Thursday, 15 October 2009

29 ...for the Prosecution II

June 15: The second half of the prosecution’s closing arguments focussed on the evidence of fraud – both on the part of the individual defendants and the two Scientology organisations charged.

As his colleague Maud Morel-Coujard sat down Nicolas Baïetto rose and gathered his papers for the second half of the prosecution’s closing arguments.

Morel-Coujard had set out the mechanics of how the alleged fraud had been committed.

Baïetto’s task appeared to be to break down the defence claim that the two Scientology organisations facing fraud charges were unique and separate entities – a key plank of their defence.

They were the two Scientology organisations: the non-profit Association spirituelle de l'Eglise de Scientologie (ASES), which ran the Paris Celebrity Centre; and Scientologie espace librairie (SEL), which ran the for-profit network of Scientology bookshops in France – including the Paris bookshop.

The plaintiff Aude-Claire Malton had spoken of a system, an atmosphere inside Scientology, said Baïetto, and it was in this spirit that the case needed to be approached.

“We need to look at things in their ensemble, for the plaintiffs were confronted with an ensemble of elements,” he said.

When it came to fraud, said Baïetto, “people often say that the bigger it is, the better it works. But here, it is not just big, it is enormous.”

What we were dealing with here was an accumulation of methods applied simultaneously, he argued, picking up the thread of his colleague’s presentation.

And this was not just fraud, he said: it was premeditated and it was orchestrated by an extremely structured organisation.

The defendants had argued that nobody had made a personal profit from their activities, said Baïetto: but the defendant Didier Michaux, who worked for the Paris bookshop, had enjoyed a salary that would be the envy of any bookseller.

Their top salesman, Michaux had been making something like 30,000 francs (4,500 euros) a month in 1998; and even more the following year.

(Earlier in the trial, Judge Sophie-Hélène Château had noted that Michaux, working on 5-15 percent commission from sales, had made 342,000 francs (nearly 52,000 euros) in 1998; and 530,000 francs (nearly 81,000 euros) the following year.)

Michaux’s colleague Jean-François Valli, another defendant, had made been making 3,500 francs (a little over 500 euros) monthly – certainly nothing to be sniffed at.

(Judge Château had put his earnings on commission at around 100,000 francs – a little more than 15,000 euros – a year.)

Two former treasurers at the Celebrity Centre had told investigators that how much the staffers received was proportional to the “donations” coming in, said Baïetto.

Since they were working on commission, since the amounts their clients spent on Scientology directly affected their own earnings, they could hardly be said to be disinterested, he added.

Some of the defendants had insisted on referring to the “donations” of the Scientologists who took courses and materials at the centre, said Baïetto. Somehow the word was intended to convey the irreproachable nature of the operation.

But these were hardly donations in the ordinary sense of the word, he argued.

If they were donations, why were they billed? And how was it that these “donations” were transferred from the non-profit Celebrity Centre’s accounts to those of the for-profit bookshop SEL?

“The plaintiffs never had any sense that they were making ‘donations’ or ‘contributions’,” said Baiëtto.

The truth was that these terms were just Scientology euphemisms for payments, pure and simple, at a fixed price, for goods and services.

Building the fraud case

The defendants had also tried to claim that 100 percent of requests for refunds were granted, he added.

“But a refund clause is not enough to avoid a fraud charge” – especially since one form that Scientology required its clients to sign involved waiving one’s right to legal redress in the courts against Scientology.

And how could one speak coherently of a refund of what was supposed to be a donation, Baïetto asked?

The plaintiff Aude-Claire Malton had been obliged to go to court to get her money back – and they had not made life easy for her in return.

So far as the individual defendants facing fraud charges were concerned, he said, the evidence presented to the court showed that each had played their role:

  • There was the salesman Valli, whose client Auffret had plundered his company’s accounts to pay for his Scientology courses. It was not until 2002, well into the police investigation that Valli developed any qualms about these transactions – and that was when investigators started looking at the role that Scientology as an organisation might have played. “There was no internal inquiry to find out what had happened,” the prosecutor noted;
  • There was Michaux, SEL’s star salesman, who despite his denials, appeared to play the role of de facto manager of the Paris bookshop;
  • There was Sabine Jacquart: on paper the Celebrity Centre’s president but who, when questioned, seemed to know nothing about anything that counted;
  • And then there was Alain Rosenberg. Rosenberg, the man who had made his fortune in the ready-to-wear clothing business and so was “above the fray” financially speaking. Rosenberg, who despite bearing the title of executive director of the Celebrity Centre at the time, said his role was a purely pastoral one, leading religious services and other events. Yet one Scientologist interviewed by investigators had said that Rosenberg sat on the board of the Centre, where all the key decisions were made. And for the former plaintiff Eric Aubry, Rosenberg was clearly the man in charge. The omni-present Rosenberg had already featured in a 1994 report drawn up by a court-appointed expert Kirchner’s report on the e-meter used in Scientology’s auditing sessions.
“His behaviour during the trial showed clearly that he was the dominant figure among the defendants,” said Baïetto.

His fellow defendants and Scientology witnesses showed him particular deference, he remarked, “It is almost as if people were treating him like L. Ron Hubbard.”

The defendants and their supporting witnesses had talked a lot about their beliefs as Scientologists, said Baïetto, and the court could make of that what it would.

“Scientology is a small world, which functions in a pyramidal system, with close family links,” said Baïetto. Its rules produced the “dumbing down” (crétinisation) effect that former member Roger Gonnet had described.

“It is a small world and it has not changed much since Lyon,” said Baïetto, referring to the 1996 trial in which several senior members were convicted on fraud-related charges – and one for manslaughter over the suicide of a Scientologist driven to kill himself in part because of the pressure to buy more courses.

So far as the law was concerned, the court did not have to establish a case against every individual in the organisation in question to establish a case of organised fraud.

But it was clear that despite the two organisations’ denials, the Paris Celebrity (ASES) Centre and the Scientology bookshop (SEL) were far from independent of each other, said Baïetto: “SEL and ASES are in fact one, single and identical entity.”

There were two trails of evidence that established this, he argued: their organisational structure and their methods.

The defendant Sabine Jacquart, president of the Celebrity Centre at the time of the alleged offences, had herself told the court that the two Scientology organisations shared a common purpose (promoting the works of Hubbard).

The organisations also shared a centralised database in which all clients were listed together and from which data was sent up to Copenhagen and the United States, said Baïetto.

This indicated not only the degree to which they were a unified entity, but how much they operated under the control of Scientology’s headquarters.[1]

Follow the money

The issue of refunds also revealed the degree to which the Paris operation was subordinate to its superiors abroad, said Baïetto.

Former member Roger Gonnet had testified that refund requests represented a blot on the copybook of any Scientology organistion. This matched what one former Scientology treasurer had told investigators: a Mme Noukrati had said that head office would penalise a Scientology operation if it paid out refunds.

Aurore Nadler, who represented SEL at the trial, had said the real manager of the bookshops was Danish Scientologist Karen Hansen, despite the fact that she spent virtually no time in France.

The court had expressed doubts about who really ran SEL: but if Hansen was its manager, said Baïetto, then this was further evidence that the Paris operation was managed from abroad.

Roger Gonnet had described the pressure to get the money in before the weekly Thursday 2:00 pm deadline; Eric Roux, representing the Celebrity Centre, had effectively confirmed this, said Baïetto, even if he had refused to put in the same dramatic terms.

Gonnet had said that the organisation’s money flowed abroad; Roux had said that this came to some 14 percent of their income.

And the statutes of the Celebrity Centre had a proviso that in case of dissolution, all assets would be transferred to the U.S. mother church.

All these factors, said the prosecutor, supported the case that Scientology’s Paris operation was part of a broader, operation subordinate to the U.S. headquarters.

Baïetto turned his attention to Scientology’s bewilderingly complex organisational chart that set out the various units operating within one of the movement’s centres.

During the trial, Baïetto had tackled more than one defendant about just what the “High Crimes sub unit” or the “Celebrity Correction Unit” did: he had rarely been satisfied with the response.

The defendant Rosenberg had tried to explain that misunderstandings could arise because of mistranslations or misinterpretations of the original English.

Now Baïetto, who had clashed with Rosenberg more than once during his testimony, made a withering reference to the “linguistic richness” displayed on the chart.

Scientology organisations, he said, had a “Word-of-mouth Unit” and a “Special Courses Word Clearer”: but they also had marketing and finance units and a Public Contact Division.

This was a chart that had not been devised in Paris, but imposed from above, said the prosecutor. And it suggested a rather more ambitious reach than those set out in the statutes of the Celebrity Centre.

For listed at the bottom of each column in the chart were what were known as “Valuable Final Product” or VFPs, said Baïetto. The VFP posted at the bottom of one section read: “Members actively applying Scientology towards the Creation of a New Civilization”.

To try to decrypt this private language, Baïetto went back to Scientology’s origins. It had grown out of Dianetics, he said, which had been intended as an alternative to psychotherapy.

If Scientology had subsequently become a religion in the United States, it had mainly been for the tax breaks that implied – a kind of religious front, he said. And you would have to look hard to find the movement’s operations in poor countries, he added.

But through all the books and the tapes, the tests and the lectures, one prime directive appeared to prevail: you had to keep moving forward, you had to keep progressing in Scientology.

And the first course always seemed to be the Communication Course: a series of sessions that seemed very much like long sessions of hypnosis.

A private language

And for Baïetto, Scientology’s private language itself had a kind of psychological shackling effect on its members.

“Hard sell” for example, meant “taking care of a person” so far as several of the defendants were concerned, Baïetto noted.[2]

And the very name of the association’s main office – the Celebrity Centre – revealed Scientology’s ambitions to recruit movers and shakers in the world of the arts, business and sport: opinion leaders who could attract more recruits.

The word “handle”, or “handling”, also featured in Scientology’s vocabulary, said Baïetto.

He referred to the “Registration” policy letter that he had earlier introduced to the court during questioning of the defendants, (HCOPL, May 3, 1961).

More than one defendant, including Jean-François Valli, had objected to its use, saying it was no longer Scientology policy and in any case had not been written by Hubbard).

“They say it was not written by Hubbard,” Baïetto noted. “But it was preceded by a warm letter of recommendation by Hubbard and I find there exactly the same argument that was used by Valli: ‘You are going to be able to spend money on yourself’.”

This was an argument which, according to the plaintiff Aude-Claire Malton, Valli had used on her when pushing her to buy more courses. (Baïetto’s colleague, Maud Morel-Coujard had quoted the relevant passage during her presentation.)[3]

Also on the subject of handling, said Baïetto, former Scientologist Roger Gonnet had testified that members of the movement were also trained to lie to the court.

There had certainly been similarities in the testimony of some of the defendants, the prosecutor noted.

He recalled the arguments they had produced when confronted with some of Scientology’s more compromising internal texts: “I understand… an error of translation… you don’t understand… you have to read the complete texts...”

The testimony of several Scientologists called as defence witnesses had also been remarkably smooth, Baïetto remarked drily.

Scientology, with its trademarks and patents, had more in common with a commercial organisation than church, said the prosecutor.

And its pricing policy, which seemed to vary between clients, left a similar impression.

Nadler, representing SEL at the trial, trying to explain the logic behind the pricing system, had explained to the court that the full price was never applied.

But Baïetto went back to the price Scientology charged for its e-meters. He reminded the court that two of the defence’s own witnesses, technical experts on the device, had expressed surprise at the price Scientology charged for them, describing them as expensive.

But why were Scientologists buying e-meters when they were available for use at the centre, he asked?

“The commercial aspect seems to me to be fairly obvious,” said Baïetto. Yet the Celebrity Centre had been set up as a non-profit association under French law.

Then there was the mix of functions between the Celebrity Centre and the SEL bookshop, he said: they shared the same premises and ordinary parishioners seemed to make no distinction between the two. And while they had two different leases, the building had the same owner, a British-registered Scientology company.[4]

For a period, the two operations had even shared the same bank card machine, (something the defendants had stressed was a temporary measure to overcome difficulties that the Celebrity Centre had faced obtaining banking facilities).

Michaux, at the bookshop, had sent out personality tests that would draw people to the Celebrity centre. And the trade-off worked both ways: for Celebrity Centre staff sold training packages in the e-meter – which involved purchasing one of the devices from the bookshop.

Baïetto described this arrangement as a kind of vente lié, a tied sale, which is forbidden by French law.

Crunching numbers

Further muddying the waters, said the prosecutor, was the fact that at least one of the bookshop’s salesmen, the defendant Valli, had simultaneously worked for the Celebrity Centre. His name, in his sales to the plaintiff Aude-Claire Malton, had appeared on the paperwork of both organisations.

And the links were also to be found in the account books of the two operations, said Baïetto. “When you look deeper into the books there is a profusion of accounts for both organisations.”

In particular, there were the client-transfer accounts, in which money deposited by someone to pay for services at the Celebrity Centre could be moved over to pay for goods at the bookshop.

In 1998, these transactions had come to half a million francs (76,000 euros) of the year’s 4.7 million francs (715,000 euros) in sales.

His examination of the books had revealed that there were 10 to 20 such transfers a month, he added.

“It was an artifice, a smoke screen,” he said, designed to conceal the fact that the bookshop was, in reality, part of the church. “All these things were done in the interests of the Mother Church.”

Baïetto went back to Eric Roux’s testimony, who had spoken for the Celebrity Centre at the trial: he had been embarrassed when asked about the degree to which Scientology’s clients borrowed to pay for goods and services – and often paying years in advance.

“Why would you go into debt to pay for things in advance?” asked the prosecutor. Was it because Scientology did not trust its own members?

Certainly there had been no quid pro quo. For members who bought an item at the bookshop in instalments could not take possession until all payments had been made.

“We don’t do credit,” the bookshop’s representative, Aurore Nadler, had explained.

Yet asked about the practice of keeping large numbers of copies of items in stock – more than made sense from a commercial point of view – she had explained that this was down to a policy set down by the founder, Hubbard.

This kind of stock management might make sense if they faced any competition, said Baïetto: but they had the exclusive rights to Hubbard’s materials. This was just further evidence of a business arrangement that could only benefit head office in the United States.

The evidence had shown, said Baïetto, that there was strong pressure on staff to bring in the money. “How can you not think that this would not have an impact on ordinary members?”

To close his financial breakdown of the situation, the prosecutor crunched a few numbers for maximum effect.

The non-profit Celebrity Centre’s turnover for “religious services” was 11.2 million francs in 1998 (1.7 million euros); and 12.5 million francs in 1999 (1.9 million euros), he said.[5]

In 1998 it held assets of 37.3 million francs (5.7 million euros) spread across 17 different bank accounts.

And a look at the balance sheet showed that in 1998 the Celebrity Centre brought in – 72 million francs (11 million euros); while the for-profit SEL bookshop could only manage 29 million francs (4.4 million euros).

This meant that more than 70 percent of the business was being done in the association that was not meant to be a commercial operation, said the prosecutor.

When vitamins becomes medicines

Baïetto’s colleague, Maud Morel-Coujard, took over to close the prosecution case.

She turned to the charge of illegal practice of pharmacy, which focussed on the large doses of vitamins taken during the Purification Rundown at the Celebrity Centre.

The defence, she said, had made much of the fact that European Union law appeared to be less strict in this area than French law.

But Mme Elisabeth Hérail, the legal expert from France’s health products watchdog, the AFSSAPS, had been clear in her testimony: if a food supplement was taken in amounts far exceeding the daily recommended dose then it was no longer acting as a supplement but as a medicine by function.

(“When you have doses that are 10 times more than normal, it is absolutely obvious that they can change the function of the organ,” she had told the court.)

The other part of the legal definition was medicine by presentation, she added.

The bottles of vitamins and minerals sold by G&G were presented as having medicinal properties: one label had said that the product was good for the treatment of depression, Morel-Coujard noted.

And the defence’s attempt to justify the taking of these massive doses in the Purification Rundown had been self-defeating, she noted.

They had argued that the programme, with its heavy exercise and long hours in the sauna meant that the body’s vitamins and minerals had to be replaced.

But this defence was the definition of a medicine by presentation.

Morel-Coujard turned to the individual defendants, dealing first with Marie-Anne Pasturel, the French contact for G&G: she had been part of the network and had earned between five and 15 percent commission on sales.

“This was not an arrangement between friends,” said the prosecutor. “It was a discreet distribution network.”

Aline Fabre, who had supervised the Purification Rundown at the Celebrity Centre – and had directed some of her clients to Pasturel for the purchase of the vitamins and minerals required.

Hers had been more than the passive role that she had described in her testimony: she had done more than just make sure that participants were following Hubbard’s instructions, as set out in Clear Body, Clear Mind.

Both the plaintiff Aude-Claire Malton and the former plaintiff Eric Aubry had made it clear that it was Fabre who had handed out the doses of vitamins to Rundown participants.

While the offence of illegal practice of pharmacy might seem peripheral to the case, it was nevertheless worth taking seriously, said Morel-Coujard.

As for Alain Rosenberg and Sabine Jacquart, who had occupied the senior executive positions at the Centre, they had to be held account for what had gone on during their watch, she concluded.

What the prosecution wants

Morel-Coujard and Baïetto had already made it clear that they considered all the defendants, including the two Scientology organisations, to be guilty as charged.

Now Morel-Coujard read out what the prosecutors’ office wanted in the way of sentencing.

The prosecution asked for:

  • the “dissolution des personnes morales”, which is to say the Celebrity Centre of the L'Association spirituelle de l'Eglise de Scientologie (ASES) and the network of bookshop Scientologie espace librairie (SEL) (though as it turned out, that law had been quietly dropped from the law books just weeks earlier);
  • each organisation to be fined two million euros;
  • the confiscation of all materials related to the fraud, including books, e-meters and other Scientology-related materials;
  • Alain Rosenberg to be fined 150,000 euros, given a four-year suspended prison sentence, and deprived of his civic rights for five years (the right to vote, the right to hold public office);
  • Didier Michaux to be fined 50,000 euros, given a three-year suspended prison sentence and deprived of his civic rights for five years;
  • Jean-François Valli to be fined 25,000 euros, given a three-year suspended prison sentence and deprived of his civic rights for five years;
  • Sabine Jacquart to be fined 10,000 euros, given a two-year suspended prison sentence and deprived of her civic rights for two years;
  • Aline Fabre and Marie-Anne Pasturel to be fined 2,000 euros each.
Minutes later, outside the court, the lawyer for the plaintiffs, Maître Oliver Morice, welcomed the prosecution’s declaration in a statement to the waiting media scrum.

Nearby Maître Patrick Maisonneuve, for Scientology, denounced it as a death sentence for the two organisations.

Media interviews over, Morice turned to Catherine Picard, the president of federation of French counter-cult groups UNADFI, which he also represented.

The two hugged each other, delighted.

[1] Although Saint Hill, in England, has great symbolic significance in Scientology as the founder L. Ron Hubbard spent several years based there, the European headquarters of Scientology is in Copenhagen. It is here that Scientology’s European centres initially send their members to do the more advanced courses that they are not authorised to sell. The most advanced students doing the highest-level courses either go to Clearwater, Florida, or to the Caribbean to join Scientology’s ship the Freewinds. Scientology’s most senior management is based in California.
[2] Judge Château had made it clear on more than one occasion that this was not her translation of the English phrase.
[3] “17. If people have money difficulties, and 99 out of 100 will tell you they cannot afford anything now, you draw up a budget for them, make them realize that they are for the first time they are spending money on themselves. It takes some doing, but I always won.” From the HCOPL “Registration”, by Sue Van Niekerk. It includes a recommendation from Hubbard, who says it was written at his request.
[4] According to the indictment, SCI SORBA was set up in January 1996 to buy and run the premises at rue Légendre, the premises of the Celebrity Centre and the bookshop – but the British-registered SOR Holding holds 99 percent of the capital.
[5] These figures differ slightly from the indictment, which are even higher. That document puts the Celebrity Centre’s turnover at 17 million francs (nearly 2.6 million euros) for 1999 – and mentions a 1999 French parliamentary report that put the overall turnover for Scientology’s operations in France at 60 million francs (9.15 million euros).

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