OFFICE OF THE ATTORNEY GENERAL

DEPARTMENT OF LEGAL AFFAIRS

THE CAPITOL
TALLAHASSEE, FLORIDA 32399-1050

September 7, 1990

Steven L. Hayes, Esq.
Pritzker & Hayes
1321 Greenbriar Road
Glendale, CA 91207

RE: Rex Publishing

Dear Mr. Hayes:

Thank you for the extensive materials you and your client have provided us.

We would appreciate your furnishing us documentary justification for a number of claims made in those materials. First, in regard to auction counseling, your materials claim that subscribing callers will be counseled by trained professional counselors. Please provide us with a list of those counselors names, resumes of their training, and recitals of their experience as trained profiessional auction counselors.

Second, from an audio tape labeled "Rex Donut Spot," a claim was made that surplus trucks were available for $65.00 from governmerit auctions. The written documentation you furnished us shows one such truck. Please furnish us documentation that numbers of trucks in excess of one truck are available for that price.

Third, from an audio tape labeled "Rex Spots One & Two" a claim is made that a house was acquired for $15.O0. The written documentation furnished us for that claim is inadequate. It consists of two memoranda concerning attempts to verify this sale neither of which contain any verification of the sale. Please furnish us documentation that a house in the Atlanta area was auctioned for $15.00.

Fourth, from an audio tape labeled "Air Check 2/14/90" the same claim is made of a house allegedly auctioned for $15.00. Please furnish us the same documentation requested in the preceding paragraph.

Fifth, from an audio tape labeled "WBAB" a claim is made that a three bedroom, three level house in Lindenhurst, Long Island, New York, was auctioned for $123,000.00. We have received no written documentation of that claim and would appreciate your providing it.

Sixth, from a video tape advertisement for the action guide to government grants and loans, many people were depicted as having received business loans with no disclaimers as to professional actors depicting them. The advertisement portrayed a woman, apparently in fashion sales, a man standing at a mechanics tool box, a male white-collar electronics or computer worker, a woman florist, and two women displaying bakery pies. Please provide us the names, adaresses, and documentation of government loans for each of the people described above who appeared in that video advertisement.

Finally, from an "Action Guide to Government Auctions" video advertisement, viewers are advised that a free brochure is available for the "Action Guide to Government Auctions." Our materials do not include such a free brochure and we request that you provide us one.

Thank you for your further assistance.

Sincerely,

MICHAEL K. STUCKEY
Assistant Attorney General
Tampa Consumer Protection and Fair
Trade Practices Unit

MEMORANDUM

TO: Donna Provonsha

FROM: Jim Lyons

DATE: Feb. 10, 1992

RE: Rex Publishing

In March of 1991, I got a call from a Clearwater PD Detective who was working with ASA Kent O'Neal of the Broward SAO. They were attempting to track down Chelekis for factoring and fraudulent use of credit card authorization; both criminal violations which are O'Neals forte. I advised him that we had an open, but inactive, case on Rex Publishing and that I knew very little about the case. The victim of the factoring is apparently a bank called "Nabanco" which reputedly offers merchant accounts to many of Florida's boilerroom operations. Nabanco believes their losses to be around $341,000. About a third of the losses are the result of chargebacks, the rest result from phony orders.

The July '91 St. Pete Times article, which is now missing from the file, reported that the Church of Scientology was probably involved in Chelekis' disappearance, which left behind huge financial debts. That would make him extremely difficult to track down.

If you are in contact with sources who may have any knowledge of Chelekis' whereabouts, you should share that information immediately with the Broward SAO or Sgt. Kronshnabl of the Clearwater PD.

cc: file

This is a FLASH message, further details will follow.

Rex Publishing principal/CEO George Chelekis vanished in 1991, walking away from his collapsed telemarketing scheme. He is back in Clearwater now, has written another book along the lines of his last - how to get rich at government auctions - and is currently marketing it from Clearwater.

Criminal authorities probing Rex are stonewalled by the 100 or so former Rex employees - all Scientologists - unwillingness to roll over. Apparently all business records were successfully shredded, indicating the collapse was engineered.

If Chelekis is currently doing anything which involves 1) telemarketing and 2) credit card sales, immediate injunctive action would be in order.

cc: Mona Fandel
file

MEMORANDUM

TO: file

FROM: Jim Lyons, Financial Investigator

DATE: Oct. 1, 1992

RE: Case Background

George Chelekis wrote a book called "Action Guide to Government Auctions" and began marketing it nationwide with cheap radio and TV spots. The basic book came with three years of access to a help hotline and some bimonthly updates for $114. There were several upgrade packages which included more books, pamphlets, and "consulting". The ads inferred immense profits and cited four specific deals done by customers using the AGGA system.

Our case began in June 1990 with a request for assistance from the Passaic County OCA, citing these claims. Mike Stuckey quickly found 20 consumer complaints, on file with DCS - there may be more with Pinellas OCA - mostly for failure to refund dissatisfied customers. These 20 were forwarded to us but not in the litigation file. Stuckey then subpoenaed Rex for substantiation of the claims. They sent a carton of materials, which we waded through and discovered was a smokescreen; the substantiation was not there. Stuckey wrote back in Sept. 1990 with further questions. That's where the file ends. Stuckey left the Department six months later.

During 1989-1990, Rex became very successful. The ads generating calls into a boilerroom which did credit card sales of the AGGA. At one point he had 100 slammers. The commission/override structure for paying them was allegedly conducive to fraud; slammers logging sales and putting through unapproved credit card charges. Chelekis the Scientologist hired mostly Scientologists and did business mostly within the Scientologist business community, with the major exception of his merchant account. That was issued by NABANCO, who shut off the account when the chargeback rate got too high, but still got stuck with $341,600 worth of chargebacks; either fraudulent charges or chargebacks already issued to dissatisfied customers. In March 1991 NABANCO, the Dept. of Revenue, and a few other creditors sued Rex, but found it shut down and Chelekis gone to earth.

The Clearwater PD would like to make a criminal fraud case, but they need to link specific victims of phony charges with specific slammers, a daunting challenge made tougher by the Scientologist- employees refusal to assist.

I've heard that Chelekis has returned to Clearwater and recently reopened another business selling AGGA again, and am working to confirm that. I'll check court records and see who perfected service and what the status of those cases are.

AGREEMENT

WHEREAS, George Chelekis, and individual with a mailing address of xxx xx xxxxxx, Clearwater, Florida 34630 ("Chelekis" hereafter) is a writer of books that have been published and intends to write books that he wants to be published and marketed (collectively the "Books" hereafter); and

WHEREAS, Maaret Schnier, an individual with a mailing address of xxx xxxx xxxxx xxxxxx, New York, New York, 10003 ("Schnier" hereafter) is experienced in obtaining publishing and marketing books; and

WHEREAS, Schnier has materially assisted Chelekis with the publishing and marketing of the Books that Chelekis has previously written; and

WHEREAS, the parties desire to set forth in writing their agreement.

NOW THEREFORE IN CONSIDERATION OF THE MUTUAL PROMISES AND PERFORMANCES OF THE PARTIES IT IS AGREED:

1. Chelekis will submit each new manuscript of the new Books that he writes to Schnier.

2. Schnier agrees to promptly review each manuscript and make suggestions to Chelekis for the publishing and marketing of the manuscript of the new Books.

3. Schnier shall assist Chelekis in negotiating a publishing and marketing agreement for each of the new Books.

4. Schnier shall assist Chelekis, when requested, in renegotiating publishing and marketing agreements for each of the new Books and for methods of assisting the publisher and/or marketer of the Books to generate more sales of the Books.

5. As consideration for her assistance, Schnier shall receive TWENTY PERCENT (20%) of all royalties received by Chelekis from any source with respect to the Books whether written now or in the future ("Schnier Fee" hereafter). The Schnier Fee shall be payable within five days after any royalties are received by Chelekis.

6. The term of this Agreement shall be five (5) years. However, this Agreement may be cancelled by either of the parties giving notice of cancellation by certified, return receipt, U.S. mail to the other party at least thirty (30) days prior to May 1st of each year during the term of this Agreement. In such event, this Agreement will terminate on May 1st of the year in which such notice is given.

7. Chelekis represents and warrants that there has been no assignment or pledge of any royalties payable to him from the Books.

8. All notices, demands, elections, requests, or other communications required or permitted hereunder shall be given in writing and either delivered in person or mailed by certified mail, return receipt requested.

9. In the event of any controversy or claim arising out of or relating to this Agreement, or breach of any of its provisions, the parties hereby agree that the dispute shall be decided as a business dispute in adherence with, and by WISE arbitrators trained in, Scientology ethics and justice policy letters with respect to all ethics relevant to such controversy and claim; and the parties agree to be bound by such decision.
   
   Provided however, if one of the parties hereto does not agree to WISE arbitration, then the parties agree that any controversy or claim arising out of or relating to this Agreement shall be resolved by arbitration conducted in accordance with the commercial arbitration rules of the American Arbitration Association in effect at the time of the arbitration. Judgment upon any award rendered by the Arbitrators may be entered in any court having competent jurisdiction.

10. The Parties hereto covenant and agree that they will execute and will cause their permitted successors, transfers, and assigns to execute such other and further instruments and documents (including but not limited to written agreements to comply with the requirements of law, if any) as are or may become necessary and convenient in the opinion of the Parties to effectuate and carry out the purposes of this Agreement.

11. Except as otherwise provided herein, this Agreement is binding upon and inures to the benefit of all Parties, their heirs, executors, administrators, assigns, successors in interest or other legal representatives.

12. If any sentence or paragraph of this Agreement is declared by a court of competent jurisdiction to be void, the sentence or paragraph shall be deemed severed from the remainder of the Agreement and the balance of the Agreement shall remain in effect.

13. Whenever required by the context, the masculine gender shall include the feminine and neuter genders, and vice versa; and the word "person" shall include a corporation, partnership, firm or other form of association; the singular shall include the plural, and vice versa.

14. This Agreement and the other instruments referenced by this Agreement constitute the entire agreement between the parties with respect to the subject matter herein contained and supersede all agreements, representations, warranties, statements, provisions, and undertakings, whether oral or written, with respect to the subject matter hereof. This Agreement may only be modified by a written instrument executed by all of the parties.

15. This Agreement shall be construed under the laws of the State of Florida as if this Agreement were executed in and to be performed entirely within Florida.

16. In the event of a dispute, arbitration or litigation with respect to any of the terms of this Agreement or the transactions contemplated by it, the prevailing party is to be awarded reasonable attorney fees and costs.

17. This Agreement may be executed in several counterparts and all so executed shall constitute one Agreement, binding on all of the Parties, notwithstanding that all of the Parties are not signatory to the original or the same counterpart.

18. No condition or obligation under this Agreement may be waived without a written acknowledgement of such waiver, and one waiver of any condition or obligation is not to be construed as creating any other waiver of a condition or obligation. Further, the waiving party is free to reinstate any such term or condition with or without notice to the party relying upon such waiver.

19. The rights and obligations under this Agreement can neither be assigned or delegated without the prior written consent of the Parties.

20. The Parties acknowledge that they have had the opportunity to review this Agreement with independent legal counsel, that they understand its contents, and legal effects, have participated in its drafting, and that they agree that this Agreement shall not be construed for or against any Party.

ENTERED INTO AND AGREED AS OF THE 1 DAY OF MAY, 1990 BY AND BETWEEN THE PARTIES WHOSE SIGNATURES APPEAR BELOW.

______________________________
GEORGE CHELEKIS

______________________________
MAARET SCHNIER