"The Fuhrer Over est" by Jesse Kornbluth

And Werner Erhard was suddenly a factor for ideas.  “How do I know I’m not the reincarnation of Jesus Christ?” Erhard asked Thaw just before Easter.  “You wouldn’t believe the feelings I have inside me.”  Thaw assured him the role had already been taken, that Erhard would have to apply for another.  Well, then, Erhard shot back, why not simply incorporate the new religion as “Erhardism”?  Thaw said, “You’re crazy, sayonara,” and left Erhard for good.

It was around this time that Erhard had his “catalytic” experience in his wife’s Mustang.  It took place, he says, “outside space and time.”  Apparently so, for in various interviews, Erhard sets this event in a number of locales — either near Greenbrae on Highway 101 or parked on a hillside in San Francisco.  Wherever the commemorative plaque is finally placed, the idea is that Erhard “got it” and understood for eternity that “what is, is” and “what isn’t, isn’t.”  “What I recognized,” Erhard has said, “is that you can’t put it together.  It’s already together and what you have to do is experience it being together.  When I realized that, everything I’d already learned became transformed.”  This explanation of why est is more than the sum of Erhard’s previous associations is, however, very close to a verbatim lift from the back cover of the then-popular Whole Earth Catalogue — “We can’t put it together.  It is together.”

If “getting it” was an actual and profound experience for Erhard, that moment pales beside his joy at meeting Harry Margolis.  Apparently, Erhard hadn’t realized that a clever lawyer could so construct his consciousness-expansion business that it would function, in effect, as a nonprofit organization.  And Harry Margolis, a Saratoga, California attorney who specializes in tax shelters, was just the lawyer to set it up.  Publicly, Erhard would explain that while est had many opportunities to make a profit, it chose, instead, to use its revenues to serve people more fully.  Privately, Erhard told intimates, “We’re going to make millions!  We’re not going to have to pay any money to taxes!”  The mechanism was simple — by Margolis’ standards.  First, Erhard sold the body of knowledge to a foreign company (est insiders suggest this may be Presentaciones Musicales, S.A.).  The offshore company, sources say, then sold the American rights to the material to est, Inc.  But, est, Inc. was a new company and didn’t have a million lying around.  So, these sources indicate, est borrowed the money from P.M.S.A. or another offshore company.  The tax savings this loan offered to est, it is said, cut the company’s yearly debt to the government to a palatable — indeed, insignificant — amount.  Erhard could thus pump most of the revenue from his trainings into other programs.  And with few people on salary and an intensive work program for volunteers, est would be guaranteed an instant success.

In mid-1971, unaware that Erhard had other plans, Alexander Everett asked him to become Coordinator of Mind Dynamics.  Erhard allowed negotiations to continue while he quietly assembled a staff for est.  Randy McNamara became the first trainer-trainee, whose assignments included bringing tea to Erhard.  The women from Mind Dynamics and his Grolier Society sales team were enlisted for office personnel.  And then, in the August Mind Dynamics course, Erhard spotted Stewart Emery.

Physically, Emery is a smaller, grey-haired version of Erhard, but with a few cultural differences: he is Australian, a former Vogue photographer and advertising specialist.  And in 1971, he was the kind of Mind Dynamics student who was vulnerable to any “aliveness” training that promised him greater and faster enlightenment.  Early in September, Erhard invited Emery to lead a special sensitivity training for his Mind Dynamics staff.  After the marathon encounter session, Emery was invited to a birthday party at Erhard’s home.  Over white wine, crab, sourdough bread and salad, Erhard turned to him and said, “I want you to know that this is very unusual, but your contribution over the last few days has been of such magnitude, you have earned the right to join us in est.” Emery replied that he was content to study with Alexander Everett.  “There’s enough money in this for us all to become millionaires,” Erhard told him.  But Emery asked for a raincheck from est; his most persistent memory of Erhard’s Mind Dynamics trainings was of a logistics assistant, on cue, relieving Erhard of his jacket.

On September 13, 1971, Werner Erhard held a public meeting at the Mark Hopkins Hotel to “present a Mind Dynamics lecture in as straightforward a way as possible.”  His second intention, he told Alexander Everett, was to announce his split from Mind Dynamics.  He invited his benefactor to send a representative and “present whatever views you wish.”  Everett surprised him by attending the meeting; he reassured Erhard when he announced, “Werner Erhard has decided to do his own thing and that is all right.”

On October 4, 1971, Werner Erhard inaugurated est.  On December 20, 1971, a company called Saratoga Restaurant Equipment Co. decided it would do much better in the mind business — as Erhard Seminars Training, Inc.  It seemed at the time, to have been a wise decision; when, four months later, Harry Margolis filed the est tax return for the year ending April 30, 1972, he was able to claim an interest expense deduction of $38,706 and an amortization expense deduction of $40,000.  In addition to whatever tax dollars may have been saved by offshore transactions, it is not inconceivable that Saratoga Restaurant Equipment offered significant carry-forward losses to est. 

These claims did not go uncontested.  In October 1975 — after an extensive investigation that had as many as five Internal Revenue agents building the case against him — Harry Margolis was indicted on one charge of conspiracy and 22 counts of aiding and assisting in the preparation of fraudulent tax returns.  Est’s tax return was one count in the Margolis indictment; the IRS thought that $928 was a more realistic figure for est’s interest expense deduction, and as for the amortization expense deduction, the government argued that est was entitled to no deduction at all.

First, Werner Erhard said, you vacuum the top of the carpet.  Gonneke Spits, a convert from the Grolier days, and Laurel Scheaf, the first President of est, watched carefully.  They studied his technique as he ran the vacuum over the rug.  Then Erhard flipped the carpet and vacuumed the bare floor.  Finally he set the carpet back in place and demonstrated how it was to be cleaned a fourth time.  He told them that books were to be removed from the shelves before being dusted.  Windows were to be washed three times.  Every pleat of the draperies was to be adjusted after cleaning.  Gonneke and Laurel agreed to take responsibility for all this.  They called it “getting the job done.”

From the earliest days of est, Erhard concentrated on enlisting women — a carry-over from his Grolier sales techniques.  A college student who was trained under Erhard’s direction to sell Grolier’s “exciting new program” of preschool learning materials to suburban housewives recalls that Erhard “wanted this to be more than a job for us, he wanted us to identify with the organization.”  Erhard sponsored get-togethers and trips to the beach, and each morning, before his mostly female sales team went into the field, there were required “Parties,” with Beatles music, story-telling, clapping games and group cheers.  “It was unnatural,” the trainee remembers.  “We didn’t see him that much.  We were encouraged to think it was special when we did.”  Erhard always made it his business to appear for the final lecture of the training program.  “We aren’t selling anything,” he told the women.  “This is a new concept.  You don’t put pressure on people to buy.  You ask them a series of questions, and by answering them, the customers decide for themselves.”

Erhard’s Orwellian redefinition of language was such a powerful sales weapon that soon after he founded est he was filling 150-seat trainings at $150 a seat.  There was not enough money yet, he said, to pay his employees what they were worth; they were so convinced that “serving Werner” was a valuable contribution to their aliveness that salary, however, was rarely an unpleasant “consideration.”  Magically, the business scraped together enough money for Erhard to separate his office from the staff’s and move into Franklin House, the San Francisco mansion he would eventually buy and fill with antique furniture and Oriental art.

Steward Emery saw that Erhard was right — the “traffic” did seem to go his way — and decided to cash in his raincheck.  Joining the est staff, he found, was more difficult than it had been in 1971.  Erhard was now a certified guru, and a guru’s main occupation is creating problems for other people to solve.  Over lunch, Erhard presented Emery with two new objections to his employment.  Money, of course, was one.  Surrender was number two.  “Everyone who works for me serves me,” Erhard said.  “How do I know you’ll do what I say?” Emery assured him that although he might, at some point, leave the est organization, the only reason to work for Erhard was to learn everything he had to teach.  He could hardly do that, he explained, if he superimposed his own beliefs unto Erhard’s.  “Now I know I can trust you,” Erhard said.  He agreed to make Emery est’s second highest paid employee.

In late 1972, Werner Erhard and Stewart Emery went to Hawaii to lead an est training.  Afterward, as they lay on the beach at the Kahala Hilton, Erhard outlined a plan.  He and Stewart and Randy McNamara would give the trainings: one a month in San Francisco and Los Angeles, five times a year in New York and Hawaii, a few times annually in Aspen.  Laurel Scheaf would run the main office in San Francisco, while Erhard and Emery and their families could move to Hawaii.  It was a sensible plan for a small organization.  But Erhard had not anticipated public acceptance on the grand scale.

He got a hint that massive success was possible when Dr. Robert Larzelere gave up his private practice to work for est at $75 a week.  Then Dr. Philip Lee, Professor of Social Medicine and former Chancellor of the University of California, San Francisco, took the training, and was powerfully impressed by it and joined the est Advisory Board.  Professional validation dovetailed with est’s “invisible sell” to bring more people into the training; suddenly est was taking in so much money that existing shelters were no longer adequate.  This is why, insiders suggest, Erhard established “est of Hawaii” in 1973 as a nonprofit, tax-exempt organization owned by est graduates — as an experiment in alternative financial structures for est.

With success came the need for a larger staff.  This was a problem for Erhard; there would not be time to bind each new employee to him through charisma alone.  If he ran an expanded est solely through intimidation and fear, some of these new employees might leave and broadcast their negative experiences.  Worse, they might complain to the California Department of Industrial Relations — they might not agree that they had “volunteered” from 35 to 50 extra hours to each 40-hour work week, they might not be willing to state that in those additional hours they had been working as “managers.” It was essential, therefore, to hire people who were not only qualified but who had special personality characteristics.  They had to be willing to dedicate themselves to est, virtually eliminating their personal lives in the process.  And, most important of all, they had to acknowledge that they were “serving God” and had no rights or privileges.  These are the kinds of employees even the CIA can’t hire — but that, perhaps, is because the CIA does not use Scientology “e meters.”

Here Erhard found a reason to keep Dr. Larzelere on staff.  He appointed him head of the est “Well Being Department” and had him trained to use the two tin cans, wires and meters that comprise the Scientology auditing device.  Then he had Larzelere process the staff.  The technique — one of many Erhard has “borrowed” from Scientology — was simple enough: the est staff member held a tin can in each hand and answered questions about his loyalty to Erhard and est.  If the meter jumped beyond acceptable limits, the subject still had a “charge,” an emotional “position” about the question.  That would be “cleared” by intensive questioning until the staff member “processed out” his “upset.” Over the years, this “one-to-one-consulting” — and the repeated insistence that an employee’s life “doesn’t work” until he surrenders to Erhard — has become the standard est technique for eliminating staff “barriers” to complete acceptance of whatever the est propaganda happens to be.

Larzelere’s Scientology training, Erhard though, was too cursory to guarantee effective results.  Fortunately, two high-level Scientologists — one had reached OT7, which is very good indeed — were available, and they seemed willing to supervise Larzelere’s operation while they developed material for Erhard.  Est considered these Scientologists important enough to pay them more than some trainers were earning.  Wisely, est’s new “researchers” requested that their employment be kept secret; they knew that Scientology would not welcome the modification of its material in a rival discipline.  For his part, Erhard must have been delighted that the Scientologists requested no public acknowledgment; as he well understood, the government would surely be less inclined to fill school curriculums with est material if est’s Scientology connection were widely publicized.

Because their assignment — correcting L. Ron Hubbard’s data and creating a new vocabulary for est — was so extraordinary, the Scientologists had unusual privileges.  They were not required to attend the 8:30 a.m. “jack ‘em up and glaze ‘em over” meetings.  They could smoke cigarettes without criticism.  And they had continual access to Erhard, who liked to sit with them by his fireplace as they brainstormed together about the material they were developing for the Guest Seminar Leader’s Program, the Communication Workshop and the training itself.  So when these Scientologists speak of Erhard as “the source of est,” they do not mean, as other employees do, that Erhard originates all est data.  “Werner has a fantastic ability to source data,” one of them explains.  “He can get to the source of the viewpoint of the material.  He can see where the creator of that viewpoint is coming from.  He can give a better talk on Scientology than someone who’s been heavily involved.”

By 1974, the Scientologists were tired of est.  The social life was dull — “It was like the women were already married,” one said — and they were ready to move on.  That seemed to suit Erhard.  The material they had developed had been successfully absorbed into est.  And Dr. Larzelere’s operation was running smoothly.  Now that he could be assured of total employee support, Erhard was ready for other consultants: Alan Lakein, the time efficiency expert, and Leonard Orr, who promised greater employee productivity to est if Erhard would then increase salaries.

The est organization was becoming more secretive, more mechanical.  Erhard kept testing his staff, probing their limits.  His rage was a weapon, often shown but rarely used; it was reserved for anyone bold enough to propose a change in his methods — such as Harry Margolis, who suggested, on various occasions, a financial restructuring of est.  “I don’t need anyone around who questions me!” Erhard reportedly shouted after one such session with Margolis.

The est staff turned mute.  On his birthday in 1973, Erhard’s “rich grandmother” bought him a Mercedes-Benz.  Curiously, this wealthy lady — who seems not to have been mentioned around est before this purchase — did not buy the car from a Mercedes dealer or even a private owner.  Instead, she bought it from Associated Convalescent Enterprises, a Saratoga-based and Margolis-connected holding company.  The est staff was unanimously incurious.  They were equally silent about the financial ambiguities of est of Hawaii.  When Erhard returned from a European trip, he told them that the greatest tragedy of World War II was the destruction of Renaissance art treasures.  No one blanched.

In the advanced trainings for those who aspired to lead guest seminars, graduates were cursed for their failure to sign up scores of new converts for est — and they took Erhard’s tongue-lashing as proof that their lives didn’t work, and set out to do better.  “Help stamp out reasonableness!” signs were placed around local est offices.  Supervisors took these notices literally.  “Don’t sit there like a fucking body!” one shouted at a hapless assistant.  “Make yourself a being!  Create some phone calls coming in!”  Secretaries wrote notes to themselves and tacked them above their typewriters.  “Goal for the year,” one read.  “Provide Werner with as much certainty as possible.”  It was all part of Erhard’s plan to create a continual crisis mentality, maximizing performance by convincing his employees that the enemy was at the very gates.  “The Germans,” Erhard liked to tell his San Francisco staff, “are in Oakland.”

Outside the “office of the source,” as Franklin House was now called, est graduates were bringing carloads of guests to their seminars and creating, without compensation, a 100 percent annual growth rate for est.  The first journalists to discover the newest California phenomenon were unanimously enthusiastic.  But inside est, Werner Erhard had a problem.  Stewart Emery no longer wanted the dual roles of trainer and Chief Executive — est, he insisted, needed a full-time president.  So Werner Erhard set out to find a very special executive: a company man who would short-circuit any threat to Erhard’s power while he relieved Erhard of the responsibility of representing est to the public.

From the back, people said, you couldn’t tell the difference between Werner Erhard and Stewart Emery.  Once that was flattering to both men.  By late 1974, though, Emery was the only key est employee who had not surrendered to Erhard.  Perhaps he was even subversive; he could not deliver Erhard’s directives to the staff without adding a little commentary that somehow knocked the edge off the master’s commands.  But Emery was too valuable to be purged — with his background in media, he was clearly the est executive best qualified to meet the press and represent est in public.  Erhard, by comparison, came across in interview situations as an embarrassment to honorable car and encyclopedia salesmen.  Before his appearance on The Mike Douglas Show, for example, Erhard’s Head of Production set up a simulated talk show in Franklin House, with est employees playing Douglas and the other guests.  “Werner had to be shown that people like Douglas have a way of interjecting something when they think it’s not important or funny enough,” the producer says.  The dress rehearsal failed.  On The Mike Douglas Show, Erhard still seemed to be hustling. 

Peter Wanger was one presidential candidate who could be effective enough in organization and credible to the public.  He had taken the est training in the spring of 1973; it stimulated him to send est a barrage of ideas.  Eventually his letters reached Stewart Emery’s office.  Emery read them carefully — Peter Wanger had built Granny Goose Potato Chips into a company Del Monte snapped up for several million dollars.  Now he was looking to get involved in what he called “the head business.”  Erhard met him and was impressed.  Wanger went skiing, believing that he would become President of est when he returned.

Then Don Cox, General Manager of the Coca-Cola Bottling Company of California, started looking for a new assistant.  His ad included the phrase “est graduate preferred.”  Suddenly Don Cox was a candidate for the est presidency.  Stewart Emery felt he was the only possible choice — Cox had been Director of Planning for Coca-Cola, U.S.A., and had taught at Harvard Business School.  Cox was an experienced team player.  Cox got the job.

Peter Wanger very disappointed.  He had already proved he could turn one new business into a much-loved success.  He knew he could do the same for est.  He couldn’t understand why Erhard didn’t understand his new company was at a crisis point — unless est normalized its operations, its erratic and trivial policies would create hordes of enemies.  Although est might appear to be sweeping the country, Wanger was concerned with a counter-trend Erhard didn’t seem to notice: by the time est “succeeded,” no one might care.

In the summer of 1974, Peter Wanger got over his disappointment.  Once again, he blitzed Erhard with letters.  Finally Erhard called.  “You have value for est,” he said.  “Fine,” Wanger thought.  “I’ll get in there and somehow get the thing straightened out.”  By which he meant: convert est into a partnership, eliminate the authoritarianism that gave the est offices the charm of a bunker and jettison the “I’m ok, you’re not ok” attitude of the est executives.  Est had a different idea.

Peter Wanger was assigned to the shipping department.  He was responsible for making sure the training materials were properly packed.  If Wanger did that expertly, Erhard laughed, he would next be assigned to cleaning toilets

Wanger had been a shipping clerk for less than a month when he was summoned to the president’s office.  Don Cox was unhappy: Wanger had been upsetting the organization.  Wanger agreed that he had not been slavishly following instructions; the telephone campaign designed to force people to volunteer for the logistics crews had, on his initiative, been replaced by phone calls that simply offered est graduates the opportunity to help out.  As a result, Wanger said, the number of volunteers was dramatically increasing.  He considered this an improvement.

Cox disagreed.  “We want you to do exactly what is being done and not come up with any new solutions.”  “Fine,” Wanger replied, “I’ll come up with solutions and I’m willing to keep them to myself.”  “No, you cannot come up with any solutions,” Cox insisted.  Wanger was equally firm.  “My mind is unable not to come up with solutions,” he told Cox, “so I’m unable to do that.”  The President of est began to blink.  He said, “You either do it this way or you choose to leave.”  “I don’t ‘chose to leave,’” Wanger said, “but I will leave because I’m unable to do it the other way.  When do you want me to go?”  At this point, Wanger recalls, Cox “went catatonic.”  His eyes glazed over.  “Now?” Wanger asked.  Cox nodded.  In less than an hour, Wanger was out of the est offices.

That left only Stewart Emery to be reeducated — or purged.  Inadvertently, Peter Wanger determined it would be the latter.  Around March 1975, Wanger decided to establish his own program he and one of the Franklin House Scientologists began to collaborate on a 12-hour event.  “The Partnership,” unlike est, was to be a theatrical experience engineered to guide an audience through progressively elevated psychological spaces.  No one would be intimidated, no one would be “made wrong,” no one would be told, “If you think your life works, go home and look in a mirror at the tragedy that is your life.”  Wanger was very excited about his new project.  He invited Stewart Emery and est Enrollment Director Carol Augustus to look at the outline.

The news of that weekend meeting reached Erhard via serendipity.  The following Monday, he got on a plane for Los Angeles and Peter Wanger was in the next seat.  Wanger was bubbling over with enthusiasm now that Stewart Emery had expressed cautious interest in his project.  Erhard smiled.

Stewart Emery was 3,000 miles away, preparing for a Washington pre-training seminar.  On Tuesday, according to his schedule, he’d be speaking to 1,500 people in New York.  On Wednesday, he’d pitch est to another 1,500 in Boston.  On Thursday, he’d be leading a guest seminar for 1,000 people in Washington.  On Saturday, he’d give “Making Relationships Work” in Hawaii.  Then he would fly all night, and, at 9:00 a.m. he’d put 250 people through a 12-hour training in Los Angeles.  And now, ten minutes before he was to begin the first of these performances, Don Cox was on the phone.

“Stewart, I understand you saw Peter Wanger this weekend,” Cox began.  “Was Carol with you?”  Yes, Emery said.  Was the purpose of the meeting to discuss Wanger’s training?  Yes.  Had Wanger offered Emery a job?  Yes.  Did est headquarters know — in advance — of this meeting?  No.  “I consider your presence there and Carol’s presence there does not serve Werner,” Cox said, “so I have terminated Carol and she has left the organization.  Where are you with that?”

“Where I am with that,” Emery replied, “is that I don’t have time to be anywhere with it.  I’ve got 250 people waiting for me.  But if I had time to be somewhere about it, right now where I’m at is that what you did represents everything I find insupportable about est.  And I don’t have time to talk to you now.”

Carol Augustus had been asked to leave the building immediately.  Stewart Emery was recalled from his week on the road.  “I’m unwilling for you to talk to 10,000 est graduates and accumulate all that agreement,” Cox told him.  “I can’t trust you to use it to serve Werner.”  Emery would have to take a salary cut.  He could give the weekend trainings and, if he served Erhard well, an occasional guest seminar.  But first, he would have to acknowledge he had been “a traitor to est.”  “Until you have unquestionably demonstrated your loyalty to Werner and we are clear that you are a person of integrity, we won’t allow you to take a major part in est,” Cox said.  Until Emery gave up all his purposes and intentions and surrendered to Erhard, his life would never work.  And, if he left the organization, Cox warned Emery to be very careful — Erhard had a premonition that Emery might become seriously ill.  “Don, I no longer want to be part of the est organization,” Emery said.

But the drama was to get even more trivial.

President Cox called a staff meeting to explain it all away.  Carol Augustus had been fired, he said, because she had looked at data outside the organization without permission.  Stewart Emery, employees learned, had left because he was unwilling to experience through a “barrier.”  Eight months later, when people kept asking what that barrier was, Don Cox felt compelled to call Stewart Emery.  Perhaps Emery’s perspective had mellowed with time and he could be persuaded to make no public statements about his est experiences.  Or — even better — maybe Emery had “processed out” his “upset,” in which case est would welcome Emery’s public explanation for leaving.  Est would even agree to put out the same story.  It could be, Cox suggested, very simply handled.  All Emery had to do was acknowledge to the press that he had created his barrier totally by himself.

With Stewart Emery out of the way, 1975 should have been the best of all possible years for Werner Erhard.  Marcia Seligson’s enthusiastic New Times article about him was reprinted in Cosmopolitan, and that magazine had, according to est, received a record number of queries.  In the spring, Erhard journeyed to Japan, where he unlocked the secret of the toughest koan for the astonished Zen masters: the sound of one hand clapping, he told them, is simply the sound of one hand clapping.  And Erhard had successfully expanded his salon.  Now the guests at his Franklin House dinners might find, to their surprise, that their names had been individually engraved on their invitations.  Between wines, Erhard’s headwaiter might dispense a touch of sherbet to clear their palates.  “You go to one of these dinners and you get a different sense of time,” a guest recalls, “Everybody was thankful to be able to be of service to him.”

But once he ruled alone, Werner Erhard became increasingly arbitrary and erratic in his exercise of power.  Already, the use of 10-pitch IBM Selectric type — and the closing “Love” on the est letterhead — had been “reserved for Werner’s personal use.”  Now, after his visit to Japan, Erhard inexplicably initiated a non-exercise called “sitting” for all est employees.  “Each member of the staff is to sit for 60 minutes a day, as a regular part of your personal life,” they were told.  “Do not go into your space or do anything; just sit, with nothing added or taken away.”  Whatever benefit this confers upon the sitter, one other conclusion is inescapable: sitting removes another hour each day from what remains of the est staff’s “personal life.”

Which isn’t to say that est employees had much autonomy to begin with.  Although est denies there is such a thing as an “official uniform” and insists that it’s coincidental most trainers dress exactly like Erhard, the fact is that est clothing styles have been traditionally determined by the highest levels of the est staff.  “Part of this agreement,” Don Cox told one seminar leader as he presented her with a $1,500 clothing allowance, “is that you will purchase wardrobe with the consultation of Ron Mann, our wardrobe consultant.”  The docility of the est staff in agreeing to everything the high-ups decree is quite remarkable — employees even “de-bonus” themselves as an act of contrition when they do something wrong.  “De-bonus me $10 for not getting Don [Cox] the shoe-holder to polish shoes,” one girl confesses.  “I have been de-bonused $50 for mishandling Don’s finances, specifically his phone bill,” another notes.

But the most extraordinary abdication of the staff’s personal freedom is its willingness to accept the recently reestablished sex codes.  “Stay in communication with Werner about your relationships, whether they involve fucking or not,” employees are told.  “Be especially conscientious about communicating about relationships which involve fucking.”  Apparently, est staffers may sleep with anyone they want — as long as their partners are not est employees.  They may even sleep with fellow employees, “except those with whom you work directly, unless you already have a screwing relationship with them which Werner knows about.”  Married staffers who wish to have affairs with their co-workers must satisfy an even more bizarre requirement: “No married staff member is to fuck anybody in est except his or her spouse unless Don Cox receives a letter from the one agreeing to allow the other to fuck someone else.  Then, unless the letter of agreement establishes specific guidelines as to who the spouse may fuck, the policies which apply to unmarried staff members will apply to that spouse.”  And Erhard is no casual voyeur about the sex codes.  The staff is on notice: “If there are upsets and/or if you’re not getting the job done, Werner will assume it is because you are fucking whoever you fuck, and either you or your partner will have to leave the est staff.”

Werner Erhard does not yet control everyone’s behavior, however.  On October 3, 1975, a San Francisco grand jury indicted est lawyer Harry Margolis for conspiracy to defraud the tax collectors.  In collaboration with the Banco Popular Antiliano, Margolis was alleged to have manipulated the bank accounts of 22 clients — including est — by transferring nonexistent funds for American tax benefits.  Documents were backdated, according to the indictment, and the true position of these accounts was maintained in secret accounting records. 

Suddenly est’s problems multiplied.  Between January and August, “out statistics” — unregisters, withdrawals and transfers — in est’s trainings averaged only 16 percent.  In the fall, they zoomed to an average of 28 percent, and in San Francisco, est’s home territory, October statistics reveal that one person was dropping the training for ever two who paid their $250.  As if San Francisco’s apparent change of heart wasn’t enough to trouble est Central, a Hawaiian judge ruled that est was practicing psychology and that a psychologist must be present in future est trainings.  (Est is appealing the Hawaiian decision.)  Inevitably, a spate of books about est appeared.  Some were only mildly favorable, but all were profitable; the most authoritative of these, by Adelaide Bry, sold to paperback for $225,000.  And, closer to home, other trainings were beginning to attract attention — especially Stewart Emery’s “Actualizations” program, a supposedly benign and anti-jargon approach that, along with its modest promise of an improved ability to communicate, is also said to “cure” est graduates troubled by est “brainwashing.”

But it was the Margolis indictment that had the greatest potential to embarrass est and discredit its claims of total financial rectitude.  It is always unfortunate when a corporation’s lawyer becomes a focus of investigation, and it is especially unfortunate when that lawyer is a sophisticated manipulator with a history of complicated transactions.  Even tax shelter specialists have had trouble following the progress of a Harry Margolis deal, and, as Margolis does not comment on his clients’ affairs, very little is really known about the intricacies of his operation.  A number of intriguing questions, however, have been pieced together, and they do suggest there may be more to est’s financial setup than Werner Erhard likes to acknowledge.  Is, for example, EST International, Ltd., the Virgin Islands-based owner of the Berkeley Barb newspaper, related to est, Inc.?  What continuing role does Associated Convalescent Enterprises play in est?  Why does est seem to have entered into partnerships with other oddly named companies — and why do they seem so unprofitable?  What is Twine, Inc., and why, on January 2, 1976, did Erhard Seminars Training become Twine?  And finally, why is it that Werner Erhard can’t divulge the name of the “charitable trust” that, according to Don Cox, “owns est for the benefit of the public, to whom est ultimately belong”?

Est sends out at least one mailing a month to its graduates, and Erhard dispatches special communiqués whenever a new revelation pops into his consciousness, but at no time in this period as est notified its graduates of its lawyer’s indictment or its own legal problems.  Instead, Erhard has taken the offensive, in an attempt to win increased respectability for est.  In September, est had sponsored a voter registration drive.  In October, Erhard announced a special evening for the clergy.  In November, he brought his entire family — both wives, all seven children and his parents — onstage with him at the “Making Relationships Work” event to show the 6,000 est graduates that his relationships were impeccable.  (Still, Harry Rosenberg, Erhard’s younger brother, told him recently, “To me now, you’re more the guy I’m trying to please than you are my brother and the person I’ve chosen to serve … I do a lot of pretending around you.”) In December, Erhard quietly met with representatives of other consciousness businesses, apparently to win pledges of cooperation.  In January, Erhard traveled to five cities, confiding to 30,000 people that in 1976 he would reluctantly become a public figure.