Recess at 11:20 to 11:25.)

24 THE COURT: Be seated, please. Before you begin,

25 there has been some question about these big guys sitting over

257

1 here in the jury box, and so just for the sake -- if anybody's

2 curious, they happen to be law students. We have an

3 internship program at this court which compensates for the old

4 days when the DU Law School was above Ma Pele meat market and

5 the students used to walk over from the law school and see

6 lawyers in court. Now it's a structured formal administrative

7 procedure. There are plans of committees that handle what

8 used to be done serendipitously, and we are very happy to have

9 these young men here. One of them in fact is already admitted

10 to the bar, but the others are in their second year of law

11 school. Go ahead.

12 MR. KELLEY: The defendant will call the first

13 witness, Mr. Robert Vaughn Young.

14 THE COURT: Mr. Young.

15 (Robert Vaughn Young was sworn.)

16 MR. COOLEY: May I inquire whether Mr. Young is being

17 called as a fact witness or expert witness.

18 MR. KELLEY: As far as I know, Your Honor, he is

19 being called as a fact witness.

20 THE COURT: All right.

21 THE COURTROOM DEPUTY: Please be seated. State your

22 name for the record and please spell your last name.

23 THE WITNESS: Robert Vaughn Young, Y-O-U-N-G.

24 DIRECT EXAMINATION

25 BY MR. KELLEY:

258

1 Q Good morning, Mr. Young. Where do you live now?

2 A Seattle, Washington.

3 Q Were you ever involved with the Church of Scientology?

4 A Yes, sir, I was.

5 Q When did that begin?

6 A It started in 1968 when I was working on my Ph.D. in Davis

7 California. That's when I began studying the books.

8 Q Did you continue your studies for some period of time?

9 A The Scientology studies?

10 Q Yes.

11 A Yes, I did. The following year I joined the staff there,

12 helped to start a mission. From that point, I was full-time

13 Scientology as a staff member until 1989.

14 Q Would you give us a history of the assignments that you

15 had while you were with the staff of Scientology during those

16 years, sort of in a nutshell.

17 A For about 20 years in one form or another of public

18 relations dealing with the media authorities, dealing with the

19 courts, dealing with federal authorities. I was at Davis and

20 in San Francisco where I joined Department 20 which was at

21 that point called the Guardian's Office. Worked in the San

22 Francisco organization there for two years dealing with the

23 media.

24 Q What's the Guardian's Office.

25 MR. COOLEY: I object.

259

1 THE COURT: Overruled.

2 THE WITNESS: The Guardian's Office was a name given

3 to Department 20 which was that section of Scientology that

4 dealt with the external influences and enemies of the church.

5 This ranged from suppressive persons to the media, to the

6 courts, to the governments, anything outside the periphery of

7 what you have heard discussed at the hearing.

8 BY MR. KELLEY:

9 Q Continue with your history of your involvement.

10 A In 1973 I was promoted to the United States Guardian's

11 Office. I was there working in a public relations capacity.

12 I worked in some high level secret programs at that time. In

13 1977 we were raided by the FBI. I was the initial spokesman

14 at that time. My name could be found in Newsweek Magazine,

15 The New York Times, speaking on behalf of Scientology about

16 the raid. I went to Washington, D.C. a couple years later and

17 served when the executives were on trial and subsequently

18 about ten or so Scientology executives went to jail as a

19 result of that raid. In 1982 I was promoted up to a level

20 called Author Services Incorporated, which we called ASI.

21 This moves into the secular area. There was an outside

22 peripheral secular area of Scientology. The office was

23 promoting itself as being Mr. Hubbard's literary agency, where

24 we were actually running Scientology for a while as the

25 changeover occurred from the executives going to jail. I

260

1 worked there in public relations as an editor and writer.

2 Also in '82 I testified as an expert in the Gerald Armstrong

3 case in Los Angeles there on the life of Mr. Hubbard. My job

4 was to present testimony, discredit him, Mr. Armstrong. And

5 then a number of capacities then in '89 -- Mr. Hubbard died in

6 '86, and things began to sort of fall apart and I subsequently

7 left in '89.

8 Q What did you do after leaving the church in '89?

9 A Began to do some freelance writing. Did that for a couple

10 years. I won some awards including the awards from the

11 Society of Professional Journalists for my writing. Then in

12 '93 I was approached by Graham Berry, who learned that I had

13 had 21 years in the organization dealing with enemies of the

14 church, and that was pretty much what we did in the Guardian's

15 Office, which is the R.T.C. That's what they were formed to

16 do, was to be above the Guardian's Office which was renamed to

17 the Office of Special Affairs. He interviewed me for a few

18 days along with another attorney, Dan Liepold and requested

19 that myself and my wife -- asked if we would serve as expert

20 consultants to help interpret the language because it's a

21 great -- as I am sure very arcane language and of some

22 complexity -- if we could interpret this and provide some

23 interpretation. I helped them find materials. We began to

24 work on the Fishman-Geertz case. Also, testified in the

25 Stevens v. Sally Jessie Raphael case. Also, a case in Los

261

1 Angeles where Emery Wilson Corporation was suing a Scientology

2 front group. They lost that case on Summary Judgment. That's

3 pretty much my history.

4 Q Did you charge consulting fees for your work on these

5 cases?

6 A When I'm taken on as a consultant, yes, sir, I do.

7 Q Did I retain you in this case to do some work for me?

8 A Yes, sir, you did.

9 Q Did I ask you to research and assemble materials showing

10 the extent to which the contents of the O.T. series has been

11 kept a secret?

12 A Yes, sir, you did. I had explained to you that I had

13 dealt in my public relations capacity --

14 MR. COOLEY: I object to this as totally hearsay.

15 The question was was he retained. The answer is yes.

16 THE COURT: Overruled.

17 THE WITNESS: Because I had explained that I had

18 dealt with instances of the O.T. materials going into the

19 public, into the media, into courts. I had been familiar with

20 this for about 20 years.

21 BY MR. KELLEY:

22 Q Did you go out and gather information of the kind that I

23 requested?

24 A Yes, sir, I did.

25 Q Have you assembled that for presenting here in court

262

1 today?

2 A Yes, sir. I gave it to you. I have been told it has been

3 put in some binders. I did see a binder.

4 Q Let me call your attention to what has been marked as

5 Defendants' Exhibit Double H-1 through double H-24.

6 A Is it okay if I move this over to this? Can I have the

7 number again, please.

8 Q I am referring to a binder which contains exhibits double

9 H-1 through Double H-24. Do you have that in front of you?

10 A Yes, I do.

11 Q Before we get into that, let me ask you this. When you

12 were with Scientology, working PR and with the GO, did there

13 come to your attention any breaches of security with respect

14 to the O.T. materials?

15 A Yes, sir. It was one of the worst kept secrets in the

16 world.

17 MR. COOLEY: I object.

18 THE COURT: Overruled.

19 BY MR. KELLEY:

20 Q Did it come to your attention that O.T. materials turned

21 up missing in circumstances other than the Copenhagen and UK

22 thefts that you heard about from Mr. McShane?

23 A Yes, sir. I was personally familiar with these instances.

24 Q Were there circumstances other than theft that gave rise

25 to missing materials?

263

1 A Yes, sir.

2 Q What kinds of circumstances?

3 A Well, the funniest one was a gentleman -- they put the

4 materials in their briefcase. He put his briefcase on the top

5 of his car and drove off and the briefcase broke open -- is

6 what we heard the story from, when we were giving the evidence

7 on this, and the O.T. materials were drifting down the

8 Hollywood freeway. And another gentleman simply lost his

9 materials in travel someplace. So there were several

10 instances where they were simply lost, and they just didn't

11 know where they went.

12 Q Now, let me ask you to take us through Exhibit double H

13 and begin with item 1 and tell us the significance of each,

14 and just given the fact we are short of time, be as brief as

15 possible.

16 A Item 1 is a copy of The Auditor which is the Scientology

17 journal. This is from 1968. What we have here is -- if I may

18 jump over to item 2 because these were put in out of sequence.

19 Item 2, Exhibit 2, should have been first. This is 1968. You

20 will see here on the front page underneath the picture of the

21 person who is Otto Roos O.T. Course Sections Three to Six has

22 been since declared as a suppressive person for using the O.T.

23 materials. Section Three began January 1, 1968, so this now

24 gives --

25 THE COURT: Tell us exactly when O.T. III started.

264

1 THE WITNESS: You will also see on this issue on the

2 next page Racket Exposed. Here's the order from L. Ron

3 Hubbard declaring people suppressive persons for having

4 taken -- forged upper level materials. So what we have here

5 is within months of 1968 there is evidence of -- according to

6 the Scientology publications, that the O.T. materials are

7 starting to get out in '68. Exhibit 1, this simply is another

8 instance. On page 2, another one, where Hubbard says here

9 that they have been stolen, et cetera. That was what I was

10 taught to say all of the time, it appears they were stolen,

11 altered, et cetera. This is what Hubbard used because

12 Mr. Hubbard said it here.

13 Q What is Item 3?

14 A Item 3 is a book section by Robert Kaufman 1972. I was in

15 the Guardian's Office at that time. This is what we called a

16 major flap. This is the first time that the O.T. materials

17 went into a book form. He takes this all of the way from

18 sections well below O.T. III which is what I believe

19 Mr. McShane was mentioning. There were other sections well

20 below that that are considered confidential. He takes them

21 all of the way through. Quite extensively it goes on for some

22 pages. That was the first book that published the O.T.

23 materials in '72.

24 Q Did you hear Mr. McShane say that the story of Xemu and

25 the volcanoes and the body Thetans and so forth were not

265

1 matters that were ever considered secrets?

2 A I heard that, sir. I was astounded.

3 Q Was that the position of Scientology while you were with

4 it?

5 A I would bet you anything -- you can collect up any group

6 of Scientologists having done O.T. III, unless they heard it

7 in the media, they have never heard or seen body Thetans or

8 been told why there are volcanoes that are symbols. They have

9 just changed the tactics for the first time in the history

10 since '68 right here. This is brand new. And that's -- I am

11 astounded. My jaw dropped.

12 Q How about Item 4?

13 A Item 4 is a copy of the magazine from Chic magazine,

14 January 1977, Inside Scientology. The opening words deal with

15 O.T. III.

16 Q What is Item 5?

17 A Item 5 is an article from the Las Vegas Review Journal of

18 August 10, 1980. My name is mentioned in this article along

19 here because I was sent to Las Vegas on this because the

20 newspaper called in and said they are going to publish the

21 O.T. materials. I was sent to Las Vegas to deal with this. I

22 met with the -- with the writer of this article, whose name is

23 in the byline, Sherm Frederick who was the city editor. He

24 had with him at the time full copies of the O.T. materials in

25 the pack, which astounded me. I had done O.T. V. He had it

266

1 all of the way up through O.T. V and was asking me questions

2 about this. I did my usual song and dance. Well, these are

3 stolen. This is altered, et cetera. He ended up writing

4 about it in here. In fact, he takes materials from O.T. V

5 about people telepathically getting somebody to flap their

6 arms or mail postcards from a distance which was in O.T. V.

7 So this is where I went off to try to stop the publication of

8 it and it went ahead to be published.

9 Q He had copies of the actual O.T. I through V?

10 A Yes, sir, he had packs of these things, which astounded

11 me, because there it was. There was a lot handwritten from

12 Mr. Hubbard. He had copies of the handwritten. He had copies

13 of the processes, the full packs, and at that time I had not

14 seen a full pack in anybody's possession.

15 When I got back, we managed to piece it together,

16 where it had come from.

17 Q Did you ask him how he got it?

18 A I asked him, and he declined to say.

19 Q Incidentally, there is an attachment to this No. 5 with

20 the word "Sea Organization" at the top. It appears to be

21 something that was misplaced here from my office. I would

22 like you to just describe what this is and separate it from

23 the rest of Item 5.

24 A Yes, this is not part of -- well, shouldn't have been part

25 of Item 5. Item 5 should have been the newspaper story. What

267

1 this thing, Sea Organization, dated 26 May '82 is a

2 suppressive person declaration. Scientology has this category

3 of suppressive persons which are team people that are engaged

4 in what they say is supressing Scientology. This declares

5 Bill Robertson and several others, Alex Sibersky. Bill

6 Robertson was formerly a highly-placed official also. These

7 orders are issued alerting everybody. You will notice up in

8 the left-hand corner it says, all staff, all public, which

9 means this goes out everywhere. So this meant every

10 Scientologist was to get -- they were to be put on the

11 bulletin board, et cetera. Basically Bill Robertson's crime

12 was dealing with the O.T. materials in creating something

13 called the Galactic Patrol and using the O.T. materials

14 primarily overseas.

15 Q While we are on that topic, let's look at Exhibit S which

16 is in a different book and ask if you can tell us what that

17 is?

18 A Exhibit S is another Sea Org suppressive group declaration

19 of September 1982 which is a few months later than the other,

20 and the Galactic Patrol is declared a suppressive group. And

21 that was Bill Robertson's group. So the earlier one was

22 specific individuals and now this is his group.

23 Q So the record is clear then, the Exhibit S material

24 relates to the same subject matter as the material that is

25 mistakenly attached to Item H-5?

268

1 A Yes, sir, they should have been together actually.

2 Q Okay. What about Item 6?

3 A Item 6 -- i apologize for this -- it came in as a Fax from

4 the Clearwater Sun of 1981. Headline: "Sect Courses Resemble

5 Science Fiction." This goes into the O.T. levels in O.T. III

6 and talking about them.

7 Q On the second page there is some art that appears as an

8 illustration?

9 A Yes, sir. In the caption under the pages which are marked

10 O.T. III say "Material from the operating Thetan course shows

11 eons-old incidents Scientologists relive during training that

12 is supposed to result in super human powers."

13 Q Are you able to tell us whether these are copies of

14 documents from the O.T. materials?

15 A They are reproduced -- small, sir, it's difficult. To

16 tell you the truth, they appear to be retyping.

17 Q How about Item 7?

18 A Item 7 is from the Clearwater Sun. I believe this is also

19 1981. Somebody punched a hole in the date. I believe it's

20 '81. The headline: "Xemu may sound wild, but so do other

21 beliefs. 75 million years ago Xemu met --

22 Q My Item 7 has a date still on it, and it's 1985.

23 A 1985 which would match with some other articles that are

24 here from 8.

25 Q How about Item 8?

269

1 A Item 8 is a newsletter called The Heretic from 1985. It's

2 from a group that we in Department 20 called a squirrel

3 (phonetic) group. These were groups that took the materials

4 and would go -- to use a more -- which Mr. McShane testified

5 as some of these knockout --

6 Q Knockoff religion.

7 A That was one of the functions of Department 20 was to

8 knock them out. This is one of these newsletters, The

9 Heretic, an open forum for technical investigation '85.

10 Summary of O.T. III, and they go on to talk about O.T. III in

11 part of the column. It's one of the phenomena of those groups

12 that they felt that the material should have been open and

13 public knowledge.

14 Q What is item 9?

15 A Item 9 is from a newspaper down in Los Angeles called The

16 Reader from '85. On the left in very small print they had a

17 section of advertisements that you could go in and place any

18 kind of free ads, happy birthday, welcome home, that kind of

19 stuff. Somebody did the recitation of O.T. III again from the

20 O.T. III materials. I included that just to show the

21 diversity between alternative press and newsletters, magazines

22 et cetera.

23 Q Item 10?

24 A Item 10, Clearwater Sun, 1985. "Court documents revealed

25 despite Scientology protest." This goes to the incident that

270

1 has been presented by the plaintiff, where the documents were

2 opened momentarily and they go through and start talking about

3 O.T. III.

4 Q And 11?

5 A 11 is another one from The Los Angeles Times with a

6 photograph of a Scientologist in the hall. Headline:

7 Scientologist blocks access to secret documents. Also talks

8 about O.T. III. Because the LA Time did obtain the -- they

9 said they obtained a copy of O.T. III.

10 Q Do you have a 12?

11 A Yes, sir, I do.

12 Q I don't have a 12.

13 A My 12 is a copy from Forbes Magazine, October 1986. The

14 Prophet and Profits of Scientology. That also does include

15 along the way materials about O.T. III.

16 Q How about Item 13?

17 A A book called Bigger Secrets by William Poundstone. The

18 book is basically a chapter revealing certain secrets that

19 people don't want you to know in various disciplines. One of

20 the secret teachings of L. Ron Hubbard. He goes into the

21 upper levels of O.T. III.

22 Q How about 14?

23 A 14 is a copy of a French magazine article from '87. And

24 even if you don't read French, you can pick it up there. 75

25 million years ago, and you will see the name Xemu.

271

1 Q Item 15?

2 A 15 if Xemu's cruel response to overpopulated world.

3 St. Petersburg Times 1988. The whole thing goes into this,

4 and they talk about the volcanoes and cost of the courses and

5 how you are made into clusters and frozen in alcohol, et

6 cetera.

7 Q 16?

8 A 16 is from Gnosis Magazine of 1989. Hubbard's Ladder. It

9 takes up as part of this O.T. III.

10 Q 18?

11 A 18, Woman Reveals Scientology Secrets. '89, St.

12 Petersburg Times, regarding Margery Wakefield. Where she had

13 revealed O.T. III and they discuss it in the article.

14 THE COURT: I have that as 17.

15 THE WITNESS: You are correct, Your Honor. It's 17.

16 MR. KELLEY: Did I skip one?

17 THE WITNESS: I am taking this by the tab order.

18 THE COURTROOM DEPUTY: Did you skip one?

19 BY MR. KELLEY:

20 Q You have described 17?

21 A That's 17, Woman Reveals Scientology Secrets.

22 Q 18?

23 A 18 is a Southern California publication called Southern

24 California Psychiatrist July 19, 1990 which is basically a

25 professional journal, a guest editorial by a Dr. West and

272

1 talks about O.T. III, an editorial to the psychiatric

2 profession.

3 Q 19?

4 A 19 is a 1990 Los Angeles Times series. They had a six

5 part series about Scientology. Part one in here, the headline

6 is -- it's about eight pages in defining the theology. There

7 are a couple of pages about the beliefs, and it talks about

8 Xemu, how he has expired, where he is up in the wire cage in

9 the mountains, et cetera. That's the Los Angeles Times.

10 Q Was that republished?

11 A That was republished in an Oklahoma newspaper. I have a

12 copy elsewhere. They took all of the six part series and

13 published it into a newspaper and distributed it to anyone who

14 wanted it. It went around the world because all six parts

15 were handled in one place in a newspaper format.

16 Q What's double H-20?

17 A Double H-20 is called the Townsend Letter. Informal

18 newsletter for doctors. It comes out of California, talks

19 about Scientology and Dianetics in a couple pages, et cetera.

20 It goes into O.T. III. This was sent to me, and I found it

21 interesting because here it was even in a little newsletter to

22 doctors and it's from '91.

23 Q How about double H-21?

24 A 21 is the Australian Weekly, '92 September. And down at

25 the bottom there it says, "What do they believe?" It goes

273

1 into Xemu and the galaxies and the hydrogen bombs.

2 Q 22, Total Freedom Trap?

3 A This is a booklet that was published by Jon Atak.

4 Published in the UK. It's a little pamphlet that -- I forget

5 how many pages -- but 36 pages. It's copyright 1992. And it

6 talks about some of the upper levels of what the O.T. sections

7 are about.

8 Q How about Exhibit double H-23?

9 A 23 is a Los Angeles magazine which is one of these city

10 regional magazines. Goes by Catch A Rising Star from

11 September 1993. It's about Tom Cruise and his involvement

12 with Scientology and talks about O.T. III.

13 Q And 24?

14 A 24 is the National Enquirer, January 1995, about John

15 Travolta. I was quoted in there because they were asking me

16 some questions, and they mention O.T. III. I was not the one

17 that discussed O.T. III. They had it from someplace else.

18 They had made it one and the same which is the National

19 Enquirer.

20 Q We have heard from Mr. McShane about the Revolt in the

21 Stars screen play. Did you have any personal knowledge of

22 that particular work?

23 A Yes, sir, I did.

24 Q Let me ask you to take a look at Exhibit R -- and Mr. Case

25 that's one of the ones that's bound like a deposition. It's

274

1 bound like a deposition.

2 Could you tell us what's contained in that exhibit?

3 A This is a screen play written by Mr. Hubbard which was a

4 science fiction story which basically begins with the whole

5 concept of O.T. III and the story of O.T. III and weaves it

6 into a movie plot pretty much as Mr. McShane described it but

7 not fully.

8 Q Did you have knowledge of any attempts to market or pitch

9 that screen play?

10 A Yes, sir. This started when I was at ASI in 1982. One of

11 our functions was to sell his works, so we were trying to sell

12 his books and his works and get them converted into movies.

13 So this was done over the fiction section DH which was not

14 directly with me but we worked together because since I was

15 over the PR section, they were out trying to peddle it.

16 Inside this exhibit I included Fiction of L. Ron Hubbard.

17 It's not part of the actual screen play. But this thing, the

18 Fiction of L. Ron Hubbard is from Author Services and lists

19 this work as Mr. Hubbard's. There is also inside of it a

20 thing from Brilliant Films which is September '79. They were

21 trying to sell it before we came along in '82. They were

22 trying to sell this Revolt in the Stars, so the treatment --

23 I'm sorry -- the screen play was being passed around

24 Hollywood. People that helped to support it in some ways,

25 contributions, investors were made copies of this so this

275

1 began to circulate through Hollywood quite a bit, so I

2 included the promotion from Brilliant Films. In the front is

3 a treatment written by Mr. Herbert, which I recognize because

4 when this was given to us, I was very surprised because it

5 listed in here in the screen play, the name of Xemu Etrawl,

6 whoever -- the man who captures Xemu ends up being L. Ron

7 Hubbard.

8 THE COURT: Mr. Kelley, it's noon. Let's recess

9 until 1:30.

10 (Recess 12:00 until 1:30 p.m.)

11 THE COURT: I'm sorry to have kept you waiting. I

12 try to be prompt but the elevator was stuck and that's quite

13 an interesting experience I haven't had before, but just so

14 you know.

15 MR. KELLEY: I have never heard of a judicial

16 elevator being stuck.

17 THE COURT: There were a lot of happy people for a

18 short period of time.

19 BY MR. KELLEY:

20 Q Mr. Young, before you went on the stand, I asked you to

21 speak quickly so we might get through this quickly. The court

22 reporter has complained about the drill we are putting her

23 through. So I am going to ask you to slow down just a little

24 bit.

25 A Thank you.

From bobpenny@delphi.comSun Oct 1 09:51:49 1995

Date: Sun, 01 Oct 1995 03:11:15 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: 9-11-95 #3

276

1 Q I want you to back up a second to the Galactic Patrol

2 which was something of a knockoff Scientology program; is that

3 right?

4 A Yes.

5 Q And at the time this was happening, you were still with

6 Scientology, it was back in the earlier years?

7 A Yes.

8 Q Did it appear that the Galactic Patrol had all of the O.T.

9 materials?

10 A I didn't have personal knowledge, but I saw reports of it.

11 MR. COOLEY: I object then.

12 THE COURT: Sustained.

13 MR. KELLEY: He was with them at the time. It's

14 talking about reports internal to the organization.

15 THE COURT: That's another matter I don't know of.

16 Q Are the reports you are talking about reports within

17 Scientology?

18 A Yes, it is.

19 Q And according to those reports, did it appear that the

20 Galactic Patrol had the O.T. material?

21 MR. COOLEY: I object to the witness talking about

22 written reports. I object.

23 THE COURT: Overruled.

24 THE WITNESS: The answer is yes the reports were --

25 that they had the upper levels.

277

1 BY MR. KELLEY:

2 Q In addition to the materials you talked about, have there

3 been books written which disclose parts of the advanced

4 technology?

5 A The one that was an exhibit that I referred to from 1972

6 Inside Scientology by Robert Kaufman.

7 Q How about a book call Messiah or Mad Man?

8 A Yes, that's by Russell Miller. I believe that has upper

9 levels that came out perhaps about four years ago, five years

10 ago.

11 Q Is there one called Piece of Blue Sky.

12 A Yes. Piece of Blue Sky by Jon Atak, who was also the

13 author of that one that I referred to in that exhibit. He has

14 quite extensive materials of upper levels in his book Piece of

15 Blue Sky.

16 MR. KELLEY: Mr. Case, could I ask you to hand the

17 witness double K and double L. These are books that are

18 separate and while we are at it double M.

19 THE COURTROOM DEPUTY: What is double M?

20 MR. KELLEY: It's a video.

21 BY MR. KELLEY:

22 Q What are double K and double L?

23 A Double K is L. Ron Hubbard's Messiah or Mad Man book by

24 Corydon. O.T. III is covered on page 353 following --

25 Q How about exhibit double M, what is that?

278

1 A Double M is a videotape recording of Big Story Inside the

2 Cult which played on English television. This was about a

3 month ago. Running time is 30 minutes, and I obtained a copy

4 of this from the UK and had it converted to the American

5 system. It talks about O.T. III on that. It's a TV film.

6 Q Did you have occasion while you were with the Scientology

7 organization to review documents obtained from the government

8 through Freedom of Information Act requests?

9 A Yes, sir, I did that for quite a while, thousands of

10 documents.

11 Q Did that review indicate that the government had any of

12 the advanced technology materials?

13 A That came as quite a surprise to me when we did get from

14 the Department of Justice and FBI files and in which there was

15 upper level material there. We didn't know how they got in

16 there, but they were in the government files as well, yes.

17 This would be in the period 1974, 1975, 1976, in that period.

18 Q Let me ask you to take a look at Exhibit S, if you will.

19 Mr. Case, it's in the first volume of defendants' exhibits.

20 A Okay.

21 Q I believe this is the same as exhibit double G which

22 Professor Cleek brought with him. Can you tell us what that

23 is?

24 A You might be referring to Exhibit T. My Exhibit S is the

25 Galactic Patrol.

279

1 Q Perhaps I am wrong. Is Exhibit T the one that deals with

2 the geological study of O.T. III?

3 A Yes.

4 This is something that I requested via the Internet

5 and came to me. It has the headers on it coming to me. Then

6 I made a copy to provide to you. This was something that

7 originally I discovered on Alt Religion Scientology back

8 around -- I think I first saw it probably around February of

9 this year. I requested a copy. I got a copy last week.

10 Q What does that purport to do?

11 A This is a scientific study of O.T. III which is done by a

12 gentleman that says he has credentials in geology. What he

13 does talk about O.T. III -- what's it all about quite

14 extensively and how it relies upon the existence of volcanoes

15 that existed 75 million years ago. He names the volcanoes

16 that are named in O.T. III. There is maybe one dozen or so in

17 here. What he does is he goes through a geological analysis

18 as to whether or not it was possible which volcanoes could

19 have geologically existed, given what we know now about the

20 geology of the earth, the movement of earth plates, et cetera.

21 He takes you through an extensive analysis of all these

22 different locations to see if there is any scientific basis

23 for these volcanoes and concludes that a number of these

24 volcanoes didn't exist at the time. Number of volcanoes are

25 in the wrong locations, et cetera; therefore, he concludes

280

1 that O.T. III cannot be supported by geological evidence. He

2 has a large bibliography in the back which is it mostly.

3 Q Do you follow Alt Religion Scientology on the Internet?

4 A Yes.

5 Q Is there a regular discussion of the O.T. series?

6 A Yes, sir, quite often.

7 Q Throughout 1995 have you seen postings of the O.T.

8 materials which is attached to the Fishman affidavit?

9 A Yes, sir.

10 Q Are you familiar with the Fishman affidavit and its

11 attachments?

12 A Yes, sir. I worked on the Fishman case.

13 Q How often have you seen postings of its entirely or parts

14 of that set of O.T.?

15 A I saw that them last night, several copies, when I checked

16 into the ARS before I flew back into Denver.

17 Q Did you see them on a regular basis before 1995, before

18 August 1?

19 A Yes, sir.

20 Q Have you seen them a number of times after the August 22

21 raid on the Wollersheim and Penny residences?

22 A In fact, the frequency increased after that point, yes.

23 Q Based upon your research in your 20 years of experience

24 within Scientology, do you feel that the O.T.s I through VII

25 and the form attached to the Fishman affidavit are in any

281

1 sense a secret?

2 MR. COOLEY: Objection. This witness hasn't been

3 offered as an expert, and I was assured he was not being put

4 on as an expert.

5 MR. KELLEY: It's offered as a factual observation or

6 in the alternative a layman.

7 THE COURT: It's not an expert opinion. I have

8 problems with the way you phrase it by saying "feel"

9 something.

10 BY MR. KELLEY:

11 Q Based upon the research that I have asked you to do and

12 your 20 years experience with this Scientology, do you have a

13 belief as to whether or not it's accurate to call the O.T.

14 materials attached to the Fishman affidavit a secret?

15 MR. COOLEY: I object.

16 THE COURT: Overruled.

17 THE WITNESS: I couldn't call them a secret, sir, to

18 the degree of the evidence that I have gone over the exhibits,

19 and it has been out in the public domain in one form or

20 another since '68.

21 MR. KELLEY: Thank you, Your Honor.

22

23

24

25

282

1

2 REPORTER'S CERTIFICATE

3 I certify that the foregoing is a correct transcript from

4 the record of proceedings in the above-entitled matter. Dated

5 this 21st day of September, 1995.

6 _______________________________

Deborah A. Stafford

7

8 DEFENDANTS' EXHIBITS

9 Exhibit Offered Received Refused Received Withdrawn

10 V,W,X,Y,Z 204 205

11 AA,BB,CC,DD,EE,FF 204 205

12 WITNESSES

13 Warren McShane

14 Cross-examination By Mr. Kelley 205

15 Redirect Examination By Mr. Cooley 220

16 Recross Examination By Mr. Kelley 241

17 Redirect Examination By Mr. Cooley 244

18 Robert Vaughn Young

19 Direct Examination By Mr. Kelley 257

20 PLAINTIFF'S EXHIBITS

21 Exhibit Offered Received Refused Reserved Withdrawn

22 69 254 254

23 70 254 254

24 88 255 255

25 81 255 255

From bobpenny@delphi.comSun Oct 1 09:55:26 1995

Date: Sun, 01 Oct 1995 03:26:11 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: 9-12-95 #1

388

1 IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

2

Civil Action No. 95-B-2143

3

RELIGIOUS TECHNOLOGY CENTER,

4

Plaintiff,

5

vs.

6

F.A.C.T.NET, INC., et al.,

7

Defendants.

8

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

9

REPORTER'S TRANSCRIPT

10 MOTION FOR PRELIMINARY INJUNCTION

11

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

12

13 Proceedings before the HONORABLE JOHN L. KANE, JR.,

14 Judge, United States District Court for the District of

15 Colorado, commencing at 9:30 p.m., on the 12th day of

16 September, 1995, in Courtroom C-401, United States Courthouse,

17 Denver, Colorado.

18

19

20

21

22

DEBORAH A. STAFFORD, Official Reporter

23 P.O. Box 3592

Denver, Colorado, 80294

24 (303) 571-0530

25 Proceedings Reported by Mechanical Stenography

Transcription Produced via Computer

389

1

APPEARANCES

2

For the Plaintiff: EARLE C. COOLEY, ESQ.

3 Cooley, Manion, Moore & Jones

21 Custom House Street

4 Boston, MA 02110

5 TODD P. BLAKELY, ESQ.

Sheridan Ross & McIntosh

6 1700 Lincoln Street, 3500

Denver, CO 80203

7

ERIC M. LIEBERMAN, ESQ.

8 Rabinowitz, Boudin, Standard

Krinsky & Lieberman, P.C.

9 740 Broadway at Astor Place

New York, New York 10003

10

HELENA K. KOBRIN, ESQ.

11 7629 Fulton Avenue

North Hollywood, CA 91605

12

For the Defendants: THOMAS B. KELLEY, ESQ.

13 NATALIE HANLON-LEH, ESQ.

Faegre & Benson

14 2500 Republic Plaza

370 17th Street

15 Denver, CO 80202

16 KEN LIEBMAN, ESQ.

Faegre & Benson

17 90 South Seventh Street

Minneapolis, MN 55402

18

19 * * * * *

20 P R O C E E D I N G S

21 THE COURT: Go back to the box, please.

22 (Lawrence Wollersheim was sworn previously.)

23 CROSS-EXAMINATION

24 BY MR. COOLEY:

25 Q Mr. Wollersheim, as I understand the testimony you gave in

390

1 your deposition, you got O.T. I through VII from the

2 Fishman -- from the Louis D'Amato firm in connection with your

3 consulting work for that firm; is that correct?

4 A I got it originally from my attorney.

5 Q I understand that, but I am talking about the

6 Fishman-Geertz affidavit which attached that --

7 A Yes.

8 Q And they were sent to you as I understand in packs for the

9 consulting work?

10 A In large cases we had -- they would send us a case or so

11 of material at a time.

12 Q Can you tell us when you started that consulting work?

13 A It was started sometime at the beginning of the

14 Fishman-Geertz case. I believe late 1993.

15 Q Were you consulting on that case at the time that Judge

16 Hupp transferred it to Florida?

17 A I wasn't aware of that even going on, so I wouldn't be

18 able to answer.

19 Q In any event, when you say -- when was F.A.C.T.Net formed,

20 can you tell us?

21 A The pilot phases were going to be -- we were registered as

22 a corporation. We had been in existence including the pilot f

23 almost three years now.

24 Q So that would take you back to '92?

25 A Late '92, something like that.

391

1 Q When you say late '93 when you started consulting for

2 Louis D'Amato, can you give us a more specific date, was it

3 December, November?

4 A I'm sorry. I would have to look at my record to do that.

5 Q In any event, at that point in time, in late '93, they

6 sent you these packs which included the material that was in

7 the Fishman-Geertz affidavit?

8 A I didn't say that they sent it in late '93. They sent it

9 sometime from the time that I started consulting to the time

10 that the case ended. I was receiving a steady stream of cases

11 and files and express mails.

12 Q That is from the time you got it until the time the case

13 was dismissed?

14 A Yes, sir.

15 Q Do you know when that case was dismissed?

16 A It's when Scientology backed out and had a prejudicial

17 dismissal. I don't know the date on it. You would know that

18 better than I.

19 Q Whatever date, that was the period that your consulting

20 work ended on the case and there was -- and there was some

21 follow-up for, say, a month or two after that.

22 A It was more making sure that loose ends were tied up.

23 Q Now, the clerk's stamp on that affidavit bears a date of

24 April 9, 1993. And was that stamp on the papers that you got?

25 A I would have to see what ones we had.

392

1 Q As I understand your testimony, when you got those papers,

2 you did not load them into your computer?

3 A No, we didn't.

4 Q You kept them in your hard copy archive, correct?

5 A To the best of my belief.

6 Q And that applies to F.A.C.T.Net's computers, right?

7 A They are volunteer staff. There are other computers

8 besides at my location. So I could not speak to -- if a

9 volunteer picked up a pack or they were done by someone else

10 without my knowledge. I can only speak to the policy of

11 F.A.C.T.Net and my knowledge.

12 Q And the policy of F.A.C.T.Net was not to load those into

13 the computer?

14 A Absolutely.

15 Q If they did -- it would get loaded, it was in violation of

16 policy?

17 A Of our strategic policy, yes.

18 Q Incidentally, one of your volunteers, is that the fellow

19 Jacobson that you mentioned yesterday in connection with

20 Mr. Lerma?

21 A He is a volunteer.

22 Q How long did he serve as a volunteer?

23 A He has been with us for about a year and a half.

24 Q Over that year and a half period, one of the volunteer

25 services he has performed is scanning documents into your hard

393

1 drive, correct?

2 A I don't believe so.

3 Q What volunteer services did he provide?

4 A He has done database research for people who don't have

5 computers. His number is listed in our main number, and they

6 call in and they call him, and what he does, he helps them,

7 individuals, helps us take care of our backlog and answers our

8 phone questions and may send him some of his material, some of

9 our material, some of our cult awareness materials. He

10 volunteers for numerous organizations.

11 Q And does he, for example, when one of these backward

12 lawyers, who doesn't know how to handle computers calls in, is

13 he one of the ones who does the research for them?

14 A No. He handles the general public. I generally have

15 handled the lawyers because I have had 15 years of working

16 court cases surrounding Scientology.

17 Q Now, incidentally, when Mr. Lerma posted those materials

18 to the Internet, when did you learn that the church -- that

19 R.T.C. had brought an action against Mr. Lerma in the Eastern

20 District of Virginia?

21 A When Arnie called me back and said that he had been

22 raided.

23 Q There was -- at that point there was no suit against

24 F.A.C.T.Net or against you, was there?

25 A No, sir, there wasn't.

394

1 Q There was no suit filed against you or against F.A.C.T.Net

2 or against Mr. Penny until after you had made a posting on

3 August 15 to the Internet, saying that Lerma acted as your

4 director and was acting pursuant to the policy of F.A.C.T.Net;

5 isn't that right?

6 A That's not correct. I had said according to the

7 guidelines, not policy. The statement says what it says.

8 Q In any event, you made a posting to the F.A.C.T.Net on

9 August 15, whatever it says, it says, but it wasn't until

10 after that posting that you were sued?

11 A I made no posting to the Internet, sir.

12 Q ARS to be precise.

13 A Yes, sir.

14 Q It wasn't until after that, that this litigation was

15 instituted against you?

16 A Yes, sir.

17 Q Yesterday you testified that this was all a kind of

18 strategy on the part of R.T.C. to put you out of business.

19 Do you have any evidence that R.T.C. knew anything

20 about your involvement until you posted on the Internet on

21 15th of August?

22 A Scientology has an intelligence agency, according to the

23 FBI, that rivals their own, and having dealt with them for 15

24 years and their operatives that have tried to break through

25 our security prior to the raid, Scientology knew of our

395

1 financial situation, they knew of our court documents or our

2 court filings. They knew more about us -- you probably have

3 more in your files than I know about myself.

4 Q But your court filings are public record, aren't they?

5 A Right.

6 Q Those aren't hard find?

7 A My position is Scientology and R.T.C. deliberately and

8 knowingly staged that raid as an intelligence raid to gain

9 information about court litigation and are using copyrights as

10 a coverup.

11 Q To stage the raid on you?

12 A The raid on our organization. You looked at this as an

13 opportunity to gather up all your adversaries and all their

14 information in one fell swoop, and that's what you did.

15 Q You are aware, aren't you, that about 6,000 infringements

16 were found on your -- on your hard drive and in your hard

17 copies?

18 A I am not aware of that.

19 MR. KELLEY: That assumes the basic issue in this

20 case.

21 THE COURT: He answered he wasn't aware of that.

22 BY MR. COOLEY:

23 Q Let me ask you this: In addition to the -- to the

24 copyrighted unpublished materials, that is the upper level--

25 we'll call them the upper level materials, the advanced

396

1 technology -- you had vast quantities of copyrighted,

2 published materials scanned into your hard drive, didn't you?

3 A Performing our functions as a library and archive, we

4 would be no different than the Denver Library or any other

5 library and archive having millions of pieces of copyrighted

6 material in their possession.

7 Q Now, when you -- when somebody comes into your files,

8 looking for copies of copyrighted material, you permit them to

9 download it unless it's in your secret file, right?

10 A Unless -- I would have to see the exact document to know

11 what you are talking about. Do you have a specific document?

12 Q I am asking. You told us that you got two sides or two

13 kinds of data, data that is publicly available to anyone who

14 comes in and asks for it from you and that includes anyone,

15 does it not?

16 A Providing they sign a library card holder's agreement

17 where they specify that they will abide by the various

18 regulations that libraries and archives exist under. They

19 sign and date an actual contract saying that they are using it

20 for scholarly research and only in the specifications as

21 delineated by their eight-page contract.

22 Q And I suppose if I called you, you would give me access to

23 that database just like any other member of the public, right?

24 A If you didn't have possession of -- right now, any member

25 of Scientology -- we don't discriminate against any public

397

1 person -- as long as you signed the contract and followed the

2 regulations, the fair use regulations, you could use it.

3 Q What would you charge me for that?

4 A There is no charge.

5 Q Incidentally, you received back -- you received a computer

6 with -- a computer has been furnished to Mr. Penny with the

7 material other than the infringing material on it and that

8 which we are still searching; is that correct?

9 A I believe so.

10 Q And that's in -- that's in F.A.C.T.Net's possession?

11 A Yes, sir.

12 Q You are back on line using that?

13 A No, we are not on line. Our library isn't up. Our BBS

14 isn't up, our E-mail is not functioning. We don't have use of

15 our own software, $10,000 worth of specialty software, that

16 this man is incapable of reproducing in his current condition,

17 that this was nothing more than a token gesture for the court.

18 Q Are you telling me that you cannot use the computer that

19 you have?

20 A It's a computer with no software, and it's nonfunctional

21 for F.A.C.T.Net's purposes.

22 Q Did you yourself refuse a computer?

23 A Yes, I refused a computer.

24 Q Did you get back all of your floppies?

25 A I don't believe that we have.

398

1 Q How many floppies were returned to you?

2 A Hundreds, but I still believe there is quite a bit of

3 material, hard copies and floppies, that you are still in

4 possession of.

5 MR. COOLEY: I would offer Exhibits 96, 97, and 98

6 that were filed this morning, sir, which are letters to

7 Mr. Kelley returning material for Mr. Wollersheim.

8 THE COURT: 96, 97 and 98.

9 MR. KELLEY: Your Honor, I will not object on the

10 basis that the letters were sent. As far as what's in them

11 and what it means, I cannot say one way or the other. I think

12 the witness has to say that.

13 THE COURT: All right. The exhibits are admitted.

14 BY MR. COOLEY:

15 Q Were you aware of these deliveries to Mr. Kelley on August

16 29, September 1, and September 5, Mr. Wollersheim?

17 A The only one that I was aware of and read was Exhibit 97.

18 Q 97, which is the delivery to Mr. Kelley of September 1?

19 A Yes, sir.

20 Q And have you gone over all of those materials that are

21 listed there?

22 A It's impossible to go over all of the materials, one

23 person preparing for court. You had nine people going for

24 three weeks, and you can't get through them.

25 Q Except they were your materials, sir, not ours. Did you

399

1 get back the 555 disks referred to in Exhibit 98?

2 A I just saw this when you handed it to my attorney a few

3 minutes ago. I have no knowledge if we get those back or not.

4 Q Now, libraries have permission from copyright owners. Do

5 you?

6 A In many cases we do.

7 Q Do you have any permission whatsoever from the Religious

8 Technology Center bridge publications or any own other area of

9 Scientology copyright of published or unpublished materials to

10 have them?

11 A No, sir, we don't.

12 Q Now, going back to the O.T. I through VII in the

13 Fishman-Geertz affidavit, F.A.C.T.Net -- as I understand your

14 testimony, whatever Lerma may have testified to, did not have

15 those materials on its optical archive, correct?

16 A To the best of my knowledge.

17 Q As a matter of fact, you never told Arnie Lerma that you

18 did, as I understand your testimony?

19 A I said that I didn't believe that we had those on, and I

20 was surprised. I was asking him where Jeff Jacobson got them,

21 and I was asking, do you think he got them from your image

22 files, and I was speaking in a sense this couldn't happen.

23 Q So whatever that situation was, as far as you knew, that

24 would be strange for you to have them on your optical archive

25 because if you had them in image form, why would you need

400

1 anyone to scan them, correct?

2 A It would be illogical. Volunteers are like gold to us.

3 We have so much work to do and so few people, that the last

4 thing we would want to do is give them busy work and have them

5 duplicate something that's already done.

6 Q Are you aware that Lerma spent 18 hours at least scanning

7 those materials into his hard drive?

8 A I would have estimated a lot more.

9 Q I thought you -- something like maybe 35 was your

10 estimate?

11 A To scan it and correct all of those pages and to do it

12 right, the formatting, it could take longer than that,

13 depending upon the OCS software and how good he is.

14 Q Is it fair to say then as far as you know that F.A.C.T.Net

15 did not have in its computer any electronic copy of that

16 material until Mr. Lerma scanned it into his hard drive and

17 sent it to you in E-mail on July 30, 31, 1995?

18 A That was my most sincere belief.

19 Q Did you at the time Mr. Lerma sent you the E-mails of July

20 30 and 31, containing the material, the Fishman-Geertz

21 affidavit, did you have in your file in Colorado the hard copy

22 that you had stored in your hard copy archive?

23 A To the best of my knowledge, I didn't have any copies of

24 it.

25 Q You didn't have the one you got from --

401

1 A I have --

2 Q -- the Louis D'Amato firm?

3 A You are talking about in hard copy?

4 Q Yes, sir.

5 A I did have. Actually it was stored up at Bob's place in

6 his garage at that time.

7 Q Let's see if I understand you correctly. You had the

8 Fishman-Geertz affidavit with the exhibits containing those

9 portions of O.T. I through VII stored in a hard copy archive

10 which at the time that Lerma posted to the Internet was in Bob

11 Penny's garage?

12 A The case was over. As we normally do, we take all the

13 boxes and put them into the archive if we are not using them.

14 Q I understand, and they were in the hard copy archive which

15 was stored in Bob Penny's garage?

16 A Right.

17 Q And was that -- excuse me. Was that hard copy that was in

18 the hard copy archives seized in the seizure?

19 A Yes, it was. At least it was returned. A copy was

20 returned to us in the things that you returned, so I assume

21 that you picked it up out of Bob's garage.

22 Q Was that the only copy that you had?

23 A There may have been another one.

24 Q Do you know?

25 A I am not certain. We got a lot of stuff sent to us in the

402

1 mail and somebody could have sent us another copy because that

2 was a very hot document.

3 Q One thing is certain that after Mr. Lerma posted to the

4 Internet -- Strike that.

5 After Mr. Lerma sent you E-mails of July 30 and 31,

6 Sunday and Monday, you had copies in your hard drive or rather

7 in your computer system?

8 A I don't know that to be a fact, sir.

9 Q You don't know that he sent you two-fifths of O.T. III and

10 the other three-fifths of O.T. III?

11 A You weren't being specific. I had different -- another

12 copy or his E-mail. If you are asking me if I had his E-mail?

13 The day that I looked at the E-mail was after the raid, so at

14 that date I could tell you that Arnie's E-mail was there, but

15 prior to that if you have ever download E-Mail, it just goes

16 automatically. You don't see what you are getting.

17 Q It got downloaded and loaded into your hard drive, didn't

18 it?

19 A Yes, but I wasn't aware of it until after the raid.

20 Q Who loaded it into your hard drive, do you know, you or

21 Penny?

22 A I did my normal download.

23 Q After that material was sent to you, you now had received

24 it by E-mail, loaded it into your hard drive, so you had it,

25 you had it electronically, and in addition you had a hard copy

403

1 in Bob Penny's garage; is that it?

2 A To the best of my knowledge, sir.

3 Q Have you testified to ten disks that you have prepared and

4 sent to various locations, CDs, correct?

5 A Yes, sir.

6 Q Where are those?

7 A I am not going to give up the locations of them, sir.

8 MR. COOLEY: I would respectfully ask the court to

9 require the witness to answer the question.

10 MR. KELLEY: Your Honor, we are going assert the

11 privilege recognized in the Silkwood v. Kerr McGee case in the

12 Tenth Circuit as to the federal claims and the Colorado

13 newsperson's shield laws to the state claims.

14 THE COURT: Request is denied. Go ahead.

15 BY MR. COOLEY:

16 Q What is on those CDs?

17 A Copies of our BBS. It's a complete backup of the library

18 in case of sabotage and a bombing or fires, so that these

19 things could be gotten back and an effort by an organization

20 to destroy us through terrorism would not be successful.

21 Q Are you saying that you have on those CDs a complete

22 backup of everything that was seized in the seizure?

23 A No, sir. I am not saying that.

24 Q What's not on it?

25 A It's a copy of the BBS. It's a copy of a 14,000 page

404

1 Scientology application to the IRS for nonreligious status.

2 It's a copy of three disks that were sent to us by the Louis

3 D'Amato firm, three CDs.

4 Q Did you say nonreligious status?

5 A That must have been a -- they got a religious -- after 20

6 years they got a religious status from the IRS and this is the

7 14,000 page application. It's a public document in

8 Washington.

9 Q That's the materials submitted in support of their 501

10 (c)(3) application, correct?

11 A Yes, sir, that's what it is.

12 Q And that's not on the disk or it's on the disk?

13 A It's on the disk.

14 Q I am interested not so much -- you said it doesn't include

15 everything you had?

16 A You are right, sir.

17 Q I want to know what it doesn't include.

18 A Well, I can only tell you that by telling you what it does

19 include.

20 Q Go ahead.

21 A It includes three CDs that were sent to us by the Louis

22 D'Amato firm that contain 17,000 pages of news articles on

23 Scientology in German, French, Spanish, English from around

24 the world. It's a 40-year compilation of all of the press

25 that they have had. It includes the suicide investigation,

405

1 the confidential names of the families who have lost their

2 kids, who have killed themselves in these secret initiations.

3 It includes information from Scientology's own intelligence

4 operatives who have defected, on criminals inside of the

5 organization. It includes huge amounts of attorney-client

6 privilege work, some for the German government, some for other

7 parties. That the work is irreplaceable.

8 Q Does it include any copyrighted materials of the Church of

9 Scientology?

10 A The only place that -- nothing of this issue in this

11 case -- nothing of issue in this case.

12 Q When you say nothing of this issue in this case, perhaps

13 the court ought to decide that. What copyrighted material of

14 Scientology materials is in there?

15 A When I discovered the 14,000 page application to the IRS,

16 Scientology had submitted some of its own booklets. When we

17 scanned that application, because we were looking at that for

18 fraud, and we have been working with tax groups because they

19 are trying to overturn Scientology's religious status because

20 they believe it was fraud or some kind of intimidation of IRS

21 people. When we looked through it, we found they had put some

22 of their own copyrighted materials in it. When I saw that, I

23 ordered that taken off all of our computers and put into the

24 backup CD disks because as an archive it was important to

25 preserve the exact records but not make that accessible to

406

1 anyone.

2 Q Does it contain the OEC volumes?

3 A I do not believe so.

4 Q Did you scan the OEC volumes into your hard drive?

5 A No, we didn't.

6 Q Did you scan any Scientology books that are published and

7 copyrighted into your hard drive?

8 A To the best of my knowledge, no, we received an anonymous

9 package -- some women who lost their kids in Scientology went

10 through all of these volumes and paraphrased and took quotes

11 and the pack was about yeah thick and there were disks

12 included, and we may have scanned a lot of her commentary on

13 these OEC volumes. It shows up as hits in the database

14 search.

15 Q Tell me, sir, what copyrighted Scientology materials did

16 you and Mr. Penny address when you set about to delete them

17 from your hard drive?

18 A I would do regular due diligence searches, and I would

19 make sure that nothing in our archive, nothing that was

20 copyrighted of Scientology's would be downloadable, and it

21 would be strictly in our preservational archive to prevent

22 alteration or Scientology removing these through theft or some

23 other way in the future from public record.

24 Q But have those materials now been placed on these CDs and

25 disbursed at these various locations you have told us about?

407

1 A No, sir, to the best of my knowledge, they haven't.

2 Q Am I to understand nothing that was on your archive, as

3 you have described it, went on the CD -- on the CDs?

4 A The CD was designed to cover the most critical --

5 Q Could you answer my question. My question was anything in

6 the archive put on the CDs?

7 A Well, I just said to you that the 14,000 page IRS

8 application by Scientology was on the CDs.

9 Q Was that in the archive?

10 A That's what I said.

11 Q You have indicated that you marked some -- you would go

12 through, do your due diligence, find copyrighted Scientology

13 materials and put them in your archive; is that your

14 testimony?

15 A That's not my testimony.

16 Q What did you do to find these copyrighted materials and

17 what did you do with the copyrighted materials when you found

18 them?

19 A You are not being specific as to archive. There is the CD

20 archive. There is the archive that we had on hand at our

21 place. Which archive are we talking about?

22 Q I am talking about what you described as your

23 non-downloadable archive.

24 A And that's -- what's the question about that?

25 Q The question is you have testified that you and Penny

408

1 pursuant to due diligence would search out, find copyrighted

2 Scientology materials and put them into that non-downloadable

3 archive, correct?

4 A Right.

5 Q What copyrighted materials are you talking about, number

6 one? And No. 2 --

7 A One question at time because it's confusing the way you

8 are adding everything together. It's not addable.

9 Q All I want to know, sir, did you locate copyrighted

10 Scientology materials and put them in your non-downloadable

11 archive, yes or no?

12 A You can't answer that yes or no because there are multiple

13 archives.

14 Q Did you put them in any archive?

15 A Yes, they went into the tape backup archives which is

16 QEC80 tapes, and they were to be removed from the bulletin

17 board and public access and we put them into QEC80.

18 Q These are the tapes for which you will not furnish a

19 password, correct, you have refused to furnish the password?

20 A Yes, sir, because they also contain information on victims

21 and former Scientology defectors.

22 Q You have also refused to allow that search to be done on a

23 counsel only basis with your counsel present, correct?

24 A Yes, sir.

25 Q But there are copyrighted materials in there, correct?

409

1 A Nothing of issue in this case.

2 Q That's your determination, right?

3 A As I read the Complaint, you are talking about your secret

4 O.T. materials.

5 Q Did you read the seizure order that referred to all copy

6 writings of L. Ron Hubbard?

7 A That is an issue of dispute. We are a library and

8 archive, and you are saying that libraries and archives can't

9 handle Scientology materials unless you give them permission.

10 Q I am saying that the court and not you will make that

11 legal decision, sir, that's all I am saying.

12 A Eventually they will.

13 Q And there are copyrighted materials written by L. Ron

14 Hubbard that are on those CDs; isn't that a fact?

15 A That we obtained as evidence in public records, yes, sir.

16 Not on the CD in our backup archive. You threw the CD thing

17 in at the end, and that's not what I meant to say. So we need

18 to be real specific which archive.

19 Q When you made those CDs, you put on them your downloadable

20 as well as your non-downloadable material, didn't you?

21 A Some of each, yes, sir.

22 Q And that included copyrighted materials of Scientology,

23 did it not?

24 A If they were --

25 MR. KELLEY: Asked and answered, Your Honor.

410

1 THE COURT: Sustained.

2 BY MR. COOLEY:

3 Q You back in July of 1994 received an infringement notice

4 from Tom Small on behalf of the Church of Scientology, didn't

5 you, or bridge publications rather?

6 A I believe I remember four letters from four different law

7 firms from Scientology.

8 Q I asked you specifically about Tom Small.

9 A I believe so. I would have to see it to confirm it

10 though.

11 Q Were you informed by Tom Small that you would infringe

12 certain HCO policy letters and HCO bulletins as well as

13 several issues of the freedom journal, which were protected by

14 copyrights held by various churches?

15 A I would have to see that. That was a long time ago. If

16 you have a copy, I would like to read that.

17 Q Did you respond to any letter from Mr. Small, cease and

18 desist from an infringement -- that he gave to you,

19 infringement notice?

20 A I remember a letter from him and I treated it -- as we

21 weren't infringing on anything, I didn't do anything

22 different, and the due diligence we did prior to his letters,

23 and I kept doing what we did according to our own internal

24 policy. I have seen lots of Scientology lawyer letters that

25 are general intimidation, a form of critics, so it was nothing

411

1 new to me.

2 MR. COOLEY: May I approach the witness, Your Honor?

3 THE COURT: Yes.

4 MR. COOLEY: I am just going to show him this to

5 refresh his recollection.

6 Does this refresh your recollection as to whether you

7 received a letter from Tom Small on the first -- on or about

8 the first of July 1994 putting you on notice of infringement?

9 A This is a letter he sent claiming that we had infringed

10 with no specific -- just a general you are infringing kind of

11 letter and the freedom journal notice, but saying that the

12 policy letters and bulletins are being infringed.

13 Q Have you posted any freedom issues to -- the printed

14 magazine issues to the Internet at that time?

15 A I am not aware of it. Because, one, I don't do a lot of

16 the postings to the Internet. Bob does most of the postings

17 to the Internet.

18 Q Incidentally, you, F.A.C.T.Net, did not post very often to

19 the Internet, did it?

20 A No, sir, we didn't.

21 Q As a matter of fact, until this litigation ensued, your

22 posting to the Internet was very rare, wasn't it?

23 A I probably personally posted about ten times to the

24 Internet. We were exceedingly busy with internal matters.

25 Q After that letter, did you post any freedoms to the

412

1 Internet?

2 A I wasn't aware that we posted them before.

3 MR. KELLEY: I object to this line. We are dealing

4 with materials that aren't in issue in this injunction

5 proceeding.

6 THE COURT: Sustained.

7 BY MR. COOLEY:

8 Q Did you -- in order to obtain your 501(c)(3) status, you

9 informed the IRS that you were a lending library, correct?

10 A We informed them of a long list of functions that we were

11 performing and that was one of probably 12.

12 Q What were the other 11 things that you told them you

13 were --

14 A I would have to look at our F.A.C.T. guidelines and

15 policies because that was submitted as part of our 501(c).

16 That spells out news wire functions, news letter functions,

17 public advocacy functions, victim support functions, working

18 with governments, professionals, there is -- if I had the

19 exhibit, I could go down. It's a huge list of functions

20 probably over 12.

21 Q And did you list that you were a newspaper?

22 A Yes, in the sense of providing news services, yes.

23 Q Did you list that you were putting out a newspaper or

24 newsletter of any kind?

25 A Yes, that's included in the language.

413

1 Q And that is in your application for 501(3) status?

2 A It's in the five principles and seven guidelines which was

3 submitted in the application, and we went through extensive

4 questioning about the whole process. I think there were four

5 versions back and forth amended and questioned by the IRS. We

6 set the parameters exceedingly broad because we educate and

7 promote dialogue.

8 Q Did you inform the IRS that you were an archive

9 preservation operation?

10 A Yes, it's in that material.

11 Q Now, in your deposition you have described yourself or

12 F.A.C.T.Net as an electronic lending library and an archive,

13 archive preservation operation; isn't that right?

14 A That was one of the descriptions.

15 Q Do you find anywhere in your deposition that you told us

16 that you were a newspaper?

17 MR. KELLEY: Your Honor, that's not a fair question.

18 THE COURT: Sustained.

19 BY MR. COOLEY:

20 Q How much did you charge -- how much do you charge for your

21 library service?

22 A We haven't charged for a year and a half. We piloted some

23 fees and it was more work keeping track of the small amounts

24 than it was just to let people -- we basically wanted people

25 to use the library. Use was more important than income, so we

414

1 opened the library to anyone and that means anyone. Anyone

2 can call that library 24 hours a day -- our worst adversaries,

3 any cult, and they can post anything they want to challenge

4 what we put up about them. They have a free space to express

5 their views.

6 Q Wasn't that offered by you subject to your right once that

7 was done to contradict it before it got posted?

8 A I don't understand what you are asking.

9 Q This concept of the people that you attack on your -- on

10 your computer material and in your database being free to post

11 themselves and tell their own story, that was subject to you

12 being able to have the last words and make comments on the

13 story that they published, wasn't it?

14 A It wasn't so. They could post anything they wanted.

15 Absolutely anything they wanted. It would not be edited or

16 censored in any form. We could put what they call

17 hyperlinks -- a hyperlink is to promote dialogue and

18 discussion. If they would make a statement and there was a

19 fact in it that would be disputed by other information, you

20 put a little button link and the person can click on the link

21 and it would automatically shoot them over to contrary

22 information, so that dialogue could take place. This is the

23 function of this new technology of promoting rational

24 discussion and viewpoint and counterpoint and dialogue.

25 Q How much did you charge for your library cards?

415

1 A What we did for the first six months the basic library

2 card was about $19. A professional card was about I think 100

3 and something, but we probably got in the whole period about

4 30 registrations, and then we abandoned it as too much labor

5 for a pilot idea. That wasn't a good idea and never worked

6 out, so we dropped it.

7 Q And when did you last receive any money for a library

8 card?

9 A I think about a month or two ago somebody who got some of

10 our old literature sent us off the money for a library card.

11 Q And did you issue a card?

12 A He didn't have to have one because he could have just

13 logged on for me.

14 Q Now, after the library -- the $19 library card, did you go

15 to another method of generating -- attempting to generate

16 income for the use of your facilities?

17 A No, sir, we didn't.

18 Q Didn't you go to a time charge?

19 A That was included in the pilot project with the library

20 card.

21 Q Was that before or after the library card?

22 A That was at the same time. They are one and the same.

23 Q How much did you charge per hour?

24 A We never actually billed anyone, to the best of my

25 knowledge. It was a pilot idea that if they were on blocking

416

1 the system for ten hours, because we were afraid of cult

2 members blocking all access, that we could have a nominal fee

3 after so many hours on the system or 40 minutes or something.

4 But it turned out that we never billed anybody for it. We

5 never used it. In the beginning of the electronic library

6 there was a lot of piloting of software and ideas. This was

7 all revolutionary. There has never been anything like a

8 complete electronic library and archive trying to get global

9 through the Internet. All through telecommunication. So we

10 have abandoned a lot of software. I think we went through 10

11 or 12 different software programs that wouldn't work, had to

12 write some of our own. We abandoned ideas of trying to

13 translate the library paradigm of what we normally expect

14 through this electronic world through computers. Some of it

15 works and some doesn't translate so well. But we have been

16 trying in the best faith effort we can to try to bring this

17 technology so what you can do with libraries and dialogue. We

18 are not perfect.

19 Q Anybody with a computer that stores materials, makes it

20 available to others could call themselves a library, couldn't

21 they?

22 A I don't know. I don't know about the law in that. I know

23 we had to go through elaborate corporate filings, corporate

24 structure, 501(c) regulations. It took us a year to establish

25 the library. And a year and a half to develop the software to

417

1 do what we are doing.

2 Q If you don't issue library cards any more, and users don't

3 need library cards, they can just log on and off without

4 getting your rules, can't they?

5 A No.

6 Q Tell me how that works.

7 A When a person calls up on a computer, the first screen

8 that comes up is an introduction that says type in your name

9 and password. And if they are not registered with a name, if

10 the computer doesn't recognize their name and password,

11 automatically this eight-page contract comes up. And they

12 have to slowly scroll through it and initial it at different

13 places, and at the end they have to sign it, and they have to

14 sign it a second time to verify that they are really who they

15 are and they are signing this on line contract, and they

16 understand that they have to abide by the fair use regulations

17 of that eight-page contract which are extensive. So even

18 though it's free, every person, whether they call in on their

19 telephones with computers or whether they mail in have to sign

20 a very clear fair use disclaimer that they are going to

21 recognize that we are a library and archive, we are trying to

22 offer information for dialogue, and it's given to them under

23 explicit restriction, and that's the best we have been able to

24 do to protect individual rights and copy holders and at the

25 same time allow the public to access critical court records

418

1 and information using this new technology.

2 People in Russia or people in Albania or people that

3 can't get to the Los Angeles courthouse where this stuff is --

4 and it's not perfect but this technology -- they call it

5 electronic frontier. We are out on a frontier trying to

6 interpret as best we can the intent and spirit of the laws and

7 of the procedures and put them in this new technology, and

8 it's very difficult, Your Honor. You will see when this goes

9 to trial, the translation.

10 MR. COOLEY: Could we at some point -- I have lost

11 track of the question. Could we ask for responsive answers,

12 Your Honor.

13 THE COURT: Yes.

14 BY MR. COOLEY:

15 Q Will you try to contain yourself and answer the questions

16 that I ask and nothing more, please.

17 When you -- in that last presentation that you made,

18 you differ markedly from the New York Public Library or any

19 other library in that when you send the stuff out there or

20 allow somebody to take it out there, it never comes back, does

21 it?

22 A Technically, it doesn't, but they have a destroy clause in

23 the contract and they agree that they will not use it.

24 Q So that you try to make up for that situation, whereas in

25 the New York Public Library or the Denver Public Library lends

419

1 you a book and gets it back, you would say what you do, you

2 send it out there, it never comes back, you have got some

3 contract that they promise that they will destroy it?

4 A In the Internet paradigm, that's about the best we could

5 think of.

6 Q What do you understand you have to do to enforce that

7 contract?

8 A Do probably what every library does to enforce their

9 library cards, as much as you can, in electronic communication

10 in these distances. We take people at their honor and that we

11 figure who use libraries are not --

12 Q If you use the library, you can't be a thief, you start

13 with the premise?

14 A We try to believe in people, that they are going to be

15 basically decent, and we trust that they will -- they sign a

16 contract that's exceedingly explicit, and they understand that

17 they are not being charged for this stuff, that we are trying

18 to do a service, that they at least won't abuse the service,

19 so we would wind up in court in an action like this.

20 Q If one of these decent people were to take some of the

21 material that you sent and decide he was going to violate

22 copyrights, notwithstanding your contract that thou shalt not,

23 and post it anonymously, you wouldn't have any way of

24 enforcing your contract, would you?

25 A I would be no different than any other library that

420

1 provides fair use and somebody takes it out of the library and

2 abuses it. I would be in the same situation as every library

3 in the world.

4 Q Except that you would be in a position whereby the

5 anonymity that is so common on the Internet, that it would

6 make it impossible for you to enforce that contract with that

7 person; isn't that right?

8 A They could be just as anonymous, taking materials out of

9 the Denver Public Library and misusing that. Anonymity wasn't

10 invented on the Internet.

11 Q No, but it was brought to a very high level on the

12 Internet.

13 A I don't know how to answer that.

14 Q You know what remailers are, don't you?

15 A Yes, sir, I do.

16 Q You know one of the most common tools on the ARS newsgroup

17 is the use of remailers to take the headers off the

18 communications, so that you can't tell who originated them and

19 who that person is?

20 A I don't know it to be one of the most common, but I know a

21 large number of people are in fear of your organization.

22 Q Please would you answer my question and -- never mind that

23 answer.

24 You know that remailers are a common factor on the

25 Internet, don't you?

From bobpenny@delphi.comSun Oct 1 09:55:38 1995

Date: Sun, 01 Oct 1995 03:26:38 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: 9-12-95 #2

421

1 A I don't know that, sir. I know that they are used, but I

2 don't know in the sense of common. Is it 50 percent or every

3 one using remailers? I have no idea.

4 Q In any event, a remailer or other anonymous means adopted

5 on the Internet makes it impossible to find out who the

6 copyright infringer is; you know that, don't you?

7 A I don't know that because the professor testified that

8 they were able to find out that Scientology was using

9 remailers.

10 Q You heard Professor Cleek testify to that?

11 A Basically he said that the rabbit patrol had found that

12 these anonymous cancellations --

13 Q He never testified that that was Scientology, sir, did he?

14 A Well, he just about came as long close to saying it as you

15 could say it.

16 Q He never was able to say that that had anything to do with

17 Scientology, and he was your expert, wasn't he?

18 MR. KELLEY: Which question should he answer, Your

19 Honor?

20 A I can't answer two.

21 BY MR. COOLEY:

22 Q You were here when he testified, weren't you?

23 A Yes.

24 Q You heard me ask him whether he was able to identify who

25 the canceller was.

422

1 A I heard him say that he tracked it all of the way back to

2 the final remailer, and you didn't ask him was Scientology

3 involved in the final --

4 Q I most certainly did. So you weren't --

5 MR. KELLEY: Argumentative.

6 THE COURT: Sustained.

7 BY MR. COOLEY:

8 Q In any event, sir, you are aware of the difficulties of

9 policing this agreement that you have erected here as being

10 the protection of copy -- from copyright infringement, right?

11 A As it a parallels any library problems, yes, sir, I am.

12 MR. KELLEY: I object to this line because it

13 pertains to materials not in issue in this case.

14 THE COURT: Sustained.

15 MR. COOLEY: I haven't heard him say that -- give

16 that testimony, Your Honor.

17 THE COURT: I have ruled.

18 MR. COOLEY: That it doesn't apply to the materials

19 in this case.

20 THE COURT: I have ruled. Next question.

21 BY MR. COOLEY:

22 Q Now, with respect to the materials that are

23 non-downloadable that you have in your in archives, are people

24 allowed in there to scan those, although not to make copies?

25 A No, sir, the only people that are accessed to our

423

1 non-downloadable archives are Bob Penny and myself. We were

2 the only ones that have adequate password security clearance

3 and physiologic security clearance to see those, and I have to

4 make a determination because Bob doesn't work in that area.

5 Q So that I am correct then that no outsider who wants

6 access to your non-downloadable files is permitted to look

7 at -- at them?

8 A They have no direct access except through me.

9 Q What kind of access is that? Do you get stuff out of

10 there for them?

11 A If in a court action a piece of information that we have

12 in our non-downloadable say is evidence, court exhibit from

13 the FBI is relevant in a Canadian court case involving

14 Scientology or South African or English or German, we may go

15 to our hard copy archives, answer, okay, it's evidence --

16 submission from another court and state, create an

17 authorization that this is an affidavit that says this is a

18 true copy of the evidence submitted in such and such case

19 against Scientology. And then we would send that to the

20 litigation in maybe another part of the United States or

21 another country.

22 Q Do you give them access to any copyrighted materials of

23 Scientology?

24 A If that was part of the evidence exhibit in a court case

25 and you guys have either stolen or destroyed or somehow sealed

424

1 or removed the record, and we obtained it while it was public

2 record, we make those court records available anywhere in the

3 world.

4 MR. COOLEY: I object. Move that the answer be

5 stricken.

6 THE COURT: Sustained. The answer stricken.

7 BY MR. COOLEY:

8 Q Do you give them access to the O.T. I through VII levels?

9 A No, sir, we don't.

10 Q You don't do that to anyone I understand?

11 A No, sir, I don't.

12 Q Now, how does -- when were the downloading charges in

13 effect, sir?

14 A The beginning pilots of the bulletin board for maybe six,

15 nine months.

16 Q How much were they?

17 A They were so much per hour, and we never collected any

18 money or used them, so I don't even remember.

19 Q All right. So for a considerable period of time, there

20 has been no income realized by F.A.C.T.Net from its library

21 operation; is that right?

22 A That's true, sir.

23 Q That is, there has been no library card fee, no

24 downloading charges, correct?

25 A It's a free library to everyone.

425

1 Q The only thing you charge for if the person is not quite

2 computer literate enough to do an effective search, you will

3 have somebody do it for them and charge them?

4 A If they can't do it themselves and they need the

5 information, we'll ask somebody in our organization to do it.

6 Q What do you charge for that service?

7 A We sometimes give it away if they have no money, and

8 sometimes if it's a powerful law firm or corporation or

9 government, we'll charge them $60 an hour.

10 Q About how much income have you yielded from that source?

11 A I would have to look at our books over the past couple

12 years, but I don't handle the books, so I don't have the

13 figures on that.

14 Q So it would be basically very little?

15 A We run on very little so -- so everything we get is very

16 little.

17 Q How do you support yourselves?

18 A I receive some money from some outside consulting, and I

19 live on hardly any money at all. I live very conservatively.

20 Q Is it fair to say that far and away the greatest amount of

21 money received by F.A.C.T.Net has resulted from consulting

22 services far lawyers in Scientology litigation?

23 A No, sir. I would say that families and people who

24 understand the dangers of Scientology have donated the most

25 money.

426

1 Q I am not talking about charitable donations. I am coming

2 to that. I am talking about money received in exchange for

3 the use of the database.

4 A I couldn't answer that without looking at the books, but

5 my belief is that it hasn't been our absolute major funding

6 source. It has been a significant funding source.

7 Q I am not saying your funding source. I will get to your

8 charitability in a minute. I mean for services rendered,

9 income for services rendered has been primarily the consulting

10 work done either by you, using the database or by F.A.C.T.Net

11 directly, isn't that right, for lawyers?

12 A And other people, yes, sir.

13 Q In fact -- that in fact these fees come to somewhere

14 between $20,000 and $30,000?

15 A I would say 20 is probably more accurate.

16 Q I remember you saying it was probably another five or ten

17 on top of that 20 at your deposition?

18 A Yes, sir, but I also don't handle the books. You had me

19 guestimating.

20 Q Now, in addition, though, you have received charitable

21 contributions, don't you?

22 A Yes, sir, we do.

23 Q And before this month nobody at your operation received a

24 salary, correct?

25 A That's correct, sir.

427

1 Q And commencing this month you went on a salary of $1,300 a

2 month?

3 A That isn't a monthly -- it was $1,300.

4 Q You got $1,300. Is that going to be periodic

5 compensation?

6 A I don't know if F.A.C.T.Net is going to survive. Haven't

7 been able to pay salaries after three years, so I have no

8 reason to believe that that will be a steady salary.

9 Q For the first time in your history after this litigation

10 was instituted you were able to take a salary, weren't you?

11 MR. KELLEY: Irrelevant, Your Honor.

12 THE COURT: Overruled. It's salary. The problem is

13 he has answered that he doesn't take a salary.

14 BY MR. COOLEY:

15 Q The first payment that you were able to take out of this

16 corporation was this month, wasn't it?

17 A Yes, sir, it was.

18 Q And did you take that out of money that you have been

19 soliciting for your defense fund?

20 A No, sir.

21 MR. KELLEY: Irrelevant, Your Honor.

22 THE COURT: Overruled.

23 A No, sir, it was given to me by the treasury secretary out

24 of the general funds of F.A.C.T.Net.

25 BY MR. COOLEY:

428

1 Q And who is that?

2 A Jan Merrill.

3 Q In the past you couldn't take any money because there was

4 no money to take; isn't that a fair statement?

5 A That's a very fair statement.

6 Q Now, there is money to take. Where is it coming from?

7 A It's coming from donations. It's coming from -- I would

8 have to look at all the sources, but some money is coming in

9 from the defense fund, some is coming in from donations, some

10 is coming in from people who are outraged about what you guys

11 did to us.

12 Q So the shoe string on which you operate got a little

13 stronger after Scientology sued you, didn't it?

14 MR. KELLEY: Irrelevant, Your Honor.

15 THE COURT: Sustained.

16 THE WITNESS: Do I need to answer?

17 MR. COOLEY: No, the Judge has sustained the

18 objection, Mr. Wollersheim.

19 BY MR. COOLEY:

20 Q Did you tell the IRS or have you reported to the IRS that

21 you are earning between $12,000 and $24,000 per year out of

22 this operation?

23 A We had to put projections on the IRS forms based on what

24 we thought we would raise in money. Those were the -- were

25 the projections that we put there, but that isn't anything

429

1 other than financial projections.

2 Q In fact, you projected that -- strike that. When did you

3 make those projections?

4 A About two years ago. When we first started assembling the

5 documentation for a 501(c). It took us almost a year to get

6 our 501(c).

7 Q And you applied for it when and when did it come through?

8 A We applied -- I think we got it in July of 1994. I am not

9 real certain of it, but we had started applying back in '93.

10 Arent Fox law firm. And we started writing the documents, and

11 501(c) is an enormous application. It takes a lot of work.

12 Took a lot of time.

13 MR. KELLEY: Your Honor, I am going to object because

14 it's all in the deposition that was tendered as part of the

15 plaintiff's case. It's repetitive.

16 THE COURT: Overruled. Next question.

17 MR. COOLEY: Thank you.

18 BY MR. COOLEY:

19 Q Was the Fishman affidavit with the O.T. I through VII

20 materials at both Penny's place and your place at the time of

21 the seizure; do you know?

22 A To the best of my knowledge, I transferred all of the

23 Geertz-Fishman documents that were used in the consulting up

24 to his garage. We finished the case, except a couple of

25 pieces that I had down at my place in a corner, and to best of

430

1 my knowledge, it was not the Fishman-Geertz affidavit because

2 that was just in with the stuff we did on the suicide

3 evaluations and that was with all of the other stuff.

4 Q Now, with respect to the upper level materials of

5 Scientology copyrighted which are involved here, the O.T. I

6 through O.T. VII, are these documents in your -- either your

7 hard copy archive or your computer archive open to the public?

8 A According to our policy, they shouldn't be in any way.

9 Q Are they made available by F.A.C.T.Net to researchers?

10 A No, sir, at this point they have been used exclusively for

11 the suicide research and in preparation for submitting that to

12 the government in a Grand Jury investigation.

13 Q Who is doing that research?

14 A I prefer not to mention their names because of retaliation

15 or security problems.

16 MR. COOLEY: This deals directly with the requirement

17 of Section 108 of the Copyright Act, Your Honor, and I really

18 have to be able to get this material.

19 THE COURT: All right.

20 MR. LIEBMAN: We don't contend that we have a defense

21 under Section 108, the library exemption. We contend it's

22 fair use, events under 107, so I don't think --

23 THE COURT: Wait a minute. You are not contending

24 you have any sort of 108 protection.

25 MR. LIEBMAN: In our brief we indicated it's

431

1 consistent with 108 and the principle of 108 could be applied

2 with respect to the fair use analysis. We don't contend that

3 it is technically.

4 MR. COOLEY: I move for the entry of a preliminary

5 injunction right now on that basis -- and on the basis

6 yesterday that this man testified that under no circumstances

7 is he being injured by not having our upper level materials,

8 so why have we been here for three days?

9 THE COURT: Mr. Kelley.

10 MR. KELLEY: We have been here for three days because

11 this man has testified and will testify that the ability to

12 discuss the rights, rituals, and procedures of this

13 organization which he thinks are highly pernicious is

14 essential to his work and ability of the public to deal with

15 this issue.

16 MR. COOLEY: There is not a shred of case law that

17 supports that proposition, Your Honor.

18 MR. KELLEY: Counsel, as you know, the copyright laws

19 forbid copying of documents but do not forbid the discussion

20 of the ideas contained in them.

21 THE COURT: What are you trying to do?

22 Direct your remarks to the court, Mr. Kelley.

23 MR. KELLEY: I apologize. What the plaintiff is

24 trying to do is to seal off such discussion.

25 THE COURT: Well, in view of the stipulation of

432

1 counsel, you need not give the names. Next question.

2 MR. COOLEY: I think, Your Honor, I don't have any

3 further questions.

4 THE COURT: Redirect.

5 MR. KELLEY: Just so that it is very clear. The

6 library exemption is something that may well be an issue in

7 the ultimate trial of this case.

8 THE COURT: I'm not concerned about that.

9 MR. KELLEY: We are not raising it at this hearing.

10 THE COURT: Do you have any questions now?

11 MR. KELLEY: Just a couple of questions.

12 REDIRECT EXAMINATION

13 BY MR. KELLEY:

14 Q Mr. Wollersheim, one of the things that I think you

15 mentioned was the fact that the plaintiffs still have your

16 hard drive.

17 Could you explain to the court what that is and what

18 the significance of it is?

19 A Bob spent months configuring the -- setting up is --

20 setting up all of this sophisticated scanning equipment, CD

21 creation equipment, ultra high tech OCR software and other

22 packages which are still experimental, plus a bulletin board.

23 He has done things with software nobody not even the

24 manufacturers could do. I need F.A.C.T.Net's equipment back

25 in order to run the operation, to run F.A.C.T.Net and to do

433

1 our defense. Inside our hard drive are also all kinds of

2 work-in-progress files, stuff that you raided in our daily

3 work. You have no idea what's going on. Our mailing lists

4 that were incorrect, all of our information to function is all

5 configured in the original configuration that, frankly, he

6 isn't able to reduplicate due to his condition. If that stuff

7 doesn't come back together exactly the way it was taken out of

8 our place, we are on the edge. We could go out of business.

9 We could go out of function as a library totally because there

10 is no one else to duplicate it.

11 So they can't give me -- one of the reasons I turned

12 the computer down, they can't give me an off-the-shelve

13 computer for when a professional programmer who owns a

14 software company has worked two and a half years on, I have to

15 have what he built. He has to have what he built. Somehow,

16 hopefully, we can keep it running with somebody new coming on.

17 So it's very important that our original equipment exactly as

18 they took it out the door of our place is returned in complete

19 functioning order, nothing changed, nothing deleted.

20 Q Now, I think you testified that the upper levels materials

21 in issue in this case, O.T. I through VII, are essential to

22 your suicide investigation?

23 A Are absolutely critical.

24 Q Let me ask you to stop there, please.

25 Now, I take it it's fair to summarize your personal

434

1 views and the views of your organization to be that the

2 assumptions and the methods and the rituals and procedures of

3 these materials are the instruments that have destroyed a

4 number of lives?

5 A Yes, sir.

6 MR. COOLEY: I object.

7 A And drive in many, many people.

8 MR. COOLEY: I object, and move that the answer be

9 stricken.

10 THE COURT: Overruled. Motion denied. Next

11 question.

12 BY MR. KELLEY:

13 Q Would you also agree that there is a significant public

14 controversy over this very issue raging at the present time?

15 A There is a tremendous controversy about it. Time magazine

16 wrote about the suicides in Scientology.

17 Q Mr. Wollersheim, just answer my question.

18 Do you think it's important to you and others who

19 would want to be involved in the resolution of that debate to

20 know about and to be able to use the ideas and concepts that

21 are involved in the O.T. materials I through VII?

22 A It's absolutely a life and death matter.

23 MR. KELLEY: That's all, Your Honor. Thank you.

24 RECROSS-EXAMINATION

25 BY MR. COOLEY:

435

1 Q Are you aware that the central practice of Scientology is

2 auditing?

3 A I don't believe that, but you claim it.

4 Q Well, auditing -- O.T. III, O.T. I those are all auditing

5 processes, upper level auditing processes, are they not?

6 A Yes, sir, they are.

7 Q Are they not, yes or no?

8 A That's what you claim, sir.

9 Q And let me see if I understand you correctly, those

10 copyrighted upper level materials you want to be able to

11 discuss and bring out and expose to the public, so that you

12 can take the position in your research that the adherence to

13 those religious practices lead to suicide; is that your

14 testimony?

15 A It's already fact.

16 Q Is that -- whether you think it's fact or not -- is that

17 what you want to do with these materials?

18 A You will have to ask the question again.

19 Q Is that what you want to do with these materials?

20 A The question you asked before.

21 Q You want to use them in public debate and discussion to

22 establish your premise and substantiate your research? That

23 suicides result from this religious practice; is that your

24 testimony?

25 A We want to dialogue on the methodologies.

436

1 Q Can you answer my question, please?

2 A Yes, sir.

3 Q Just once.

4 A Yes, we want to dialogue on it.

5 Q And that is why you have got them lurking in your archive

6 waiting to do it, right?

7 MR. KELLEY: Argumentative, Your Honor.

8 THE COURT: Sustained.

9 BY MR. COOLEY:

10 Q You also want them to see if a politically well connected

11 law firm can't get the church indicted; isn't that right?

12 A That's not correct, sir.

13 Q Didn't yesterday you say you had yourself a nice

14 politcally connected law firm that you were hoping would get

15 the church indicted?

16 A I didn't say that, sir. I said a Washington law firm was

17 assisting us in preparing these, so they were suitable for the

18 standard of a Grand Jury investigation.

19 MR. COOLEY: You cleaned that up. I have no further

20 questions.

21 THE COURT: Anything else?

22 MR. KELLEY: No, Your Honor. Thank you.

23 THE COURT: You may stand down. Next witness,

24 please.

25 MR. KELLEY: That will be all of our witnesses. We

437

1 just have some exhibits to offer.

2 THE COURT: Go ahead.

3 MR. KELLEY: At this point, first is exhibit double N

4 which are excerpts from the deposition of Warren McShane. N

5 as in Nancy, excuse me. Double O are plaintiff's answers to

6 interrogatory No. 13 of interrogatories propounded. Mr. Case

7 reminded me he has to get the originals. Thank you, Your

8 Honor. Finally, double P which is the deposit, copyright

9 office deposit for O.T. III, as we understand it. And we

10 would offer all of our exhibits which are on the exhibit list

11 A through double M, many of which have already been received,

12 but we would like to make sure that all are received now. And

13 with that, I think we are prepared to rest. Let me just

14 confer.

15 THE COURT: All right.

16 MR. COOLEY: We would ask that the upper level

17 materials in those exhibits as well as in ours be maintained

18 in the same confidential basis they have been, and with

19 respect to that Exhibit R of the defendants' which is that

20 screen play on which intervention was sought by Galaxy, that's

21 a copyrighted, unpublished work that I would ask and I think

22 Mr. Kelley has agreed that be sealed permanently. Perhaps

23 that wouldn't require Galaxy to come back here.

24 MR. KELLEY: It would be first time in my life I have

25 ever agreed to the sealing of any record, but I am not going

438

1 to object. We have no interest.

2 THE COURT: I will keep it with these other materials

3 that you want protected for the time being. I am not going to

4 go any further than that at this time point.

5 MR. COOLEY: Your Honor, I have three rebuttal

6 witnesses, but I would like to have some time in view of that

7 stipulation that was entered into it and see whether it's

8 really necessary.

9 THE COURT: I received this morning, a motion to

10 exclude expert testimony, as the to law, and I am granting

11 that motion. If you have any other rebuttal witnesses.

12 MR. COOLEY: I would merely say that Mr. Jaeger is

13 the leading authority and author in the country on trade

14 secrets and has had enormous experience with all the

15 permutations of the uniform act as it exists in the various

16 statements and I thought his views on what is or what is not

17 generally known as a person who surveyed that material

18 throughout the country as well as the other elements of trade

19 secret would be of assistance to the court.

20 THE COURT: You can include that in your summation

21 but not as a matter of testimony.

22 MR. COOLEY: That being so, then I have two rebuttal,

23 possibly three rebuttal -- three witnesses. I meant to say I

24 have four. That will eliminate Mr. Jaeger, and I would like

25 to consult with my clients in view of the stipulation.

439

1 THE COURT: Let's take a 15-minute recess. And you

2 can let me know. We'll be in recess.

3 (Recess at 10:55.)

4 THE COURT: Thank you. Be seated, please.

5 MR. COOLEY: Your Honor, I have two and maybe three.

6 The Internet expert, I haven't seen yet. Is he here? I have

7 three rebuttal witnesses.

8 THE COURT: All right.

9 MR. COOLEY: Let me say to the court that we are

10 fully prepared to redeliver to Mr. Wollersheim his original

11 equipment and his hard drive sanitized of the hits that came

12 up on the search, so that he will be back in business except

13 for the materials that remain in issue for adjudication on the

14 merits here. In view of that wipe out of the library

15 provision under the Copyright Act, and Mr. Wollersheim's

16 testimony that he is not harmed in any way by not having the

17 upper level materials because he doesn't use them and doesn't

18 plan to use them except to try to get us indicted, it seems to

19 me that there ought to be a stipulated injunction here, but

20 certainly a preliminary injunction to fight out the matters

21 that have been reserved for the merits would be appropriate at

22 this time without the necessity for rebuttal, but if Your

23 Honor feels you want to hear the complete matter --

24 THE COURT: I am not going to do anything without

25 getting the summation of counsel, which I hope you'll consider

440

1 to be brief, but I want those, so I think you had better go

2 ahead and call your witnesses.

3 MR. COOLEY: Very well, Your Honor. Mr. Rinder.

4 (Michael Rinder was sworn.)

5 THE COURTROOM DEPUTY: Your attention please. Please

6 be seated. State your name for the record and please spell

7 your last name.

8 THE WITNESS: Michael Rinder, R-I-N-D-E-R.

9 DIRECT EXAMINATION

10 BY MR. COOLEY:

11 Q Are you an executive of the Church of Scientology

12 International?

13 A Yes, I am. I am a member of the board of directors of the

14 Church of Scientology International.

15 Q Are you the commanding officer of the -- are you a Sea

16 Organization member?

17 A Yes, I am.

18 Q And are you the commanding officer of the Office of

19 Special Affairs International?

20 A Yes, I am.

21 Q Did you know Mr. Vaughn Young during that 20-year period

22 that he was a Scientologist?

23 A Yes, I did. I knew him for a number of years. I have

24 been in the Sea Organization since '73. And I had various

25 dealings with Mr. Young throughout that period in a number of

441

1 capacities in which he worked.

2 Q Now, Mr. Young has testified here to his version of a

3 contact between him and his wife on the one hand and you and

4 Michael Sutter on the other hand.

5 Will you now tell us what transpired in those

6 meetings over that six-day period?

7 A Well, I think I should begin with the first incident that

8 occurred which was some years after Mr. Young had left the

9 church. He contacted one of our counsel and said that --

10 MR. KELLEY: Your Honor, that's hearsay.

11 THE COURT: Sustained.

12 BY MR. COOLEY:

13 Q Deal with your communications with Mr. Young and in his

14 wife's presence and what transpired at that meeting.

15 A All right. The first thing that happened was Mike Sutter

16 spoke to Stacy Young and told her that we were concerned that

17 there was some degree of upset between Stacy Young and her

18 husband with regard to the church. She said, please speak to

19 my husband.

20 MR. KELLEY: Your Honor, hearsay.

21 THE COURT: Sustained.

22 A Myself and Mike Sutter went down to visit Vaughn. Stacy

23 was living in Seattle at the time. Vaughn was living in

24 Corinna Del Mar (phonetic.) We went down to his house,

25 knocked on the door. He wouldn't come to the door. He was

442

1 sitting in the front. We went around to the front window and

2 I said, Vaughn, we want to talk to you. We have spoken to

3 Stacy. She asked us to come and see you to see if we couldn't

4 sit down and resolve matters, to resolve any upsets or

5 difficulties that you may have. He said -- he was unwilling

6 to talk, to begin with, that he wanted me to speak to his

7 attorney, and I said I would be happy to speak to his attorney

8 if he told me who it was. He got on the phone and put Graham

9 Berry on the phone, and his reference to me standing in the

10 bushes was he passed the phone out the window. And I spoke to

11 Graham Berry, who said that he didn't have a problem if we

12 spoke to Vaughn to see if we couldn't resolve any differences

13 that there may be. There then ensued some efforts to arrange

14 this meeting with Stacy in Seattle and Vaughn in Los Angeles.

15 Ultimately, what happened was Stacy arranged for us

16 to go to Seattle to visit her. The first meeting we had, the

17 first of those six-day period, we sat down, talked to him,

18 Stacy broke down and said that she was very upset with how

19 the -- how their life was going. She didn't want to continue

20 to be involved in this business of giving testimony against

21 the church because she felt that she was living a lie and that

22 her and her husband had been unhappy in their lives. Since

23 they had left the church, they had been unable to find

24 employment. That Vaughn in fact had refused to get a job,

25 that he had worked as a cab driver for a short period of time

443

1 but was unable to continue, and his cab somehow ran over his

2 leg and he became injured, that they had a few jobs trying to

3 write for various publications, that they had not worked out,

4 and that they were basically destitute. She said that she had

5 decided just like in Gone With The Wind, the movie, that she

6 was never going to be poor again. She said that she would

7 rather resolve matters than have to continue to live this life

8 of being at the behest of the people who wanted to attack the

9 church. Vaughn said that he was unwilling to give up that

10 life-style or give up that potential income source because it

11 was the only income source that he had. That he didn't have

12 any other way of making money, and that if they were going to

13 change what they were doing in their lives, that they needed

14 to find something else that they could become employed with in

15 order to make money to live.

16 These conversations went on for some time because

17 they had difficulty determining or figuring out what they

18 would be able to do if they weren't going to be testifying in

19 court cases. In the course of that, we discussed with them

20 what testimony they had given because both Vaughn and Stacy

21 had known myself and Mike Sutter for a long time, and we were

22 aware that much of what they had said in declarations, in

23 depositions, that they had been involved in was simply not

24 true or were twists of the facts. So we discussed with them

25 how that had come about, why they were doing that. Vaughn and

444

1 Stacy both said that because it was the only way they had of

2 making money. They had to provide testimony to those who

3 would pay them for it, and that if they didn't provide the

4 testimony that was wanted, then they wouldn't get paid.

5 We took out some specific examples with them such as

6 the matter of Steve Fishman who they had written a declaration

7 about claiming that he was a Scientologist. When we were

8 talking to them about that, they said we had to figure out how

9 to state things in a fashion that would create the impression

10 that something was a certain way even though the facts didn't

11 necessarily add up to that. By way of example specifically

12 they said that they had seen a video of Steve Fishman that he

13 had made and he had been describing the E-Meter and that the

14 E-Meter was a central part of anybody who is involved in

15 Scientology who claims to be an auditor as Steve Fishman did.

16 And on this video they had seen that Steve Fishman was unable

17 to describe or had misdescribed what the E-meter in fact was

18 and how it worked. And that as a result that they knew that

19 Steve Fishman was not in fact a trained Scientologist. But

20 that in any case what they had done and figured out how to

21 word things so they didn't exactly say that he was a

22 Scientologist but by implication created that effect.

23 MR. KELLEY: I object. This goes beyond what

24 Mr. Young was confronted with and given a chance to respond to

25 yesterday.

445

1 THE COURT: Overruled.

2 THE WITNESS: What then happened was Stacy and Vaughn

3 then said, Well, if you want us to get out of this business

4 quote unquote and Vaughn's exact words were "I am like a

5 Toyota car salesman, if I am no longer going to be Toyota car

6 salesman, I have to have some other form of employment." We

7 said, fine. We'll help find you a job. Then he said, We

8 would prefer that what we have is while we get our feet on the

9 ground, that you give us enough money to be able to survive,

10 so we can go back to college, so we can get our medical

11 expenses covered, so that we can take a vacation and so that

12 we can buy a farm. They had figured out this schedule how

13 much money that would entail. We said there is absolutely no

14 way that we could or would pay them any money to do this.

15 Especially in light of the fact that we weren't attempting to

16 settle litigation against them. There was no claim that they

17 had, they hadn't filed a suit. We said, look, we'll go back

18 to Los Angeles and see if we can find a job for you. Both of

19 them were interested in the field of animal rights. We then

20 checked around and contacted all sorts of people and actually

21 found three potential jobs for them in that field. They

22 wanted to move to Washington D.C. So we found jobs that

23 would allow them to be locate in Washington, D.C. if they

24 wished.

25 When we went back to Seattle after having found these

446

1 jobs, thinking that we had now resolved this problem, that

2 they would be very happy because now they would have gainful

3 employment, they wouldn't need to continue to be involved in

4 telling lies for pay and litigation that they were involved in

5 or future potential litigation. They then said we have spoken

6 to our lawyers. We don't want to do this any more. What we

7 want is $540,000. And the way they figured out $540,000 was

8 the cost of this farm, the cost of going back to school for

9 both of them, enough money for them to survive for two years

10 without having to work, enough to cover Stacy's medical

11 expenses because she had had a physical condition that had

12 occurred, which they did not have money to be able to cover.

13 We told them at that point that that was absolutely

14 ridiculous and that there was no way that we were going to pay

15 them any money. They then brought up the fact that there had

16 been other people who had left the church who had gotten loans

17 and perhaps it would be possible to arrange a small loan. We

18 said we are not sure if that's possible. We'll see if we

19 could arrange a loan. If we get you these jobs, you can then

20 go and start your life over in Washington, D.C., get a new job

21 and repay the loan. That was the point where they said, no,

22 we are not interested in doing this, and really that was the

23 end of the conversation.

24 Q Did you at any time ask either Vaughn or Stacy Young to

25 commit perjury for the church?

447

1 A No, sir.

2 Q Did you ask them to lie for the church in any way?

3 A Not at all.

4 MR. COOLEY: That's all.

5 CROSS-EXAMINATION

6 BY MR. KELLEY:

7 Q Sir, when you visited Young, what was your position with

8 the organization at that time?

9 A Same as it is now.

10 Q As I understand it, you had made the decision, you and

11 Mr. Sutter, is it?

12 A That's correct.

13 Q Made the decision to contact these people and see if you

14 couldn't persuade them from their current ways which was to

15 testify against the church; is that right?

16 A No, not exactly. We had decided to contact them because

17 Mike Sutter and I had been involved with a number of other

18 people who had differences with the church. We had sat down

19 with them and been able to resolve them, and two of those

20 people in months preceding our contact with the Youngs had

21 said, well, we really wished that instead of having gone on

22 for a number of years engaged in a dispute with you, that we

23 had sat down and talked right from the beginning.

24 Q Was one of those people Vicki Aznaran?

25 A One of those people which?

448

1 Q That you resolved things with?

2 A Yes, certainly.

3 Q Did you resolve things with Vicki Aznaran?

4 A Did I? Yes.

5 Q Did that involve a payment of money, did it not?

6 A No, I am not sure. You are asking me if I paid Vicki

7 Aznaran money?

8 Q Did it involve a payment of much money by anyone to Vicki

9 Aznaran, yes or no?

10 A It involved resolving the disputes that they had and the

11 resolution of the litigation.

12 Q Sir, did it involve a payment of money to her?

13 A It settled their suit.

14 Q Did it involve a payment of money?

15 A I am not sure.

16 Q That's just something you don't know, one way or the

17 other?

18 A Certainly.

19 Q Now, at the time that you wanted to resolve things with

20 the Youngs, they were expert witnesses against you in

21 litigation in which Mr. Berry was involved; isn't that right?

22 A They weren't expert witnesses.

23 Q They were witnesses and consultants employed by Mr. Berry.

24 We can argue over whether they were experts or not. But they

25 were witnesses, were they not?

449

1 A Correct.

2 Q They were consultants retained by Mr. Berry?

3 A What I know, they were paid by Mr. Berry. Whatever their

4 relationship was, I am not sure.

5 Q And you made the decision to go up to Seattle to resolve

6 things with them, essentially reproselytize them and dissuade

7 them in the positions that they were taking in their testimony

8 that you claim were false; is that right?

9 A I wouldn't characterize it that way. I would characterize

10 it the way that I said to begin with, which was to -- which

11 was to attempt to resolve the differences or upsets that they

12 had.

13 Q Your testimony is you called Mr. Berry who had retained

14 them as consultants and said, we want to talk to these people

15 to try to resolve things. This is your opponent in the

16 litigation, and Mr. Berry said, fine; is that right?

17 A No. My best testimony is that I spoke to Vaughn and

18 Vaughn said that I won't talk to you. You have to talk to

19 Graham Berry.

20 Q Mr. Berry said it's fine. Go ahead. Go ahead and talk to

21 these people?

22 A Yes, he did, that's correct.

23 Q Then you spent six days talking with him up there in

24 Seattle; is that right?

25 A Yes. Well, there was a day or two where we went back to

450

1 Los Angeles.

2 Q Isn't it true in fact you offered them a large sum of

3 money to change their testimony?

4 A Absolutely not.

5 Q But in any event, it was you that sought the meeting and

6 you that went up there and talked with them for six days?

7 A Absolutely correct.

8 Q And it's your testimony that almost immediately these

9 people acknowledged regret and feelings of guilt over the

10 positions they had been taking?

11 A Yes.

12 Q And that was -- their position during those entire three

13 days was confessing to you that they had been taking

14 disingenuous positions in the litigation?

15 A That's correct.

16 Q Your organization has had public investigators following

17 these people, has it not?

18 A No.

19 Q And Scientologists are picketing their house; isn't that

20 true?

21 A I think that some Scientologists and other parents of

22 people who have a dispute the Awareness Network have been

23 doing so. I don't know that they are all Scientologists. And

24 the reason for them doing so has to do with the Youngs

25 involvement with the Awareness Network and kidnapping

From bobpenny@delphi.comSun Oct 1 09:55:56 1995

Date: Sun, 01 Oct 1995 03:27:02 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: 9-12-95 #3

451

1 children.

2 Q Did you tell the Youngs that there is nothing you wouldn't

3 do to protect Scientology?

4 A Absolutely not.

5 Q Sir, what's does the term "dead agent" mean in your

6 organization?

7 A The term dead agent -- it's not a term in our

8 organization. It's a term that comes from -- actually, I

9 don't know where it comes from. It's a term that describes

10 that when someone who has been found to be an agent for the

11 opposition is proven to be a liar, then, they no longer have

12 any credibility.

13 Q Isn't it then in fact someone that the Scientology

14 organization sets out to establish has no credibility through

15 false accusations and whatever it can dig up?

16 A I am not following your question.

17 Q Isn't a dead agent someone that Scientology decides that

18 it wants to try to discredit?

19 A No. A dead agent is someone who has been proven to be a

20 liar, and therefore, no longer has any credibility and is

21 therefore quote unquote a dead agent.

22 MR. KELLEY: Nothing further, Your Honor.

23 THE COURT: Thank you. Any redirect?

24 MR. COOLEY: No, Your Honor.

25 THE COURT: You may stand down. Thank you, sir.

452

1 Next witness, please.

2 MR. COOLEY: I have a computer expert in the room

3 somewhere. Okay. I am about to meet my expert for the first

4 time.

5 (Norman Paredes was sworn.)

6 THE COURTROOM DEPUTY: Your attention, please.

7 (Norman Parades was sworn.)

8 THE COURTROOM DEPUTY: Please be seated. State your

9 name for the record and please spell your last name.

10 THE WITNESS: My name is Norman Paredes

11 P-A-R-E-D-E-S.

12 DIRECT EXAMINATION

13 BY MR. COOLEY:

14 Q And would you tell us where you live, sir?

15 A I live in Littleton, Colorado.

16 Q And what is your occupation or profession?

17 A I am a principal in Internet Services, a provider.

18 Q Would you give the court a resume of your education

19 training and experience with particular reference to the

20 Internet?

21 A Yes. Basically, I have a bachelor's in computer science

22 from the University of the State of New York received back in

23 '79 and have spent most of the my professional career as a

24 computer professional, specialize in software information

25 systems and networks. Have approximately 10 to 12 years

453

1 experience in dealing with the Internet, both in the defense

2 and the aerospace industry. I spent a number of years --

3 which was then Martin Marietta. And for the last three years

4 and a little bit I have had my own company and have been

5 involved in the Internet for that period of time. Extensively

6 since the venture that I am doing now for little over a year

7 has been going. As a user and as a computer professional, I

8 have been using the Net for over one dozen years.

9 Q Using it personally?

10 A Yes.

11 Q And you provide access to the Internet for subscribers to

12 your service?

13 A Yes, we do.

14 Q Where is that service located?

15 A Littleton.

16 Q The name?

17 A Net Way 2001.

18 Q How long have you been running that service?

19 A Just over a year, since August of last year.

20 Q And do you provide full access to the Internet?

21 A Yes, we did do.

22 Q Including news groups?

23 A Yes.

24 Q With respect to figures or statistics concerning the

25 readership of news groups, are there in your experience

454

1 reliable figures available?

2 A There are some general indications, statistical

3 indications that might give some relative data on various news

4 groups, but as far as absolute reliable data, no.

5 Q Do they -- are there reliable figures or statistics with

6 respect to viewership?

7 A Not really, no.

8 Q Are there reliable figures or is there information kept on

9 the issue of downloading? Are there reliable figures on who

10 does downloads on the Internet?

11 A In any general sense typically, no.

12 Q To the extent that any figures are available with respect

13 to readership, do they show anything more than who looked at a

14 directory?

15 A Typically, no.

16 Q Do you know what the person who looked at the directory

17 did?

18 A No.

19 Q Do you know if he and she went any further than scanning

20 the threads?

21 A Not unless they generate a message.

22 Q And if you know what the term "lurker" means.

23 A Yes, I do.

24 Q Is it fair to say that -- well strike that.

25 In any given news group there may be far more lurkers

455

1 than there are posters; isn't that right?

2 A That's usually case from what we can tell.

3 Q Is a lurker someone who logs on and you don't know what he

4 does?

5 A Typically, yes.

6 Q Do you know whether he reads anything?

7 A No.

8 Q Do you know what he reads?

9 A No, we do not.

10 Q Do you know whether he does more than scan the threads?

11 A No.

12 Q Do you know whether he looked at any messages at all?

13 A If we wanted to make lots of effort we could but typically

14 we do not.

15 Q Now, are you familiar with the practice of coming into a

16 news group, seeing the number and, read messages, running the

17 threads, reading one or two and marking them all read?

18 A That's often typical behavior. It's what I do a lot.

19 Q You mark them read even though you haven't read them?

20 A That's correct.

21 Q So the next time you log on you won't have such a big

22 backlog of threads to run; is that a fair statement?

23 A Basically, yes.

24 Q Tell me with respect to -- would you define for us the

25 term "scanning the threads?" I have been using it, but I

456

1 haven't defined it.

2 A When a message is posted to a news group on a particular

3 topic, if someone else would like to continue a discussion,

4 respond to that message, then they essentially generate a

5 follow-up message on the same subject. On a particular

6 subject you may have a string over a period of time of many

7 messages. Scanning the threads basically the software enables

8 you to track rather anonymous messages in the chronological

9 order they were received. It allows you to track the

10 responses to any individual message and allows you to follow

11 that message string or chain. So that's typically what that

12 would refer to.

13 Q So, for example, have you looked at ARS, Alt Religious

14 Scientology group at all?

15 A No.

16 Q Assume that on that news group a message is originally

17 posted and the title of the message in its kindest possible

18 terms are "Cooley is an idiot," and there are lot of other

19 responses to that and the thread runs and runs until it runs

20 its course. Do you have any way of telling if it's posted

21 anonymously, who posted it? Do you have any way of telling

22 that?

23 A There is usually not an anonymous posting on news groups

24 but the newspaper in general you wouldn't be able to without

25 prior effort to do that.

457

1 Q If it went through a remailer, you definitely wouldn't be

2 able to do that?

3 A Probably not.

4 Q You accept messages that come in from remailers on your

5 service?

6 A We do and --

7 Q And that is a system whereby someone in some other

8 location gets the message, takes off the header and then sends

9 it out and you don't know who it's from?

10 A More or less, yes.

11 Q In any event, you have no way of knowing who ran the

12 thread, we talking about "Cooley is an idiot thread," you

13 don't know who ran that thread?

14 A No.

15 Q You don't know who read it?

16 A No.

17 Q You certainly don't know whether the lurkers picked it up,

18 correct?

19 A That is right.

20 Q If there were files posted to an FTP or file transfer

21 protocol, do you have any way of knowing how many downloads

22 took place there?

23 A We could -- we don't maintain that information. It's not

24 useful.

25 Q Is that information maintained and available as a general

458

1 industry statistic?

2 A Here and there they may keep track of some numbers but in

3 general, no.

4 Q Now, with respect to Web sites, can you tell who accesses

5 what Web page and when?

6 A Yes.

7 Q What is a Web site?

8 A The worldwide Web basically allows for a graphical user

9 interface. It's the more advanced features of the Internet.

10 With the worldwide Web it's a simple point in click interface

11 with graphics and so on. Servers essentially provide

12 information graphics, texts, sounds, movies, anything that is

13 on the client's piece of software, on the user's machine goes

14 out and requests. That information is then downloaded from

15 the server to the client's machine.

16 Q While you may be able to tell who accessed the Web, is

17 there any way of knowing what part of the Web page the person

18 actually looked at?

19 A No.

20 Q Do FTP sites keep track of who accesses?

21 A Some of the anonymous FTP sites do keep a log of anonymous

22 users, provided they have provided their address for some

23 period of time. Mostly, if anything, it would keep aggregate

24 statistics for a site as a whole.

25 Q Do these statistics have any correlation to who accessed

459

1 the FTP site and what they did when they got there?

2 A Typically, no.

3 MR. COOLEY: That's all, sir.

4 MR. KELLEY: It's not going to be myself this time,

5 Your Honor. It's Ms. Hanlon-Leh.

6 CROSS-EXAMINATION

7 BY MS. HANLON-LEH:

8 Q Good morning.

9 A Good morning.

10 Q Just a few questions.

11 Do you have any relationship with the Scientology

12 religion?

13 A Absolutely not.

14 Q Are you being paid to be an expert here today?

15 A Yes.

16 Q How much are you being paid?

17 A That's still under negotiations.

18 Q How long has your business been open?

19 A This particular business since August of '94.

20 Q Would you say that business is going well?

21 A I would say so, yes.

22 Q How many new subscribers have you had go on the line in

23 the last year?

24 A In the last year over 500.

25 Q How many each month are you putting on line?

460

1 A Right now, it's running at 60 or more people or companies

2 per month.

3 Q Are those companies or individuals?

4 A Mixture of both right now. I would say with us about half

5 and half.

6 Q How many people would you say nationwide are going on line

7 each month?

8 A I would say at least several hundred thousand possibly,

9 you know, half a million.

10 Q Would all of those people have access to the news groups

11 that are on line and available?

12 A Theoretically most of them would have some access to news

13 groups.

14 Q Theoretically all of those people would potentially access

15 to news groups at issue in this case; isn't that correct?

16 A Potentially.

17 Q When you are talking about not being able to track those

18 numbers, while it's possible to not be able to define them

19 with any preciseness, isn't it always possible that all of

20 those people could access particular news groups in a

21 particular month?

22 A It would be highly unlikely but it's within the realm of

23 possibility.

24 Q It's your testimony today that you have never been on ARS?

25 A On ARS, no, never have been.

461

1 Q Is ARS one of the news groups that you allows access

2 through your service?

3 A I believe it is, but I wouldn't know one way or the other.

4 I believe it is part of our standard feed.

5 Q Have you ever scene any materials regarding Scientology on

6 the Net?

7 A No, I have not.

8 Q Have you ever looked to find materials regarding

9 Scientology on the net?

10 A No, I have not.

11 Q At this point you can't deny that it's possible that some

12 of those materials -- and there may be materials about

13 Scientology on the Net?

14 MR. COOLEY: I object to possibilities, Your Honor.

15 THE COURT: Overruled. He may answer.

16 THE WITNESS: It's certainly possible that there are

17 materials on -- there are many on many subjects, so certainly

18 it's possible.

19 BY MS. HANLON-LEH:

20 Q Were you present here on Friday afternoon when Professor

21 Cleek testified regarding readership statistics involving the

22 Net?

23 A No.

24 Q Are you aware of any surveys discussed regarding

25 readership statistics on the Net?

462

1 A I am aware of quite a few surveys on the Internet and

2 several other things that basically do some surveys and

3 statistical analyses, yes.

4 Q Are you aware of some of the ones that look at

5 institutional mainframe computers and other places where there

6 are a large number of readers to --

7 A Yes, I am aware.

8 Q Do you recognize that those don't include the thousands of

9 personal users that come onto the Net?

10 A Yes.

11 Q So in addition to even those figures that there are --

12 there are thousands of personal users who could be accessing

13 these rather various news groups?

14 A Could be.

15 Q Is it your testimony today that you can't estimate how

16 many people are downloading from these news groups?

17 Is it your testimony there is no way based upon these

18 figures to give a complete record of how many people were

19 downloading various --

20 A There is no comprehensive information.

21 Q That people could be downloading these documents 24 hours

22 a day all over the world; isn't that correct?

23 A It seems highly unlikely.

24 Q But it's possible that could be happening?

25 MR. COOLEY: Again possibilities. The defendant has

463

1 the burden of proof on this issue and possibilities won't do.

2 MS. HANLON-LEH: I guess I dispute whether we have

3 the burden, Your Honor.

4 THE WITNESS: I suppose it's remotely possible. I

5 would consider it unlikely.

6 BY MS. HANLON-LEH:

7 Q There is nothing to get in the way from someone accessing

8 it in the morning then downloading its materials?

9 A No, there is nothing preventing anyone in the world who

10 has access to --

11 Q In fact, there is nothing to stop people from anyplace in

12 the world who have access to this computer from downloading

13 the information that might be in a news group?

14 A If the news group is on a server that they have access to,

15 there would be nothing to prevent them from doing so, if they

16 have access to that particular news server.

17 Q It's correct once information is downloaded or placed in

18 an FTP site that additional downloads and copies could be made

19 at that point; isn't that true?

20 A They could be.

21 Q In your knowledge of news groups, would you say that ARS

22 is one of the more popular groups?

23 A I would say that I probably have been aware of its

24 existence because of things in the newspapers and so on. I

25 have no way of thinking that it would be all that popular.

464

1 Q Wouldn't people who might read about it in the news group

2 want to go visit and see what it is all about?

3 MR. COOLEY: I object.

4 THE COURT: Sustained.

5 BY MS. HANLON-LEH:

6 Q Would it surprise you to know or hear that the figure --

7 that the readership of ARS has gotten as high as over 30 to

8 40,000 in a particular month?

9 A Depends on how you defined readership.

10 Q Readership in terms of people that are accessing ARS --

11 A I guess the question would be whether that's a number of

12 accessors, number of different people who have access, and

13 sometimes it's very easy to confuse those 20 network

14 statistics. So 20 to 30,000 total accesses in a month is

15 quite reasonable. Those may have been made by anywhere from

16 500 to a couple thousand people. It's hard to --

17 Q Your testimony today is you really don't know about any of

18 these; isn't that correct?

19 A That's correct. It's not central to the business of the

20 Internet. Also, since the Internet has become more

21 commercial, to keep this kind of data, it does nothing that

22 helps us provide better service or anything else, and it would

23 be an undue burden of resources to try to do this.

24 Q And your job is to get more people on the Net not to track

25 what they are doing?

465

1 A To provide a service -- and it's not our responsibility to

2 track what they are doing, that's correct. That's correct.

3 MS. HANLON-LEH: If I can confer just a minute?

4 THE COURT: All right.

5 BY MS. HANLON-LEH:

6 Q Are you familiar with the RM command?

7 A Yes.

8 Q What is that command?

9 A Well, in the UNIX operating system, it's a command that

10 allows you to delete a file.

11 Q And is it to delete a file or delete a group?

12 A Well, within some of the older news reader programs, you

13 could use that to delete a group with appropriate provisions.

14 Q What is your opinion of anonymous attempts to remove

15 groups? Is that something that you would condone and would

16 allow to happen on your service?

17 A We have a number of security safeguards that would not

18 make it possible under normal circumstances for the average

19 person or even a reasonably knowledge person to do that. Our

20 opinion is that the owner of -- the particular server,

21 particular equipment has the responsibility for maintaining it

22 and that's not something we want voluntary people from

23 anywhere to do for us.

24 MS. HANLON-LEH: Thank you.

25 THE COURT: Any redirect?

466

1 MR. COOLEY: Yes, Your Honor.

2 REDIRECT EXAMINATION

3 BY MR. COOLEY:

4 Q With respect to these questions you were asked whether

5 this could be -- that could be possible or whether this could

6 be possible or that could be possible, is it your view that

7 the statistics that you tried to explain are unreliable?

8 A I was saying they are an incomplete picture.

9 Q For example, on a readership issue and you get a number of

10 ten, can you tell whether one person has read the same message

11 one time or whether 10 people have read it once?

12 A Not unless I determined ahead of time that I wanted to

13 know the answer to a question and set up something that would

14 tell me that.

15 Q Is that mechanism employed generally throughout the

16 industry?

17 A I would say no.

18 Q With respect to your fee, you quoted a fee of $150 an hour

19 that you would like to charge?

20 A That's reasonable, yes.

21 MR. COOLEY: We'll pay you that, so there will be no

22 question of what the fee is. That's all.

23 THE COURT: All right. You may stand down. Next

24 witness please.

25 MR. COOLEY: Warren McShane in rebuttal, Your Honor.

467

1 THE COURT: You are still under oath in this case.

2 (Warren McShane was sworn previously.)

3 DIRECT EXAMINATION

4 BY MR. COOLEY:

5 Q Mr. McShane, I think you have testified that you have done

6 the O.T. levels; is that correct?

7 A Yes, sir.

8 Q Up to what level?

9 A I did it up to the old O.T. VII, and I have done it

10 through the new O.T.V.

11 Q Mr. Wollersheim testified that people go into some kind of

12 a hypnotic trance while doing the O.T. levels; is that true?

13 A Not at all, sir. The O.T. levels are done as all auditing

14 is done in Scientology with the person fully aware of what he

15 is doing. It differs from any other type of counseling,

16 because the person knows exactly what's happening to him.

17 There is no hypnosis whatsoever. It's just Mr. Wollersheim's

18 attempt to degrade our religion.

19 MR. KELLEY: Your Honor, I move to strike the last

20 comment.

21 THE COURT: Sustained.

22 BY MR. COOLEY:

23 Q With respect to hard copy documents seized in the seizure

24 from Mr. Wollersheim's residence and from Mr. Penny's

25 residence, for that matter, did you seize any hard copies

468

1 other than O.T. materials?

2 A No. I went through -- there must have been 50 boxes of

3 materials he had in his apartment. I went through all of them

4 and only took O.T. materials that I found.

5 Q And were there O.T. materials found in hard copy form at

6 Mr. Wollersheim's residence?

7 A Yes, there was. There was -- I found the Fishman

8 affidavit. I think I found two copies of it which contains

9 the O.T. materials that are the subject of this litigation,

10 and I take that back. I did find other -- not confidential

11 material but other copyrighted material of Mr. Hubbard.

12 Q Copyrighted published material?

13 A Yes, published material.

14 Q Mr. Young testified when he was on the witness stand about

15 going to Las Vegas with respect to a newspaper reporter that

16 was doing an article and trying to stop the article, and he

17 said that the reporter had O.T. materials. What can you tell

18 us about that situation?

19 MR. KELLEY: I think there ought to be some

20 foundation. The article was before he started the work he is

21 doing now.

22 THE COURT: Sustained.

23 BY MR. COOLEY:

24 Q Were you in R.T.C. at that time?

25 A Not at that time, no.

469

1 Q Did you read the article that that reporter published?

2 A Yes, absolutely.

3 Q Were there any quotations from the O.T. materials in

4 there?

5 A No, not at all. The article was written by a reporter who

6 was talking to an ex-member, and he was quoting from the

7 ex-member whatever conversation they had.

8 Q With respect to that incident that Vaughn Young testified

9 about O.T. materials blowing down the street, can you tell us

10 what materials a person on O.T. III was permitted to take home

11 with him?

12 A Sure. As I explained to the court before, there are --

13 some of the O.T. materials are divided into two. One is the

14 actual materials that you read. That contains Mr. Hubbard's

15 discoveries. You learn how to counsel on that process. Then

16 there is the second part which is actually the materials you

17 need to take into session with you to actually do the

18 counseling. The only materials that people were allowed to

19 take home in locked briefcases and other security requirements

20 are the materials that they need in session, not the materials

21 that they studied when they were in the church.

22 Q Are those called plattens.

23 A Plattens. They are materials. In fact, if I have the --

24 if I could get the exhibit book back.

25 Q Exhibit 79.

470

1 A Yes.

2 Q It's a separately bound long book, sir. Perhaps the

3 Court's could be made available. Be sure you tell the court

4 exactly where you are so the court can be at the same place,

5 otherwise it's a wasted exercise.

6 THE WITNESS: Your Honor, there is a tab called O.T.

7 II. If you go through the one right after tab 46 --

8 THE COURT: I see. It's right after.

9 THE WITNESS: Right after tab 46 there is a little

10 tab that says O.T. II.

11 THE COURT: Here it is. Okay.

12 MR. COOLEY: Your Honor, if you look at tab No. 5

13 underneath that.

14 THE COURT: All right.

15 THE WITNESS: You will see that there is -- at least

16 on that page there is a series starting from No. 1 that goes

17 to No. 12.

18 THE COURT: Yes.

19 THE WITNESS: That is what we call a platten. That

20 is something that the parishioner would take with him into a

21 counseling session. This is -- this is a part of

22 Mr. Hubbard's discoveries as to what occurred to the

23 individual as far as these past traumatic experiences, and

24 this particular platten and on this particular level there are

25 21 of them -- is the instructions on what to do to undo that

471

1 traumatic experience or whatever it may be.

2 Like I say, there are 26 of them and the parishioner

3 is only allowed to take one at time. He would take this sheet

4 with him, go into a counseling session and with a particular

5 command that he learns on the beginning section of the course,

6 he would then do this with himself in session. When he is

7 done with that, this material would be returned to the church,

8 and he would receive the second one. This is similar to other

9 O.T. materials. And Your Honor, if you would turn to the very

10 beginning of the booklet of this exhibit.

11 MR. COOLEY: What tab, sir?

12 THE WITNESS: Under tab 4. It's part of the

13 handwritten --

14 THE COURT: Yes.

15 THE WITNESS: There, Your Honor, it says tech data

16 No. 3 on the top, on the handwritten part.

17 THE COURT: Yes.

18 THE WITNESS: This particular exhibit I am looking at

19 is O.T. III. And as I explained to the court the other day,

20 when we were talking about what's generally known in the 75

21 million years ago and Xemu and the volcanoes, which is

22 knowledge that has been known for years, that is contained in

23 bits and pieces in the first paragraph of page 1. This is

24 page 3. Your Honor, if you look at the first full paragraph,

25 it starts with "one's" on the handwritten part.

472

1 THE COURT: All right.

2 THE WITNESS: First full paragraph where it says

3 "one's body." From that point on -- at least on that point is

4 what's trade secret. Mr. Hubbard describing what has occurred

5 to the individual, not the general description of what events

6 happened 75 million years ago, but what happened to the

7 individual person. That is a trade secret. That's what's not

8 published in any works. From that point forward is a

9 description of the actual technology itself and how to undo

10 that great catastrophe that occurred. Many of the O.T. levels

11 are exactly set up the same way, Your Honor. The O.T. IV

12 materials and O.T. V materials, these are all specific

13 processes that Mr. Hubbard developed on how to undo the great

14 traumatic experiences that occurred on the individual.

15 BY MR. COOLEY:

16 Q Now, you have given the court an example and shown the

17 court an O.T. III. Could you do the same thing and pick

18 another level, so the court would be sure what you are talking

19 about?

20 A Your Honor, the one that we were on, on O.T. II, if you

21 continue on through the tab right after tab 22 of the

22 second -- tab 22 on this booklet, there will be a tab called

23 O.T. IV.

24 THE COURT: All right.

25 THE WITNESS: Your Honor, under tab 3, there is a

473

1 page, typewritten page, which is page 4. Do you see that,

2 Your Honor?

3 THE COURT: Yes.

4 THE WITNESS: There is at the top -- in fact I think

5 it's highlighted in your copy, sir, is a description of what

6 this level was designed to handle which is very confidential.

7 Then the second part under the case supervisor class

8 eight, it talks about the O.T. IV rundown. And it says that

9 is done by the auditor on a case which means a person who is

10 fully set up by various directions. Those things listed

11 underneath, there again, are specific instructions by

12 Mr. Hubbard on how to undo the specific traumatic existence --

13 or I'm sorry -- the incident that has occurred on that

14 particular level.

15 Q Is that secret?

16 A Yes, that is very secret. Then, Your Honor, one other tab

17 I would like to point out to the court. If you keep going

18 down there is a tab called O.T. VI.

19 THE COURT: I have got it.

20 THE WITNESS: Okay. First tab is a handwritten

21 section entitled Section O.T. VI, Section VI, O.T. part one.

22 This again is a specific process. Under -- you see under

23 paragraph No. 1 that Mr. Hubbard has developed for an

24 individual to do with himself privately in session. It's a

25 secret process. That is designed to incorporate with all

474

1 other processes to achieve a specific spiritual phenomena in

2 an individual. I have highlighted that first two lines there,

3 but it goes onto describe other particular things that the

4 person would have to do with himself. These are all trade

5 secrets and have never been in any newspaper article.

6 BY MR. COOLEY:

7 Q Now, with respect to the theft of the O.T. materials in

8 England and in Denmark, when did that occur?

9 A The first one I think was in April 1983.

10 Q The second one?

11 A December 1983.

12 Q And was it after that that those materials started showing

13 up, for example, in the Wollersheim case and elsewhere?

14 A Yes. One point that I did -- with Mr. Young, for

15 instance, that this reporter had copies of it, which is not

16 true, the materials --

17 MR. KELLEY: Your Honor, the --

18 THE WITNESS: The materials that were stolen in 1983

19 were the first instances of a theft of O.T. I, II, and III.

20 Any instances at all before that occurred in a book or

21 newspaper article have always been somebody's interpretation

22 or somebody's memory of it. There have been no quotations. I

23 have seen, I think, every publication, any book. This is what

24 I do to protect the materials. In all instances, there has

25 never been any evidence that the actual materials themselves,

475

1 the physical copy, whatever has been out there.

2 Another example he gave was Bill Robertson. Bill

3 Robertson is an ex-member who was -- I believe he operated in

4 Germany. He had this Galactic Patrol Sector -- the bulletins

5 that he created. I investigated that specifically right after

6 Mr. Scott was arrested and imprisoned and met with many of

7 Mr. Robertson's people and got copies of all his material.

8 They are psychotic ramblings of persons very sick.

9 Q So Robertson didn't have any of the materials on the above

10 Scientology materials?

11 A That's correct.

12 Q Now, with respect to the Atak book that Mr. Young referred

13 to, what happened to that book?

14 A The book was enjoined -- was taken off the shelf. And

15 Mr. Atack -- I don't know if Mr. Atak has ever republished it.

16 Q Has R.T.C. or anyone to your knowledge authorized in the

17 church of Scientology or R.T.C. or anywhere else ever given

18 permission to F.A.C.T.Net to input copyrighted materials into

19 its equipment?

20 A No. He has never gotten permission at all in regard to

21 the O.T. materials. Nobody would ever get permission.

22 Q Have you taken actions against infringers on the Internet?

23 A Yes, we have.

24 Q Is Mr. Lerma one?

25 A He is one.

476

1 Q He has identified himself when he posted without comment?

2 A Yes.

3 Q Anonymous posters, what do you do about them?

4 A Anonymously posters, the first thing we do is deal with

5 the service provider, and there are many service providers in

6 the world, and the majority of them have been very

7 cooperative. When we notified them, they take the infringing

8 materials off their system. Although naturally they don't

9 have a way of identifying because it's anonymous. But they do

10 tell us what remailer was used, where they received the

11 materials from, and we go to the remailer to discover who the

12 actual source of that material is.

13 Q Have you done that?

14 A We have done that on several occasions. In fact, in

15 Finland in cooperation with the local authorities we had a

16 remailer -- his premises raided by the police, to put it in

17 simple terms, because he refused to give us the identity of a

18 person who had infringed our materials. The authorities went

19 in and made him -- under threat of taking his whole computer,

20 give us the name. We are getting a lot of cooperation from

21 the industry in this particular matter because they have

22 recognized that intellectual property needs to be protected.

23 MR. KELLEY: Objection, Your Honor.

24 MR. COOLEY: That's all, sir.

25 THE COURT: Any questions?

477

1 MR. KELLEY: I will be very brief.

2 CROSS-EXAMINATION

3 BY MR. KELLEY:

4 Q Mr. McShane, is your testimony that the book, Piece of

5 Blue Sky, has been enjoined?

6 A Yes.

7 Q Would you be surprised to know that the copy of that book

8 was bought at the Tattered Cover about two weeks ago?

9 A I would be surprised. Maybe the process is slow coming

10 over from England.

11 Q Mr. McShane, you testified I think that you have taken

12 courses of O.T.s I think you said the old O.T. I through

13 VII. Is that what you said? Straighten me out, please.

14 A I have taken O.T. I, the old O.T. I., which I did back in

15 1975. II and III, and IV, V, VI, and VII at the same time

16 period which is the old VI, V, VI, and VII. Since then I have

17 done the new O.T. IV and the new O.T.V.

18 Q The O.T. IV through VII, the old O.T. IV through VII, are

19 they the ones that are on the attachments to the Fishman

20 affidavit?

21 A Yes, I believe so.

22 Q They are no longer in use, are they?

23 A Bits of them are. And they will be in the future.

24 Q But at the present time for the most part O.T. IV through

25 VII are not in use?

478

1 A They are -- they are not delivered as they were, no, they

2 are not.

3 Q How about O.T. I, is that still in use in the form that it

4 exists in the attachments to the Fishman affidavit?

5 A O.T. I is revised, some of the same.

6 Q Now, are the plattens that you said were permitted to be

7 taken out overnight or what have you -- I want to make

8 absolutely clear -- are these non-confidential materials that

9 the parishioners get to keep?

10 A No, these are confidential.

11 Q What are the non-confidential materials?

12 A I am not tracking with you. Non-confidential materials

13 anywhere or O.T. levels or what?

14 Q Well, let's say O.T. levels. I think you said as far as

15 you are concerned the story of Xemu is non-confidential.

16 A Well, I said the name Xemu or the 75 million years ago

17 incident is not confidential. Mr. Hubbard has talked about

18 that.

19 Q That is something that would be covered under the

20 non-confidential nondisclosure part of the agreement that

21 people signed with the church; is that right?

22 A The description of the incident with Xemu is described in

23 very great detail in the O.T. III materials. It's interwoven

24 with what we had done to different people. That whole story,

25 the background materials, et cetera, and what he has done

479

1 which is interwoven into that is trade secret, is

2 confidential.

3 Q So are you saying the entire thing is confidential trade

4 secret or not?

5 A What I am trying to explain, the reference to Xemu or

6 Mr. Hubbard's description of the incidents that happened is

7 not. How it is greater described in the O.T. III material and

8 that description which I pointed out to the court, that first

9 paragraph you look at, it's interwoven with a lot of factual

10 things that have happened to individual persons. That is

11 secret.

12 Q Under your agreements with your parishioners, it would be

13 perfectly okay for someone who had taken O.T. III to go out

14 and tell persons that are not opposed to Scientology that what

15 they were working with involves Xemu and the volcanoes and

16 something that happened 75 million years ago; is that right?

17 A If somebody has taken the level and gone out and talked

18 about the great catastrophe that occurred 75 million years ago

19 and talked about Xemu and volcanoes, that wouldn't be off

20 policy or wouldn't be breaching that agreement.

21 Q Unless it's done with someone who is opposed to

22 Scientology?

23 A Not even then. The volcanoes on the cover of Dianetics,

24 the tape -- that he talks about the catastrophe is in a tape

25 that is sold to the public.

480

1 Q Are there any parts of the copyrighted works of Ron

2 Hubbard that are not included -- and I am talking about O.T. I

3 through VII -- in the registration deposits?

4 A Yes, all of the non-confidential materials that are

5 included in those levels are not included in deposits.

6 Q As far as you know, they are not part of the registration

7 of copyrighted works through the R.T.C.

8 A That's correct.

9 Q You said that the only materials you took from

10 Mr. Wollersheim's garage were hard copies of the Fishman

11 document.

12 Isn't it true that because of time constraints

13 several large files containing hard copies of documents were

14 taken without going through them?

15 A I scanned through several files. When I discovered any

16 copyrighted material that were affixed to -- that were bound

17 in some form within the file, I didn't want to undo the

18 binding just because of the allegation we expected

19 Mr. Wollersheim to make, so I kept them intact.

20 Q In addition to the Fishman affidavit, you took his entire

21 file in a 1977 FBI raid of Scientology, did you not?

22 A I don't believe so.

23 MR. KELLEY: If I could just have a few seconds?

24 That's all, Your Honor. Thank you.

25 THE COURT: Any redirect?

481

1 MR. COOLEY: May I consult with my --

2 REDIRECT EXAMINATION

3 BY MR. COOLEY:

4 Q With respect to the old O.T. levels, portions of them are

5 still in use in the O.T. level; is that correct?

6 A There is bits of it, yes.

7 Q There is intention to use them again?

8 A Absolutely.

9 Q In any event, all O.T. levels are covered by copyright,

10 are they not?

11 A That's correct, sir.

12 Q Each one having an individual copyright?

13 A Yes.

14 MR. COOLEY: That's all.

15 THE COURT: You may stand down. Thank you.

16 MR. COOLEY: The plaintiff rests, Your Honor.

17 THE COURT: Any surrebuttal?

18 MR. KELLEY: I don't think so, Your Honor. Let me

19 just check.

20 THE COURT: All right.

21 MR. KELLEY: No, Your Honor.

22 THE COURT: We are going to stand in recess. Come

23 back at two o'clock. Each side will have 30 minutes to sum

24 up. We'll be in recess.

25 (Recess at 12:15 to 2:00 p.m.)

482

1 REPORTER'S CERTIFICATE

2 I certify that the foregoing is a correct transcript from

3 the record of proceedings in the above-entitled matter. Dated

4 at Denver, Colorado, this 25th day of September, 1995.

5

6 _______________________________

Deborah A. Stafford

7

8 WITNESSES

9 Lawrence Wollersheim

Cross-examination By Mr. Cooley 389

10 Redirect Examination By Mr. Kelley 432

Recross-examination By Mr. Cooley 434

11 Michael Rinder

Direct Examination By Mr. Cooley 440

12 Cross-examination By Mr. Kelley 447

Norman Parades

13 Direct Examination By Mr. Cooley 452

Cross-examination By Ms. Hanlon-Leh 459

14 Redirect Examination By Mr. Cooley 466

Warren McShane

15 Direct Examination By Mr. Cooley 467

Cross-examination By Mr. Kelley 477

16 Redirect Examination By Mr. Cooley 481

17 PLAINTIFFS' EXHIBITS

18 Exhibit Offered Received Refused Reserved Withdrawn

19 96,97,98 398 398

20 DEFENDANTS' EXHIBITS

21 Exhibit Offered Received Refused Received Withdrawn

22 NN,OO,PP,A-MM 437

23

24

25