Mark Rathbun: on the Check Forgery Frame Ads (May 28, 2013)

When the DOJ utilized the Flynn tactic of seeking L. Ron Hubbard’s deposition and then asking to win by default when the church failed to produce him, it only reinforced our view that Flynn and the DOJ were in league. When I met with the Boston DOJ office attorney responsible for the check investigation, our suspicions of a grand conspiracy became virtually irrefutable fact, in our minds. Bracket Badger Denniston III was the Assistant US Attorney
in the fraud division who was assigned the case. Denniston was a snooty, thirty-something, conservative blue-blood. He treated me with cool disdain. Denniston never shared a single detail of his own alleged investigation. He listened to the results of our investigation with disinterest, and when I detailed Flynn or DOJ connections with the Bank of New England he merely smirked condescendingly.

When we had exhausted all leads and run into a stone wall with the DOJ, mild-mannered Geoff Shervell came up with an audacious idea. We would place a full page ad in the New York Times, offering a ten-thousand-dollar reward for information leading to the conviction of the masterminds behind the attempted passing of the forged $ 2 million L. Ron Hubbard check. Miscavige loved the idea and green-lighted the project. Within days of the ad’s publication, Ingram, the contact point named in the ad, received a call from a woman in Boston.1

Notes

  1. Rathbun, Mark (2013-05-28). Memoirs of a Scientology Warrior (p. 222). Amazon Books. Kindle Edition.

Mark Rathbun: on mounting the offensive against Flynn and FAMCO (May 28, 2013)

In early May, 1982 I was busily mounting the offensive against Flynn and his FAMCO scheme to bankrupt and destroy Scientology. Up to that point in time, several people had served as buffers between me and David Miscavige. All that changed one morning when Miscavige called me over to his offices at Hubbard’s newly-formed personal services corporation, Author Services Incorporated (ASI). Miscavige was the chairman of its board. As such he was recognized as the most senior and powerful person in the Scientology hierarchy. It was understood by then that all communication to or from L. Ron Hubbard went through Miscavige’s hands. I hopped into the small Japanese car that came with the job of Special Unit Litigation Director and sped over to see Miscavige. I brought Geoff Shervell with me. Geoff was my opposite number for the intelligence/ investigation function of the church. He was a short, portly fellow from New Zealand. He was handsome and friendly in looks and manner. Geoff had worked at the Guardian’s Office Worldwide in England for years. The Special Project had investigated him thoroughly and concluded that he had not engaged in any illegal acts while in the Guardian’s Office. His amiable demeanor and his training and understanding of intelligence had resulted in Miscavige tapping him to run all intelligence for the church. Up to that day Shervell had been reporting directly to Miscavige.

[…]

Miscavige seemed somberly unnerved, an attitude he rarely showed to anyone. He wore a dirty blonde mustache and glasses then. He stood about five feet, five inches, solidly built. He looked at me with piercing, intense blue eyes. “Marty, Geoff’s a nice guy, but he doesn’t have the confront for this job.” With that succinct statement, Miscavige put the intelligence function, and Geoff, under my supervision. “Does the GO have any PIs you can trust?” “I haven’t worked with any, sir.” “Well, you need to find a PI that has a pair of balls and won’t be compromised.” “Ok, I’ll get right on it.” “Look, somebody tried to pass a forged check on LRH’s account at Bank of New England. Some Arab guy named Aquil Abdul Amiar shows up at Middle East Bank in New York City with an LRH check with a forged signature. The check is from LRH’s account at BNE. BNE calls us and we tell them LRH never signed any check made out to any Arab, and no check for two million dollars to anybody . They stopped payment. We keep LRH’s check registers. There are no checks missing. We write all of LRH’s checks and submit them to him for signature. He signs them. We mail them and every one of them is accounted for. Norman can show you all that.” I looked at Norman. Norman gave a serious nod back. Miscavige continued, “We asked BNE for more particulars. BNE won’t give any. We have Sherman Lenske (LRH’s corporate and finance attorney ) call MEB and BNE and nobody will cooperate with him. BNE says they want to hear from LRH directly. We have all the proper powers of attorney on his accounts, but they won’t recognize them. They tell us the FBI is investigating. And the FBI won’t tell Sherman anything either. This whole thing smells . These fucking bankers are supposed to be working for LRH, and it looks like they are doing the work of Flynn and the FBI. You need to get a PI onto this and get to the bottom of it.” “Yes, sir.” “Okay, Norman , show him the documents we have, like the POA (power of attorney) and all. Marty, you report direct to me on this . Tell the finance people this is top priority if they give you any flack on the PIs.” “Yes, sir.” “Nobody in the GO or Special Unit or anywhere else needs to know about this, get it?” “Yes, sir.”  1

Notes

  1. Rathbun, Mark (2013-05-28). Memoirs of a Scientology Warrior (p. 216-218). Amazon Books. Kindle Edition.

Star Tribune: Mystery past of Petters associate unfolds (September 15, 2009)

Mystery past of Petters associate unfolds1

The Los Angeles mystery man who helped Tom Petters allegedly launder billions of investors’ dollars appears to be a disbarred Boston-area attorney with a shadowy criminal history and stints as a wire-wearing government informant.

Newspaper clippings, court rulings and other public documents leave little doubt that the co-defendant known as Larry Reynolds is actually Larry Reservitz, a swindler and drug trafficker who had associations with the New England mob in the 1980s and eventually was placed in the government’s witness protection program.

[…]

He moved on to new crimes, including various check-fraud schemes and, at one point, tried to buy a “truckload” of pot from an undercover Drug Enforcement Administration, according to the article.

Cooperation with the feds

Facing serious time, Reservitz began cooperating with federal authorities in 1984, wearing hidden tape recorders. In 1986 he testified that he was involved in a scheme to cash a bogus check for $2 million out of the account of L. Ron Hubbard, the late founder of the Church of Scientology.

The case made national headlines as the church waged a public battle to locate the culprit who actually wrote the fake check. One media account of the 1986 trial described Reservitz as a “high-rolling gambler … who participated in the second alleged fraud as an informant for the FBI.”

Reservitz eventually served 13 months of an 18-month prison term. Court records indicate Reservitz and his family subsequently entered the Witness Security Program.

[…]

Notes

  1. Phelps, D.; Bjorhus, J.  Mystery past of Petters associate unfolds startribune.com. Retreived on 23 September 2014 from http://www.startribune.com/business/59288882.html?page=3&c=y

US v. Kattar 840 F.2d 118; 1988 U.S. App. LEXIS 2161

United States of America, Appellee, v. George T. Kattar, Defendant, Appellant

No. 87-1172

UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

840 F.2d 118; 1988 U.S. App. LEXIS 2161

February 22, 1988

PRIOR HISTORY:

[**1] Appeal from the United States District Court for the District of Massachusetts, Hon. John J. McNaught, U.S. District Judge.

COUNSEL: Michael Avery with whom Ellen K. Wade and Avery & Friedman were on brief for Appellant.

Gary C. Crossen, Assistant United States Attorney, with whom Frank L. McNamara, Jr., Acting United States Attorney, was on brief for Appellee.

JUDGES: Coffin and Breyer, Circuit Judges, and Caffrey, * Senior District Judge.

* Of the District of Massachusetts, sitting by designation.

OPINION BY: COFFIN

OPINION: [*119] COFFIN, Circuit Judge.

Appellant George Kattar was indicted in 1986 on three counts of wire fraud, one count of stolen or fraudulently taken monies, and one count of extortion under the Hobbs Act (18 U.S.C. § 1951). The trial court granted a motion for judgment of acquittal on one of the fraud counts at the close of the government’s case. Following a thirteen-day trial, the appellant was acquitted of all remaining counts except the extortion charge, on which he was convicted. He appeals from that judgment of conviction.

I.

Because of the complicated nature of appellant’s argument on appeal, it is necessary to marshal the facts of the case in some detail. [**2]

In June 1982, someone attempted to pass a counterfeit $ 2,000,000 check drawn on the account of L. Ron Hubbard, the founder and, until his recent death, the head of the Church of Scientology. This attempt failed. The check was part of a scheme concocted by a former attorney named Larry Reservitz, who had access to genuine checks and inside information at Hubbard’s bank, the Bank of New England. The government soon discovered that the check scheme was Reservitz’s brainchild. The government subsequently enlisted Reservitz for assistance in investigations of the Church. The government evidently suspected that the Church was attempting to obtain false incriminating testimony regarding the check scheme in order to discredit certain individuals. Reservitz, himself not a member of the Church, was sent undercover to acquire information concerning the Church’s own investigation of the Hubbard counterfeit check scheme.

At some point in 1984, an attorney named Michael Flynn, considered by the Church to be an enemy of Scientology, alerted a probate court to the check scheme, as evidence of serious mismanagement of Hubbard’s funds by the Church. The Church responded to Flynn’s charges by stepping [**3] up its own investigation of the check forgery.

Geoffrey Shervell was put in charge of the Church’s investigation. Shervell, who testified as a government witness in this case, oversaw the investigation in his capacity as Director of Scientology’s Investigation Section. The Church ran advertisements in several major newspapers, including the Boston Globe, offering a $ 100,000 reward “for information leading to the arrest and conviction of the person or persons responsible for the forgery and attempted passing of [the] check.” Shervell employed private investigators to look into the check scheme. Some evidence was adduced at trial that these investigators, particularly Eugene Ingram, suborned false statements from various persons in order [*120] to implicate Flynn himself in the check forgery. The statements against Flynn were given substantial play in the Church’s newspaper, Freedom. The Church also publicized these allegations in a number of press conferences.

Shervell was removed from the check scam investigation for several months due to his “ineffectiveness” in procuring information, but was reinstated by the Church in August 1984. At this point Reservitz, the actual mastermind of [**4] the check scheme, became a cooperating witness and operative of the government. Reservitz testified that he approached Church investigators to see if they would attempt to procure false testimony from him. In effect, he was to be bait for possible illegalities by the Church. Church investigator Ingram did in fact try to get Reservitz to implicate Flynn. Reservitz, while wearing a body recorder provided by the FBI, negotiated with the Church investigators about how much he was to be paid for his incriminating statements.

At about the same time, Shervell had contacted Harvey Brower and appellant George Kattar for further leads in the check investigation. Brower persuaded Shervell that Kattar had information which might be helpful. Brower also said that Kattar had other information about Flynn that might interest the Church. Eventually, in September, Brower reported to Shervell that Kattar would provide information relating to the check scheme in exchange for the $ 100,000 reward payment. The negotiations went back and forth for a while, and there is much dispute over the exact understanding each party had as to the terms of any agreement they might enter into. Shervell seemed reluctant [**5] to part with the $ 100,000 without more assurance from Kattar about the content of his information, while Kattar insisted on a guarantee of payment before he would provide any statement. Shervell did testify that Kattar at one point told the Church investigators something to the effect of “I know what you want, I have the information you have advertised for. I know you want Flynn and I can get that information for you.”

After several meetings with Brower, Kattar’s intermediary, Shervell was told that Kattar would provide the information pursuant to an initial payment of $33,000, which was to represent a good faith demonstration of the Church’s willingness to part with the reward money. The $33,000 was to be placed in an escrow account, to be withdrawn by Kattar after the conditions of the agreement had been met. Shervell did not respond immediately to this plan. Brower then contacted Shervell to convey that Kattar was angry with the delay. Brower told Shervell that if the $ 33,000 was not provided within two days, Kattar would go to Flynn and tell him that the Church had tried to bribe him into giving false information about Flynn. At this point, the Church authorized the $33,000 [**6] payment to Brower to be placed in escrow. According to Shervell, he gave the money to Brower, on the understanding that it would be shown to Kattar, and then returned to Shervell pending Kattar’s revelation of the information. However, Brower apparently never returned the money to Shervell.

At a meeting the next day, Kattar provided Shervell information that merely reiterated what the Church already knew about the check fraud. Shervell told Brower that he was dissatisfied with this worthless information, and asked for the $ 33,000 back. Brower called Shervell back to inform him that Kattar was furious with the suggestion that the money be returned. Shervell testified that Brower conveyed a threat by Kattar that if the demand for repayment were pressed, then Kattar would tell Flynn that the money had been paid to Kattar as a contract on Flynn’s life.

At this point, Shervell contacted the FBI. Arrangements were made for Special Agent George DiMatteo to go undercover as a Church associate of Shervell’s.

DiMatteo accompanied Shervell to a meeting with Kattar on October 2, 1984.Both Shervell and DiMatteo testified that Kattar was incensed at that meeting. DiMatteo testified about Kattar’s [**7] actions at the meeting as follows:

[*121] He said he was in charge of the rackets in that area, that he had unchallengeable power, that he had worked with several people in that area, that when he made money everyone had to make money. He said that he held our fate, not in these words, but in his hands. He told us that if we were not more receptive to his way of doing business that he, quote, “would throw our names in the hat.”

DiMatteo testified that Kattar used a threatening tone of voice and threatening gestures at this meeting. Kattar acknowledged receiving the $ 33,000, and demanded that the additional $ 67,000 be paid at their next meeting, claiming that he would there provide information that would be useful to the Church. According to DiMatteo, Kattar directed Shervell and DiMatteo “not to go to the Feds,” because his power “was unchallengeable in that area” as well.

On the next day, Kattar had a meeting with Larry Reservitz to discuss information that Kattar could give to the Church. Kattar and Reservitz had previously discussed the check fraud when that scheme was in its incipiency, so Kattar knew that Michael Flynn was not part of it. Kattar also knew that Reservitz was a source [**8] for details about the scheme. On October 3d, Kattar did not know that Reservitz was working for the government and equipped with a hidden body recorder. Kattar and Reservitz discussed the fact that the Church would not release the $ 67,000 unless Kattar provided the name of someone at the Bank who might have been involved in the check scheme. They agreed that this name would have to be that of someone who was not in fact part of the scheme, so as to protect Reservitz. On the tape of this meeting, Kattar is overheard describing to Reservitz his meeting the day before with the Church representatives:

I says you gotta fuckin’ deal with me — you’re not gonna back out. Your whole fuckin’ church is coming down. I wasn’t bullshitting.
. . . .
I said I’ll break your fuckin’ head you motherfucker. You gonna deal with me — you fuckin’ better. n1

Later that same day, Reservitz met again with Kattar. On this occasion they discussed at length the fabricated information Kattar was to give to the Church. Kattar reiterated that he had warned Shervell that “I’ll break your fuckin’ head.” Shervell also testified that these various threats had been made.

[FN]

n1 These quotations are adapted from the transcripts provided to the jury. Those transcripts were not themselves in evidence, though the underlying tapes were.

[FN]
[**9]

The next day, October 4, 1984, Shervell and DiMatteo again met with Kattar. DiMatteo wore a body recorder to this meeting. Kattar provided the phony information he had concocted with Reservitz, including that Flynn had helped plan the check scheme in order to create bad publicity for the Church in his campaign against it. Kattar explained that this information would ” bury” Flynn. Although Kattar did not directly threaten DiMatteo and Shervell at this meeting, he made it quite clear that he had substantial muscle at his service. For instance, he suggested that his strongarms had used their powers of persuasion to get the information, and that he commanded much power and respect in “our business” and “our family.” He made numerous remarks as to how he would use physical force in retribution if his sources and others had deceived or crossed him in any way. Kattar agreed to give the Church a week to verify the information, after which he expected to receive the remaining $ 67,000. It is unclear from the tapes whether the “deal” that was struck between Kattar and the Church was that Kattar would provide the true information about the check scheme, or whether Kattar was merely to provide [**10] information which would “stick” against Flynn.

Later that day, Kattar and Reservitz spoke on the telephone, and Kattar bragged that “I belong in Hollywood.”

A secretary for the Church in Los Angeles testified that she received a phone call on October 18, 1984, from a person identifying himself as George Kattar. The caller allegedly left a message that “if we [*122] don’t hear from Geoff [Shervell], they are all going to the other side.” The government argued that this comment was a threat that Kattar would go to Flynn if he didn’t receive the money.

At this point, the FBI told the Church to desist in its investigation. The Church evidently did not forward the $ 67,000 to Kattar, and there is no evidence in the record that the Church ever used Kattar’s information in any way.

The government charged Kattar and Brower with attempting to defraud the Church by giving it false information in exchange for a reward fee, 18 U.S.C. §§ 1343, 2315, and with extortion under the Hobbs Act, 18 U.S.C. § 1951. Both defendants were acquitted on all fraud charges. Brower also was found not guilty of extortion. Kattar, however, was found guilty on the extortion count. Kattar now challenges his conviction on [**11] a number of grounds, including improper instructions to the jury, the government’s use of false and deceptive testimony, and the exclusion of out-of-court statements helpful to his defense.

II.

In order to understand appellant’s contentions in this appeal, it is necessary to set forth briefly his theory of defense to the extortion charge at trial. The Hobbs Act, 18 U.S.C. § 1951, defines extortion as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” Certain threats of economic harm, and almost all threats of physical harm, are actionable under the statute. Attempted extortion is also proscribed by section 1951, so that it is not material for our purposes here whether or not fear was actually induced, or whether the property was in fact obtained by the defendant.

According to the government, the evidence demonstrated at least five separate Hobbs Act violations. The first deals with the payment of $ 33,000 that actually was made to Kattar. According to the testimony of Shervell, Kattar threatened through Brower that if the $ 33,000 wasn’t put into escrow, he would inform [**12] Flynn that the Church had attempted to bribe him into giving false testimony against Flynn. That information could, in turn, be used as ammunition in Flynn’s litigation against the Church. Kattar’s alleged threat thus implicated economic and public relations concerns of the Church. A similar “economic” threat allegedly was made concerning the remaining $ 67,000, when Kattar threatened at the October 2d meeting to bring down the Church if Shervell did not cooperate.

The final “economic” threat allegedly occurred when a man identifying himself as Kattar informed a Church secretary over the phone that he would “go to the other side” if the $ 67,000 payment was not forthcoming.

As to these three allegations of extortion, Kattar argues that his threats were not “wrongful” under the meaning of the statute. According to Kattar, his agreement with the Church was to provide information that could implicate Michael Flynn in the check fraud, regardless of the veracity of that information. Kattar reasons that he was entitled to the money requested under the terms of this “contract” with the Church, and that certain forms of economic coercion are not “wrongful” under the Hobbs Act when [**13] the defendant has a right to the property in question. We address this argument in section III, infra.

The government also points to two separate incidents in which Kattar allegedly used threats of violence to attempt to obtain the $ 67,000. At the first meeting at which Agent DiMatteo was present, on October 2d, Kattar told Shervell and DiMatteo that he would “throw their names in the hat” if they did not go through with the exchange. According to both Shervell and DiMatteo, Kattar used a threatening tone of voice and demeanor in order to frighten them into parting with the remainder of the reward money. There was some testimony that Kattar stressed that he was in “the rackets.” This characterization of Kattar’s behavior was corroborated by Kattar in the [*123] taped conversation he later had with Reservitz.

At the next meeting, Kattar did not make any direct threats of violence, but he did make a point to establish that he had substantial muscle at his disposal. He brought to the Church representatives’ attention two of his associates who were standing guard over the meeting: the “big man,” who “would blow your fuckin’ head off in ten seconds,” and “Dino,” a “fuckin’ animal” who’d [**14] “sit on his mother.” This meeting was recorded on tape, and was introduced as evidence. It is unclear whether the show of intimidation was directly related to the demand for the $ 67,000, but the jury could certainly have inferred such a connection.

Kattar concedes that threats of violence are unlawful under the Hobbs Act in a non-labor context even if the defendant has a valid claim of right to the property extorted. See United States v. Porcaro, 648 F.2d 753, 760 (1st Cir. 1981); United States v. Zappola, 677 F.2d 264 (2d Cir. 1982). He argues, however, that his threats of violence were specious and illusionary. His defense is that he had been warned that the Church was prone to use violence in its transactions. Victor Piscattello, a private investigator, testified that he earlier had told Kattar to watch his step with the Church, because the Church had been known to employ violence. Kattar’s argument to the jury was that he had employed rough language not in order to extort the money from Church representatives, but instead to forestall any effort by the Church to do harm to him.

The jury was not asked for a special verdict on whether its finding of guilty was based [**15] on economic or physical extortion. Therefore, if either ground is found wanting, we must vacate the verdict. This comports with the rule that “a general verdict must be set aside if the jury was instructed that it could rely on any of two or more independent grounds, and one of those grounds is insufficient, because the verdict may have rested exclusively on the insufficient ground.” Zant v. Stephens, 462 U.S. 862, 881, 77 L. Ed. 2d 235, 103 S. Ct. 2733 (1983). See also Stromberg v. California, 283 U.S. 359, 367-370, 75 L. Ed. 1117, 51 S. Ct. 532 (1931); United States v. Norton, 808 F.2d 908, 911 (1st Cir. 1987). We shall address in turn the defendant’s challenges to the government’s theories of extortion through economic threats and extortion through threats of violence.

III.

Appellant first contends that the jury was improperly instructed on the circumstances in which a threat of economic harm may be the basis of a conviction for extortion. He claims that the jury should have been required to find that he had no entitlement to the funds obtained or sought before it could find him guilty.

A violation of the Hobbs Act requires the use of wrongful means to procure the property. A threat of economic harm — unlike the [**16] threat of physical harm n2 — is not per se wrongful; a legal right to the funds or property at issue may therefore justify the threat of pecuniary harm, depending on the sort of harm threatened. “Fear of economic loss is not an inherently wrongful means; however, when employed to achieve a wrongful purpose, its ‘use’ is wrongful.” United States v. Clemente, 640 F.2d 1069, 1077 (2d Cir. 1981). A straightforward example of a lawful economic threat is where one party threatens litigation in order to persuade another party to honor a contract which the first party believes has been breached.

[FN]

n2 Except in certain labor contexts, see United States v. Enmons, 410 U.S. 396, 35 L. Ed. 2d 379, 93 S. Ct. 1007 (1973), using threats of violence to induce the payment of money is unlawful, regardless of the extortionist’s possible legal right to the funds at issue. See United States v. Porcaro, 648 F.2d 753, 759-760 (1st Cir. 1981).

[FN]

In this case, the challenged jury instructions were as follows:
You have to decide whether, as the government contends, the Church of Scientology parted with thirty-three thousand dollars of its money fearing that if they failed to do so, a threat to [*124] give information to Michael [**17] Flynn would be carried out or whether, as the defendants contend, the Church wanted information incriminating Mr. Flynn regardless of its truth or falsity.

It’s for you to decide whether, as the government contends, the defendants attempted to obtain another sixty-seven thousand dollars by threat that unless it were paid, information would be given to Mr. Flynn; and you have to keep in
mind, of course, that the government has the burden of persuading you of all the essential elements of the crime charged beyond reasonable doubt and that the defendants have no burden to carry.
Appellant’s dispute is only with the second paragraph. He claims that it was improper not to include in that paragraph a charge like that in the first, which would have suggested that the jury could not find Kattar guilty of economic extortion if “the Church wanted information incriminating Mr. Flynn regardless of its truth or falsity.” Kattar’s argument assumes that this case is simply a variation of the straightforward contractual/litigation situation described above. He claims that his agreement with the Church was to provide information regardless of its veracity. Because he met this obligation, he argues, [**18] he was entitled to the money, and this “legitimate entitlement” forecloses a conviction for economic extortion of that property. He claims that the challenged instruction improperly allowed the jury to find him guilty even if it believed Kattar was thus “entitled” to the $ 67,000. Appellant further argues that the acquittals on the fraud charges provide compelling evidence that the jury did believe that the defendant had a “legitimate entitlement” to the money.

Kattar’s theory, however, fails; the facts of this case are not equivalent to a threat of litigation in response to a breach of a legal contract. Kattar was properly convicted for his threats to go to Flynn with damaging information against the Church, even if his agreement with the Church was to provide the information which he tendered regardless of its veracity.

We reject the idea that Kattar’s asserted “agreement” with the Church could constitute a “legitimate entitlement” to the reward money. Any contract that was entered into between Kattar and the Church that Kattar would be paid $ 100,000
for false information, so that that information could be used to defame, ridicule and discredit Michael Flynn, is an illicit [**19] and unenforceable pact. Even if Kattar had some sort of claim to the money, such cannot be said to have been a “legitimate entitlement.” We therefore conclude that any threat of pecuniary harm used to obtain the money would have been “wrongful, ” and thus a violation of the Hobbs Act. If the jury found that Kattar threatened to blow the lid on the Flynn incrimination scam unless paid the $ 67,000, then conviction was appropriate on a theory of economic extortion, even though there may have been an agreement to exchange the money for Kattar’s false statements. n3

[FN]

n3 We do not mean to suggest that no economic threat is ” wrongful” where there exists a legal right to the property obtained. Though litigation certainly is a lawful threat in response to a breach of contract, it in not obvious that every form of economic fear is equally legitimate, even where there is a ” claim of right” to the property. However, because we reject Kattar’s claim that he had a “claim of right” to the $ 67,000, we need not reach the question of whether Kattar’s threat to go to Flynn would itself have been “wrongful” even if he did have a legal right to the reward.

[FN]

The trial judge instructed the jury, [**20] in addition to the language quoted above, that the government had to prove that the defendant attempted to obtain money “without right to do so.” The judge defined “wrongful, ” the crucial term in the statute, as “doing something without lawful claim or right.” This instruction was more than sufficient. Kattar had no lawful claim to the $ 67,000, even if he did have some agreement with the Church. n4 The defendant [*125] was, in fact, benefited by the court’s very generous instructions. The judge did not inform the jury that Kattar’s alleged “deal” was in fact unlawful; the jury may have concluded incorrectly that it was legal. More significantly, the judge implied, as quoted above, that there was no extortion of the $ 33,000 if, “as the defendants contend, the Church wanted information incriminating Mr. Flynn regardless of its truth or falsity.” This was an error in the defendant’s favor. He cannot now be heard to complain on the ground that the same error was not repeated in the instruction regarding the remainder of the money that he attempted to obtain.

[FN]

n4 Implicit in Kattar’s briefs is the contention that, whether or not there was in fact a claim of right to the money, Kattar himself thought he had such a right. Even if such a distinction were material, however, Kattar did not argue this theory to the jury, nor ask for a particular instruction regarding it. The judge properly instructed the jury that a necessary element of extortion is that the defendant act willfully and purposefully, “with an intention to do something forbidden by the law.” Such an instruction, along with the court’s generous definition of “wrongful,” was more than sufficient.

[FN]
[**21]

IV.

Appellant’s next contention is that the government knowingly elicited false testimony. Kattar claims that this false testimony materially discredited his defense to the charges of extortion through fear of physical harm, and thus
violated his right to due process. He specifically challenges three rulings of the district court made in response to his arguments on this issue at trial. We first describe the background of the issue, and then turn to the district court’s rulings.

Regardless of any possible claim of right to the property extorted, threats of violence are always, except in certain limited labor circumstances, wrongful under the Hobbs Act. See supra note 2. Defendant’s counsel did not, and could not, deny the threats of physical harm made by Kattar — they were loud and clear on the recorded conversations played for the jury. Instead, Kattar’s defense was that these threats were idle and groundless, and that he had been forced to “talk tough” purely as a defensive, prophylactic matter. The defense theory was that Kattar knew that the Church in the past had used violence against its enemies, and that he was afraid that if the deal fell through, he might be subject [**22] to its retaliatory attacks. His violent outbursts and threats were, his counsel argued, meant not to extort the money owed him, but instead to forestall any effort by the Church to do harm to him. A former Church private detective testified that he had told Kattar that the Church could be very dangerous, had been known to use violence, and allegedly once had bombed someone’s premises.

Appellant complains that the government knowingly elicited testimony from witness Geoffrey Shervell that falsely characterized the Church as a reformed organization. On direct examination, Shervell acknowledged that there had been serious illegal activities conducted on the part of the Church by some of its highest ranking officials in the 1970s. Shervell contended, however, that this activity was isolated and contrary to Church policy, and that there had since been instituted a system of reform, in which he allegedly took part, designed to clean up the operations of the Church. He claimed that the investigations section of the Church, in which he was working during the time of the Kattar negotiations, was a benign group that was not involved in any illegal activities. The overall gist of Shervell’s testimony [**23] was that the Church had undergone a substantial “reformation” since the law-breaking days of the 1970s.

Most significantly for purposes of this appeal, Shervell claimed that the “Fair Game Policy” of the Church had been discontinued shortly after its implementation in 1967. That policy, according to an official policy letter from the office of Church leader L. Ron Hubbard, instructed that ” enemies” of the Church “may be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist. [The enemy may] be tricked, sued or lied to or destroyed.” Shervell testified that this policy was not in effect during either the activities of the late 1970s or the time of his negotiations with Kattar in 1984.

Kattar contends that Shervell’s characterization of the Church activities was false and deceptive. He claims that the Fair Game Policy, in spirit if not in name, was [*126] alive and well during the Church investigation of the check fraud, and that the Church investigation was designed to destroy the ” enem ” Michael Flynn. Kattar introduced substantial evidence to show that the Church had been trying to “destroy” Flynn through the use of voluminous false [**24] information that they had disseminated about him.

The basis for Kattar’s due process claim is that the prosecution elicited Shervell’s characterizations of the Church despite the government’s own knowledge that those descriptions were distorted. Kattar suggests that, as a result of these mischaracterizations, the jury would have been less likely to believe his defense that he had to threaten physical harm to protect himself from Church retributory violence. In particular, Kattar contends that the government itself did not believe that the crimes committed by Church members in the 1970s were mere isolated indiscretions contrary to Church policy, but instead knew that these incidents were fully consistent with and authorized by the official instructions and teachings of the Church hierarchy. Kattar further contends that the government believed the Fair Game Policy to have continued in effect not only throughout the 1970s, but also through the period of time during which the Kattar/Flynn episodes took place.

The evidence offered by Kattar to demonstrate that the government’s own beliefs about the Church conflicted with those testified to by Kattar consists of the following:

In the late [**25] 1970s, the United States successfully prosecuted a number of high-level Scientologist operatives for various crimes involving illegal break-ins, burglaries, and wiretaps. In one of those cases, United States v. Kember and Budlong, No. 78-401 (2&3) (D.D.C.), two Church officials were convicted of nine counts of aiding and abetting burglary in the second degree. In its sentencing memorandum in that case (the “Kember memo”), submitted to the federal court in 1980, the Justice Department characterized the defendants’ “brazen and persistent burglaries and thefts” as “but one minor aspect of the defendants’ wanton assault upon the laws of this country,” and noted that the defendants’ crimes were “of a breadth and scope previously unheard.” The memo described the defendants as highly placed officials of the Church, and claimed that their operations were performed with the full authority and approval of the Church. The memo accused the Church and its members of considering themselves “above the law,” with “carte blanche to violate the rights of others, [and] frame critics in order to destroy them.” The Church, according to the U.S. Attorney, “launched vicious smear campaigns. [**26] . . against those . . . perceived to be enemies of Scientology.” The Church’s methods for this included the subornation of perjury. The memo also acknowledged the existence of the Fair Game doctrine as the active animating philosophy of the Church.

This characterization, even where it does not technically contradict Shervell’s testimony, certainly does cast the Church in a radically different light from that used by the prosecution in the instant case.

A more direct and substantial contradiction of Shervell’s testimony was contained in a brief filed by the United States in February 1986, more than one year after the events in question here took place, in a civil case instituted by the Church against the F.B.I., Founding Church of Scientology of Washington, D.C. v. Webster, 802 F.2d 1448 (D.D.C. 1986). In that brief (the ” Webster brief”), the government again asserted that the illegal activities of high-level Scientologists in the 1970s were carried out under the orders of the Church hierarchy, and pursuant to explicit policy directives issued by the Church. More significantly, in a footnote, the government alleged that the Church ” continues to pursue” (in 1986) the Fair Game [**27] Policy, “as the action against Flynn, Sullivan and others referenced in the text attests.” This directly contradicts Shervell’s testimony, and in fact strongly suggests that the Fair Game Policy was in effect as to Michael Flynn during this time period.

[*127] The defense brought this brief to the government’s and the court’s attention after Shervell’s direct examination, and moved for dismissal. That motion was denied. The defendants then moved for discovery of additional evidence in the government’s possession that may have been the basis for the claims in the brief. This motion also was denied. Finally, the defendants asked that the government’s statements be introduced into evidence. The trial judge allowed defense counsel to use the document on re-cross, but excluded it from evidence, even in a redacted version.

Appellant argues that each of the three rulings by the court was improper. We address each in turn.

A.

A conviction obtained by the knowing use of false or perjured testimony “is fundamentally unfair, and must be set aside if there is any reasonable likelihood that the false testimony could have affected the judgment of the jury.” United States v. Agurs, 427 U.S. 97, [**28] 103, 49 L. Ed. 2d 342,96 S. Ct. 2392 (1976). It is immaterial that the particular prosecutor in this case may not have known about the evidence that revealed Shervell’s testimony as possibly false. The Justice Department’s various offices ordinarily should be treated as an entity, the left hand of which is presumed to know what the right hand is doing. See Giglio v. United States, 405 U.S. 150, 154, 31 L. Ed. 2d 104, 92 S. Ct. 763 (1972). At any rate, the United States Attorney in this case was made aware of the Webster and Kember briefs after direct examination of Shervell, and yet continued on redirect to elicit testimony which, at least in spirit, contradicted the government’s asserted position in the District of Columbia proceedings.

A more difficult issue is whether Shervell’s testimony was in fact false or perjurious. For the most part, the differences between Shervell’s account of Church policies and those of the government in its other briefs are differences of characterization. In its actions against the Church, the government naturally attempted to paint the Church in the most prejudicial light possible. In its litigation against Kattar, the government not surprisingly tried to downplay the dark side of the Church so as [**29] to make Kattar’s actions seem more fraudulent.

This inconsistency is troubling where its source is the prosecutorial arm of the federal government. It is one thing for private counsel to characterize events in contrasting ways in two separate litigations, because the counsel there is required under our adversary system to defend its clients in the most vigorous fair manner possible — counsel is expected to put the best possible gloss on a client’s case. The function of the United States Attorney’s Office, however, is not merely to prosecute crimes, but also to make certain that the truth is honored to the fullest extent possible during the course of the criminal prosecution and trial. If it happens that the government’s original perspective on the events in question is proven inaccurate, such revelation is in the government’s interest as well as the defendant’s. The criminal trial should be viewed not as an adversarial sporting contest, but as a quest for truth. See Brennan, The Criminal Prosecution: Sporting Event or Quest for Truth?, 1963 Wash. U. L.Q. 279. See also Agurs, 427 U.S. at 104 (use of perjured testimony involves “a corruption of the truth-seeking function [**30] of the trial process”). This principle and this ideal are reflected in the constitutional requirement that the government make available to the defendant all material evidence favorable to the accused. See Brady v. Maryland, 373 U.S. 83, 87, 10 L. Ed. 2d 215, 83 S. Ct. 1194 (1963).

Thus, it is disturbing to see the Justice Department change the color of its stripes to such a significant degree, portraying an organization, individual, or series of events variously as virtuous and honorable or as corrupt and perfidious, depending on the strategic necessities of the separate litigations. Having previously acknowledged the Church’s illegal practices and maintenance of the Fair Game Policy, [*128] the prosecution should not have attempted in this case to describe the Church as a righteous organization without any designs to unfairly discredit its enemies, in order that the defendant’s actions would seem more egregious. The government, of course, was free to argue that the Church’s activities were immaterial to the events in question, but it should not have pretended that those activities were mere blights on an otherwise spotless history.

Nevertheless, the government’s inconsistent positions do not rise to the level of [**31] constitutional error in regard to Kattar’s conviction. To begin with, we are reluctant to conclude that most of Shervell’s testimony was false or perjurious, even when compared to the government’s previously stated conclusions about the Church. Shervell acknowledged the convictions in the 1970s, and admitted that the Church frequently attempted to defame Michael Flynn on the basis of patently untrue testimony. The significant difference between Shervell’s testimony and the government’s previous assertions lies in characterization, in the degree of significance attributed to the Church’s illicit activities. Most of Shervell’s testimony was, therefore, technically not untruthful.

More serious were Shervell’s repeated claims that the Fair Game Policy was not in effect at the time of the check scheme operation. The government, in footnote 20 of the Webster brief, explicitly contradicted this assertion. Even though Shervell presumably could not be prosecuted for perjury unless it was shown that he himself knew that the policy was still in effect, the government is precluded from using evidence that is known to the government to be false. See Napue v. Illinois, 360 U.S. [**32] 264, 269, 3 L. Ed. 2d 1217, 79 S. Ct. 1173 (1959) (government “may not knowingly use false evidence, including false testimony”). Shervell’s testimony about the Fair Game Policy should not have been elicited by the U.S. Attorney, given that the government itself contended elsewhere that the policy remained in effect throughout the period in question. When the U.S. Attorney was made aware of the Webster brief, he should have made an attempt to correct Shervell’s testimony in this regard during subsequent redirect examination. Cf. id. (conviction must fall when the prosecution, ” although not soliciting false evidence, allows it to go uncorrected when it appears”).

This conclusion alone, however, is not sufficient to require a new trial. The verdict must be set aside only if “there is any reasonable likelihood that the false testimony could have affected the judgment of the jury.” Agurs, 427 U.S. at 103. We are required to apply “a strict standard of materiality” in making this determination. Id. at 104. As Justice Blackmun noted in United States v. Bagley, 473 U.S. 667, 87 L. Ed. 2d 481, 105 S. Ct. 3375 (1985), false testimony should be considered material “unless failure to disclose it would be harmless beyond a reasonable doubt.” [**33] Id. at 680. n5 Even under this stringent standard, the false testimony here is not fatal to the conviction, primarily because it appears that the jury rejected that testimony. It is eminently clear that the jurors’ verdict on the extortion count was entirely unrelated to any view they may have had regarding the Fair Game Policy or the Church’s activities generally. In fact, the verdict of not guilty on all the fraud counts strongly suggests that the jury did not believe Shervell as to the clean hands and good intentions of the Church. If the jury had convicted on those counts, the false testimony likely would have constituted a due process violation sufficient to necessitate a new trial on those charges. But the jury evidently believed the defense’s theory that the check scheme investigation was closely associated with the Fair Game Policy.

[FN]

n5 Although the section of Bagley from which this language is taken was joined only by Justice O’Connor, the particular proposition quoted was not in any way disputed by the other Justices.

[FN]

In addition, the evidence overwhelmingly supported the jury’s judgment that Kattar’s clear threats of physical harm were not made in self defense. [**34] The tape recordings show no evidence of a man fearing for [*129] his physical safety. They reveal a man of overwhelming confidence and swagger. At no point does Kattar sound frightened of the Church. In a discussion with Reservitz on October 3, 1984, the tape picks up the conversation apparently right after Kattar has told Reservitz that he has been informed of the Church’s violent tendencies:

Reservitz: Good. I don’t really think that will be a problem. I don’t think that’s their style. Kattar: He tells me they bomb guys. I said I’ll blow the whole fuckin’ Church up. I said I want these guys to take a look at you.

Reservitz: They bomb people?

Kattar: That’s what he says.

Reservitz: Oh. I don’t know that much about him.

Kattar: Who gives a fuck? All my life I’ve lived with those kind of people.

Reservitz: Well, I met these people. The people I met didn’t seem like they could bomb themselves, never mind anybody else. I mean, that guy Geoff, the Englishman, he didn’t seem like he bothered a soul.

Kattar: He’s the guy I’s told “I’ll break your fuckin’ head.” He’s the one that got smart.

These are not the words of a man who’s running scared. And even if the jury had been persuaded [**35] that Kattar feared the Church, the evidence overwhelmingly indicated that his threats were not made as a response to that fear, but rather as a means of collecting the money.

More significantly, any testimony of Shervell that the Fair Game Policy was still in effect would have added nothing to Kattar’s defense. That defense concerns Kattar’s own state of mind. Whether or not the Church actually continued the official policy is immaterial to what Kattar thought about the Church. The fact that the government believed the Church to be a ruthless organization adds nothing to the jury’s understanding of what Kattar’s ideas about the Church were, except that it might have slightly supported the credibility of the detective who testified that he told Kattar of the Church’s dangerousness. It is beyond any doubt that the false testimony had no material effect on the jury’s findings as to either Kattar’s motives or his threats of violence. Therefore, for the purposes of this conviction, even the strict standard of materiality has not been met. The government’s use of the false testimony had no effect on the extortion verdict.

Appellant also argues that revelation of Shervell’s [**36] false testimony could have tarnished Shervell’s credibility. The principle of not allowing the knowing use of false testimony “does not cease to apply merely because the false testimony goes only to the credibility of the witness.” Napue v. Illinois, 360 U.S. 264, 269, 3 L. Ed. 2d 1217, 79 S. Ct. 1173 (1959). But even if this exposure would have completely impeached Shervell as a witness, the remaining evidence was beyond a doubt sufficient to convict on the extortion count. The tape recordings are proof positive of Kattar’s threats, and the testimony of Agent DiMatteo independently establishes the threats at the October 2d meeting. As the government admits, the most logical way to interpret the jury’s mixed verdict is that they disbelieved Shervell (hence, acquittal on the fraud counts), but believed DiMatteo and the tape recordings (leading to conviction on the extortion charge). Shervell’s testimony was not at all crucial to the conviction obtained. n6 Even if the false testimony had come to light, there is no doubt that the jury would have returned the same verdict. n7

[FN]

n6 There was also sufficient evidence to support a finding of economic extortion even if Shervell had been discredited. Kattar himself boasted to Reservitz that he had told the Church representatives “You gotta fuckin’ deal with me. You’re not gonna back out. Your whole fuckin’ church is coming down.” In addition,the church secretary testified that someone identified as Kattar had in a telephone call threatened to “go to the other side” unless Shervell followed through on the deal. [**37]

n7 Appellant also argues that the government should have been ” judicially estopped” from changing its characterization of the Church from that which it alleged in the previous litigations. The doctrine of judicial estoppel, sometimes known as the doctrine of preclusion of inconsistent statements, prevents a party from asserting a position contrary to a position taken by that party in an earlier proceeding. See Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 211-15 (1st Cir. 1987); 1B Moore’s Federal Practice para. 0.405[8] at 238-47 (2d ed. 1984). In this circuit, the doctrine is only applied when a litigant is “‘playing fast and loose with the courts.'” Patriot Cinemas, 834 F.2d at 212 (quoting Scarano v. Central R. Co., 203 F.2d 510 (3d Cir. 1953)). The government’s conduct here does not meet this standard. In addition, as far as we can tell, this obscure doctrine has never been applied against the government in a criminal proceeding. We need not decide whether the government could under any circumstances be so estopped, because we find that the inconsistency in this case was not sufficiently egregious, and was notmaterial to the appellant’s conviction.

[FN]
[**38]

[*130] B.

The defendants moved at trial for discovery of all documents in the possession of the government that formed the basis of the statements at issue in the Webster brief and in the Kember sentencing memorandum. These motions were denied. We agree with the trial judge that the basis for the government’s assertions in those documents is provided in relevant part in the documents themselves. The government supported its accusations against the Church by citing numerous incidents and litigations that gave rise to their characterizations of the Church’s policies and practices. It would not have been in the government’s interest to omit any significant bases for its assertions, since it had a stake in persuading the federal judges in those two cases of their veracity. The Justice Department could ill afford to rest on mere conclusory statements.

It was well within the district court’s discretion to decide that any further search through the voluminous government files on the Church of Scientology would be a mere fishing expedition, and likely would reveal nothing more than what was already included in the government memoranda. In any event, any further evidence on the nature of [**39] the Church’s policies would not have assisted appellant in disproving the extortion charge. As we explained above, conviction on that count was obtained wholly independent of the debate concerning the true character of the Church; the entirety of the United States’ files on the Church could reveal nothing that would have affected the jury’s determination of what Kattar thought or how he acted.

C.

Appellant argues that he should have been permitted to introduce into evidence the government’s statements regarding the Church in the Kember memo and the Webster brief, as admissions of a party opponent under Rule 801(d)(2) of the Federal Rules of Evidence. An admission by a party opponent is not hearsay under that rule if the statement is either (A) the party’s own statement in either an individual or a representative capacity or (B) a statement of which the party has manifested an adoption of belief in its truth, or . . . (D) a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship. . . .

Appellant contends that the government statements are admissible under subsections (B) and [**40] (D).

We first must determine whether the government is a “party-opponent” for purposes of this rule in a criminal case. We agree with Judge Bazelon that “the Federal Rules clearly contemplate that the federal government is a party-opponent of the defendant in criminal cases.” United States v.Morgan,189 U.S. App. D.C. 155, 581 F.2d 933, 937 n.10 (D.C. Cir. 1978). We can find no authority to the contrary or reason to think otherwise. Whether or not the entire federal government in all its capacities should be deemed a party-opponent in criminal cases, cf. United States v. American Tel. &Tel., 498 F. Supp. 353, 356-58 (D.D.C. 1980) (civil case), the Justice Department certainly should be considered such. Cf. Giglio, 405 U.S. at 154.

Kattar initially argues that the briefs in question contained admissions of “agents” of his party-opponent, and were therefore admissible under Rule 801(d)(2)(D). See 4 D. Louisell & C. Mueller, [*131] Federal Evidence §426, at 328-29 (1980). We need not deduce the scope of Rule 801(d)(2)(D), however, because the statements here were admissible under Rule 801(d)(2)(B) as statements of which the party-opponent “has manifested an adoption or belief in its [**41] truth.” The Justice Department here has, as clearly as possible, manifested its belief in the substance of the contested documents; it has submitted them to other federal courts to show the truth of the matter contained therein. We agree with Justice (then Judge) Stevens that the assertions made by the government in a formal prosecution (and, by analogy, a formal civil defense) “establish the position of the United States and not merely the views of its agents who participate therein.” United States v. Powers, 467 F.2d 1089, 1097 n.1 (7th Cir. 1972) (Stevens, J., dissenting). n8 See also United States v. Blood, 806 F.2d 1218, 1221 (4th Cir. 1986) (statements by government attorney during voir dire would be binding against the government if they had constituted a clear and unambiguous admission). The inconsistency of the government’s positions about the Church should have been made known to the jury. n9 The government cannot indicate to one federal court that certain statements are trustworthy and accurate, and then argue to a jury in another federal court that those same assertions are hearsay. See Morgan, 581 F.2d at 937-38 & n.11.Cf. Powers, 467 F.2d at 1097-98 [**42] (Stevens, J., dissenting).

[FN]

n8 Although disagreeing with Judge Stevens on the characterization of the assertions in that case, the majority in Powers suggested that it might have decided the case differently had there been proof “that the Government, as opposed to any individual thereof, had taken an inconsistent position earlier.” 467 F.2d at 1095.

n9 Indeed, because the prior assertions were made by representatives of the specific party-opponent (the Justice Department) itself, they might be admissible as the party’s own statements under Rule 801(d)(2)(A).

[FN]

We could find no indication in the record as to the reasons for the trial judge’s exclusion of the redacted briefs offered by the defendants. They were not hearsay, for the reasons stated above, and they were certainly material to the defense, inasmuch as they undercut the government’s assertions that the investigations by the Church at the time in question were legitimate. A statement by the government that the Fair Game Policy was in effect at the time of the check scheme investigation would have been highly probative of the nature of the information sought by the Church; it likely would have completely undercut the [**43] government’s assertion that Shervell was seeking only true and verifiable information from Kattar. It was therefore error to exclude those documents. n10

[FN]

n10 Of course, this sort of party-opponent admission is still subject to the trial court’s balancing of its probative value against its prejudicial effect under Rule 403. We doubt that such a balancing would have weighed against admissibility in this case.

[FN]

Once again, however, Kattar’s appeal fails at the threshold of materiality. Exclusion of the documents would have required reversal of any fraud convictions, but it had no material effect on the jury’s verdict on the extortion count. Regardless of whether the Fair Game Policy was in effect, Kattar still threatened the Church officials with physical as well as economic harm. It is not clear that admission of the Justice Department briefs would have added anything to the jury’s opinion of how violent the Church might be, the issue upon which appellant relied for his defense. But even if such admission had revealed that the government believed the Church to be dangerous, this would still have little bearing on Kattar’s impression of the Church, or Kattar’s reasons for making [**44] the threats. For this reason, his appeal must fail
on this ground as well.

V.

Finally, appellant argues that it was error for the trial judge to exclude the statements of two persons that were to be offered through the testimony of a private detective. The detective apparently would have testified that these two persons (both of whom were admittedly unavailable to testify) told her that they had been paid money by a Church operative (not Shervell) [*132] to provide false information implicating Flynn in the check fraud. For the same reasons as those stated above in regard to the government’s prior assertions, these statements also would have been immaterial to the jury’s deliberations on the extortion charge. Even if they had been material, however, the district judge was well within his discretion in finding insufficient “corroborating circumstances clearly indicat[ing] the trustworthiness of the statement[s] .”
Fed. R. Evid. 804(b)(3). See United States v. Hemmer, 729 F.2d 10, 16 (1st Cir. 1984).

VI.

For the foregoing reasons, the judgment of conviction on the extortion count is affirmed.

Notes

St. Petersburg Times: Scientology verdict returned (December 30, 1986)

Scientology verdict returned1

A real estate developer was convicted of extortion Monday in Boston for selling false information to the Church of Scentology about a forged $1 5.million check drawn on the account of church founder L. Ron Hubbard. The federal jury deliberated for two days before convicting George Kattar, 67, of Methuen of extortion for collecting one-third of a $100,000 reward offered for information about the forgery. The check was drawn, but never passed, on Hubbard’s account in 1982. Kattar and co-defendant Harvey Brower, 49, of Swampscott, allegedly blamed a longtime church adversary, Boston lawyer Michael Flynn for attempting to pass the bad check. The jury cleared Kattar of fraud and Brower of all charges.

A government witness, Larry J. Reservitz, testified that Flynn was not involved. Reservitz testified he masterminded the attempt to pass the forged check.

Notes

The Boston Globe: Jury To Resume Deliberations In Scientology Extortion Trial (December 28, 1986)

by William J. Doherty, Globe Staff1

A US District Court jury yesterday heard final arguments in the trial of two men accused of extortion and fraud for selling false information to the Church of Scientology about the forgery of a church check.

Attorneys for Harvey Brower, 49, of Swampscott, and George T. Kattar, 67, of Methuen, admitted that their clients provided the false information, but said no fraud was committed on the church.

The defense lawyers argued that the church did not care whether the information was true or false as long as it incriminated a longtime church adversary, Boston lawyer Michael J. Flynn.

The jury deliberated more than two hours after listening to instructions from Judge John J. McNaught. The panel will resume deliberations tomorrow.

Larry J. Reservitz, a convicted swindler, was the chief prosecution witness during the three-week trial. He secretly tape-recorded conversations in which Kattar and Brower decided to falsely blame Flynn for the forgery in a bid to collect a $100,000 reward from the church.

The church offered the reward for information about an attempt to pass a $1.5 million forged check drawn on an account of church founder L. Ron Hubbard at the Bank of New England.

Reservitz, a disbarred lawyer who became a government informant following his own convictions on other fraud and drug charges, said he hid a tape recorder in his cowboy boot to record his conversations with Brower and Kattar.

The FBI initially equipped Reservitz with the tape recorder as part of an investigation of the church. But after taping several meetings with church officials, Reservitz switched his attention to Kattar and Brower.

Reservitz, formerly of Brookline, testified that he masterminded the 1982 attempt to pass the $1.5 million forged check. The forgery scheme failed, Reservitz testified, because an accomplice of his attempted to deposit the check at a New York bank without identification. He said Flynn was not involved.

According to testimony, church officials were seeking derogatory information against Flynn to discredit him and stop him from filing lawsuits against the church. Over the past several years, Flynn has filed numerous lawsuits against the church on behalf of disaffected church members. Earlier this month, the lawsuits, including one for defamation Flynn filed on his own behalf, were settled, reportedly for close to $5 million.

In his closing argument to the jury yesterday, Assistant US Attorney Gary C. Crossen said Kattar and Brower concocted the scheme because they felt the church would be a “perfect mark,” eager for anti-Flynn information, and reluctant to complain to authorities because of a longstanding feud with federal officials.

One former church official, Geoffrey Shervell, testified that Kattar and Brower obtained $33,000 from the church in return for the information implicating Flynn. Shervell said Kattar also threatened him in an attempt to collect the remaining $67,000 during an Oct. 2, 1984, meeting at Indian Ridge County Club in Andover.

According to tapes played during the trial, Kattar shouted at Shervell: “You’re finished. … Your days are numbered.”

Referring to one of his bodyguards, Kattar told Shervell: “He would blow your head off in 10 seconds. … You’re lucky I’m going to let you walk out of here, my friend.”

Shervell, who was chief of the church’s investigation section, said Kattar warned him: “Your name is going in the hat,” which Shervell said he intepreted as a threat to kill or bully him.

Crossen said Kattar also told church officials that he was “in the rackets” and that any attempt to oppose him would be disastrous for the church.

Neither Kattar nor Brower testified during the trial.

In his final argument to the jury, Kattar’s lawyer, Michael Avery, said his client was “set up” by church officials to deflect a federal investigation of the church. Avery called the threats Kattar made on tape “rough language” designed to protect himself from church officials he had been told were dangerous.

In his closing argument, Brower’s lawyer, John F. Ciciline, conceded that his client provided false information to the church to help it discredit Flynn.

“We are not denying that’s what he did. That’s what he was hired to do – to collect information for the church to destroy Flynn,” Ciciline said.

Ciciline attacked the credibility of the church, saying it believed it was permissible to lie and manufacture evidence to destroy a perceived enemy. He likened the church to terrorist groups.

Notes

  1. Retrieved on September 24, 2014 from http://www.scientology-lies.com/press/boston-globe/1986-12-28/jury-to-resume-deliberations-in-scientology-extortion-trial.html.

Lowell Sun: Charges of scheme to bilk church of $2M take new twist (August 22, 1986)

Charges of scheme to bilk church of $2M take new twist1
by Raymond Howell

BOSTON — An international con artist has been charged in a scheme to bilk the controversial Church of Scientology out of $2 million, adding a new layer of intrigue to a Byzantine case that already involves a reputed organized crime figure, a disbarred lawyer and a financial swindler-turned-FBI-Informant.

Ala Fadili Al Tamimi, a naturalized U.S. citizen born in the United Arab Emirates (UAE), was arraigned Tuesday in U.S. District Court in connection with the scam against L. Ron Hubbard, the late and reclusive Scientology founder. He pleaded innocent and was detained without bail.

Last May, reputed organized crime figure George T. Kattar of Methuen and disbarred attorney Harvey Brower of Swampscott were indicted on charges of offering the church false information about the scam in exchange for a $100,000 fee. Both are free on bail.

Kattar and Brower were implicated by Larry Reservitz, a disbarred Brockton lawyer, high-rolling gambler and convicted financial swindler who participated in the second alleged fraud as an informant for the FBI. He is in the federal witness protection program.

Extradited from Germany

Tamimi, 34, was indicted in the $2 million scheme last November. But at the time, he was serving a prison sentence in Germany for a fraud in that country. He was extradited last Friday.

Also indicted in the case was Tamimi’s brother, Akil Abdul Amir Al Fadili Al Tamimi. But Akil Tamimi is believed to be in the UAE, which does not have an extradition treaty with the U.S., according to Assistant U.S. Attorney Gary Crossen.

A federal grand jury continues to investigate the $2 million scam. “Our belief is there are other conspirators and there is therefore an ongoing grand jury investigation,” Crossen said yesterday.

Harry L. Manion III, a church attorney and spokesman, said: “Church officials wonder why at this point Ala Tamimi’s co-conspirators have not also been indicted.

“The church will press on to expose this conspiracy wherever the web of the conspiracy may lead and to expose whoever may be caught up in it,” he said.

Ala Tamimi also faces trial on fraud charges stemming from his dealings as president of a company called First Boston Arabian Corporation in 1981.

Promised lavish loans

The company purported to find Arab shieks willing to make lavish loans at low interest rates to real estate developers and other businessmen in the U.S.

Tamimi required borrowers to pay him advance finder’s fees, but he had neither loan commitments nor funds, the government charges.

His clients included a German national named Wolfgang Jurgens, for whom Tamlmi purportedly arranged a $75 million loan.

Tamimi’s fee was $2.5 million and he allegedly demanded $870,000 in advance of the closing. Jurgens paid it in the form of 1.7 million German Deutschmarks, two Mercedes-Benzes, two BMWs, $12,000 in U.S. currency and an $8,000 Rolex watch.

Tamimi was indicted in the First Boston Arabian case in March 1983. But in June of that year, he jumped bail.

Shortly afterward, he was arrested for fraud in Sicily, according to an FBI affidavit and Tamimi’s attorney, John C. McBride of Boston.

Tamimi spent two and a half years in an Italian jail. Upon his release, he was transferred to Germany, where he was wanted for fraud and where he ended up serving nine months in jail, according to McBride.

In March 1984, while he was incarcerated abroad, Tamimi was secretly indicted for perjury in connection with statements he made in court before he jumped bail in the first Boston Arabian case.

Court documents indicate that during bail hearings in that case, Tamimi claimed to have two passports — one from Jordan and another from the U.S. Both were eventually turned over to authorities.

But it was later learned that he possessed two other U.S. passports and used one of them in Italy, according to an FBI affidavit.

Tamimi cannot be tried on the perjury indictment, however, because the extradition agreement with Germany does not include that charge, said Crossen.

The German government was “disinclined to extradite hint based on the perjury indictment,” the prosecutor said.

It was also during his incarceration abroad that Tamimi was secretly indicted in the Scientology scheme.

The two-count indictment, returned Nov. 22, 1985, accuses Tamimi and his brother of conspiracy and interstate transportation of conterfeit checks.

It alleges that in May 1982, they obtained a $2 million forged check drawn on an account of Hubbard and a $500,000 counterfeit check drawn on an account of a company called Indian River Foods Inc. Both accounts were at the Bank of New England in Boston.

The indictment further alleges that in June 1982, they transported the checks from Massachusetts to New York and attempted to deposit them in the Middle East Bank Ltd., where Akil Tamimi had opened an account under the alias of Aquii Abdulamiar.

Suspecting that something was wrong, bank officials raised questions about the check and did not cash it.

Attorney McBride said yesterday: “We’re going the whole route. The government can’t prove its case.”

Referring to the fact that the check was never cashed, he said: “The church was never defrauded out of any money. Mr. Hubbard never lost any money.”

Although Tamimi had not been formally charged in the Hubbard check case until Tuesday, he has been linked to it as far back as 1984.

At that time, a private investigator hired by the church, Eugene Ingram, visited Tamimi in jail in Italy and brought back an affidavit in which Tamimi implicated himself and Boxford attorney Michael Flynn. The affidavit was turned over to the FBI and has been cited in civil litigation involving the church.

Flynn, who has been battling the church for years in numerous civil suits, has vigorously denied any involvement in the scam, denied knowing Tamimi and accused Scientology officials or trying to smear him.

Flynn was out of town and unavailable for comment yesterday, but an associate, Mike Tabb, said Tamimi has since sent telegrams to Flynn stating that the portion of the affidavit about Flynn is untrue.

Tabb also claimed that Ingram has been investigated by a grand jury for possibly having “procurred perjury” from Tamimi.

“From our investigation, it appears that Mr. Tamimi was involved in the Hubbard check, but Mike Flynn had no involvement in that,” Tabb added. “…The government has never indicated that Michael Flynn is a target of a grand jury investigation or that he is seriously considered a suspect.”

McBride, when asked about his client’s affidavit, said Tamimi has since disavowed it. He also claimed that the Justice Department has “publicly” rejected the “credibility” of the affidavit.

Assistant U.S. Attorney Crossen said the government has not made any public declarations about the credibility of the affidavit. But he refused to comment further on it.

The names of Flynn and Tamimi have begun to surface in court documents filed in the case of Kattar and Brower, who allegedly schemed to bilk the church in 1984.

In two handwriting exemplars filed by Kattar’s attorney, Michael Avery, during discovery proceedings, Kattar mentions Flynn and Tamimi as having been involved in the original check scheme.

The handwriting exemplars were requested by a grand jury in January 1988, along with photographs and fingerprints of Kattar, Avery said in an affidavit. Presumably, they were requested so they could be compared to identically worded notes already in the grand jury’s possession.

Noting that Kattar and Brower have been accused of fabricating a story about the $2 million scam, Tabb claimed the notes represented “the false story that Kattar told.”

Tabb also pointed to an FBI affidavit which quotes certain conversations involving Kattar and Brower. In the narrative, the affidavit says: “In essence, they decided to falsely accuse several persons of complicity in the check offense, including a Boston lawyer (Michael Flynn).”

Neither Assistant U.S. Attorney Crossen nor Avery, Kattar’s attorney, would comment on the handwriting exemplars.

Notes

The Boston Phoenix: What’s the scam? (June 3, 1986)

What’s the scam?1

by Jim Schuh

This article originally appeared in the June 3, 1986 issue of the Boston Phoenix

Back on the morning of June 7, 1982, a man walked into the New York branch of the Middle East Bank on the 25th floor of a Madison Avenue office building and tried to deposit a $2 million check. The man, a native of the United Arab Emirates, left without completing the transaction.

The check, written on an E.F. Hutton money-market account handled by the Bank of New England, was a forgery. Although attempted bank fraud of that ilk is not particularly unusual, this particular incident triggered a complex, bizarre and, at times, vicious battle that shows no sign of abating nearly four years later.

The forged check had been written on the account of L. Ron Hubbard, reclusive founder of the Church of Scientology, who died last January. No one has ever been charged publicly with that attempted fraud, which Scientologists have come to regard as the most brazen of assaults on their religion and church. Some Scientologists believe that Boston lawyer Michael J. Flynn — who has made something of a career out of suing the Church of Scientology — was behind the scam.

Flynn vehemently denies any involvement with the bogus Hubbard check. And indeed, the accusation has always seemed preposterous. For even if the Hubbard check had been successfully deposited, it is far more likely that the Bank of New England (or, to be more precise, the bank’s insurance company), and not L. Ron Hubbard, would have lost the money.

To gather evidence in the case, Scientologists offered a reward of up to $100,000 for information leading to the conviction of those who had tried to pass the bogus Hubbard check. And that reward offer produced results, though not necessarily what the Scientologists wanted. Among those who got portions of the reward were a con artist known as the Prince of Fraud, another man reputed to be an organized-crime figure, and a third character, who has since admitted involvement in the check scam — Larry Joseph Reservitz.

Larry Reservitz is a former lawyer who was disbarred for bilking insurance companies on bogus car accidents and for cheating a client out of a fee. He then moved on to other vocations: forger, cardshark, Las Vegas gambler, friend to politicians and professional athletes, black-marketer, international fugitive, and, in his latest incarnation, a protected government witness.

Reservitz is at the fulcrum of a complex tale of intrigue that has only begun to unfold in federal court. Much remains unknown, though it is clear that Scientologists, the FBI, reputed organized-crime figures, and private investigators have all engaged in some labyrinthine scheming. But in many ways it is unclear who is the victim and who is the culprit; who is the con man and who is the conned; who is investigating whom, for what crimes, and — finally — why.

The Scientologists have claimed in court documents that one man involved in the scheme was Ala Fadili Al Tamimi, a native of the United Arab Emirates, who blazed an unparalleled trail of fraud across Massachusetts before jumping bail, according to charges still pending against him. Scientologists say that they gave him $25,000 for writing an affidavit — a move which is technically legal, if risky — in which he claimed he had helped mastermind the bogus check scheme along with Flynn. When the Boston Globe, in July 1984, wrote about those allegations, Larry Reservitz got a laugh at the Scientologists’ pursuit of Flynn, who, Reservitz said, had nothing to do with the check. Michael Flynn didn’t laugh. He sued the Globe for libel, a case that is still pending.

(A federal grand jury, however, does not doubt that Tamimi had some involvement with the bogus Hubbard check. Indeed, court records in Germany, where he is being held, indicate that Tamimi was secretly indicted in Boston last November for attempting, along with his brother, to pass two bogus checks at the Madison Avenue Middle East Bank between April and June of 1982. The indictment remains sealed, apparently pending Tamimi’s extradition to this country on old fraud charges unrelated to this case. Tamimi recently was extradited from a prison in Italy to a prison in Germany, as he makes the rounds of atonement for a career of fraud.)

The latest chapter in the bogus-check case was made public last week: reputed organized-crime figure George T. Kattar, 67, of Methuen, and defrocked lawyer Harvey Brower, 49, of Swampscott, were indicted last week on fraud and extortion charges. The grand jury claims that Brower and Kattar offered to provide information to Scientologists about the bogus Hubbard check for $100,000. Brower and Kattar allegedly bilked the Scientologists out of an initial down payment of $33,333, using “threatened force, violence and fear.” The indictment says Brower and Kattar gave Scientologists inaccurate information about the check, but the indictment doesn’t detail the nature of that information.

Scientologists say that they were threatened in their dealings with Kattar and Brower. And Earle C. Cooley, a lawyer for the Scientologists, says that they were bilked in that they did not receive the documentation and witnesses they had been promised. But Cooley says he remains unconvinced that the information Scientologists did receive — which implicated Flynn — was inaccurate. “The church is satisfied that there is a complex breadth of obstruction and conspiracy involved in this entire affair,” says Boston lawyer Harry L. Manion III, who, along with Cooley, represents the church. “This indictment represents the outer skin if a very strong-smelling onion. The church will continue to peel the onion until its core is fully exposed.”

The Scientologists have become increasingly bitter over what they perceive as the federal government’s failure to aggressively investigate the bogus Hubbard check and the Kattar-Brower matter. They have taken out advertisements in newspapers offering a $75,000 reward for information about “complicity and/or obstruction of justice” by four federal prosecutors, three FBI agents, and two private lawyers. The indictment against Kattar and Brower was brought in part because a Scientologist, Geoffrey Shervell, secretly tape-recorded – at the behest of the FBI – his negotiations for their information, according to those familiar with the case. But part of the government’s case will be to prove that the information that Brower and Kattar allegedly supplied was phony. And given that Larry Reservitz claims, on tapes he made for the government, that he was involved in the check scheme, it seems likely he will take the witness stand for the prosecution to repeat that assertion, thereby undermining any contention Kattar and Brower might make that Flynn did indeed mastermind the Hubbard check.

Reservitz secretly tape-recorded his conversations with Kattar, a federal prosecutor has said in court during another case in which Reservitz is a government witness. It is unclear whether those conversations pertain to the Hubbard-check case or to yet another matter, for which the prosecutor said Kattar was under investigation — allegedly plotting to cash another bogus Bank of England check, this one from a Florida millionaire, for $12 million.

(Where the Kattar case may lead boggles the mind. The Wall Street Journal reported last Tuesday that ultra-conservative politician Lyndon H. LaRouche Jr. approved a $100,000 payoff to Kattar in 1980 to get LaRouche votes in the 1980 Democratic presidential primary. Kattar has reportedly confirmed helping LaRouche but has denied receiving the money. Brower, Kattar’s purported accomplice, was once a talented defense lawyer. He was disbarred for counseling a client to jump bail. Later, Brower, a drummer, formed a musical group called Harvey and the Bail Jumpers.)

Indeed, there are many Reservitz tapes. He spent nearly five months in late 1984 gathering evidence for the government, as part of his plea bargain, tape recording his telephone calls and sticking a tape recorder down his boot for documenting face-to-face meetings, according to court testimony. Reservitz and an odd assortment of characters star in more than 100 separate tapes, according to an FBI agent.

Many of those tapes have yet to become public, and some perhaps never will. Among them, according to those familiar with the case, is a tape Reservitz made for the FBI when he met in a law office with two Scientologists investigating the phony check written on the Hubbard account. During the session Reservitz reportedly received $12,500 in reward money from the Scientologists for information he provided them. Some people familiar with the case believe that Reservitz was sent into that meeting to gather evidence against Scientologists for obstruction-of-justice charges in their attempt to implicate Flynn in the bogus Hubbard check.

A witting attempt to provide fraudulent evidence to convince federal prosecutors to indict an innocent man – if that’s what occurred – would clearly be an obstruction of justice. “I do not believe anybody from the church will be indicted because that would be an obscenity,” says Cooley. “The church has pursued this investigation in good faith.”

International intrigue presumably is foreign to the Scientologists. But for Larry Reservitz, it is the habit of a lifetime.

The son of a lawyer, Reservitz grew up in Brockton and went to a private school in New Hampshire, graduating in 1959. He was an honor-roll student; he worked on the school newspaper and his class yearbook. Reservitz was athletic; he was a member of the varsity football and track teams and the junior-varsity basketball team. He was a proctor and a member of the dramatics club. His quote in the year book was an enigmatic “Eeee-yes.”
Reservitz went on to Tufts, where he majored in economics. During a recent appearance as a prosecution witness in a federal fraud case, Reservitz said he had departed Tufts because of “very poor grades.”

According to his own testimony, Reservitz switched to Suffolk University. For the six summers of his college career, he worked in his father’s law practice. Reservitz recently explained the work that he had done for his father: “Basically carry a briefcase, follow him around, and try to learn some things.”

While in college, Reservitz was heavily involved in high-stakes card games, according to a former classmate. Reservitz also boasted about his friendships with professional athletes, including players on the Red Sox and the Celtics. In 1967, Reservitz passed the bar and joined his father’s law firm, pursuing his career with, as one acquaintance recalls, “vim and vigor.”

But within a year Reservitz’s father died of a heart attack. And Larry – with vim and vigor, if not judiciousness – embarked on a career in crime. He started concocting phony car crashes and bilking insurance companies for damages, according to his own testimony. The motivation, Reservitz acknowledges, was “probably greed.”

“It was part of a large deal,” Reservitz testified. “They were set up accidents. It wasn’t that there was a legitimate client. The majority of these accidents were phony accidents, they were staged …Where there was a legitimate accident, if there were two people in the car, for example, by the time the case got ready for settlement it would have been four people in the car.”

Among Reservitz’s partners in crime was a man named Elias Kenaan of Braintree. Kenaan’s wife, Eileen, is the daughter of Ilario “Larry Baione” Zannino, now the reputed head of the Boston Mafia. Reservitz testified that he had probably filed more than 20 phony insurance claims during an 18-month period. The scheme had come to an abrupt halt when Reservitz read in a newspaper that a grand jury in Plymouth had been convened to indict an unnamed lawyer for filing false claims.

In early 1970, Reservitz, his wife, and their baby fled to Europe. Shortly before he left, he received a $650 fee to represent a Stoughton man charged with selling LSD to a state policeman. Reservitz never represented the man but did not return the fee. Reservitz said he’d hoped the move to Europe would bolster his faltering marriage. After landing in Geneva, Reservitz and his family moved to the Spanish island of Palma de Mallorca, about 120 miles off Barcelona. He invested in a nightclub and ran a small clothing store. Reservitz and his wife had another child. But one day Reservitz returned home to find his family had vanished.

A few months later, more trouble struck. A member of the Spanish secret police, whom Reservitz had befriended, told him that he was about to be arrested and extradited. While he was in Spain, Reservitz had been indicted in Plymouth County on more than a dozen charges of bilking from insurance companies, in bogus claims that exceeded $50,000.

Reservitz quickly sold off his interests in the clothing store and the nightclub at a loss and flew to Marseilles and then to Genoa. From there, he took a boat to Israel –  “because I’d never been there before and I wanted to see it.” He settled in a suburb of Haifa for several months, living off his savings and selling money on the black market.

During his travels, Reservitz met his future second wife, a Scottish woman named Antoinette. When they tired of life in Israel – hampered by their inability to speak Hebrew and Reservitz’s failure to find work – they moved briefly to Edinburgh, where Antoinette’s parents lived. Reservitz also spent time in London, frequently gambling in high stakes games at a club called the White House, a college classmate told the Phoenix. Scotland Yard became interested in him in part because his passport showed him frequently traveling between Rome and Britain. British police checked with investigators in Italy, who informed them that Reservitz was traveling with Antoinette, and that he was expected to visit her family in Edinburgh for the holidays.

Meanwhile, Scotland Yard learned that Reservitz was wanted back in the States for the insurance fraud. On New Year’s Eve, 1971, Reservitz was arrested at the home of Antoinette’s family. He was transferred to Pentonville prison in North London, a grim, forbidding structure built in the 1700’s. Reservitz was to stay there for the next four months.

He was held in solitary confinement in an eight-foot-by-five-foot cell, with one small overhead light, a window about one square foot, and a solid-steel door with a peephole for guards to observe prisoners. There was no sink or toilet, just a plastic pail that was emptied once a day. He was released from the cell for a half-hour every day. Showers were allowed on Sundays. The mattress was straw, and Reservitz had one worn blanket. He had no radio. A two-month-long power outage meant that Reservitz sat in darkness for half his stay. “That is a very, very old prison,” Reservitz testified. “It’s exceptionally unpleasant.” While he was incarcerated, he was notified that his first wife had filed for divorce.

A Massachusetts assistant attorney general eventually went to London and obtained Reservitz’s extradition. Reservitz was released on bail after arriving in Brockton. While awaiting trial, Reservitz and Antoinette moved to an apartment in Brookline and started a women’s-clothing business – with Reservitz’s mother providing some of the seed capital. After a year out on bail, Reservitz pleaded guilty to two larceny charges and was sentenced to 18 months in the Plymouth County jail.

Despite his legal problems, Reservitz apparently remained quite solvent. He and Antoinette bought a large brick house in Brookline for $72,000, where he installed a pool. While Reservitz was in jail, Antoinette ran the clothing business. When he was released in 1974, he appears to have gone straight – for awhile. He merged the dress business into a retail clothing firm, which operated a store called Feathers, on Boylston Street in Back Bay. Reservitz opened branches in Quincy, Brookline, Newton, and in several Gilchrist department stores. But the Gilchrist chain went into bankruptcy, taking the Feathers chain with it, Reservitz testified. “They forced me into bankruptcy because I had so many goods left over that weren’t sold. There was nothing I could do. I owed money to so many people. And actually before we went into bankruptcy the business was insolvent.” When Feathers folded in November 1976, it went down hard – owing taxes to the federal government and money to 99 creditors and 10 employees.

Without Feathers, Reservitz returned to an old skill to pay the bills: he gambled, playing cards and placing bets on sports events. In the late 1970s federal investigators charged Reservitz with possession of counterfeit money, but a magistrate dropped the charges because federal agents were unable to prove Reservitz knew the money was bogus.

Around 1980 Reservitz appears to have developed a source of information inside the Bank of New England. Reservitz says he then became involved in six or seven major frauds using bogus checks, some of which were, at least initially, quite successful. But two of those schemes eventually went sour and contributed mightily to the downfall of Larry Reservitz.

Reservitz testified he had worked with a man named Irwin Swartz to carry out those scams. Using fraudulent paperwork, they had arranged for a financial investment concern to transmit $2 million to the account of a Chicago jeweler in 1980. After the money transfer had occurred, Swartz, purporting to represent the financial concern, picked up $2 million worth of jewels for the jeweler. It was a scheme that netted Reservitz more than $100,000. But three weeks later, Swartz was arrested in Montreal while making a pick-up at a coin shop in a similar scam. Swartz was convicted of fraud and sentenced to a decade in prison. Despite pressure from investigators, Swartz initially refused to name Reservitz as the mastermind of the scams, because Reservitz was paying him to remain silent. But Swartz eventually cut a deal, and Reservitz was indicted on a variety of charges, including wire fraud, conspiracy, and obstruction of justice.

At about the same time, Reservitz erred again. He attempted to buy a truckload of marijuana form undercover agents of the Drug Enforcement Administration. That cost him a three-year sentence.

Swartz was partly through his testimony in the fraud case when Reservitz cut his own deal. He pleaded guilty on July 13, 1984, to five charges and secretly agreed to cooperate in criminal investigations for the federal government. Reservitz immediately informed investigators of another scheme that he was already helping orchestrate: an attempt to pass a bogus $12 million check from an account at the Bank of New England. The participants, Reservitz said, were Jack W. McNatt, 39, of Boxford, a departmental-systems manager in the corporate-agency department at the bank, and Arcangelo “Bochie” DiFronzo, 49, a Somerville man who was then co-owner of New England Mail Services Group. They were convicted this April following a trial at which Reservitz and his tapes were the star witnesses.

While Reservitz was gathering evidence for his new friends at the FBI, he had supported himself by gambling, he testified. He bet on sporting events, and he played gin with the fellows over at the swank Cavendish Club, in Brookline, where his gregarious personality made him a favorite.

It was while Reservitz was wearing a hidden tape recorder for the McNatt-DiFronzo investigation that he revealed his involvement in the Hubbard-check scheme. According to transcripts, Reservitz, sipping black Sanka in a Cambridge restaurant, chuckled as he told DiFronzo that Scientologists thought Flynn was behind the check scam. “They think that I’m part of a conspiracy to defraud the church, that I’m tied up with Michael Flynn [and other Flynn associates] . . . I’ve never heard of these people. I wouldn’t know these people if they stood up in front of me.”

And in another meeting that he tape-recorded with DiFronzo, Reservitz explained that the Hubbard-check scheme had failed because Hubbard himself had written a check to pay taxes at about the same time, thus drawing down his balance. Recalled Reservitz, “Do you understand that L. Ron Hubbard wrote out a tax check, the guy whose check it was happened to write out a tax check at the same time and take money out of the fuckin’ account?” Scientologists say that though Hubbard had recently paid his taxes when the bogus check was presented in New York, there was enough money in the account to cover the check.

It was within hours of completing his street work for the McNatt-DiFronzo case that FBI agents whisked Reservitz off to prison on December 6, 1984. The two-year sentence he eventually received on the check frauds was eventually consolidated with that from the marijuana case, and both were cut to 18 months. Reservitz served 13 months in prison and then returned to the streets.

Reservitz, his wife, and two children were relocated at government expense and given a new identity through the witness-protection program. There is an unconfirmed report that he was in a crowd at a recent Las Vegas fight featuring another Brockton man and Reservitz acquaintance, middle-weight champion Marvelous Marvin Hagler.

As FBI agent Dennis Carney testified at the recent McNatt-DiFronzo trial, the saga of 44-year-old Larry Reservitz may be far from over. “He’s free to engage in other scams right now,” Carney said.

Notes

  1. Retrieved on September 24, 2014 from http://thephoenix.com/Boston/News/90451-Whats-the-scam/?page=1#TOPCONTENT. This document in PDF format.

Lawrence Eagle Tribune: Prosecutor cites Kattar crime ties; family, friends tell different story (May 31, 1986)

Prosecutor cites Kattar crime ties; family, friends tell different story1
by Michael Foley

BOSTON — Assistant U.S. Attorney Brackett B. Denniston said Methuen businessman George Kattar is tied to an organized crime family in Providence, R.I., and was given permission by “La Cosa Nostra” to murder a key government witness against him.

His friends said, however, that Kattar is not a violent man.

U.S. District Court Judge Lawrence Cohen listened to both sides yesterday at a hearing to decide whether Kattar could be released on bail or held to protect the community. Judge Cohen took the case under advisement, leaving Kattar behind bars at least over the weekend. He did not say when he would issue a decision.

Kattar, 67, 131 Jackson St., and disbarred lawyer Harvey Brower, of Swampscott, were arrested Wednesday on charges they tried to defraud the Church of Scientology of $100,000. Brower was released on $50,000 bail.

An affidavit based almost entirely on tape-recorded conversations asserted that Kattar:

* TALKED EASILY OF MURDER. “You know they make a big deal out of a whack, but it’s the easiest thing in the world, especially if you don’t know the guy,” he is quoted as saying.

* CLAIMED UNCHALLANGEABLE POWER in the Merrimack Valley “rackets.”

* THEATENED a representative of the Church of Scientology. He told a representative of the church if he challanged Kattar in the future “his name would be put in a hat.”

* USED BODYGUARDS to Intimidate a representative of the Church of Scientology. Kattar is quoted a saying: “You’re lucky I’m going to let you walk out of here, my friend.”

* PLANNED TO KILL a man named Irwin Swartz, who testified against an associate. No attempt was made on Swartz’s life.

* KEPT BOMBS, two machine guns, a sawed-off shot gun, and three silencers at his Meredith, N.H., summer home.

Two character witnesses for Kattar painted a different picture of the man.

Phillip De Fusco, 66, 112 Fox Hill Road, said Kattar is a peaceful man with colorful way of talking.

“He would say that ‘if you don’t come to see me I’ll kill you,'” De Fusco testified. “That was his expression.”

George S Naddif, 2 Landau Lane, Andover, said “He’s one of the most honest guys on two feet.”

Judge Cohen asked if De Fusco’s opinion of Kattar changed after weapons were siezed in a raid at his summer home April 29.

“Those aren’t the sort of things that one goes bird hunting with,” said Judge Cohen. De Fusco said his opinion remained unchanged.

Defense attorney Michael Avery also gave the court about 100 letters in support of Kattar from friends of the family and prominent citizens throughout the Merrimack Valley. An inventory of the letters was not available yesterday.

Denniston said 10 conversations were recorded by FBI informant Larry Reservitz in the fall and winter of 1984. Two of the conversations referred to in the affidavit took place at the Indian Ridge Country Club in Andover.

Reservitz agreed to wear “a wire” in return for a lighter sentence on convictions in two fraud schemes and a marijuana deal.

According to the affidavit, Kattar talks of his relationship to Providence, R.I., crime boss Raymond Patriarca Jr. The affidavit states Kattar indicated he heard from Patriarca every day and the Rhode Island family was the “sponsor of my outfit.”

The affidavit also states “a reliable confidential informant” told the FBI that the New England Cosa Nostra “had given approval to Kattar to kill Larry Reservitz.”

Avery argued that if Kattar wanted to kill Reservitz he could have done it before his arrest.

About 25 Kattar family members filled the small hearing room to show support for him. His three sons, three daughters and his wife Phyllis sat together. The women cried and comforted each other. The men sat quietly.

As Kattar Sr. was removed from the courtroom his duaghter Kimberly gave him a farewell kiss.

“Don’t cry, I said,” said Kattar raising a finger in a mock threat. Then he winked and said “See ya.”

Excerpts from tapes

The following are FBI excerpts of the affidavit submitted by the U.S. District Attorney:

“Kattar described in the meeting how easy it is to murder someone. He referred to a woman whose husband had been beating her. He then stated that he had a guy ‘whack him’: ‘You know they make a big deal out of a whack, but its the easiest thing in the world, especially If you don’t know the guy’.” Kattar is quoted. “He then stated ‘I take care of a hit for you,’ (speaking of no particular person) and ‘you take care of a guy for me.’ He added that then, ‘I George Kattar have no problem with alibis.’ “

“Kattar talked about the new stucture of the La Cosa Nostra in New England in the wake the Angullo indictments. He refers to Raymond Partriarca Jr. of Providence, R.I.

Reservitz: Who’s running things now?
Kattar: …The boy is boss.
Reservitz: Junior is?
Kattar: Oh Year… Guarantee all the way… New York, all the way down …”

Notes

  1. Retrieved on September 24, 2014 from http://www.xenu-directory.net/news/library-item.php?iid=3024. This document in PDF format.

Clearwater Sun: Two men charged in Scientology scam (May 30, 1986)

Clearwater Sun1

BOSTON — FBI agents on Wednesday arrested a New Hampshire man and a disbarred lawyer on charges of extorting $33,000 from the Church of Scientology by offering false information about a scheme to steal $2 million from the church.

George T. Kattar, 67, of Meredith, N.H. formerly of Methuen, Mass., was held without bail pending a detention hearing today. Harvey Brower, 49, of Swampscott, Mass., a former lawyer turned writer, was released on $50,000 bail.

According to an indictment issued by a federal grand jury in Boston, Kattar and Brower obtained the money from church officials by offering to provide them with information about a forged $2 million check drawn on an account of L. Ron Hubbard, the church founder.

Kattar and Brower allegedly offered the information — which proved to be false — in return for a $100,000 fee, one-third of which was to be paid in advance.

The indictment does not specify what information was allegedly supplied by the defendants in return for the $33,000.

Notes

  1. Retrived on September 24, 2014 from http://www.xenu-directory.net/news/library-item.php?iid=3023. This document in PDF format.