[Memorandum
To: Dr. Bryan Zwan
From: Denise Licciardi, VP Administration
Subject: Digital Lightwave-Ethics Situation
Date: May 9, 1997
CONFIDENTIAL

Bryan,
I have some observations that I need to make known to you. It is for the survival of the group that I communicate this and as a point of integrity. Please read this carefully.

I have observed a decay in your ARC for the organization, the Management team and for the staff as a whole. I have observed that your trust in individuals, Beth, Sam, Dan, Chris and even me to the degree you are out of communication regarding certain matters, it's nil, in fact you believe that in some instance there are those actively undermining you. This is contrary to what one can observe in the number of hours and work getting accomplished. The crew you have here are not working to make it go wrong.

During the IPO roadshow, I spent a great deal of time dead agenting-handling False Reports that were given to you specifically by Seth. Every single piece of entheta information that he gave you, that you told me about, I was able to clarify with true, sane data. This is a stat.

The false data acted as third party and caused you and many others a great deal of enturbulation. When I sent you the write up on Why Orgs Stay Small, you were very frustrated in how you could "trust nobody" in the organization to do anything right. You spit out some situation regarding Sam, which caused you not to trust him. This, upon inspection, was a False Report.

I should not have been surprised when I found that that false piece of data regarding Sam came from Seth. Seth told me Sam told him that. Sam said he never told him that. Sam has never been dishonest with others or me and Seth has lied numerous times. I believe Seth lied in this instance. I do not know when he gave you this data, or what his intention was-but it was not good. This is true, and I have verified it with both Beth and Tom.

Seth is your right hand man. He has your ear 24 hours a day. He is an executive in this company and should be held to a high ethical standard. Whether he knows what third party is or false reports are or not, he is responsible for his actions and the destruction they cause.

I do not know what Seth has told you about Beth. I know that he personally has taken no responsibility for that area. And also know if one looks at her stats the production of her division-not only the OUTPOINTS-one should see all that she has contributed to this company. All HE + R and third party aside-she does have stats. I also have observed she was once trusted by you and date coincident with Seth's arrival your relationship changed. Only you know if you have been told derogatory data, and not gone about cleaning it up.

It is extremely destructive for you, the Company and those terminals involved to be getting these False Reports on your lines. I consider it my duty as your senior admin terminal and your friend to find out who and what are on your lines causing your extreme stress and to report on any out-ethics scene. This out-ethics scene with Seth was very apparent to both you and I, and has continued to occur though obviously submerged from my view. When you recently you spit out this out-point about Sam which turned out to be Seth on the Third Party best I realized there is a situation still in PT.

I also know that since Seth arrived at the company your comm line to 2 people you once considered key dropped out, Doug and Libby. These are two OTs. Please remember that even before the situation arose that led to Libby's departure that your comm line with her had reduced to basically no comm and that which did exist was screaming and yelling. Most of this HE+R was in relation to the ATM project not being completed, yet even with an industry veteran such as Jerry it is still not completed. As regards Doug, I believe it was made clear to you, by Seth, that Doug was not someone you should have in your Company. It is my understanding that you were quite close to both of these individuals…what happened? Again, only you know if you had been told derogatory data, and not gone about cleaning it up. I do know you have virtually cut any personal comm line with both of these guys.

Data on False Reports

HCO P/L Justice
… "In an extension of third party technology (see HCOB of THIRD PARTY LAW), I have found that false reports and suppression are very important in third party technology."…

… "In reviewing several org upsets, I have found that the third party can go completely overlooked even in an intensive investigation.

A third party adds up to suppression by giving false reports on others."….

… "There can also be FALSE PERCEPTION. One sees things that don't exist and reports them as fact."…

… "An executive should not accept any accusation and act upon it. To do so would undermine the security of one and all.

What an executive should do on being presented with an accusation or down stats or "evidence" is conduct an investigation of false reports and false perceptions.

An area is down stat because of one or more of the following:
1. No personnel
2. Personnel not trained
3. Cross orders (senior orders unattended because different junior orders)
4. Area doing something else than what it is supposed to do.
5. An adjacent area dumping its hat.
6. False perceptions leading to false stats
7. False reports by rumor or misunderstanding
8. False reports from single rare instances becoming accepted as the condition for the whole
9. False reports on others defensively intended
10. False reports on others maliciously intended (real third party)
11. Injustices cumulative and unremedied.

This is a list of probable causes for upset or downstat area.

Security

The personal security of the staff member is so valuable to him apparently that when it is undermined (by false accusation or injustice) he becomes less willing and less efficient and is the real basis for a PTS condition.

Justice

The only thing which can actually remedy a general insecure feeling is a renewed faith in justice.

Justice would consist of a refusal to accept any report not substantiated by actual, independent data, seeing that all such reports are investigated and that all investigations include confronting the accused with the accusation and where feasible the accuser, BEFORE any disciplinary action is undertaken or any condition assigned."

… "Harsh discipline may produce instant compliance but it smothers initiative.

Positive discipline is in itself a stable datum. People are unhappy in an area which is not well-disciplined because they do not know where they stand.

An area where only those who are trying to do their jobs are disciplined encourages people to hide and be inactive.

But all discipline must be based on truth and must exclude acting on false reports."

… "Then is the primary breakdown in any justice system-that it acts on false reports, disciplines before substantiation and fails to confront an accused with the report and his accuser before any discipline is assigned, or which does not weigh the value of a person in general against the alleged crime even when proven." LRH

This is a list of known False Reports Seth has made about this group, of which have caused many hours of investigating to get the true data.
1.Falsehood: In late December 95 Seth told me in front of you that the fax machine/printers that were sent out to the sales guys didn't work and they couldn't get quotes or send letters. This was alarming to you and I.
1a. Truth: Steve Gasich didn't know how to get his printer out of ship mode and it took him a few hours to figure it out.

2. Falsehood: In Jan 97, Seth accused Admin of failing to handle Wayne Drivers "bonus". Seth accused Sam of not getting this order executed.

2a. Truth: Due to my diligence on this cycle, the bonus that we paid was only $2,100.00 because of the incorrect data Seth had and his lack of inspection. There is a full write up to substantiate what occurred on this. There was no dropped line or failure to follow through on the part of Division I, only a false accusation.

3. Falsehood: Accused Admin of failing to "follow up on personnel". Seth said to me over the telephone, in early January, "there are out lines in the following up of recruits. No one follows up on the cars, or stock options etc."

The information lines and follow through are extremely strong in and out of Division One, however I assumed Seth had run into a glitch in that he specifically mentioned Jackie was not getting the information regarding the stock options.

3a. Truth:

· The employment contracts are sent to Payroll via Beth. This is where any signing bonus money ges noted, leasing is being done in Treasury, and Maggie follows through on each of these specific points.

· Kristi Jo follows up and ensures that the guys get cell phones, laptops, etc, using the standard lines (Judy, in Communication Dept., Jim in US etc)

· Susan Arnold used to forward to Jackie the information regarding stock options on exactly what was promised to the employee. Now Julie does. Jackie will confirm that she has received all of this data. Jackie had run into a stop in getting these stock options issued in that she could not get the copy of the form off of your machine and therefore had nothing to give out. I had not been aware of the fact that Jackie needs a typist to do this and therefore could not get this done.

· There was no dropped line. This is more a case of a missing terminal at the end of the line. This missing terminal was Jackie Joseph, who informed me she "was not a typist." To remedy this, I asked Lisa Teifer to type these up and Div 1 compiled this information and has now ensured that all new employees hired since the Dec. 5 staff meeting have received and executed their Stock Options.

· Seth falsely accused again, generating dev-t.

4. Falsehood: In the same conversation, Seth pointed out that it was a Division One failure to ensure that stock options get issued, even if his area doesn't do it, I should follow up. This is a false accusation.

4a. Truth: I clearly understand this to be a function of Corporate Services, in Seth's area of responsibility. You can see from the above Division One took responsibility and now knows to stay on this line, though Seth was big on blame.

5. Falsehood: Due to Seth's misunderstanding of a quote given on health insurance, he falsely accused our insurance agent of trying to rip us off, therefore an Admin failure. Additionally he generated many hours of unnecessary work for Div 1.

5a. Truth: He had instructed Chris to give the bid and quote to a friend of his on the East Coast. He had wanted to give this business to his friend.

6. Falsehood: Seth said that Beth had sent a large check to Baker and McKenzie on her own volition.

6a. Truth: Seth instructed Beth to send the check with a nice note. (He denies this.)

7. Falsehood: Seth told you recently that Sam had somehow screwed up on a production cycle. He told me that Sam told him that.

7a. Truth: Sam was key in repairing those purchasing lines and by inspection and verification from other terminals did not cause any situation.

8. Falsehood: Seth vehemently accused both Michelle and Kristi Jo of covertly being in cahoots in doing harmful actions against the company. He wanted them fired. You wanted them fired. You even accused Sam of being reasonable for not thinking we should fire them.

8a. Truth: Upon inspection of the lines, it was verified that Jordan was spreading false rumors and was fired. Neither Kristi Jo nor Michelle could be verified as having any evil or ill intentions against the company and had excellent stats. They were kept on, with your OK and have continued to have good stats. Seth has told me over and over this "was a mistake," despite the evidence found.

9. Falsehood: Seth promotes the fact that because none of us (Scientologists) has been in the telecom industry you should not expect us to know what to do. "Sam should be excused (although he did kill you in his failure in MCI) because he has never done this before." What this really means is "Hey he just isn't an able guy-so let's just move him aside-how can we expect anything else?" This is degrading and 1.1.

9a.Truth: Ken Hargrove, an "industry expert," worked the same account for 3 weeks prior and two weeks since and still has not gotten an order. Sam is an expert in LRH Management Tech and has excellent stats in a far larger game.

10. Falsehood: It is a falsehood that Sam alone bares the responsibility of the stock crashing. It is irresponsible and a viewpoint of "responsibility as blame."

10a. Truth:

· Seth has no experience in managing companies, in this industry, in finance or in the business world. He does have experience in law, as he is a lawyer.
· He had no experience in helping to attain or even demonstrated in any business environment the attainment of a strategic plan.
· He had a great deal of in put on the projections yet he has no business experience, organizational training, that would demonstrate the knowledge in what it takes to get the necessary sub-products which lead to VFP's.
· The remarks and the enemy lines Seth covertly whispers in the CEO's ears are true about him (no experience etc)


11.Falsehood: Jackie and Seth stated that Maggie had shown a non-Scientologist a "green volume." Creating an imaginary bad situation, putting enturbulation on your lines.

11a. Truth: In trying to get statistics implemented, Maggie only used English dictionaries to clear terms.

12.Falsehood: In reviewing checks for CEO to be signed, he made many notes regarding staff on the road receiving expense money for Breakfast, Lunch and sodas. He made this appear to be alarming, even stopped an expense payment to our VP Sales of over $4000 of expenses dating back to March 8th. This is money expensed out of pocket on behalf of DLI. This is falsely being labeled an alarming situation which rather than helping the CEO by providing a service he goes about questioning the established policy of DLI, without knowledge of industry standards, and throwing doubt on the integrity of our accounting and sales employees.

12a. Truth: The industry standard is breakfast, lunch and dinner plus hotel. ($50.00 per diem for meals). Digital Lightwave gives $40.00 per diem disbursed as $10 for breakfast, $10 for lunch and $20 for dinner.

· TTC: Covers breakfasts, lunch and dinners: $10 for breakfast, $15 for lunch and $25 for dinner (over or under a buck or two was ok)

· HP: They pay the same $ amount as TTC. Business conferences typically managed by the manager received verbal OK to spend extra on dinner with customers. A check with boss first was required.

· Alternatively, in the case of Harris (I have a brother-in-law who works there), he gets $50.00 per diem period. He puts all charges on a Company credit card, which is also in his name and he uses an expense check to pay it off.

· RealWorld would pay $50.00 a day.

12b.Truth: On expense reimbursements, I know the company pays for Seth's lunches when he is on the road. Seth had the company pay for Jackie's airline ticket for a trip to Boston on January 1st which she did not use because she did not feel like getting out of bed. The intention here is quite clearly to alarm (you) under the guise of 'help'.

12c. Truth: It was Seth who negotiated the $25,000 payment to Steve Gasich, Seth who promised the car of his dreams. Seth who ordered the checks and $8000 in commissions Fed-x'd to a guy who had yet to work one day at DLI. Though we got the $25,000 back we did not get the wasted salary and expenses from someone who was pure criminal.

In HCO P/L Ethics and Executives, this is what LRH has to say

… "IT IS VITAL TO ANY ORGANIZATION, TO BE STRONG AND EFFECTIVE, TO BE ETHICAL.

THE MOST IMPORTANT ZONE OF ETHICAL CONDUCT IN AN ORGANIZATION IS AT OR NEAR THE TOP.

Ethics failure, at the top or just below it, can destroy an organization and make it downstat.
Historical examples are many.

THEREFORE, IT IS POLICY THAT AN EXECUTIVE MUST KEEP ETHICS IN ON HIMSELF AND THOSE BELOW HIM OR BE DISCIPLINED OR COMM EVED AND REMOVED FROM ANY POST OF AUTHORITY AND SOMEONE FOUND WHO IS HIMSELF HIGHLY ETHICAL AND CAN KEEP ETHICS IN ON THOSE UNDER HIS AUTHORITY.

The charge in any such case for a staff member or executive is FAILURE TO UPHOLD OR SET AN EXAMPLE OF HIGH ETHICAL STANDARDS.

Such offenses are composed of:

1. DISHONESTY.
2. Use of false statements to cover up a situation.
3. Representing a scene to be different than it actually is to cover up a crime and escape discipline.
4. Irregular 2D connections or practices
5. Drug or alcoholic addiction.
6. Encouraging out ethics
7. Condoning or failing to effectively handle out-ethics situation in self or others as an in-charge

LRH

My understanding of Seth's area would mean his statistics would be "# of OEM deals," "# of Acquisitions" and "# of PR Sits Handled". These are not apparent.

Recent stats:
· Seth has made no OEM deals.
· Seth has acquired no companies.
· Seth has failed to handle the PR.
· He points out to you daily how well other companies are doing as he has tons of time to search the WEB. Did he tell you how long it took Premysis to get to 200 million? On the other hand, lay out how they did it strategically? Nope-just dumps the data right on your lines-as in "What is wrong with us?" Where is the solution?
· Gasich was not a Doug product-he was a Seth product. We both know it. He only spoke to Seth. This is his stat.
· The scene created with Gasich is key to understanding Seth's judgement of people.
· False Reports to you on others, those known about listed above. Those unknown are still unverified though I am sure being acted upon.
· When hatting tried to occur on staff regarding stats in both instances Seth blew up. First with Jerry Gentile (who really liked the data) and with his secretary, Lynda, where the false report was given about Maggie.
· Seth has not one area that he is responsible for and yet points out daily to you how Wall Street is going to @#$% you (Because of your management teams failing.)
· Seth has no stat. You cannot measure his production. The software on the accounting? What has he done to get this done? Isn't he over finance?


Only you can tell me what Seth is doing or has done to contribute to our current scene. I had thought the false report, third party situation with Seth had been handled-that his early false reporting and third party had ceased. This was foolhardy as per the tech, one needs to be audited to move up in responsibility level and the tone scale. By his actions, by your tone level from being around him, and by actual evidence of his activities, I can say with 100% certainty that Seth is 1.1. This data is true not because I say so but because LRH says so:

"At 1.1, truth receives her severest drubbing; for here truth is confused, upset, used, twisted and hidden for fear somebody may make retaliation, until one understands that data from this level on the Tone Scale has only two purposes: To wreak the most harm upon others and secure the greatest safety for self. Here we have lies used to hide lies amid the most frantic protestations of honesty and a noisy advertising campaign about the ethics of the speaker. "…In this band we have fantastically accomplished actors, who may weep and plead and decry with deep contempt and disdain, asserting their honesty and their sincerity and demonstrating them with such consummate conviction that even the most critical observer may be unable to detect the slightest falsehood; and yet in the 1.1, a deep and exhaustive inspection of motivations and goals reveals a snake pit of lies and insincerities, of pretenses and unrealities. Such people can turn on tears and other emotions at will and use the language of highest honor to serve the most despicable ends.

LRH, Science of Survival

The administrative method with which we (Sam, Dan, Eric, me) thought the goals of the company would be attained was through the standard application of LRH tech.

This policy or the thought of using it has been successfully gotten rid of through Seth's covert comments on what Wall Street thinks. The Wall Street guys who would just as soon spit on you, are apparently those who we are trying to appease. Even Bill Hamilton says to forget about Wall Street and to just concentrate on building the company. This does not mean yelling over a long distance comm line, invalidating the works of others, saying 1.1 remarks to the CEO, which cause him to distrust the staff. This means BUILD the company.

I do not know what other covert remarks Seth has been saying to you about the team. To hear the utter lie he told about Sam and to see the smiling face, while looking at me when he explained how this was true-This was a red flag.

It is also true that Seth received millions of dollars up front from you in stock. He has a 5-year contract and gets 1000.00 a day. He is so tied into this place that there is no risk. He has got his exchange up front. He does not have to produce. In addition, he can and does third party the rest of us. This is a proven fact. You know that this is true. Brilliant, isn't it?

Not one other person here made such a deal or demanded so much. We left our lives behind for a reasonable salary, a small (relative to Seth) amount of stock to help you attain your goal. We (Eric, myself, Sam, Dan) thought we were going to boom this company through the application of LRH Admin tech. To become a showcase of LRH tech. This was what you communicated to each of us was your dream during the recruitment. You had the product, the tech and all that was needed was willingness from a dedicated staff. (You do still have all three you know)

Several of us work night and day towards this goal. Yet somehow on an evening where we had already put in a 12 hour day you mention that we all "don't get it" and that "Jackie and Seth are here"? JACKIE? Who does not type? Who cannot make it to work on time? Who cannot arrange her own couriers or Fed-Ex services? Who is here soley to service her husband? Who was a major third party on your lines between you and your wife and your personal secretary? Yes, I would say there is third party.

The above is absolute fact and when I hear you cannot sleep, I feel that I must point out some obvious areas of out-ethics and the insidious nature of the communication you receive from Seth, your most trusted adviser.

Last year at this time you had few customers, 20-30 staff, personal and company debt up to your ears. This year, the Company has 0 debt, 38 million in the bank, you are personally wealthy, have your bridge to eternity available to you at the drop of a pin, a dedicated staff who are willing to work day and night and who all KNOW THE THIRD DYNAMIC TECH TO HANDLE THIS, yet you cannot sleep. Despite these stats, you actually believe your team to be incompetent, believe that they did nothing to contribute to this, believe we should clean house and you have a lawyer, untrained in business, and any third dynamic tech as your most valuable terminal.

The biggest contrary fact to this whole scene (which makes it laughable) is Ron took a group of willing people and wrote out the laws of how to win on the third dynamic. Applying this technology, and flawlessly delivering their product, this group of willing people with a worthwhile purpose will free all beings and ensure their eternity by simply applying this tech. Big Game huh?

Here all we are trying to do is get to be a billion-dollar company in the telecom industry- why don't we just apply the tech? It is simple. Yet, the game we are playing has been made into one big "Stat Push." The reason we don't is because Seth has completely undermined this.

Who is making this threat so incredible to you? What is the threat? No one is going to close our doors, no one is going to take away your eternity, no one is going to take our money. I am attaching the policy "The Stat Push" as it is what we are dramatizing. This Wall Street game has taken the company from building a business to simply a stat push. It is a very important policy and hopefully you are able to look at this from an exterior viewpoint.

Read this and hopefully it will indicate.

There is no false perception on my part and I want to win in this game. If I did not report up to you on these points I would be culpable. I believe LRH is a point of agreement for you and I and therefore we should be able to communicate about this and have increased affinity. I will also attach another policy on Administrative Skill. It is excellent.

There is one final reference here-
Discipline
SP's and Admin
How Statistics Crash
… "One of the ways an SP works to stop an activity or halt an affluence is to pick out key personnel, spread wild rumors, false and alarming stories about them.

Another way, often used in conjunction with the above is to pound key executive with alarming entheta about staff, divisions, activities. This urges the key executive to take uncalled for action and upsets things and which may lead to the dismissal of valuable staff.

Also, it is a symptom of an org under external pressure to come down on its own personnel than on the public or on real SPs." …

… "If I ever heed any 'Kill everybody' advice, it is to put the adviser up against a brick wall."

One really cannot argue with Ron.

I can only hope you will tell me all of the other data Seth has given you and then I can get you true data and help to calm this area down.

Respectfully submitted,
Denise