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Attorneys for Plaintiff, RAUL LOPEZ, by and through his Guardian ad Litem ALICIA LOPEZ SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES, CENTRAL DISTRICT RAUL LOPEZ, by and through his Guardian ad Litem, ALICIA LOPEZ, Plaintiff, vs.

CHURCH OF SCIENTOLOGY MISSION OF BUENAVENTURA, CELEBRITY CENTRE INTERNATIONAL, CHURCH OF SCIENTOLOGY FLAG LAND BASE, WORLD INSTITUTE OF SCIENTOLOGY ENTERPRISES, CHURCH OF SCIENTOLOGY RELIGIOUS TRUST, ROBERT CEFAIL, TOLI CEFAIL, MICHAEL ZETNER, THE RC&A GROUP, INC., MICHAEL HALEY, BRENT JONES, RAUL VALLE, TOM STEINER and DOES 2 through 50, inclusive, Defendants.

CASE NO.: BC200852 JUDGE REGINALD A. DUNN, DEPT. 44 SECOND AMENDED COMPLAINT FOR:

1. BREACH OF CONTRACT;

2. NEGLIGENCE;

3. FIDUCIARY ABUSE;

4. CONSTRUCTIVE FRAUD;

5. FRAUD - INTENTIONAL MISREPRESENTATION;

6. FRAUD - CONCEALMENT;

7. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS;

8. UNFAIR BUSINESS PRACTICES;

9. PROFESSIONAL MALPRACTICE;

10. NEGLIGENT MISREPRESENTATION;

11. RESCISSION AND RESTITUTION; AND, 12. CONSTRUCTIVE TRUST AND ORDER OF CONVEYANCE;

COMES NOW Plaintiff RAUL LOPEZ, by and through his Guardian ad Litem, ALICIA LOPEZ, and for his causes of action against the Church of Scientology Mission of Buenaventura, Celebrity Centre International, Church of Scientology Flag Land Base, World Institute of Scientology Enterprises, Church of Scientology Religious Trust, Robert Cefail, Toli Cefail, Michael Zetner, The RC&A Group, Inc., Michael Haley, Brent Jones, Raul Valle Tom Steiner and Does 2 through 50, inclusive, and each of them, alleges as follows:

[...] 16. Defendants: Church of Scientology, Mission of Buenaventura; Church of Scientology Celebrity Centre International; Church of Scientology Flag Land Base also known as Church of Scientology Flag Service Organization, Church of Scientology Religious Trust and the World Institute of Scientology Enterprises constitute a portion of the overall enterprise known as Scientology. The Enterprise of Scientology consists of numerous corporate entities, but operates as a seamless structure _ultra vires_ of the corporate lines of authority. The enterprise of Scientology constitutes a _deceptis visus_ designed to make the enterprise of Scientology and its individual corporate components "impregnable" and immune from the collection of liability judgments. The enterprise of Scientology is in fact controlled by and through an unincorporated, paramilitary like association known as the "Sea Organization" whose members are placed in key management positions within key corporations such as Defendant World Institute of Scientology Enterprises. The leadership of the "Sea Organization,"

through its placement of members in corporations that it runs, is able to control the whole of the enterprise of Scientology, channeling money, assets and employees around the enterprise of Scientology at will regardless of existing corporate structures.

[...] GENERAL ALLEGATIONS 19. Plaintiff Raul Lopez was born on July 25, 1966. On August 27, 1985, at the age of 19, he was gravely injured when the light pick-up truck he was driving was demolished in a head-on collision by an 18-wheel truck. Plaintiff was hospitalized for approximately seven months following the incident. Among the many injuries he suffered was a closed head injury resulting in irreversible trauma to his brain.

This injury caused cognitive dysfunction that rendered Plaintiff substantially impaired mentally and emotionally, including a compulsion toward impulsive and irrational behavior. Accordingly, Plaintiff became permanently incapable of caring for his property, protecting his rights, transacting business or fully understanding the nature or effects of his actions.

20. Following his accident, Plaintiff, through his mother, Alicia Lopez, hired Defendant Michael Haley to prosecute a Personal Injury action on his behalf. During the course of that claim, Defendant Haley obtained the opinions of various health care professionals for use in prosecution of that claim. The evaluating neuropsychologist, Dr.

Charles Fretheim, concluded Plaintiff was incompetent to act responsibly on his own behalf, and Dr. Fretheim strongly recommended that a conservator be appointed. Despite this, Defendant Haley neither discussed Dr. Fretheim's recommendation with Plaintiff or Plaintiff's mother, nor moved for the appointment of a conservator. Thus, when Plaintiff's personal injury claim was eventually settled for the sum of $2.5 million, there was no mechanism in place to prevent Plaintiff from accessing the funds, even though he was known to be incompetent to handle them responsibly.

21. Following Plaintiff's release from the hospital in or about March of 1986, Plaintiff embarked on a grueling outpatient rehabilitative physical therapy program to enable him to walk again and perform other activities of daily living. One day in the early summer of 1987, as part of his recovery program, Plaintiff visited a swap meet. There, using the cane he required in order to ambulate, Plaintiff slowly walked up and down the rows, pausing for significant lengths of time at the end of each one to rest before starting down a new row. At the end of one such row, situated in the vicinity of the spot where Plaintiff had stopped to rest, was a booth bearing a sign advertising "Dianetics" and offering literature authored by L. Ron Hubbard, promulgator of what is known as the Church of Scientology.

22. While Plaintiff was resting near the "Dianetics" booth in preparation to begin his walk down the next row, a woman stationed at the booth struck up a conversation with Plaintiff. That person was an agent and authorized representative of Defendant Church of Scientology Buenaventura Mission and the enterprise of Scientology who inquired about Plaintiff's obviously impaired physical condition. Plaintiff told her of the vehicular accident.

23. During the initial conversation between Plaintiff and the Scientology representative, the woman encouraged Plaintiff to complete a "free personality test," and Plaintiff did. The "free personality test" is a standard and usual method by which members of the public are recruited to join the Church of Scientology. Subsequently, consistent with a second standard and usual step in Scientology's recruitment process, Plaintiff was contacted by and participated in a formal interview with a Scientology agent, who became known to Plaintiff as Jim Hamre, a Church of Scientology "registrar" associated with the Church of Scientology Buenaventura Mission and the overall enterprise of Scientology. Jim Hamre's position as a Scientology "registrar" required him to employ a "Hard Sell" sales technique on Plaintiff which Scientology defines as "not being reasonable with stops and barriers (objections) and getting him (Mr. Lopez) fully paid up and taking the service." In accordance with Scientology protocol, Hamre advised Plaintiff his test results indicated various areas of difficulty in his life for which he could receive help by participating in Scientology courses and an intermittent process of interrogation and counseling known as "auditing."

24. From the very first days of his affiliation with Scientology, Plaintiff's brain damage was known to Jim Hamre and Tom Steiner, as was the fact that Mr. Lopez was in possession of significant assets.

Thereafter, Plaintiff's auditor, on behalf of the Church of Scientology Buenaventura Mission and on behalf of the enterprise of Scientology, sought to obtain, and did obtain, all of Plaintiff's medical and psychiatric records as part of Plaintiff's indoctrination into the Church of Scientology. Accordingly, Defendants and/or their agents have, at all times, been aware of Plaintiff's permanent mental limitations including the contents of those records, which revealed that Plaintiff had received a traumatic head injury resulting in significant permanent impairment of cognitive function. At all times, all Defendants, with the exception of Defendants Haley, Jones and Valle have represented to Plaintiff that his permanent physical impairments would be improved by intensifying his study of Scientology.

25. At the time of Plaintiff's formal interview, as described herein above, Plaintiff was afflicted with a loss of neuromuscular control in both hands which manifested as a tremor, a consequence of his vehicular accident. The tremor was quite visible and a source of distress and anxiety to Plaintiff, who made this known to Jim Hamre, the conductor of the interview. Thereafter, in addition to representing that Scientology courses and auditing would cause improvement in Plaintiff's mental and emotional status, Hamre assured Plaintiff that the tremor would be cured, and that he be fully returned to he pre-accident condition by his participation in those Scientology activities.

26. Also during the course of the interview described herein above, Jim Hamre made repeated inquiries of Plaintiff about how much money he had in his bank account, how much interest he had earned on it, and how he could obtain access to it. Beginning that day, and approximately three to five times per week thereafter, at the urging of Jim Hamre and other Scientology agents, Plaintiff inquired of his mother, Alicia Lopez, about how much money and interest he had in his accounts. At the time, Plaintiff had multiple accounts. Ms. Lopez was a joint tenant on the accounts, but her signature was not required in order for Plaintiff to obtain funds. At the time Plaintiff began making these incessant inquiries of his mother, Ms. Lopez was a hospital inpatient, recovering from surgery. Owing to her weakened state, she acceded to Plaintiff's initial Scientology-instigated requests for information about Plaintiff's funds without scrutinizing them.

27. At the urging of Jim Hamre and the other Scientology agents with whom Plaintiff became acquainted, Plaintiff continued to make almost daily inquiries of his mother regarding the amount of funds in his bank accounts.

Plaintiff reported the information he learned from his mother back to the Scientology agents, who continually urged him to buy additional expensive courses and L. Ron Hubbard-authored literature. The relentlessness of these inquiries engendered much tension and discord between Plaintiff and his mother. Eventually, during a time when Ms.

Lopez was herself in a weakened state of health, she became exasperated and relinquished all control of the bank accounts to Plaintiff, vowing to have no further involvement in the management of his money.

28. Although Plaintiff's mother, Ms. Lopez, was aware he had become involved with an organization, she did not know in the first two weeks anything about it or the extent to which Plaintiff was giving his money to it. By the end of the second week following his initial interview with the Scientology agent, Plaintiff had already spent or pledged approximately $30,000 for Scientology courses, materials and/or auditing services that Plaintiff had been told would bring him back to his pre-accident condition, curing his permanent injuries.

When Ms. Lopez learned this, she accompanied the Plaintiff to the premises of the Defendant Buenaventura Mission to confront the persons who had influenced Plaintiff. Once there, Ms. Lopez, citing Plaintiff's impaired and vulnerable mental state, demanded the return of his money. After some discussion, the Scientology agent returned approximately $28,500 to Plaintiff and told him never to return to the Church of Scientology.

29. Despite having admonished Plaintiff to leave Scientology and never return, the representatives from the Defendant Buenaventura Mission subsequently communicated with Plaintiff and once again began encouraging him to spend his money on Scientology literature, courses and auditing. They once again advised Plaintiff his only chance of "handling" the difficulties in his life, and returning himself to his pre-accident condition was by participating in Scientology activities.

However, this time, they advised him he could become involved with Scientology only if he prevented his mother from interfering with the affiliation. Plaintiff was advised that his mother and other members of his family were "suppressive persons" who impeded Plaintiff advancement in Scientology and sought to actively interfere with his receiving the promised benefits of Scientology.

Accordingly, Plaintiff, while endeavoring to keep the information from his mother, commenced paying for Scientology products and services at the rate of thousands of dollars every month until, by the end of 1996, Plaintiff had paid hundreds of thousands of dollars for Scientology services and products.

30. Plaintiff participated in the Scientology process known as auditing as often as five to six days a week at the Church of Scientology Buenaventura Mission. In addition, he was passed on to other members of the enterprise of Scientology, including Defendant Church of Scientology Celebrity Centre and Defendant Scientology Flag Land Base (also known as the Flag Service Organization) for further advanced auditing. Despite the fact that Plaintiff never obtained any of the benefits promised to him and Plaintiff repeatedly passed out (lost consciousness) during auditing sessions, representatives of the enterprise of Scientology continually insisted that the solution to any problems Plaintiff had was additional expensive auditing. With knowledge that Plaintiff was having a continuing and alarming physical reaction to the auditing processes, Defendants Church of Scientology Buenaventura Mission, Church of Scientology Flag Land Base (also known as Church of Scientology Flag Service Organization) and Church of Scientology Celebrity Centre failed to stop the processing or advise the Plaintiff that he should obtain medical advice before obtaining further auditing.

31. Defendants Church of Scientology Buenaventura Mission, Church of Scientology Celebrity Centre and Church of Scientology Flag Land Base proceeded to audit Plaintiff in direct contravention of the policies of Scientology, stating that persons such as Plaintiff who had a history of psychiatric care or treatment with psychiatric drugs are "illegal PCs" and ineligible for auditing.

32. Plaintiff was induced to participate in Scientology and the business transactions described herein primarily by statements frequently made to him by Jim Hamre and other Scientology agents, to the effect that Scientologists were "the most ethical people on the planet." This was of great significance and importance to Plaintiff, since it caused him to believe the Scientologists who were advising him were trustworthy and concerned with his best interests. However, Plaintiff never learned during his tenure with Scientology that the Church of Scientology, which refers to its methods as "technology,"

adheres to its singular definition of the word ethics, which is that:

Ethics is a first dynamic action. All ethics really does is hold the lines firm so that you can route and audit. All ethics is for in actual fact is simply that additional tool necessary to make it possible to get technology in. That's the whole purpose of ethics; to get technology in.

33. In late 1991, Plaintiff was approached by Jim Hamre, who, after again inquiring about the amount of funds available to Plaintiff, told Plaintiff of a business opportunity, which Hamre characterized as very promising. Hamre introduced Plaintiff to Defendant Michael Zetner, also a Scientologist, who described his company, RC&A Group, Inc.

(hereinafter, "RC&A"), and its purported plan to install telephones in jails for use by inmates. Defendant RC&A is a Scientologist-owned and run company licensed by Defendant WISE to use the "administrative technology" of L. Ron Hubbard, founder of Scientology, for a fee of 10% of RC&A's gross receipts. Zetner boasted to Plaintiff of the great plans he had for RC&A and its jailhouse telephone scheme, and he and Hamre encouraged Plaintiff to act quickly to invest in the company.

Although they knew of Plaintiff's mental disability, Hamre and Zetner urged that there was no need for Plaintiff to seek independent advice regarding the soundness of investing in RC&A and urged Plaintiff to act without delay. As had the other Scientologists with whom Plaintiff had communicated, Zetner assured Plaintiff that he, Zetner was extremely ethical, and he solicited and gained Plaintiff's trust and confidence.

34. Hamre's encouragement to Plaintiff to enter into the jailhouse telephone investment scheme was made in his capacity as registrar, and as an authorized agent for the Church of Scientology Buenaventura Mission and the enterprise of Scientology. From its inception the investment scheme was solely designed to provide RC&A, Zetner and the Cefails a method by which they could obtain funds to channel into the enterprise of Scientology or pay for its products and services.

35. Accordingly, on October 16, 1991, Plaintiff entered into the first of three contracts with Cefail and RC&A. The October 16, 1991, contract called for Plaintiff to invest $60,000 with RC&A in exchange for a minimum monthly income stream after 14 months of $135 for each of 20 phones for 48 consecutive months, with a maximum monthly payment of up to 50% of the phones' net revenue. The October 16, 1991, contract is attached hereto as Exhibit "A" and incorporated by reference as though fully set forth herein.

36. A second contract, also between Plaintiff and RC&A on the same terms as the October 16, 1991 agreement, was executed, also in October 1991. Plaintiff and Defendant Cefail, as authorized agent of RC&A, signed it. Defendant Zetner promised to provide Plaintiff with a copy of the contract.

However, he never did so. The second contract is attached hereto as Exhibit "B" and incorporated by reference as though fully set forth herein.

37. A third contract was executed on December 9, 1991. Although Zetner led Plaintiff to believe he was contracting with RC&A again, this contract was actually executed between Plaintiff, on the one hand, and Defendants Robert and Toli Cefail and Michael Zetner, as individuals, on the other. Nevertheless, the third contract contemplated the same investment purpose as had the October 1991 contracts. This third contract called for Plaintiff to invest a total of $180,000 for 70 additional phones, with the same provisions for minimum and maximum monthly income streams as were associated with the first and second contracts, as set forth in Paragraphs 34 and 35 above, except that:

under this third contract, Plaintiff was also to be paid 12 consecutive payments of $3,500 each, beginning four months after the execution of the agreement. Thus, under all three contracts, Plaintiff was to receive a total minimum return of $754,800. The third contract is attached hereto as Exhibit "C" and incorporated by reference as though fully set forth herein.

38. At all times when Plaintiff was being encouraged and pressured to invest in the jailhouse telephone scheme by Hamre and Zetner, Plaintiff was in need of independent professional legal and/or investment advice. Plaintiff was actively discouraged by both Hamre and Zetner from having the jailhouse telephone scheme and the contracts (appended hereto as Exhibits "A", "B" and "C") examined by anyone who could give him unbiased professional advice about the appropriateness of the scheme in general and/or the wisdom of entering into the specific contracts set forth as Exhibits "A", "B" and "C."

Plaintiff was advised by Hamre and Zetner that, rather than having the contracts reviewed by an attorney, he should have the contracts reviewed by a non-attorney Scientologist based on Scientology "Ethics and Justice" principles.

39. The actions of Hamre in inducing Plaintiff to invest in the jailhouse telephone scheme were known to Defendant Thomas Steiner and Defendant Church of Scientology Buenaventura Mission and were ratified by them.

40. Pursuant to the advice and pressure of Hamre and Zetner, Plaintiff in fact paid a fee to have Exhibit "A" reviewed by a Scientology "ethics officer," who advised the Plaintiff that the contract should specify that Defendant WISE would be selected to resolve any disputes that arise under the contract.

41. Plaintiff fully performed his obligations under each of the three contracts described above, to wit: Plaintiff paid consideration in three separate transactions of $60,000, $60,000 and $180,000, respectively, to Robert Cefail, Toli Cefail, Michael Zetner and RC&A as investments in the jailhouse telephone scheme as set forth herein.

42. Although Plaintiff received the first $3,500 payment in April, 1992, as called for by the third contract, beginning in May of 1992, and at all subsequent times, Defendants RC&A, Robert Cefail, Toli Cefail and Michael Zetner have failed to pay in accordance with their obligations under the above-described contracts.

43. On information and belief, neither the Cefails, Zetner nor RC&A ever intended to use, nor did they use, the full amount of Plaintiff's investments toward the furtherance of the jailhouse telephone scheme as called for by the contracts with Plaintiff. Instead, Defendants used a small portion of Plaintiff's investments for the purchase and installation of some telephones and diverted the remaining funds for their own use and benefit and for the use and benefit of the enterprise of Scientology.

44. On information and belief, Plaintiff alleges that prior to entering in to the contracts set forth herein as Exhibits "A", "B" and "C," Defendants Robert and Toli Cefail, Michael Zetner and the RC&A Group, Inc. were themselves being pressured by representatives of the enterprise of Scientology to channel funds into the "Church of Scientology Religious Trust." Defendants Robert and Toli Cefail, Michael Zetner and RC&A, Inc. advised representatives of the enterprise of Scientology that they were in the process of obtaining a large amount of funds from Plaintiff through Plaintiff's investment in the jailhouse telephone scheme. Defendants Robert Cefail and Toli Cefail, Michael Zetner and RC&A, Inc. sought permission from agents of the enterprise of Scientology to enter into the contracts set forth herein as exhibits "A", "B" and "C." Defendants Robert and Toli Cefail, Michael Zetner and RC&A, Inc. were granted permission by agents of the enterprise of Scientology to enter into the contracts so long as "a decent portion of the money went to" the enterprise of Scientology.

45. On information and belief, Plaintiff alleges that Defendants Robert and Toli Cefail, Michael Zetner and RC&A Group, Inc. channeled a significant portion of the $300,000 invested by Plaintiff into various Scientology organizations and projects including the "Church of Scientology Religious Trust."

46. Following the initial breach of contract by Defendants Robert Cefail, Toli Cefail and Michael Zetner and RC&A in May of 1992, Plaintiff approached one or more representatives of Defendant Church of Scientology Buenaventura Mission and the enterprise of Scientology for advice and help in prompting RC&A, the Cefails and Zetner to honor their contractual obligations. Plaintiff was advised that the way to resolve his conflict with the Cefails, Zetner and RC&A was to join the World Institute of Scientology Enterprises (hereinafter, "WISE") and avail himself of its provision for arbitration proceedings. In June of 1992, Defendant Toli Cefail further encouraged Plaintiff to take the matter of his complaint against her, Robert Cefail, Michael Zetner and RC&A to WISE. She did so by sending information to Plaintiff regarding how to begin WISE arbitration proceedings.

47. In mid-1992, in reliance on Defendants' repeated representations about the "ethical" nature of Scientology and WISE, Plaintiff made successive requests of WISE for assistance in resolving the matter of Defendants' failure to pay him according to the terms of their contracts. On August 27, 1992, in response to a fax from WISE, Plaintiff applied and paid for membership in WISE in order to qualify for its provision for arbitration.

48. WISE is a religious organization specifically and solely dedicated to the furtherance of Scientology principles and practices, and it operates according to the definition of "ethics" as set forth in Paragraph 32 above.

WISE, In fact, constitutes an integral part of the enterprise of Scientology. At all times referred to herein, Defendants and their representatives with whom Plaintiff consulted knew the Scientology definition of "ethics," knew that WISE operated upon that definition, and knew that, in arbitrating Plaintiff's claim, WISE's only concern would be to preserve and uphold all avenues for the flow of money into Scientology organizations, including the ratification of the transfer by RC&A and Defendants, Robert and Toli Cefail and Zetner of funds fraudulently procured from Plaintiff to the enterprise of Scientology.

49. Plaintiff was repeatedly advised and unduly influenced by all the Defendants, with the exception of Defendants Haley and Church of Scientology Religious Trust that WISE constituted the only forum available to an "ethical" Scientologist for the resolution of claims against fellow Scientologists. Defendants further advised Plaintiff that it was a violation of Scientology ethics for one Scientologist to pursue a claim against another Scientologist outside the Scientology ethics and justice system. Specifically, Defendants employed the auditing procedure to gain Plaintiff's assent to the WISE arbitration on the basis that if he did not agree to pursue his claims against his fellow Scientologists in an ethical manner, he could not avail himself of the promised opportunity to be returned to his pre-accident condition. Plaintiff relied on these statements and the repeated assurances of WISE that WISE would take care of Plaintiff and handle all of Plaintiff's claims pursuant to Scientology ethics in joining WISE and consenting to its arbitration processes.

50. Rather than providing a neutral quasi-judicial forum for the resolution of the dispute between Plaintiff and RC&A, the WISE arbitration was designed from the beginning to provide the trappings of a fair forum while in reality having as its primary purpose protecting the enterprise of Scientology. WISE knew at the time that it acted to induce Plaintiff to make use of its sham arbitration services that it had no intention of providing a quasi judicial forum and that in fact that it was primarily acting to protect the flow of funds into Scientology and protect the enterprise of Scientology from examination by the "WOG", (Non-Scientology), judicial system.

51. The WISE arbitration proceedings are ongoing and have not concluded. At all times up to and including the present, Plaintiff has received repeated assurances from Defendants and their representatives that he should trust the WISE program to satisfactorily resolve his claim. However, the WISE arbitration proceedings have been and continue to be a sham. In actual fact, Defendants have acted from the beginning to conceal WISE's true mission from Plaintiff and, although knowing of his incapacitated mental state, have encouraged him to forego any alternative legal rights and remedies he may otherwise have, and to rely on their assurances about the WISE proceedings. On each occasion when he has complained about the lack of resolution, he was unduly influenced by having been advised by Defendants and/or their authorized agents to both trust in WISE and to undergo further Scientology auditing services.

52. In or about 1993, Jim Hamre introduced Plaintiff to an individual named Don Sturges, also a Scientologist, who sought a mortgage to be funded by Plaintiff. At the urging of Hamre, who knew of Sturges' tenuous financial position, but nevertheless strongly recommended the transaction, Plaintiff made the loan. He did so in reliance on the assurances of Hamre to the effect that both Hamre and Sturges were "ethical" Scientologists and could be trusted. However, Sturges defaulted after one payment and never repaid the loan. Hamre's urging to Plaintiff to enter into the transaction was made in his capacity as registrar, and as an authorized agent for the Church of Scientology Buenaventura Mission and as an authorized agent of the enterprise of Scientology, and was solely designed to provide Sturges a method by which he could obtain funds to donate to the enterprise of Scientology or pay for its products and services.

53. On two occasions, Plaintiff submitted paperwork to Defendant, Church of Scientology Mission of Buenaventura in an effort to have WISE arbitrate his claim against Sturges; however, after each occasion, Plaintiff was informed his paperwork had been lost. Upon complaining to WISE, Plaintiff was advised to obtain additional Scientology auditing services.

54. Jim Hamre engaged in a continuing practice on behalf of the Mission of Buenaventura and the Enterprise of Scientology of using Plaintiff as a bank so as to enhance the revenue stream of the Church of Scientology Mission of Buenaventura and his own personal "STATS"

(statistics) as registrar of the Mission. On multiple occasions when Mr. Hamre was "regging" (Hard Selling) individuals who had no funds to purchase Scientology goods or services, Mr. Hamre would pressure Plaintiff to loan funds to the individual. Thus, the Mission would get paid for its services, while Plaintiff would have to collect an unsecured loan. This pattern and practice was known to Mr. Steiner, the Mission's owner and approved and ratified by him.

55. In or about 1993, in response to one of Plaintiff's many complaints about the failure of RC&A to pay him in accordance with the terms of the contracts, Plaintiff was referred to an attorney for assistance. The attorney, Defendant Brent Jones, was also a Scientologist dedicated to the furtherance of Scientology pursuant to its "ethics" policy as described in Paragraph 32 above. Accordingly, he advised Plaintiff that the WISE arbitration procedure was in Plaintiff's best interests, despite knowing that WISE's foremost concern was for the furtherance of Scientology and not for the acquisition of justice for Plaintiff.

56. Upon undertaking the representation of Plaintiff, Defendant Jones was fully apprised of Plaintiff's vehicular accident and ensuing mental incapacity. Nevertheless, during the time when he was representing Plaintiff before the WISE Charter Committee, Defendant Jones failed to seek the appointment of a conservator or guardian to act on Plaintiff's behalf. Instead, Jones repeatedly exploited and took advantage of Plaintiff's vulnerable mental state.

57. In or about mid-1994, which was also during the course of his representation of Plaintiff before the WISE Charter Committee, Defendant Jones approached Plaintiff regarding a business venture in which Jones was then involved, the breeding and sale of ostriches.

Jones represented to Plaintiff that he, Plaintiff, should invest in the venture, that if he did so he would reap a sizeable return on his investment, and that there was no need to seek independent advice about the viability or advisability of going forward with the investment. Jones further advised Plaintiff that he should act quickly so as not to miss out on the chance to become involved with the venture. With Jones' representations in mind, Plaintiff invested in the venture for the purchase of two ostrich eggs to be harbored for incubation and subsequent maintenance with other such ostriches on property owned by Jones.

58. Despite having paid for two ostrich eggs, when Plaintiff subsequently visited the property of Jones to see them, Jones told him he could not distinguish which of the several eggs then present belonged to Plaintiff. Nevertheless, Jones assured Plaintiff there was nothing to worry about. Plaintiff, having complete trust in Jones, accepted Jones' assurances.

59. Subsequently, after the ostrich eggs had hatched, Plaintiff again visited the property owned by Jones where the ostriches were harbored.

At that time, Jones showed Plaintiff an open yard with many ostriches standing about. Upon Plaintiff's inquiry about which of the live ostriches belonged to him, Jones indicated he was unable to distinguish between the ostriches; however, he nevertheless again assured Plaintiff he had no reason to worry, and Plaintiff acquiesced.

60. Subsequently, Jones advised Plaintiff that, in order to assure the maximum protection of the ostriches, it would be necessary to build a pen on Jones' property where the ostriches could be contained. At Jones' request, Plaintiff purchased the materials with his own funds and built the pen himself on Jones' property.

61. Shortly after Plaintiff completed construction of the ostrich pen on Jones' property, in or about late 1994, Jones advised Plaintiff, without further explanation, that both of Plaintiff's ostriches had died.

62. In addition to the investment in Ostrich Farming in 1995, Defendant Jones also convinced Plaintiff to invest $15,000 in a company Jones was the President of, New Era Technologies. Plaintiff's entire investment in New Era Technologies was lost when the company went bankrupt.

63. At various times during the course of his affiliation with Defendants, Plaintiff, upon the insistence and urging of Defendants and/or their authorized agents, paid money for Scientology products and services by not only extracting funds from his personal accounts, but also by charging them to his credit cards up to the maximum allowable limits. Defendants, knowing that they were taking advantage of Plaintiff's mental incapacity, sought to cover up their systematic looting of Plaintiff's funds. Defendants instructed Plaintiff on numerous occasions that he should purchase cashier's checks made out to himself. Defendants would then have the Plaintiff endorse the cashiers check on the back with his name in payment for Scientology "Services".

Also, at the urging of Defendants and/or their authorized agents, Plaintiff was taught how to obtain funds by refinancing the two homes he had purchased free and clear after receiving his lawsuit settlement proceeds, and he tendered these funds to the Church of Scientology Buenaventura Mission and/or Celebrity Center International and/or Church of Scientology Flag Land Base. Plaintiff has subsequently been unable to keep either of the two homes.

64. At various times, pursuant to the policies of the enterprise of Scientology, Plaintiff was passed "up the Bridge to Total Freedom" by the Church of Scientology Buenaventura Mission so that he could receive advanced "auditing" and other Scientology services and products at the Celebrity Centre International facility in Los Angeles, California and the Church of Scientology Flag Land Base also known as the Church of Scientology Flag Service Organization in Clearwater, Florida. On the occasions that Plaintiff was "passed up the Bridge to Total Freedom" Plaintiff's records including his "preclear file" was also "passed up the Bridge" thus each Scientology Organization selling products and services to Plaintiff knew of Plaintiff's incapacity as alleged herein. Plaintiff was obligated to pay for all Scientology products and Services he received.

65. In furtherance of the policies of the enterprise of Scientology and for the economic benefit of all Defendants with the exception of Defendant Haley, the Defendants formulated a plan to unduly influence Plaintiff by isolating and disconnecting him from the advice, protection and support of those persons who would naturally be concerned with his welfare and were not in full alignment with the goals, policies and doctrines of the enterprise of Scientology.

Defendants' plan of isolation and disconnection of Plaintiff was carried out with full knowledge of Plaintiff's limited capacity to manage his own affairs and included, but was not limited to: 1) supplying the Plaintiff with "instructions" for investment within the Scientology community; 2) channeling Plaintiff away from the "Wog,"

(non-Scientology) justice system and into the closed Scientology WISE justice system; 3) supplying Plaintiff with a Scientology lawyer in order to divert him from competent legal advice; 4) supplying him with a Scientology tax preparer in order to monitor his funds and shield the extent to which Plaintiff's resources were being depleted from examination by a "Wog" accountant; 5) having his auditor, an agent and employee of the Church of Scientology Buenaventura Mission and the enterprise of Scientology live in Plaintiff's house for approximately a year and a half in order to monitor Plaintiff's activities and contacts with others outside the enterprise of Scientology.

66. Defendants, with the exception of Defendant Haley have acted to conspire to commit the acts alleged herein. Defendants conspiracy had as its purpose to unduly influence Plaintiff so as to the systematically strip him of his assets for the benefit of the individual Defendants and for the benefit of the enterprise of Scientology and to cover up Defendants wrongdoing and to induce Plaintiff to forgo his legal rights against the individual Defendants and the enterprise of Scientology. Said conspiracy was and is ongoing and includes overt acts in furtherance of said conspiracy through October of 1998.

FIRST CAUSE OF ACTION (Breach of Contract Against Defendants RC&A, Robert Cefail, Toli Cefail and Michael Zetner) [...] 68. Defendants RC&A, Inc. Michael Zetner, Robert Cefail and Toli Cefail have repeatedly and in an unjustified manner materially breached their obligations under the contracts attached hereto as exhibits "A", "B" & "C."

[...] SECOND CAUSE OF ACTION (Negligence Against Defendant Church of Scientology Mission of Buenaventura and Thomas Steiner only) [...] 72. Defendants' fully and completely controlled Plaintiff at all times while he was being counseled by means of auditing.

73. Defendants knew or should have known that in Plaintiff's impaired mental state that counseling Plaintiff by means of auditing presented a risk of injury to Plaintiff that was both predictable and unnecessary.

[...] THIRD CAUSE OF ACTION (Fiduciary Abuse Against All Defendants, except Defendants RC&A, Robert Cefail, Toli Cefail and Michael Zetner) [...] 77. Each of the Defendants herein stood in a relationship of trust and confidence to Plaintiff. Specifically, Defendants Church of Scientology Buenaventura Mission, Tom Steiner, Celebrity Centre International, Church of Scientology Flag Land Base, Church of Scientology Religious Trust, and World Institute of Scientology Enterprises stood in a special relationship to Plaintiff in that, individually and/or through their agents, they represented to Plaintiff that they could and would provide him with guidance, all in his best interests, and that, as Scientologists, they were bound to do so according to the highest ethical calling in the world; in saying these things to Plaintiff, Defendants knew that Plaintiff would place especial trust and confidence in them, and he did. These Defendants ratified, the acts of their agents, including but not limited to Jim Hamre, as described herein above.

78. Defendants Haley and Jones stood in a special relationship to Plaintiff in that they served as Plaintiff's attorneys.

79. Defendant Valle stood in a special relationship to Plaintiff in that he was referred to Plaintiff by Plaintiff's advisors at the Church of Scientology Mission of Buenaventura to serve as Plaintiff's tax preparer and financial advisor and thereby owed Plaintiff a fiduciary duty of care.

80. Plaintiff's expenditure of thousands of dollars each month on Scientology products and services was done, in every instance, at the instruction of Defendants Church of Scientology Buenaventura Mission, Tom Steiner, Celebrity Center International, Church of Scientology Flag Land Base and the Enterprise of Scientology, individually and/or by and through their authorized representatives, who frequently and relentlessly exhorted and directed Plaintiff to purchase said products and services, despite knowing he was afflicted with a brain injury rendering him of substantially limited capacity and unable to comprehend the significance of his actions. In so doing, Defendants acted to further their own pecuniary gain, in that each said Defendant obtained a direct economic benefit from the Plaintiff's expenditure of funds for Scientology products and services, to wit: each said Defendant received an incremental financial benefit based upon the amount of money Plaintiff spent on Scientology products and/or services.

81. In doing the things herein above alleged, Defendants Haley, Jones and Valle disregarded their fiduciary duties to Plaintiff, as follows:

Defendant Haley knew, based upon the professional opinion relayed to him by the neuropsychologist, Dr. Charles Frethiem, that Plaintiff's impaired mental condition required that a conservator be appointed to manage his affairs. Yet, Defendant Haley declined to seek such an appointment in order to avoid the necessity of obtaining the approval of a court of competent jurisdiction of the settlement of the claim, which would almost certainly lead to a direct reduction of his fee.

82. Defendant Jones failed to pursue Plaintiff's claims against RC&A, the Cefails and Zetner in such a way as to obtain, or attempt to obtain, a fair forum; Defendant's failure in this regard demonstrated his loyalty was to the Church of Scientology's policy to ensure maximum funds for Scientology and that he had no comparative loyalty to his client, the Plaintiff herein.

By doing so, Jones participated in exploiting Plaintiff's incapacity and contributed to unduly influencing him.

83. Defendant Jones further acted to involve Plaintiff in dubious business dealings, including direct dealings with Jones as alleged herein above, without permitting Plaintiff to seek independent advice or counsel and without obtaining a written waiver of Plaintiff's conflict of interest; and in those dealings, Jones took unfair advantage of Plaintiff.

84. Defendant Valle took unfair advantage of Plaintiff by extracting an exorbitant fee each month in exchange for which he obtained and continues to obtain de minimis payments from the Defendants Cefail and RC&A. Further, despite representing to Plaintiff that he has made efforts to obtain increased payments consistent with the true obligations of said Defendants, Defendant Valle has in fact made no such efforts, or any efforts he has made have been illusory. Defendant Valle's conduct has been, and continues to be, designed to placate Plaintiff and dissuade him from seeking remedies in an alternate forum.

[...] FOURTH CAUSE OF ACTION (Constructive Fraud Against All Defendants) [...] 88. By virtue of the fiduciary relationship between Plaintiff and Defendants as set forth herein above, and especially because they knew of Plaintiff's mental incapacity, Defendants owed Plaintiff the utmost good faith and fairness in all matters pertaining to their financial and/or legal advice to him.

89. Defendants, and each of them, were aware of Plaintiff's reliance upon them for matters pertaining to his financial affairs. By virtue of Plaintiff's reliance on Defendants, Defendants gained an advantage over the Plaintiff in matters concerning his financial dealings.

90. Defendants, however, were not the least interested in the Plaintiff's financial well being, but were motivated solely by Defendants' own greed and desire for pecuniary gain.

[...] FIFTH CAUSE OF ACTION (Fraud - Intentional Misrepresentation Against All Defendants Except Defendant Haley) [...] 95. In representing to Plaintiff that Scientologists are the "most ethical people on the planet," all Defendants with the exception of Defendant Haley, individually and/or by and through their authorized agents, knew Plaintiff would comprehend that statement, if at all, according to the common English definition of the word "ethical."

Thus, Defendants' representations were false, since they used and meant the word "ethical" according to its Scientology definition, which provides that "ethical" actions are those which serve to advance Scientology.

96. In addition, Defendants' false representations to Plaintiff included, but were not limited to the following: (1) that by receiving auditing, Defendants would return Plaintiff to his pre-accident condition; (2) that Plaintiff would be provided a fair, and conflict free forum so that he could resolve grievances with other Scientologists; (3) that Plaintiff would not be placed in investments for the benefit of others; and, (4) that Plaintiff was eligible for auditing under Scientology's internal rules.

97. Further, said Defendants knew, when inducing Plaintiff to join and/or participate in WISE and use its arbitration procedure to air his claim against the Cefails, Zetner and RC&A, that WISE also operates according to the Scientology definition of "ethics" and is therefore committed to performing in a way which will secure and preserve the maximum resources for Scientology enterprises, even if, as was the case with Plaintiff, it does not result in justice for the claimant.

98. Further, in representing to Plaintiff that the business investments they recommended to him were sound, Defendants, either individually and/or through their authorized agents, misrepresented the true facts, which were that the investments were shams or designed to primarily benefit the enterprise of Scientology.

99. In saying the things to Plaintiff as herein above alleged, Defendants knew them to be untrue.

100. As a result of Defendants' fraud and deceit as stated herein, Plaintiff was exposed to Defendants' control and undue influence without his knowledge or consent which exacerbated his preexisting mental capacity.

101. The true facts were that said Defendants, individually and/or by and through their authorized agents, intended to induce Plaintiff's reliance on their false statements, in order to further their own pecuniary interests and/or those of the Enterprise of Scientology at the expense of Plaintiff.

102. Plaintiff, being of limited capacity as described herein, reasonably relied on the statements, believing that Defendants were acting in his best interests, as Defendants had induced him to do.

[...] SIXTH CAUSE OF ACTION (Fraud - Concealment Against All Defendants) [...] 107. Defendants knew the information they withheld from Plaintiff would, if disclosed to Plaintiff and/or his mother, be likely to result in measures advantageous to Plaintiff but disadvantageous to Defendants' pecuniary interests. Despite this, Defendants withheld the information in order to induce Plaintiff's reliance.

108. Plaintiff reasonably relied on Defendants to provide him with information in accordance with his best interests, as they had ensured him they would do, and, particularly because of his impaired mental status, he had no reasonable basis for suspecting Defendants were withholding material information from him.

[...] 110. By virtue of the foregoing, Defendants' conduct was malicious and oppressive, and was committed intentionally and in conscious disregard of the rights of and perils to the Plaintiff.

SEVENTH CAUSE OF ACTION (Intentional Infliction of Emotional Distress Against All Defendants) [...] 112. As a legal and proximate result of Defendants' misconduct, Plaintiff has been subjected to severe mental pain and suffering, all to his general damage in an amount according to proof.

[...] 114. The conduct of Defendants, and each of them, as herein above alleged, was so vile, base, contemptible and loathsome that it would be looked down upon and despised by ordinary, decent people. Since, despite knowing the Plaintiff placed special trust and confidence in them, Defendants have acted and/or are continuing to act in furtherance of their own pecuniary interests, and in disregard of Plaintiff's interests, their conduct constitutes despicable conduct that has subjected Plaintiff to cruel and unjust hardship; and, in so conducting themselves, Defendants have acted in conscious disregard of Plaintiff's rights, resulting in oppression to Plaintiff.

EIGHTH CAUSE OF ACTION (Unfair Business Practices Against All Defendants except Defendant Valle) [...] 116. In the course of the conduct by Defendants Church of Scientology Buenaventura Mission, Celebrity Center International, Church of Scientology Flag Land Base, Church of Scientology Religious Trust, Steiner, and/or their authorized agents on behalf of the Enterprise of Scientology as herein above alleged have violated a number of laws, including breaches of "common law" duties, statutes prohibiting such conduct and a stipulation that, upon information and belief, was entered into between the Founding Church of Scientology and the United States Food and Drug Administration, prohibiting the Enterprise of Scientology or its agents from representing to its members or members of the public that use of an "E-meter" in Scientology activities would give rise to medical benefits, including but not limited to cures for physical ailments. Defendants Jones and Haley have violated rules of professional conduct which bind attorneys in their dealings with Plaintiff. Accordingly, said Defendants have engaged in unfair and fraudulent business acts and practices as set forth in Business and Professions Code section 17200.

[...] NINTH CAUSE OF ACTION (Professional Malpractice Against Defendants Haley, Jones and Valle) [...] 119. Defendants Haley, Jones and Valle owed Plaintiff the duty to use such skill, prudence, and diligence as other members of their professions commonly possess and exercise.

120. In doing the things herein above alleged, said Defendants breached their duties to Plaintiff by placing their pecuniary interests ahead of his and thereby acting contrary to Plaintiff's best interests.

[...] TENTH CAUSE OF ACTION (Negligent Misrepresentation Against Defendants Church of Scientology Mission of Buenaventura; Tom Steiner; Celebrity Centre International;

Church of Scientology Flag Land Base) [...] 123. Defendants' through their authorized agents, repeatedly represented to Plaintiff that counseling by auditing was a safe counseling process for Plaintiff to undergo and would not cause Plaintiff to suffer physical reactions or emotional harm; that Plaintiff was an eligible candidate for auditing under the governing policies of Scientology; that auditing was a reliable, proven and efficient method of eliminating all of Plaintiff's life problems including resolving Plaintiff's organic brain damage.

124. Defendants representations as to auditing as set forth in paragraph 122 were not true and constituted misrepresentations of fact. Plaintiff placed great reliance on Defendants repeated representations as to auditing and believed them to be true.

125. As a result of Plaintiffs belief in Defendants misrepresentations as to auditing Plaintiff has suffered damages including but not limited to spending hundreds of thousands of dollars on auditing, wasting hundreds if not thousands of hours of time and experienced abnormal physical reactions and effects, emotional distress and mental pain and anguish.

ELEVENTH CAUSE OF ACTION (Rescission and Restitution Against Defendants Church of Scientology Religious Trust; Church of Scientology Mission of Buenaventura; Church of Scientology Flag Land Base; Church of Scientology and Celebrity Centre International) [...] 127. At various times from 1986 through 1997 Plaintiff was "regged" by Defendants on a regular basis to contract to purchase various Scientology services and to "donate" funds to Scientology entities.

128. At the time Plaintiff and Defendants entered into the contracts to purchase Scientology goods and services and to make donations to Scientology entities, Plaintiff was a person of unsound mind, substantially unable to manage his own financial resources to resist fraud or undue influence.

129. On March 1, 1999, Plaintiff was adjudicated incompetent to handle his own affairs by the order of the Superior Court of Ventura County in case No. P 73699.

130. Plaintiff has been damaged in that he parted with sums in an unknown amount but estimated to be between $700,000 and $1,100,000.00 for Scientology products, services and donations. Said sums then represented between one half and two thirds of his entire net worth.

The Scientology services and products purchased by Plaintiff had absolutely no monetary value to Plaintiff in his incompetent condition.

[...] TWELFTH CAUSE OF ACTION (Constructive Trust and Order of Conveyance Against Defendant Church of Scientology Religious Trust) [...] 133. In December 1991 Plaintiff was in possession of the sum of $100,000. As a portion of the consideration for the contract to purchase an interest in jailhouse telephones as set forth in Exhibit "C" attached hereto Plaintiff was prevailed on to transfer said sum of $100,000 to Defendant Church of Scientology Religious Trust by Jim Hamre and Michael Zetner who were acting as agents of the enterprise of Scientology and the Defendant Church of Scientology Religious Trust. Plaintiff transfer of the sum of $100,000 to Defendant Church of Scientology Religious Trust was accomplished by the exercise of fraud and undue influence on Plaintiff who was of unsound mind.

134. Defendant Church of Scientology Religious Trust gained an unfair advantage over Plaintiff who trusted in Defendants' agents as ethical persons and believed that the transfer of funds was being effected as a portion of his investment in a jailhouse telephone scheme that would generate income to Plaintiff as promised by the Defendants' agents.

[...] WHEREFORE, Plaintiff prays as follows:

1. For general and special damages according to proof at trial;

2. For a permanent injunction prohibiting Defendants from engaging in the practices as alleged and such other equitable remedies caused by these practices;

3. For reasonable attorneys' fees pursuant to Welfare and Institutions Code section 15657 and the applicable provisions of the Business and Professions Code;

4. For punitive damages against Defendants Steiner, Haley, Jones and Valle. Plaintiff will seek leave of court to allege punitive damages, pursuant to C.C.P. =DF 425.14 against Defendants Church of Scientology Mission of Buenaventura, Church of Scientology Celebrity Centre, World Institute of Scientology Enterprises, Church of Scientology Flag Land Base, also known as Flag Service Organization and Church of Scientology Religious Trust;

5. For an award of treble damages pursuant to C.C.P. =DF 3345.

6. For an order that Defendant Church of Scientology Religious Trust hold the sum of $100,000 in trust for the Plaintiff;

7. For an order-compelling Defendant Church of Scientology Religious Trust to return to Plaintiff the sum of $100,000;

8. For an order that all contracts entered into between Plaintiff and Defendants Church of Scientology Religious Trust; Church of Scientology Mission of Buenaventura; Church of Scientology Flag Land Base and Church of Scientology Celebrity Centre International for the donation of funds to Scientology entities or the purchase of Scientology goods and services be rescinded;

9. That Defendants Church of Scientology Religious Trust; Church of Scientology Mission of Buenaventura; Church of Scientology Flag land Base and Church of Scientology Celebrity Centre international be ordered to account to Plaintiff for all sums received from Plaintiff for donations to Scientology or the purchase of Scientology goods and services;

10. That Defendants Church of Scientology Religious Trust; Church of Scientology Mission of Buenaventura; Church of Scientology Flag Land Base; and Church of Scientology Celebrity Centre International be ordered to pay to Plaintiff the total amount paid by Plaintiff to said Defendants plus interest for the purchase of Scientology goods and services and donations to Scientology entities;

11. For civil penalties pursuant to Business and Professions Code section 17206.1;

12. For Interest on damages pursuant to Civil Code sections 3287 and 3288;

13. For costs of suit herein; and, 14. For such other or further relief as the Court may deem proper.

DATED: May 26, 1999 LEIPOLD, DONOHUE & SHIPE, LLP By:______________________ DANIEL A. LEIPOLD Attorneys for Plaintiff, RAUL LOPEZ, by and through his Guardian ad Litem ALICIA LOPEZ HUB LAW OFFICES By:______________________ FORD GREENE Attorneys for Plaintiff, RAUL LOPEZ, by and through his Guardian ad Litem ALICIA LOPEZ

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