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SUBSECTION PAGE 1 OF 2
$4 MILLION PATIENT BLOOD MANAGEMENT SCANDAL
May 17, 2014
Blood Restricted Against Doctors' Orders
PATIENTS at a major Western Australia public hospital were used as part of a three-year pilot program that deliberately restricted the amount of blood used in many transfusions -- sometimes against the recommendation of the bedside doctor.
The program of restricting blood for WA patients which started at Fremantle Hospital in 2009 is continuing and is being rolled out across all WA public hospitals over the next few years.
It is already underway at Sir Charles Gairdner, Royal Perth and King Edward Memorial hospitals.
Two Jehovah's Witnesses whose religion forbids blood transfusions and donations were part of the taxpayer-funded WA "Patient Blood Management" (WA PBM) team who were implementing the program, which includes a "single-unit" policy being used at Fremantle Hospital to dictate how much blood certain patients can receive.
This means some patients, such as those who are not bleeding and not in an operating theatre, but need blood for other reasons, such as anaemia, can only receive one unit (usually 220ml) at a time, regardless of whether the doctor thinks more is required.
This blanket one-unit policy is a departure from standard medical practice in which the doctor decides what is best for the patient, taking into account the patient's preferences. The new state-sanctioned regimen at Fremantle Hospital means that all requests for blood transfusions for patients by attending doctors are reviewed by nominated "gatekeeper" laboratory staff.
Doctors, including senior doctors, may order blood for patients but have their orders overridden by a member of the hospital PBM team, which may be a nurse or a doctor who is not involved in the case.
Doctors at the hospital are monitored for compliance with the program.
Hospital department heads were told during the pilot program at Fremantle that using more than one unit of blood for certain patients was contrary to National Blood Authority guidelines. However, the NBA guidelines were not published until well after the pilot was finished. These guidelines, once published, did not contain an evidence-based recommendation for a single-unit policy.
A poster used to promote the single unit policy claims that the policy is in accordance with the 2001 guidelines of the nation's peak health body, the National Health and Medical Research Council. There is no such policy in those 13-year-old guidelines.
The overall effects of the scaled-back transfusions or bloodless drug alternatives on the health of the patients in the blood pilot are unknown.
Results published in an online medical journal by the WA PBM team stated only that in some patients undergoing knee surgery at Fremantle Hospital, the average length of stay in hospital decreased by one day, from 5.9 to 4.8 days.
Two of the authors of the online article, Jehovah's Witnesses Shannon Farmer and Axel Hofmann, neither of whom is a medical doctor, have declared that some of the pharmaceutical companies that make the bloodless alternative drugs had paid them consulting or lecturing fees or travel support.
Dr Neale Fong, who was WA Director-General of Health when the WA PBM proposal was given the go-ahead in 2007, said he was not aware that sometimes drugs were given to patients in place of blood transfusions.
Dr Fong also said he was not aware at the time of approval that the PBM program was being recommended by Jehovah's Witnesses.
"My understanding, even at this point of time, of PBM is that it's about autologous use of blood and savings (of blood) from operations, from the surgical procedures," he said. "That's the bit I remember. I'm not sure what the other aspects are. It was years ago."
Autologous use of blood is using pre-donations of the patient's own blood or blood salvaged during surgery.
Dr Fong said the risks to the patient of the drugs used as alternatives to transfusion should be considered.
"Patient safety is always the highest issue here," he said. "It's not savings or efficiencies. It certainly is always a case of patient safety, always."
When told that the consulting doctors' orders for blood were sometimes overridden at Fremantle Hospital, Dr Fong said: "I would have some concerns over that."
What is Patient Blood Management?
Patient Blood Management is defined as identifying patients "at risk" of transfusion and providing a management plan aimed at "reducing or eliminating the need for allogeneic transfusion". Allogeneic blood is donated blood. The rationale is that this will reduce "inherent risks, inventory pressures and the escalating costs associated with transfusion".
PBM developed from "bloodless" medicine and surgery which originated in the US in mainly community hospitals that were seeking a marketing advantage in the competitive American health market by specifically catering for Jehovah's Witnesses, whose religion forbids blood transfusions.
PBM may be used in patients undergoing surgery as well as patients with non-surgical disorders such as anaemia, or blood cancers such as leukaemia and lymphoma, or other medical disorders. PBM has also been used in patients with massive bleeding.
It is used in patients who have elective surgery, are admitted to hospital for acute health problems (rapid onset and/or a short duration), or who are in intensive care.
National Australian guidelines are being developed for use of PBM in newborn babies, children and pregnant women.
PBM strategies to minimise or avoid blood transfusions include the use of manufactured pharmaceutical drugs, such as intravenous iron and ESAs (erythropoiesis-stimulating agents), and the use of equipment such as the cell salvage machine which collects, filters and washes the patient's own blood, which is later reinfused. Another PBM strategy is acute normovolemic hemodilution, in which the patient’s blood is withdrawn and the lost volume is replaced with "volume expanders". The withdrawn whole blood is then transfused back during or after the procedure.
The drugs used in place of blood transfusions, the cell salvage machine and the acute normovolemic hemodilution technique carry risks of adverse events. Two of the drugs, including the ESAs, and one of the volume expanders have a Black Box warning, which means they are potentially fatal.
The National Blood Authority (NBA) in its newly released guidelines on Patient Blood Management in surgical patients says more clinical evidence is required to support the use of PBM programs. The NBA said it could only make a grade C recommendation concerning the adoption of PBM programs. A Grade C recommendation, which is the third lowest of four levels, means the evidence provides some support for the recommendation but care should be taken in its application.
May 20, 2014
Sect Members' $4M For Blood Program
THE WA Department of Health has paid almost $4 million to two Jehovah's Witnesses, neither of whom is a medical doctor, to roll out a statewide program to cut blood transfusions to thousands of patients being treated in public hospitals.
The Sunday Times can reveal the two men, Axel Hofmann and Shannon Farmer -- whose religion is vehemently opposed to blood transfusions -- won the lucrative five-year contract in 2008, with an American associate, without having to bid for the job.
The contract was approved by the Health Department for exemption from the usual open-tender rules because, according to the department, the trio were the only ones with the skills to plan and implement a "patient blood management" (PBM) program in WA.
The aim of the WA PBM is to identify patients "at risk of transfusion" and implement a management plan aimed at "reducing or eliminating" the need for transfusions using donated blood. It also aims to reduce the potential risks to the patient and cut the costs associated with transfusion.
However the national body charged with overseeing a safe blood supply to Australians says more evidence is required to support the use of PBM programs and the WA Health Department has failed to provide conclusive data that confirm the program has proven health benefits across the whole patient population.
The Sunday Times can also reveal:
The man who championed the introduction of PBM to WA was the former Chief Medical Officer, Dr Simon Towler, who has known Mr Farmer professionally since the early 1990s.
The PBM rollout was given the go-ahead by the Health Department after receiving presentations from Mr Farmer and Mr Hofmann in 2007.
The department told The Sunday Times the religion of the two men was "known to the Department's State Health Executive Forum prior to contracts being rewarded (sic)".
However, Dr Neale Fong, who was WA Director-General of Health and head of SHEF at the time, told The Sunday Times that he did not think he was told that the men were Jehovah's Witnesses.
"I don't believe so," he said. "You've surprised me by mentioning it. I think it should have been declared."
However, Dr Fong said it probably would not have made any difference to the decision.
"If they are just motivated out of their own religious background, well, that just goes to the motivation, but the issue should still be able to be adjudicated on its own rights," he said.
"But I think from an ethical point of view it would have been useful for them to declare it."
Dr Fong said Dr Towler was the sponsoring executive of the program, which meant he was responsible for the policy related to it and for making sure "all the ducks were lined up" and that it made sense.
Dr Fong said the PBM proposal had made sense in terms of health economics and he had been very pleased to support it.
He stressed that the key consideration for any initiative was the welfare of the patient.
"Patient safety is always the highest issue here," he said. "It's not savings or efficiencies, it certainly is always a case of patient safety, always."
When told that the consulting doctors' orders for blood were sometimes overridden at Fremantle Hospital, Dr Fong said, "I would have some concerns over that."
Dr Fong stood down as Director-General in January 2008, three months before the contract was awarded.
"God knows what happened to (PBM), I don't know," he said.
The contract was for the "Implementation of a System Wide Patient Blood Management Program to the Department of Health" -- the first time in the world, it is claimed, that a PBM program has been applied across a whole taxpayer-funded health system.
According to the Health Department, PBM is now operating at Fremantle, Royal Perth, Sir Charles Gairdner and King Edward Memorial hospitals.
The Sunday Times has established that the contract was awarded on April 10, 2008, through an Austrian entity called "Medicine and Economics" (M&E), which is owned by Mr Hofmann, a health economist who has a base there.
Under the contract, M&E was paid $3,901,703. The money was paid into a bank account in Austria, according to the Health Department.
It is not clear why the contract was awarded to German-born Mr Hofmann's Austrian business entity, since he does not appear to have had any previous experience in establishing and operating a PBM program. He does not have a degree in medicine but he has a Masters in economics and a PhD in health science.
Mr Farmer, who has no tertiary qualifications, and a California-based associate, who also is not a medical doctor, but has degrees in economics and health science, have been involved in implementing such hospital programs, even though on a much smaller scale than the statewide program in WA. Mr Farmer was the co-founder of a "bloodless" surgery program in 1990 at Fremantle's Kaleeya private hospital.
During the term of the M&E contract, it is also apparent that Mr Hofmann and Mr Farmer received payments as consultants or guest lecturers from the pharmaceutical companies that make the often expensive drugs used as substitutes for blood transfusions.
Mr Hofmann has declared payments or travel support for consulting or lecturing from at least 14 pharmaceutical companies. Mr Farmer has declared that he received lecturing or consulting payments or travel support from at least six pharmaceutical or related companies.
The Sunday Times has tried to contact both men without success.
Dr Towler, who has long been interested in alternatives to blood transfusion and has published articles on the subject in peer-reviewed journals, told The Sunday Times that he commissioned the strategy document for the WA PBM program.
"It was my idea," said Dr Towler, who is now the clinical co-lead at Fiona Stanley Hospital. "It was a completely legitimate project. We chose to engage people with substantial expertise in delivering hospital-based programs."
Dr Towler referred questions about the tender and terms of the contract to the department, but told The Sunday Times: "Through PBM, we have saved more than we spent on the project."
Current Chief Medical Officer Gary Geelhoed said the M&E contract -- which was awarded several years before he came into the job -- had undergone due diligence and had been given a formal exemption under the tender rules.
"This concept was so new," Dr Geelhoed said. "They got selected because there was no one else around in Australia."
However, programs along the same lines had been operating in hospitals in the US and western Europe for years before the plan was put forward for the WA health system.
Asked why an Austrian entity was awarded the WA contract rather than tenders being sought from around the world, Dr Geelhoed said, "Well, I could not comment on that."
He said the five-year contract was not renewed last June 30 when it expired because the consultants had fulfilled their role, which was to spread the PBM concept across the health system, introduce the idea to clinicians and hospital staff, give lectures, produce written material, and provide a "blueprint" of how to implement the program.
"The outside consultants educated people. They got people onboard," he said.
Both Dr Towler and Dr Geelhoed argued strongly that they believed Mr Hofmann and Mr Farmer's religion was irrelevant to their getting the contract.
Health Minister Kim Hames told The Sunday Times he was aware of the circumstances surrounding the PBM contract because questions had been raised in 2012. The questions were raised by one of these reporters.
"After then reviewing the information on the program, I was fully satisfied with the way it was implemented," Dr Hames said.
"I remain confident that there is nothing inappropriate about the nature of the contract or the program itself."
The program officially started in WA in July 2008, but the rollout of PBM across the whole hospital system was not announced until April 2011, with a brief media release quoting Dr Towler. There was no mention of the involvement of any external contractors.
The Sunday Times does not suggest that Dr Towler, who is not a Jehovah's Witness, obtained any financial benefit from the PBM contract or was motivated by any other factor other than a genuine belief in the project.
The WA PBM initiative has been promoted, at international doctors' conferences and in medical journals, as being a world leader.
However, there has been no mention that Jehovah's Witnesses, whose religion not only prohibits transfusions but also bans blood donation by members, have been key players driving the WA PBM project or that millions of dollars were spent on their services.
And the results of the introduction of PBM, in dollar terms or patient outcomes, have not been published in any of the WA Health Department's annual reports between 2008 and 2013.
There is not a single mention of it in the Health Department's 2012-13 annual report for the Metropolitan Health Service, which includes Fremantle Hospital.
Dr Geelhoed told The Sunday Times: "It's been a very successful program and saved a lot of money. The program pays for itself. I'm happy to say that."
In March, The Sunday Times asked Dr Hames whether he believed the $3.9 million M&E contract was "value for money" for WA taxpayers. The Minister has failed to respond.
The Patient Blood Management (PBM) program has resulted in improved patient outcomes such as fewer complications, reduced length of stay, fewer infections and reduced usage of red cell blood products, the WA Health Department claims.
The Sunday Times asked the Health Department on March 28 to provide the results of patient outcomes from more than five years of PBM initiatives in WA.
More than five weeks later, the department provided four graphs on superficial (skin) infection rates and hospital length of stay.
There was no rationale provided to show how superficial infection rates might be caused by blood transfusions.
According to the US Centers for Disease Control and Prevention and other medical establishments, superficial infections involve the skin only.
The four graphs showed data from 2008/9 to 2012/13 in selected patients.
Two graphs showed the superficial infection rates along with red cell transfusion rates in hip and knee replacement patients.
The graphs showed superficial infection rates generally went down as transfusion rates went down.
But both graphs showed superficial infection rates in one year went up as the red cell transfusion rate came down. In another year, superficial infection rates in knee replacements went down as transfusion rates went up.
The two other graphs supplied showed changes in length of stay in hip or knee replacement and heart surgery patients.
The graphs show that the length of stay was higher in patients who had a blood transfusion.
There were no data to show how blood transfusions directly affect length of stay, including whether patients who had a blood transfusion had a longer length of stay because they were sicker.
In all graphs, no actual patient numbers were given, only percentages, so it is unknown how many patients in these select groups were included in the statistics.
The department did not produce any results for "fewer complications" apart from the superficial infection rates.
The "reduced usage of red cell blood products" is not a patient outcome.
The department also did not provide any data on whether patients who were refused a blood transfusion or received a restricted amount of blood under the PBM program suffered any adverse effects or were readmitted to hospital.
The department said it would not be commenting further on the issue of the PBM program.
In an online medical journal article last year, the WA PBM team reported on the implementation of the PBM program from 2009 to 2011 at Fremantle Hospital, in which some requests by doctors for blood for their patients were refused and some patients were given restricted amounts of blood.
The only specific patient outcome reported for the three years was that in some patients undergoing knee surgery, the average length of stay in hospital decreased from six to just under five days.
The main outcome reported was that there was a decreased number of blood transfusions.
There were no reported results on whether patients' health benefited or was adversely affected by not being given a blood transfusion, or by being restricted to a single unit of blood at a time.
The article's conclusion was that the PBM program "likely improved outcomes" by reducing patient exposure to donated blood transfusions.
June 1, 2014
Blood "Conflicts" Not Declared To National Body
THE National Blood Authority appointed a Perth Jehovah's Witness, whose religion bans the donating or receiving of blood, as the key "consumer representative" on a federal government panel developing new transfusion guidelines for the nation's hospitals.
Shannon Farmer was described by the NBA at the time as a "consumer" and "independent consumer advocate".
But Mr Farmer is in no way a consumer, because Jehovah's Witnesses are forbidden to have transfusions, and he has spent many years advocating for fellow Witnesses in Perth hospitals to ensure they did not receive blood.
The NBA says Mr Farmer never formally declared that he was a Jehovah's Witness, though a biography he tabled at the first meeting of the NBA's expert panel in July 2008 mentioned his advocacy role for Jehovah's Witnesses.
The NBA also confirmed Mr Farmer didn't declare he had been consulting since 2007 to an Austrian business, Medicine & Economics (M&E), that is involved in commercial tendering for PBM projects around the world.
The Sunday Times revealed two weeks ago that Mr Farmer and two M&E colleagues got a $3.9 million contract in April 2008 to roll out a Patient Blood Management (PBM) program in the state's public hospitals.
The NBA said it would review the details provided by The Sunday Times on Mr Farmer's religious affiliation, his consultancy work for multinational pharmaceutical companies, and his role with M&E.
"The NBA believes any potential conflict of interest, real or perceived, should be declared," a spokesman said.
Mr Farmer, who has no medical qualifications, was appointed in 2008 to the expert panel developing six national guides on clinical blood use.
He was also the sole consumer representative on the clinical/consumer reference groups (CRGs) for the first two guides, which have to be approved by the National Health and Medical Research Council.
After the NHMRC queried the NBA about consumer representation in late 2011, Mr Farmer stopped being listed as a "consumer" and morphed into a "researcher" and "PBM advocate". He continues to serve on the panels in that role.
For many years, Mr Farmer has been a member of three international "medical societies", two of which aim to minimise blood transfusions or avoid them altogether, and a third that focuses on alternatives to transfusion.
He has also received fees for consulting and lecturing from multinational pharmaceutical companies, such as Johnson & Johnson, which paid him for lectures at several international medical conferences in 2010 and 2011.
None of these potential conflicts of interest were declared in the first two guides, which were signed off by the NHMRC in November 2010 and November 2011.
In the third guide, approved in July 2012, Mr Farmer only declared his "patient advocacy" role with the three medical societies.
By the fourth guide, signed off in December 2012, he had belatedly declared his earlier links with Johnson & Johnson.
The chairs of the CRGs did not consider any of these declared interests were of "sufficient conflict" for Mr Farmer to excuse himself from the panel's discussions.
"On the evidence I have seen, (Mr Farmer) was appointed because of his considerable depth and breadth of experience and expertise in PBM coupled with extensive patient advocacy. This is well supported," the NBA spokesman said.
"I am also satisfied with the arrangements for consumer representation at the time."
Mr Farmer did not respond to questions put to him by The Sunday Times.
May 24, 2014
AWA Hospitals' Patient Blood Management Program Needs "Independent Review"
WA's Patient Blood Management program needs to be independently reviewed, an eminent human rights lawyer says.
Associate Professor Bebe Loff, ethicist and director of the Michael Kirby Centre For Public Health and Human Rights at Melbourne's Monash University, said an external inquiry, perhaps by an Ombudsman, was required.
Prof Loff made the call after The Sunday Times revealed last week that WA's PBM program -- aimed at cutting blood transfusions to patients in public hospitals -- was spearheaded by two Jehovah's Witnesses.
Prof Loff, who has been on the World Health Organisation's ethical review committee and the Australian Health Ethics Committee, said it was very important to maintain public confidence in the sensitive area of blood transfusion.
"The raising of doubt about the safety of blood that might be used for transfusion can have an impact on people's willingness to accept blood products and their willingness to donate," she said.
Prof Loff said the intent of the program -- to make best use of blood, an extremely limited resource -- made intuitive sense.
But the program's implementation in WA and the selection of the two men chosen to do it -- Shannon Farmer and Axel Hofmann, whose religion is opposed to blood transfusions -- raised questions.
Professor Loff said the intent of the PBM made "intuitive sense".
Prof Loff said the Government did not appear to have regarded the fact they were Jehovah's Witnesses as a matter of importance, rather that it was their capacity to do the job that mattered.
Ordinarily a person's religious background might not be relevant, she said, but there was a very widely known position on the part of Jehovah's Witnesses around the use of blood and blood transfusions.
"I would have thought it was entirely proper and, in fact, required to inquire into this further," Prof Loff said.
Questions have been raised about Axel Hofmann's suitability for the PBM program.
Well-known WA GP Dr Joe Kosterich echoed the call for an external review and emphasised it should not be conducted by anyone connected to the Health Department.
Dr Kosterich said reducing the need for blood was a good idea because transfusions could cause a response in the body that made recovery a bit slower.
Also, if elective surgery patients were prepared properly beforehand and blood loss was avoided during operations, it would be better for them.
But he questioned the contract with Mr Farmer and Mr Hofmann.
"People who are Jehovah's Witnesses are probably the worst people to implement this sort of program because there is a perception that they are doing it for religious, not medical, reasons," he said. "I think it is an issue of perception."
"If you wanted to talk about the side effects of the contraceptive pill, probably if you wheeled out a Catholic priest, they might say, 'Well, you're against the Pill on religious grounds, not medical grounds, you're just trying to make it look like you're using medical reasons'."
Prof Loff said some of the literature by the two men seemed to convey the view that transfusion was dangerous.
"Whilst that may sometimes be true and it may sometimes be the case that blood transfusions are given where alternative approaches could do the job, I find it very hard to accept a position that conveys an increasingly negative view of transfusion," she said.
A spokesman for the Australian Red Cross Blood Service said it supported PBM and its intention to improve transfusion practices and outcomes.
Shannon Farmer was hired as a consultant for the PBM program.
THE two Jehovah's Witnesses who got almost $4 million of taxpayers' money to introduce a Patient Blood Management program in WA are involved in a much bigger contract to do the same in the European Union that is costing about one tenth of the price.
The EU contract, worth just 300,000 euros ($443,000), is for the establishment of pilot programs in major teaching hospitals in five countries -- spread across the length and breadth of Europe -- and the development of a "how to" PBM manual and training course for all 28 member states.
Axel Hofmann and Shannon Farmer have been hired as consultants by the successful tenderer, the Austrian Institute of Technology, a partly government-owned R&D organisation in Vienna.
Mr Hofmann, a health economist who lives in Austria, will be on the core project team. Perth-based Mr Farmer, who co-founded a "bloodless" surgery program at Fremantle's Kaleeya private hospital in 1990, will be a member of a seven-member international "expert panel" who will act as advisers to the project.
As The Sunday Times revealed last week, Mr Hofmann, Mr Farmer, and an American associate were paid $3,901,703 by the WA Health Department to implement a "system-wide" PBM program in the state's public hospitals.
The net result of the five-year contract was that PBM strategies have been implemented in just four hospitals -- Fremantle, Royal Perth, Sir Charles Gairdner and King Edward Memorial. The roll-out began at the 450-bed Fremantle Hospital in 2009 with a three-year pilot scheme.
Under the 30-month EU contract, AIT has to develop pilot programs in five teaching hospitals, each with a minimum of 750 beds, that have "no or moderate" implementation of PBM. Initially, the project team must do a "baseline evaluation" of patient outcomes and transfusion risk and blood use at each hospital.
The team also has to do an overall evaluation of the pilots after a year, analysing the strengths and weaknesses of the program.
A key criterion of the tender was that the project head was medically qualified, with experience in blood transfusion. Mr Hofmann and Mr Farmer are not medical doctors.
The AIT team leader has been named as Professor Dr Hans Gombotz, who retired in March as head of the Department of Anaesthesiology and Intensive Care at Linz General Hospital in Austria.
The Health Department failed to respond when asked about the cost differential.
Axel Hofman, Shannon Farmer, Aryeh Shander, and Hans Gombotz have really been racking up the frequent flyer miles. See this 2019 "The South African Medical Journal" article.
For decades, the WatchTower Society has repeatedly portrayed itself to its followers and the general public as one of the most cost effective and cost efficient organizations on the face of the earth. Why? Because, the WatchTower Society is the organization chosen by God, and directed by God, to do His earthly work in the "last days" of "this system of things".
While reading the following HENWOOD court case, ask yourself not only how cost effective and cost efficient was the WatchTower Society for the last quarter of the 20th century with regard to what is assumed to be one of its largest expenditures, but also ask yourself whether such was simply due to incompetence at all levels, or whether such was possibly due to other reasons which seem to ooze out of the Court's opinion.
IN RE BANKRUPTCY OF RFS ECUSTA INC. was the 2002-03 North Carolina federal Bankruptcy case of a Cigarette and Bible paper manufacturer which owed the Watchtower Bible and Tract Society $117,685.39 for accumulated returns amounting to 3 trailer loads over the 14 month period preceding the filing of bankruptcy -- during which it is arguable that the WBTS should not have been doing business with this company given its instability, ie, purchase by a foreign investor, ongoing labor dispute, etc.
"Although Watchtower never entered into a contract with Paper Corp. or Fraser, the following arrangement developed over time: Watchtower placed orders through Henwood and Paper Corp.; Fraser manufactured paper at its mills and sold it to Paper Corp. at a price negotiated by Fraser and Paper Corp.; Paper Corp. then added a gross margin determined by Henwood and Dan Romanaux (Romanaux), the president of Paper Corp. during the relevant period; Paper Corp. then sold the paper to Watchtower." (Note that "Fraser" is the manufacturer from whom Paper Corp purchased the paper which was sold to the WatchTower Society.)
"Henwood, as the Paper Corp. sales representative, was intimately involved with, and controlled the Watchtower account on a day-to-day basis. He communicated with Watchtower and Fraser regarding, among other things, the quality and volume of the paper purchased by Watchtower. He also attended quarterly (and other) meetings where paper quality, inventory and other issues were discussed. From 1991 through 1999, Watchtower was Henwood's only account. He neither serviced nor attempted to develop other accounts during this period."
"Despite having only a one-client book of business, Henwood was the highest paid sales representative at Paper Corp. for each year between 1985 and 1999. Henwood's financial success was due, in part, to the unusually high gross margin that he, in consultation with Romanaux, set on paper sales to Watchtower. The average gross margins on the type of paper purchased by a client of Watchtower's size were typically in the range of 3% to 4%; the gross margins charged to Watchtower were 11% to 13% and higher. This resulted in relatively high commissions for Henwood, who in 1998 earned commissions in the amount of $1,329,692.68 and in 1999 earned commissions in the amount of $1,007,038.74."
"In 1995, Wayne Rittenbach assumed responsibility for the entire United States purchasing operation at Watchtower. As the supervisor of all of Watchtower's purchases, Rittenbach reported to Watchtower's Operations Committee, which was responsible for Watchtower's operations in the United States. In servicing the Watchtower account, Henwood worked directly with both Rittenbach and Ralph Lindem (Lindem), a paper buyer for Watchtower who began reporting to Rittenbach in 1995. Beginning in approximately 1997, Watchtower, through Rittenbach, began to ask Henwood specific questions about the cost components of the paper Watchtower purchased through Henwood (i.e., those factors that affected the total price)." ... ... ..."In March 1998, Watchtower's Operations Committee met for its quarterly meeting. The agenda for the meeting included a discussion of the pricing of paper purchased by Watchtower from Paper Corp. Henwood attended the meeting and was aware that Rittenbach intended to present various graphs and pricing indices that compared the price Watchtower was paying to industry trends. However, after consulting with Lindem, Rittenbach decided not to raise the issue openly at the quarterly meeting." ... ... ..."By a letter to Romanaux dated March 16, 1999, Rittenbach renewed Watchtower's requests for price information by asking Paper Corp. to provide specific information." ... ... ...."Subsequently, on April 24, 1998, Rittenbach met with Henwood and Romanaux for the specific purpose of discussing the pricing of the paper Watchtower had been purchasing through Henwood. According to Rittenbach, he received 'nothing of any value' on the issue of price justification at this meeting." ... ... ...In an internal memorandum to the Operations Committee dated July 15, 1998, Rittenbach expressed concern about Paper Corp's failure to respond to Watchtower's inquiries about pricing. ... ... ...
By a letter to Romanaux dated March 16, 1999, Rittenbach renewed Watchtower's requests for price information by asking Paper Corp. to provide specific information.
"I was very clear with him in front of anybody who wished to - - - any Watchtower people who were around, that I felt my responsibility to my company and to [Watchtower] was to make sure that we were fully and completely competitive, because I recognized that they had the option at any given time, sans a contract, to go out and purchase a similar quality and grade from anyone in the world. And, if they were successful in doing that, with a product equal to what we were supplying, that I either had to meet that price or give them a better price or lose the business. ... When [Rittenbach] asked about the costs, I deflected it by the statement I just gave you. That was my response to his request for costs." ... ... ..."Rittenbach also testified that his disclosure to Henwood that Watchtower was interested in looking at the marketplace for competitive costs led to some negative reaction from Henwood. Rittenbach testified:'I mean a significant negative reaction. I remember some instances where after discussions - - I remember one in particular, a discussion on the way home from the Madawaska Mill in the airplane. There was a very animated discussion on the part of Mr. Henwood trying to convince us of why it would not be appropriate to go looking to the marketplace and why it would be inappropriate for us to contract our paper - - competitively bid our paper.'"
"... we also realized that our business was large enough to justify inquiry to the paper mill directly. ... - - it seemed like the time was right. Our volume was enough so it was time to make that inquiry."
1990s Scandals in the Island of Malta
Whenever it has so fit their purposes, over the decades, the WatchTower Society has repeatedly reminded both its members and informed non-members that WatchTower "Bethelites" must take a "vow" of poverty, and that Bethelites as high as the President of the WatchTower Society and as low as a 19 year-old broom-pusher ALL receive the exact same monthly room, board, and meager stipend.
That is why TWICE during the 1990s, an uproar arose on the island of Malta during the District Convention visits of Italy Branch Coordinator Walter Farneti and WatchTower President Milton G. Henschel, and both their wives. Previously, when WatchTower officials had visited Malta, they would stay with one of the families of the 500 local Jehovah's Witnesses -- such being considered quite a privilege by the locals.
However, in 1992, from the 27th till the 30th of April, the Henschels and the Farnetis lodged at one of Malta's five-star hotels, THE HILTON INTERNATIONAL HOTEL. The bill for the two rooms reportedly was equal to the wages of a local laborer for three months. Some locals also took offense when the four JW celebrities spent time and money taking multiple "tourist" trips rather than spending time in field service with local JWs, and allowing local JWs to show them the island.
Knowing that Henschel and Farnetis had been made aware of such complaints, Maltans expected that Henschel's Convention visit in April 1996 not only would be more discreet, but possibly some gesture of apology might be made to the locals. They were wrong! Instead, in 1996, the four WatchTower celebrities stayed at Malta's premier five-star luxury hotel, THE SAN GORS CORINTHIA HOTEL.There, room rates were 150% to 200% more expensive than previous. Reportedly, the indiscretions of the Italy Branch Coordinator and the WatchTower President motivated several local JWs to reconsider in whom they had trusted their eternal futures.
The Honesty and Integrity of Pastor Charles Taze Russell
This is a free country. The right is freely conceded to every man to have his own opinion about the Bible and what it teaches. Furthermore, every sincere and devout student of the Bible, who is studying to know God's will, in order to do it, is entitled to respectful treatment. Who are we that we should bear hard feelings to a man because he does not interpret the Bible according to our doxy!
Is Pastor Russell entitled to respectful treatment in his role as an exegete and expounder of the Bible? We think not, for two reasons -- one is his lack of scholarship, and the other is his lack of character. This latter is by far the most serious reason. When a man gives evidence of a sad lack of principle, when he shows himself wanting in those essential and fundamental virtues of truthfulness and honesty, those commonplace virtues which are necessary to justify a man's claims to moral respectability, he forfeits all right to considerate treatment when he gets up as a religious teacher and leader. We are excusable for regarding him as a wolf in sheep's clothing.
What is some of the evidence against the character of Pastor Russell? He has been charged several times through the public press with many gross offenses against morality. Twice, he has gone into court and tried to have those dark stains removed from his character, and both times he has signally failed! He has gone out of court in a worse plight than he walked in. The Brooklyn Eagle charged him "with defrauding his wife of her dower interest, with having his name sensationally connected with those of other women, with giving himself out as an interdenoninationalist, when in fact he is connected with none, but opposed to all, with publishing himself as giving addresses to great crowds in important places, where he has not spoken a word at all, with seeking to dupe certain ministers into supporting daring transactions, with being connected with lead, asphalt, and turpentine companies, with selling, or causing to be sold, "Miracle Wheat" at $60 a bushel, with influencing the sick and dying to make their wills in his favor, with engineering the sale of a property worth $35,000 for $50 for the purpose of defrauding others." This is a formidable list, and if the half is true, Russell merits the reprobation of all men who have a respect for decent morality, and especially of all those who have a reference for the Christian religion. He sued the Brooklyn Eagle for $100,000, and all he got was a judgment of the court against himself.
Rev. J. J. Ross, pastor of James Street Baptist Church, Hamilton Ont., Canada, charged Pastor Russell with many of these same delinquencies, and in addition asserted that "he never attended the higher schools of learning, knows comparatively nothing of philosophy, systematic or historical theology, and is totally ignorant of the dead languages, and yet, he is successful in making his disciples believe that the most difficult passage in the Old Testament, and the book of Revelation are as simple as a sunbeam to him. Pastor Russell was never ordained and has no church affiliation." A second time, Pastor Russell tried to cleanse his besmirched character by a libel suit, and a second time ignominiously failed. Under oath, he admitted the truth of every accusation made against him. His wife sued for a divorce on the grounds of cruelty and of having wrong relations with other women. The court, after hearing the evideuce, granted the divorce and allowed alimony.
The effrontery of the man almost passes belief. Take this specimen from Rev. J. J. Ross's account of the libel suit in Hamilton, Ont., Canada: "Do you know Greek," asked the attorney. "Oh, yes" was Russell's reply. Here, he was handed a copy of the New Testament in Greek, by Westcott and Hort, and asked to read the letters of the alphabet, as they appear on the top of page 447. He did not know the alphabet. "Now," asked Mr. Staunton, "are you familiar with the Greek language?" "No," said Mr. Russell, without a blush. He then admitted that he know nothing about Latin and Hebrew, had never taken a course in philosophy, systematic theology, and had never attended any of the schools of higher learning. After first swearing point blank that he knew all those things, he swore point blank that he did not know them, and lacked the self-respect to blush when he did it.
In perfect keeping with this colossal effrontery, he still goes around the country pretending to a high order of expert knowledge. We recently heard him expound in a most learned fashion the Abydos tablet, showing how it "fully agrees with Genesis, and is often corroborated by tho Greek and Egyptian historians Herodotus and Manetho. It shows Adam as the first Pharaoh, and Noah the twentieth, while the intermediate eighteen correspond with Genesis with remarkable accuracy. Mona's wife was Shesh -- Hebrew, Ish-woman. Her first son was Pharaoh II -- Greek Teta Khent -- guilty one; Hebrew, Kanight; Latin, Athos; English, Cain. The tablet for Abel represents him as the non-resistant one." Now, here is more information than all the learned Egyptologists have been able to get out of that Abydos tablet since it discovery in 1818. Not only so, but it is far more information, confirmatory of the Bible, than all the Egyptologists have been able to gather from all the inscriptions which they have unearthod since they began work there more than a century ago. Note that splendid exhibition of linguistic lore -- Greek, Hebrew, Latin, and English. He has again picked up the three dead languages which he swore he did not understand. Look at that large Hebrew word which is the equivalent of Cain. This is more Hebrew than Moses knew. His Hebrew for Cain is Cain; the English being a mere transliteration. We are simply helpless to properly characterize tho colossal impudence of this oft-convicted, and yet amazingly successful, impostor. -- Presbyterian Standard, 1914.
Stealing The Collection Plate
Jehovah's Witnesses Take Tacoma to the Cleaners
July 20, 2000
By Brian Winchell
Excommunications, end of the world prophecies, strict orders that mandate members shall not make friends outside of the organization; this is what the Watchtower Bible and Tract Society commonly known as Jehovah's Witnesses is all about. When they flock to the Tacoma Dome this weekend for the fourth in a series of conventions, the Watchtower Society will run away with hundreds of thousands of dollars in parking fees that, if they abide by their contract with the Dome, should stay here in Tacoma.
The situation has caused a crisis of conscience for 51 year old, Bruce Baker, a lifelong Jehovah's Witness, For the past several years, Baker served on the Watchtower Convention Committee (WCC) which oversees the functions of the Watchtower Convention at the Tacoma Dome.
In early June, Baker was excommunicated for raising concerns about the organization's financial practices and several of its beliefs, particularly the one that defines the Watchtower Society as the only conduit to God's true message. As a result of the excommunication, Bakers oldest daughter and son-in-law can no longer speak to him, and he has lost touch with his 19 month-old granddaughter. Many of his friends are likewise no longer speaking with him, for fear of being excommunicated themselves.
"This is a big boat to rock," Baker said. "I've discovered a tot or things about the organization on the Internet, and from being one of the higher ups in the area."
Just what did Baker find out that resulted in his excommunication? Last January, at a pre-convention meeting, he was told by Mark Lahfdany, another leader of the WCC, that the contract with the Dome specifically states that the Watchtower Society cannot charge for parking.
Yet at assembly halls, Baker says Jehovah's Witnesses are frequently told that to not pay the parking "contribution" would be a sin. A February letter from the Watchtower Society in New York to the Tacoma chapter refers to a "per-day suggested parking contribution" yet goes on to refer to a ticket that can be acquired in advance for all three days. Does a contribution require a ticket?
Perhaps most telling about what the Society really expects from its members is this line from the letter: "Parking Department attendants should be on hand in full force when the lots open each morning. Otherwise delegates park and do not contribute, which is unfair to those who come later and make a contribution." If the parking "contribution" is not a requirement, as the contract with the Dome states it must not be then why do attendants need to be out in "full force" to ensure that everyone contributes?
With over 10.000 attendees at the three-day convention, the Watchtower Society collects over $120,000 from the parking "donations" of one convention, money that usually goes into the pockets of the Tacoma Dome. Last Friday, Baker sent information to Mayor Brian Ebersole, city Manager, Ray Corpur, and City Council member Kevin Phelps, urging them to take action against the organization. None could be reached for comment.
What may stop them from raising the issue, however, is the fact that the Watchtower Society fills the Dome for a month straight during the down season, thereby contributing money to the local economy. And, as Baker points out in his letter to the three politicians, the New York headquarters for the organization has "strongly intimated that if the Dome tries to flex with pricing at all they wilt pull out and go somewhere else." Which leads to the question: Would we really miss them?
TOM WILLIAMS v. SANDOR PETROLEUM was a significant 1957-1959 Texas civil court case that pitted the WatchTower Society's resident attorney in Texas, named Tom Williams, against the Head of the WatchTower Society's Legal Department, and one-time WatchTower Society Vice-President, Hayden Cooper Covington. Tom S. Williams was a Houston, Texas attorney who personally represented dozens of his fellow Jehovah's Witnesses during the multitude of state and federal court cases that occurred in Texas in the 1940s and 1950s. Tom Williams handled the "dirty work" at trial level, and then acted as Hayden C. Covington's co-counsel on the numerous appellate court cases that Hayden Covington decided to take to the state and federal appellate levels. It is this "THEFT" case that very well may have motivated the other WatchTower Society Leaders to excommunicate (disfellowship) Hayden Covington from the organization; which eventually transpired in 1963.
In late 1955, four Jehovah's Witnesses, Hayden Covington, Tom Williams, Alec Joseph Sabo, and his wife, Evelyn Sabo, incorporated Sandor Petroleum Corporation as an oil and gas exploration business. At the time that Sandor Petroleum was formed, the Sabos contributed the corporation's original assets, which consisted of various oil and gas leases on about 1000 acres of land scattered about on three sections of land in Upton County, Texas. The Jehovah's Witness Combine wanted to first obtain leases on the balance of the unleased acreage before drilling was started.
In addition to performing the corporation's legal services, it was Tom Williams job to obtain the leases on the unleased portions of land. The appellate court decision does not say exactly how much of the unleased acreage that Williams was able to obtain, but Williams evidently did a good job, because the Sabos and Covington agreed to give Williams 10% of the corporation's authorized capital stock in exchange for Williams' time and cash that Williams spent obtaining those leases.
By latter 1956, Tom Williams was unhappy with the way that Sandor Petroleum was being managed (specifics not provided by court), and Williams apparently made his feelings known to the others; including his desire to sell his stock. On January 8, 1957, Hayden Covington traveled from WatchTower Society Headquarters to the Sabos home in Abilene, Texas, where Covington and the Sabos held a special Board of Directors meeting for the purpose of amending the corporation's bylaws so as to restrict the sale and transfer of Williams' stock, and give the corporation first option to purchase any of its' stock offered for sale, at a price to be fixed by appraisers. Covington and the Sabos notified Williams of the changes that same day via telegram.
Two weeks later, Williams offered to sell his stock to the Sabos, but they refused to buy it. Williams then offered his stock to Hayden Covington, but Covington also refused to buy Williams' stock. Covington and the Sabos also failed to make an offer for Williams' stock on behalf of the corporation, that is, until Tom Williams threatened to file a civil lawsuit for "CONVERSION", which is the civil law equivalent of criminal "THEFT".
Covington and the Sabos then made an offer to buy Williams' stock, but their offer was withdrawn, and Williams was advised that he would have to proceed according to the amended bylaws if he wished to sell. On February 18, 1957, Covington and the Sabos canceled Williams' two original stock certificates, and mailed Williams a new stock certificate, which had the amended bylaw printed on its reverse side. On the same date, Covington and the Sabos gave notice to the prospective buyers of Williams' stock that they would not recognize a sale, or transfer the stock on the corporation's books, unless the restrictions contained in the amended bylaw were first complied with. Tom Williams refused to accept the new stock certificate, and returned it to the corporation. The corporation thereafter returned the new stock certificate to Williams, and he again tendered it to them at the trial.
Shortly thereafter, Tom Williams filed this civil action for the "theft", or "conversion", of his Sandor Petroleum Corporation stock. Williams alleged that the "conversion" was accomplished by a corporate bylaw passed after the issuance of the stock to Williams resulting in the cancellation of his original stock certificates, issued without restriction as to their sale or transfer, and substituting in lieu thereof, a stock certificate with restrictions concerning sale and transfer. The case was tried before a jury which found that the act of canceling Williams' two stock certificates, and amending the bylaws of the corporation by making certain restrictions relative to the sale of the stock, constituted a "conversion" of said stock. A judgment was entered for Tom Williams for the sum of $27,500.00.
UNBELIEVABLY, on appeal to the Supreme Court of Texas, the Defendants/Appellants contended that Williams' two original stock certificates were not issued for money paid to, labor done for, or property actually delivered to the corporation, as required by Texas law, and that Williams' stock certificates thus were "void". The Defendants/Appellants also contended a bunch more malarkey -- none of which was "bought" by the Texas Supreme Court, which affirmed the trial court's rulings and judgment, stating in part:
The evidence shows that certificates numbers four and eight were issued to Williams for a good and valuable consideration. ... There was evidence to the effect that the corporation received and accepted legal services rendered by Williams of the value of $3,950 and that he expended $1,250 in money in behalf of the corporation. The jury found upon sufficient evidence that appellants accepted such services and money from Williams in consideration for stock certificates numbers four and eight and recognized the validity of the certificates. ... ... ...... There was no provision in the articles of incorporation, in the original bylaws or in the shares for a restriction on the sale or transfer of the stock except a provision that a transfer must be made on the stock transfer books of the corporation. Williams thus acquired 2,500 shares of Sandor Petroleum Corporation stock free of any charter limitation on its sale or transfer. His ownership of the stock and his right to sell or transfer it was a vested right and interest, subject only to the right of the corporation to manage and regulate its affairs under the laws of this state and under the provisions of its charter and bylaws. ... ... ...... Conversion is defined as "an unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another to the alteration of their condition or the exclusion of an owner's rights." ... The essence of conversion of property is the wrongful deprivation of it to the owner. Conversion may be direct or constructive. ... The evidence shows that in accordance with the bylaw restricting the sale of non-restricted stock certificates previously issued to Williams, the corporation cancelled his certificates numbers four and eight and substituted in lieu thereof certificate number nine containing the restrictions on sale and transfer. This was an unauthorized alteration of the condition of Williams' stock. Actually the cancellation of his original shares was in effect a taking of his stock and was an unauthorized and unlawful act amounting to conversion. ... The new stock certificate was enclosed in a letter to Williams from the corporation advising him of the action taken. The letter stated in part: "Please return original certificates number four and eight which are cancelled." The evidence further shows by letters from the corporation to Williams that unless the procedure prescribed in the amended bylaw restricting the sale and transfer of stock was complied with no transfer would be recognized or entered upon the books of the corporation. Williams had been negotiating with prospective purchasers of his stock. Appellants by letter advised such prospective purchasers that the corporation would not recognize a sale of Williams' stock and would not enter a transfer on its books unless the requirements of the amended bylaw were first complied with. They were wrongfully asserting and exercising an authority over a right in the stock which was adverse to and destructive of the vested property right and interest of Williams therein. ...
*** Alec J. Sabo was reared as a JW in Carteret, New Jersey. In 1946, at age 26, Alec Sabo moved to Abilene, and married a JW named Evelyn Parker, in May 1947. During WW2, Hayden Covington "unsuccessfully" represented Sabo's brother-in-law in a "draft dodger" case in New Jersey. Given Sabo's age, and having moved long distance away from friends and family soon after WW2 ended, Sabo too may have done prison time during WW2, and may also have been represented by Hayden Covington.
Interestingly, Sandor Petroleum Corp is still doing business in 2013, and is still partially owned by 98 year-old Evelyn Parker Sabo. However, the current President now is a wealthy Jehovah's Witness Investor in multiple businesses domiciled in Lousiana and California, named Walter H. Bass. Former WatchTower Society attorney, Judah Ben Schroeder, may possibly be Sandor's corporate attorney.
PIONEERS IN THE TRAVEL-TRAILER and MOBILE HOME INDUSTRIES
Visitors should first read the Texas SANDOR PETROLEUM court case above to understand that there is concrete proof that the WatchTower Society and/or its top brass were engaging in for-profit business operations in the state of Texas during the 1950s.
Given the fact that this Editor was reared as a Jehovah's Witness during the days when many WatchTower Society "Circuit Servants" (District Sales Managers) pulled travel trailers from congregation to congregation, I could not help but be intrigued when I ran across the fact that during the 1950s that "Jehovah's Witnesses" in Texas were "Pioneers" in the travel-trailer and mobile home industries. Having previously discovered and publicized the SANDOR PETROLEUM case, when we further discovered that a WatchTower "Circuit Servant" had been introduced into the management of a second Texas company, we could not help but be "suspicious" that the WatchTower Society and/or its' top brass possibly had wiggled their way into becoming "silent-partners" with the Jehovah's Witnesses who had founded and were operating that Texas manufacturing business. Our suspicion only increased when we further learned that soon after the introduction of the "Circuit Servant" into the management of that Texas manufacturing business, nationwide expansion occurred, which was quickly followed by the sale of that business to capitalize on its recent large increase in worth and future market potential -- all in only 3 years. Here is what we have discovered. Take such for what its' worth.
UNITED STATES v. CLETUS COY HENSLEE was the 1942-43 Texas federal prosecution of a 23 year-old Jehovah's Witness who had refused to be inducted into the U.S. military, when he was drafted soon after Pearl Harbor. Cletus C. Henslee was convicted and sentenced to two years in prison. Undoubtedly, Cletus Henslee and fellow DFW Jehovah's Witness Attorney Hayden Covington became well acquainted during this court case.
In 1948, in Grand Prairie, Texas, Cletus Coy Henslee began to build "trailers" of unknown kind and quantity. That new business grew quickly into the Henslee Mobile Home Manufacturing Company, which eventually was relocated to Arlington, Texas. There, in October 1954, the new corporation, Hensley Mobile Homes, Inc., was formed. Cletus Henslee also founded a Finance Company called Mobile Homes Investment Finance Company, as well as a separate wholesale distribution company, and a separate local retail sales lot. Money was rolling in. That fact apparently caught the eye of the Henslee family's fellow Jehovah's Witnesses.
In 1949, George Card and his wife, of Portland, Oregon, graduated from the WATCHTOWER BIBLE SCHOOL OF GILEAD. From 1949 until 1955, George Card and his wife were assigned by the WatchTower Cult as a "Circuit Servant" (District Sales Manager) couple to various regions of the state of Texas. In October 1955, 45 year-old George Card suddenly ceased his duties as a Circuit Servant and became "Vice President" and "General Manager" of Henslee Mobile Homes, Inc. Three months later, in January 1956, a new Texas corporation was formed as a holding company for the Henslee factory properties.
Soon thereafter, a second Henslee manufacturing plant, Casa Manana Trailer Corporation, was pursued in Waycross, Georgia. In December 1956, Henslee finalized a deal with the City of Waycross, Georgia and Ware County, Georgia, to lease a 37,000 square foot building at the Waycross Airport, for a new mobile home manufacturing plant, where operations were begun as soon as the building was remodeled. Other than that, little more is known about Henslee's Georgia operations. We will assume that Cletus Henslee did to the citizens and taxpayers of Waycross, Georgia, what Henslee thereafter did to the citizens and taxpayers of Bend, Oregon, and that the well-publicized Oregon maneuvers had been patterned after Henslee's maneuvers in establishing the barely-publicized Georgia operation.
Even before the Georgia deal was finalized in December 1956, in mid-1956, a third Henslee manufacturing facility was pursued in the state of Oregon -- George Card's home state. Henslee and Card negotiated with the Chambers of Commerce at both Salem, Oregon and Bend, Oregon, and played one against the other. By December 1957, the Chamber of Commerce of Bend, Oregon had agreed to lease to Henslee a 7 acre tract of industrial property, to which the City of Bend would construct a new road and railroad spur. The cost of the new spur and road has not been found, but the new water main/lines, supply, etc., required for the sprinkler system at the new Henslee factory cost the City of Bend a new $200,000.00 bond issue. Henslee's new Oregon corporation, Henslee Mobile Homes Manufacturing Inc., received a local bank loan of $125,000.00 for the construction of the building, and was also given local loans for equipping the new factory, which totaled $50,000.00 -- a $30,000.00 bank loan co-signed by seven local investors, and a $20,000.00 direct loan from the same group of investors. Basically, the citizens and taxpayers of Bend, Oregon were conned into putting up most if not all of the $$$$, and conned into taking all of the financial risk of this new business venture. Cletus Henslee began attempts to "cash-out" his limited investment in this Oregon operation around the same time that manufacturing operations started.
Ground was broken on the new 50,000 square foot factory on December 31, 1957. Construction took less than six months. Production of "trailers" began in June 1958 -- with Gilead-graduate and former WatchTower Circuit Servant George Card serving as the Oregon manufacturing plant's "Resident Manager" -- as well as serving as the new "Congregation Servant" of the Eugene Oregon Kingdom Hall of Jehovah's Witnesses.
In early January 1959, the seven local Bend investors received a telegram from Cletus Henslee informing them that he was going to "retire" (age 39) to his cattle ranch on the advice of his doctor due to his poor health, and that he was selling all three of his manufacturing operations for $1.5 Million to "Midwest Steel", of Dallas, Texas -- subject to the "first option" rights held by those seven Bend stockholders. Henslee offered to sell the majority shares in the Oregon corporation held by Henslee and an "Ivan Toller" (identified as the Manager of Henslee's Georgia factory) to the seven Bend investors for $70,000.00 (the corporation's debts and legal obligations stayed with the corporate entity -- thus we are unsure exactly what Henslee and Toller actually had invested in that "$70,000.00").
When those seven Bend investors did not exercise their right to purchase Henslees and Tollers stock, Cletus Henslee announced that his Georgia and Oregon manufacturing operations had been sold to Eugene Fant, a Texas investor who owned one of Henslee's steel suppliers -- New Process Steel and Supply Corp, of Dallas, Texas. An option on Henslee's Arlington, Texas operations was included.
Curiously, in June 1959, although the sale of the Oregon factory to Gene Fant was completed, Cletus Henslee, his family, Ivan Toller, and Gene Fant, all traveled to Bend to look over the Oregon operations. Bend reporters were told that Fant had also purchased Henslee's Arlington, Texas operations, as well as a fourth mobile home manufacturing operation in Arkansas.
In November 1960, the Bend, Oregon factory was closed down by unpaid creditors -- with that separate Oregon Corporation owing around $553,000.00 to local Oregon lenders, investors, and suppliers. We have not yet discovered what happened to the Texas and Georgia operations under Fant's ownership. Neither do we known what happened to George Card after the bankruptcy of the Oregon corporation. George Card and his wife seem to disappear off the face of the planet. Interestingly, the aforementioned fourth mobile home manufacturing plant purchased by Fant at the same time that Fant supposedly had purchased Henslee's operations, which Eugene Fant had briefly mentioned to the Bend media, was also "busted out" and forced into bankruptcy almost at the same time as was the Oregon operation. Interestingly, no mention of any of these purchases, or the ownership or operation of any of these separate corporations, are included in the now deceased Eugene Fant's business biography.
Is anyone else reminded of the GOOD FELLAS restaurant bust-out segment? Anyone else wonder how many similar, but smaller and unpublicized, JW-owned business profit-taking scenarios may have occurred over the decades? There is an unconfirmed rumor that for decades thereafter at WatchTower Cult HQ in Brooklyn, New York, that "Bend, Oregon", was known more aptly as "Bend-Over, Oregon".
We also ran across several other HALF-TRUTHS and LIES told during the BEND, OREGON SCAM. First, in the 1958 local newspaper article in which George Card introduced himself to the community as the new "Congregation Servant" of the Eugene Oregon Kingdom Hall of Jehovah's Witnesses, George Card failed to mention that he was "Vice President" of the Henslee Mobile Homes, Inc., and that he had relocated to Bend to work as the "Resident Manager" at the new factory. George Card simply related his graduation from the WATCHTOWER BIBLE SCHOOL OF GILEAD, and that thereafter, he had served as a WatchTower Society "Circuit Servant" in Texas. George Card told the reporter that he had ceased serving as a "Circuit Servant" in Texas, and had relocated to serve as Bend's "Presiding Minister" due to his "ill health" -- without Card mentioning that he had been working as the General Manager of the Henslee factory in Arlington, Texas, since October 1955.
During Cletus Henslee's negotiations with the Bend Oregon Chamber of Commerce, Henslee apparently also misled them into believing that he was going to relocate his main offices from Texas to Oregon. In fact, in 1957, the Bend CoC publicly announced to local businessmen that if their negotiations with Cletus Henslee were successful that Henslee and his family were going to relocate to Bend. Cutely, Cletus Henslee placed one of his mobile homes on a trailer lot owned by a local JW, and the Henslee family did in fact stay there several weeks while the new Oregon factory was being constructed. However, they thereafter returned to their mansion in Texas. Additionally, while it may have been true that Henslee had "ulcers", it soon became apparent that Henslee never had any intentions to "retire".
In fact, starting in the early Spring of 1959, Henslee Mobile Homes, Inc., began purchasing additional tracts of land for the construction of additional manufacturing facilities at Arlington, Texas, including a tract that contained a residential home, which was converted into a new Henslee Manufacturing office building. There is no further evidence -- other than their claims -- that Henslee actually sold his ownership of the Texas corporation to Eugene Fant. In fact, Henslee trailers and mobile homes continue to be manufactured in Arlington, Texas throughout the 1960s under the management of Cletus Henslee. Additionally, at some point after the departure of George Card, around 1965-66, Card was replaced as the "Vice-President" and "General Manager" of Henslee Mobile Homes, Inc. by Cecil A. Rainwater (see below), who also became the "Congregation Servant" at the local Grand Prairie Texas Congregation of Jehovah's Witnesses.
Finally, in January 1969, Henslee Mobile Homes, Inc. was sold to a Dallas corporation named Republic Gypsum Company. Henslee Mobile Homes, Inc. possibly was valued as much as $8.5 MILLION at the time. Stock ownership is unknown, but Cletus Henslee was still "President" when the sale occurred. Thereafter, business was conducted under a new corporation called Republic-Henslee, Inc.
DANIEL K. BURRY and SARA BURRY v. NATIONAL TRAILER CONVOY, INC. Visitors should first read our summary of National Trailer Convoy, Inc. to understand that at all times regarding this court case, CONVOY was managed by Cecil A. Rainwater, "Congregation Servant" at one of Tulsa's two Kingdom Halls, while the other Congregation Servant, Chester Brazeal, also worked at the company. Other JWs undoubtedly also worked at CONVOY. WatchTower HQ and/or top HQ officials likely had a piece of this profitable pie. Rainwater and others were intentional CROOKS, as indicated.
United States Court of Appeals, Sixth Circuit. November 25, 1964. (edited)
Plaintiffs, who are husband and wife, sued to recover unpaid minimum wages and overtime compensation, liquidated damages and attorneys' fees under the Fair Labor Standards Act.The USDC entered judgment for plaintiffs, awarding $5,447.73 to Dan Burry and $2,512.73 to Sara Burry; and fixed attorneys' fees at $2,000.
Defendant, whose home office is in Tulsa, Oklahoma, is engaged in the transportation of house trailers and mobile homes throughout the country, both from manufacturer to dealer and from place to place under contracts with private owners. It maintains approximately 160 terminal offices in 45 states.
In 1956 (the year that Cecil Rainwater took over management of daily operations), defendant set up a number of new terminals in the southeastern part of the United States, and during September of that year established a terminal at Knoxville, Tennessee.
During the period here involved, this terminal consisted of an office in plaintiffs' house trailer. Dan Burry was placed in charge of the Knoxville terminal, and worked under an oral contract from 1956 until November 1, 1960, when a written contract was executed.
Prior to opening the terminal, both Burrys attended a training course at defendant's establishment in Thomson, Georgia, where they were instructed in the use of defendant's tariff books, the methods of filling out freight bills and drafts, obtaining permits for contract haulers, and other details of the business.
In addition to managing the Knoxville terminal and soliciting business away from the terminal, Dan Burry operated a truck as a contract hauler, in the transportation of mobile homes for defendant. This hauling was done under defendant's Interstate Commerce Commission permit. It was necessary that Mr. Burry be away from the Knoxville terminal for days at a time while so engaged in the transportation of mobile homes out of Knoxville and out of the state of Tennessee.
The USDC made an affirmative finding of fact that Sara Burry with the knowledge of defendant performed all the necessary duties incident to the maintenance and operation of the Knoxville terminal when Daniel K. Burry was absent from the terminal office.
The USDC further found that the terminal was kept open and available to the public from 8:00 a. m. until 9:00 p. m. on week days, and from 8:00 a. m. until 2:00 p. m. on Sundays, and that the responsibility for managing the Knoxville terminal involved the following duties: the preparation of freight bills; paying of contract haulers or drivers working in and out of the Knoxville terminal; the relaying of trailers; checking leased equipment which consisted principally of trucks owned by various contract haulers and which were leased to the defendant corporation; performing routine office work; soliciting business; and miscellaneous activities, such as receiving telephone calls from various drivers working both in and out of the Knoxville terminal, handling numerous telephone calls from prospective customers who sought information concerning tariff rates, and also handling communications between the various terminals operated by the defendant throughout the United States and communications between the home office of the defendant in Tulsa, Oklahoma, both by mail and telephone.
The plaintiffs also had to prepare all necessary papers and instruments relative to hauls and transportation of mobile homes through the Knoxville terminal to satisfy the rules of the defendant corporation and to comply with Interstate Commerce Commission regulations, promulgated for this type of activity.
As to the relationship between the parties, the USDC found that under the agreement and the procedure followed in the operation of the terminal, Dan Burry was under the control of defendant, and that his relationship with defendant was that of employee, not independent contractor; that it also was contemplated that Sara Burry would work in the Knoxville office; that defendant suffered and permitted Sara Burry to work for it within the meaning of the Fair Labor Standards Act with its knowledge and under such circumstances that the duty of paying compensation to her will be implied; and that Mrs. Burry was an employee of defendant within the meaning of the FLSA.
The district court found that the contract between the parties was a device to circumvent the provisions of the Fair Labor Standards Act and is, therefore, void and a nullity, and the terms of this contract cannot be invoked and relied upon by the defendant to the detriment of either of the plaintiffs; that Burry was paid on a commission basis, which failed to provide him with the minimum compensation prescribed by the Fair Labor Standards Act and did not include any compensation for his hours of overtime work; that defendant paid nothing to Sara Burry for her services; that the contract undertook to impose limitations upon the time to be expended by Burry in certain terminal functions; that in other areas representatives of the defendant corporation undertook verbally to circumscribe the activities of Burry from a time limitation standpoint; that the reports of time devoted to the business which Burry filed with defendant each week were inaccurate and the home office reviewed his weekly worksheet and was cognizant of the patent inaccuracies therein; that the defendant was well aware that the Knoxville terminal was being kept open hours far in excess of those shown on time reports submitted by plaintiff, Burry; that Burry is not bound by the figures contained in the various weekly time reports which he submitted to the home office of the defendant because these reports can not deprive him of minimum compensation as prescribed by the Fair Labor Standards Act; and that the defendant's representative who presented a written contract to the plaintiff for his execution, stated in substance, or led the plaintiff to believe from what he said, that if the hours stated on the time report exceeded commissions earned, then the Knoxville terminal would be closed.
On this appeal, defendant-appellant argues that Burry was an independent contractor, not an employee; that the contract was valid and binding; that Sara Burry was not an employee of defendant, and, if she is entitled to any compensation, it is the obligation of Dan Burry to pay her under the terms of the contract; that plaintiffs failed to sustain the burden of proof; and that the trial court committed prejudicial and reversible error in permitting plaintiffs to introduce parol evidence to vary the terms of the written contract of employment. This court will not overturn the decision of the district court involving issues of fact unless clearly erroneous.
We have read the entire transcript of the evidence introduced before the district judge and it is our opinion that his findings of fact as to both Dan Burry and Sara Burry are ... supported by substantial evidence. ... The holding of the USDC that Dan Burry was an employee, rather than an independent contractor, is well supported by the authorities. ...
The holding of the USDC to the effect that defendant with knowledge suffered and permitted Sara Burry to work for it, so that she became an employee within the meaning of the FLSA, Defendant further contends that plaintiffs cannot recover because the written contract prohibited Dan Burry from working in excess of 40 hours per week without first obtaining defendant's written consent, and because he submitted time sheets showing fewer hours than he actually worked.
The USDC found as a fact that defendant had actual knowledge that Dan Burry's hours of work exceeded those specified in the contract and shown on his time sheet, and that the contract was designed to circumvent the Fair Labor Standards Act. For the same reasons we hold that defendant cannot avoid liability by reason of the time sheets prepared by Burry which defendant knew to be inaccurate.
All other contentions made by defendant-appellant have been considered and found to be without merit. The judgment of the district court is affirmed.
FOOTNOTE: More detailed findings of fact made by the USDC as to Sara Burry were as follows:
The Court also finds that Sara Burry was an employee of the defendant and that the defendant suffered and permitted her to work for it and knew that she was employed at the Knoxville terminal; that when Daniel K. Burry was employed in 1956 to manage the Knoxville terminal, both he and his wife, Sara Burry, were directed by the defendant to go to Thomson, Georgia about September or October, 1956, and there receive instructions together at the terminal office of that city owned and operated by the defendant and there both plaintiffs took a course in managerial duties to acquaint them with terminal operations and to prepare them for the management of the Knoxville terminal and they both spent some two and one-half days at this Georgia City in learning the operations of the company business at Knoxville; that shortly after their return to Knoxville, one Thomas Swift, a company representative from the Georgia office, came to Knoxville and gave further help and instructions to both plaintiffs in regard to operation of the Knoxville office.
Further evidence of the defendant's knowledge that Sara Burry was working in the Knoxville terminal during her husband's absence is the fact that the company representative, Abla, came to Knoxville while Daniel K. Burry was absent and talked with Sara Burry at the terminal office which she was operating at that time. From her testimony, it was found that she signed a signature card furnished by the defendant concerning the company account at the National Bank of Commerce in Tulsa, Oklahoma, and that occasionally Sara Burry paid drivers by check drawn on this bank and on the defendant's account at the National Bank of Commerce, and which fact is confirmed by Ernest Connatser, witness for the plaintiff, who was formerly a driver at the Knoxville terminal, and who testified that he formerly worked for the defendant for a period of some five (5) years prior to January, 1962, and that he was personally aware of the fact that Sara Burry performed all the necessary duties incident to the maintenance and operation of the Knoxville terminal when the plaintiff, Daniel K. Burry, was absent from the terminal office.
The Court finds that Donna Cottengim, representative of the defendant corporation in the home office at Tulsa, Oklahoma, wrote a letter to Daniel K. Burry on November 16, 1961, complaining about the way Sara Burry had allegedly mishandled a situation with a customer of the company, which imputes knowledge to the corporate defendant of her activities for and on its behalf.
Included in the USDC's decision were additional CONVOY employees whom had interacted with the Burrys -- Cecil A. Rainwater, General Manager; Mr. Humburg (former Indiana State Trooper); Mr. Privitt; Carl James; Mr. Connatster; Mr. Radford; E. Wayne Thompson, Manager; Mr. Thee; Mrs. Huff; Mr. Bruce, Sect/Treas; and Mr. Alba.