Ananda Village files bankruptcy papers; Plaintiff lawyer says it's a delaying tactic

The Union/September 16, 1998
By James Nash

Battered by two costly lawsuits by a former member, Ananda Village filed for bankruptcy Tuesday.

The San Juan Ridge religious community's decision to seek Chapter 11 bankruptcy protection will buy time in its defense against a second lawsuit filed by Plaintiff, a former Ananda member who claimed she was sexually harassed by two Ananda leaders.

The bankruptcy filing won't disrupt the day-to-day operations of the 30-year-old religious community, Ananda's lawyers said. Nor is there an immediate risk of Ananda going out of business, they said.

The bankruptcy filing won't change the status of a number of businesses affiliated with Ananda, such as the Earth Song Market and Cafe in Nevada City, village officials said. The businesses are legally separate from Ananda, although they tithe to the church.

"This is an opportunity to take a breather, if you will, from the financial problems," said Walter Dahl, a Sacramento bankruptcy attorney representing Ananda. "It probably means that we're going to term out payments to this judgment creditor (Plaintiff) and other creditors over a period of time."

In February, a judge awarded Plaintiff, $350,000 in compensatory damages against Ananda for a case in which she alleged that Ananda founder J. Donald Walters stood by while another Ananda minister, Danny Levin, sexually abused her. Ananda has yet to pay anything on the settlement.

Shortly after the first verdict, Plaintiff filed another lawsuit against Ananda and several individuals, alleging that the religious community conspired to defame her character and ordered the theft of several trash bags full of legal documents from her lawyers. In the second lawsuit, still pending in Nevada County Superior Court, Plaintiff seeks more than $38 million in damages.

Ananda offered to settle both cases this month with a financial award, said Allan Haley, an attorney for the village. Haley would not disclose the amount, which he called "fair."

When Plaintiff's lawyers declined the settlement, Ananda had no choice but to file for bankruptcy, Haley said. Ananda had a legitimate fear that its assets could be sold in a "fire sale" to satisfy its debts to Plaintiff, said Haley.

An attorney for Plaintiff characterized Ananda's settlement offer as a "joke" and said the bankruptcy filing appeared to be an attempt to get around its financial obligations from the first lawsuit.

"This is simply another delaying tactic by Ananda trying to avoid the inevitable consequences of its behavior," said Ford Greene, a San Anselmo lawyer. "They've got to pony up, and they've got to pony up in a manner that's commensurate with the despicability of their behavior."