Golden Temple reorganization called conspiracy

The Register-Guard, Oregon/May 24, 2011

Portland - The attorney for the Sikh ministers who are suing the religious group's business leaders described in opening statements Monday a conspiratorial plan that enabled an elite group of Golden Temple executives to gain control of the Eugene food company and become instant millionaires.

But attorneys for the executives, including Golden Temple CEO Kartar Singh Khalsa and "Unto Infinity," the governing board of Sikh companies, insisted that their clients did nothing wrong and in fact acted decisively to save the community from a financial crisis that threatened its network of educational and religious nonprofit groups.

It was the first day of what is expected to be a four-week trial in a standing-room-only Multnomah County Circuit Court room, which was packed with Sikh Dharma adherents wearing their distinctive white clothing and turbans.

It was an unusual spectacle, with one Sikh witness breaking into song to show what initially attracted him to his teacher, Yogi Bhajan, and another adherent meditating silently on the floor as Unto Infinity board member Peraim Kaur Khalsa took the stand near the end of the eight-hour day.

In their lawsuit, initially filed more than 1 1/2 years ago, the ministers have accused the Unto Infinity members of breaching their fiduciary responsibility to safeguard the community's assets.

They also have accused the Golden Temple executives of personally profiting from a 2007 company restructuring, which ultimately gave the executives 90 percent of Golden Temple's assets.

Defense attorneys denied those allegations.

"Contrary to what the plaintiff asserted, this is not a sweetheart deal for Golden Temple management," Unto Infinity attorney Paul Fortino said.

The ministers' case was merged in December with one filed by Oregon Attorney General John Kroger, who oversees charitable organizations in the state. State attorneys were present Monday but did not give opening statements.

The parties agree that Roy Lambert, Yogi Bhajan's longtime personal counsel, was the chief architect of the 2007 company restructuring. It converted Golden Temple Oregon Inc., which had been wholly owned by Unto Infinity, into a limited liability company.

John McGrory, the ministers' attorney, said Lambert described the restructuring as "the most complicated transaction and novel transaction he's ever worked on."

Three entities put capital into the deal, McGrory said. Unto Infinity put in $23 million - the value of Golden Temple in 2007 as determined by an outside appraiser - and the six Golden Temple managers put in $100; KIIT BV, the owner of Golden Temple's European Yogi Tea operations, put in an estimated $10 million, the appraised value of that company in 2007, McGrory said.

For those contributions, Unto Infinity and KIIT BV each received a preferred annual return of 8 percent, plus 10 percent of any company profits beyond that. The other 90 percent of the profits went to the group of Golden Temple managers: CEO Kartar Khalsa; CFO Karam Singh Khalsa; operations director Ajeet Singh Khalsa; research and development director Guru Hari Singh Khalsa; sales manager Gurudhan Singh Khalsa; and marketing manager Robert Ziehl.

In the event that Golden Temple's U.S. business sold, Unto Infinity would be paid the $23 million appraised value before any remaining proceeds were split, 10 percent to Unto Infinity and 90 percent to the Golden Temple executives, McGrory said.

If the European tea division were sold, KIIT BV would receive the $10 million appraised value before any remaining proceeds were split, 10 percent to KIIT BV and 90 percent to the Golden Temple executives, he said.

McGrory said that Kartar Khalsa, the CEO, was set to receive $15.7 million of the $32.8 million profit flowing to the Golden Temple managers. The Golden Temple managers' attorney, Kenneth Davis, called that figure "grossly inflated."

McGrory said three Unto Infinity board members approved the restructuring: Siri Karm Kaur Khalsa, Sopurkh Kaur Khalsa and Siri Ram Kaur Khalsa - all longtime aides to Yogi Bhajan.

McGrory said Siri Ram Khalsa - who later resigned from the Unto Infinity board - will testify that "she didn't understand the transaction." And when she later tried to see the documents outlining the deal, McGrory said, she was rebuffed by Lambert, Kartar Khalsa and Sopurkh Khalsa.

Attorneys for the Golden Temple executives and Unto Infinity board said they averted a funding crisis by restructuring the company.

Funding for the nonprofit groups fell "virtually overnight" from $1.8 million to $400,000, largely because of an $18 million settlement against Akal Security, another Sikh company, Davis said.

He said restructuring worked: "It restored funding to pre-'06 levels."

Fortino, Unto Infinity's attorney, said his clients fulfilled their obligations.

What the evidence will show, he said, is that the Unto Infinity managers knew their duty, knew their task, knew their direction, and lived up to their responsibilities.

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