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Scientology founder's tenets drive Pinellas title company, under fire for rapid document processing

The Palm Harbor Chamber of Commerce named Nationwide its 2006 large business of the year.

JIM DAMASKE | Times

The Palm Harbor Chamber of Commerce named Nationwide its 2006 large business of the year.

In 2009, a low-profile Pinellas County company drew unwelcome attention in a growing national controversy over home foreclosures.

Employees of Nationwide Title Clearing, a leading processor of mortgage-related documents for banks, loan servicers and the Federal Deposit Insurance Corp., were under fire for signing paperwork as "vice president'' of various banks although they actually worked for NTC.

The assembly-line process in which workers scrawled their names or initials on hundreds of documents at a time — typically without reading them — helped prompt the term "robo-signing.'' Critics said robo-signing raised questions about the accuracy of documents and the legality of thousands of foreclosure cases.

What few people knew was that the Palm Harbor company had extensive ties to the Church of Scientology. And that NTC's owners, who have donated heavily to church projects, ran the company on management principles of Scientology founder L. Ron Hubbard.

Norm Novitsky, a longtime Scientologist who founded NTC in 1992, once credited the company's success to Scientology.

"There are many companies like ours,'' he wrote on a Scientology-related website, "but I'm proud to say, through hard work and L. Ron Hubbard's administrative technology, in just a short time we rose to being one of the leading servicers in our field."

Hubbard's "tech," originally used to manage his church and later adapted to business, stresses the use of statistics to measure and spur employee output. Companies with flat-line statistics showing no change are in an "emergency'' condition, he said.

The use of Hubbard's technology on Nationwide's busy campus — which can image up to 500,000 pages of mortgage documents a day — has sparked complaints that the company foists Scientology principles on workers and creates a high-pressure environment.

"Employees are being told not to talk to each other and if they do, they are terminated,'' a manager of WorkNet Pinellas, a nonprofit job agency, wrote in an e-mail to colleagues in December. "Papers that are signed at the time of hire have L. Ron Hubbard info on it.''

NTC's owners declined to be interviewed. In a statement responding to questions submitted by the St. Petersburg Times, the company acknowledged that it uses Hubbard's techniques, which it described as "nonreligous,'' and that it offers employees courses at work based on his management theories.

"We use this system because we have found it to be workable,'' the statement said, adding emphasis. "Twenty years ago, NTC started with limited capital, today NTC provides nearly 200 jobs in Pinellas County. This is what we mean by workable.''

The company denied pressuring or forcing employees to study Scientology or to become Scientologists. "This workplace is for work: no religious prejudice, hostility or intolerance has any role here.''

Other companies are accused of robo-signing, but there is no indication Hubbard's "tech'' is part of their workplaces. But as one of the nation's leading service providers to the residential mortgage industry, NTC is an example of the Hubbard business principles put into practice. And a look at NTC offers insight into thousands of other companies that use Hubbard's techniques, many of them Tampa Bay businesses also owned by Scientologists.

Production above all

Now 64 and retired from NTC, Novitsky lives in California and has become an independent film producer.

He didn't respond to requests for an interview for this story. But on a website where Scientologists tell how they've been helped by the religion, Novitsky said he joined Scientology during a turbulent period in his early 20s.

"I couldn't hold onto success very long and ALL of life's mysteries and answers were occluded to me,'' he wrote.

At a friend's suggestion, Novitsky visited a Scientology center in San Francisco and "the rest is history,'' as he put it. According to the website of his BluNile films, he studied "Organizational Executive Management and Marketing and his early career focused on those areas.''

Those were areas that fascinated Hubbard.

Along with writing his seminal work, Dianetics, Hubbard developed operational principles and techniques that could be applied to all organizations, including businesses. First used by staffers in Scientology churches, they eventually were issued as the Organization Executive Course and the Management Series set and were made available to Scientologists.

Hubbard preached that managers keep a keen eye on statistics and not worry about coddling employees.

"However one tries to coat the pill, there is no substitute, in an executive, for the ability to get the crew to produce," he wrote. "The fire-breathing product officer will be followed and supported when the wishy-washy old pal guy will be stepped all over in the rush to follow the real leader."

The only way for an organization to survive is to grow, said Hubbard, who also devised a system of "ethics" in which unproductive employees could work their way out of conditions called "danger'' and "nonexistence.''

Novitsky embraced Hubbard's theories. By 1988, he had served as president of a California mortgage company and started his own company, Public Home Loans.

Then in May 1992, "after extensive R&D in the banking services industry,'' Novitsky founded Nationwide Title Clearing in Glendale. It was 5 miles from Scientology's world headquarters in Los Angeles.

Companies like NTC are premised on a simple idea: Banks have something better to do with their time and staff than processing massive amounts of paperwork. Instead, the servicer handles the preparation and recording of lien releases, assignments of mortgage and other routine documents — work that requires rote efficiency by lower-level employees.

Just a year later, Novitsky and his wife, Terri, declared bankruptcy. He reported making $5,700 a month at NTC, but had debts of $667,639, including $120,000 he owed his own loan company.

Records show that Novitsky shared ownership of NTC with three other Scientologists — Alan Turbin, Edward E. Marsh and Ivan "Ike'' Kezsbom. The latter had worked as a loan counselor for Novitsky and had declared bankruptcy himself with nearly $500,000 in debts, most of it from a mortgage and credit cards.

Within a few years, fortunes markedly improved.

"By 1996 the company had become one of the leading service companies of its kind,'' Novitsky's BluNile bio says.

NTC said Novitsky's financial affairs were personal and never affected the company.

Though NTC remained in California through the '90s, it began looking east to the lower-cost Tampa Bay area. And Clearwater was home to the church's spiritual headquarters and thousands of Scientologists.

"We wanted a community to settle into permanently and develop headquarters large enough to facilitate an expansion of services,'' Jim Stewart, NTC's former president, would later tell the Palm Harbor Chamber of Commerce. "We found that perfect match in Pinellas County.''

He added that the bay area "provided a strong employee base.''

By 2001, Novitksy, Marsh and Kezsbom, NTC's president, all had homes in Clearwater.

A year later, Abundant Life Family Church, a Christian congregation that had closed its school and needed to reduce its space, sold its three buildings in Palm Harbor for $2.1 million to a new company called National U.S. Alliance. Its incorporation papers had the address of Kezsbom's Clearwater house, but didn't list any officers or directors.

As the deal was going through, NTC already had applied to do business in Florida. It incorporated in early 2003 and by that summer completed its move to Pinellas County.

Church before self

In its early years in Florida, NTC felt the shock waves of a huge fraud that exploited close ties among Scientology's business community.

Reed Slatkin, a California Scientologist, had promoted himself as a successful financial adviser. In fact, he was running the biggest pre-Madoff Ponzi scheme in history, paying early investors with money raised from newer ones. The trustee in Slatkin's 2001 bankruptcy case alleged that part of the money Slatkin took in was transferred to the Church of Scientology.

NTC and three of its owners — Novitsky, Marsh and Kezsbom — invested $7.8 million with Slatkin and later submitted claims to the bankruptcy court.

But in a notable display of loyalty to Scientology, Kezsbom didn't want to be made whole at the expense of his church.

"I am a long-standing member of the Church of Scientology,'' he wrote the court after learning that the trustee intended to sue to recover money from the church. "I would be opposed to any plan that involves suing my Church.''

In 2003, Slatkin was sentenced to 14 years in prison on fraud and money-laundering charges. In 2006, the trustee settled the lawsuit with the church and related entities, which agreed to pay $3.5 million.

Kezsbom didn't live to see it. On Nov. 28, 2003, not long after his letter to the court, he died suddenly at age 56.

Boom was a boon

Within a few months of Kezsbom's death, his sons-in-law, John Hillman and Todd Kugler, both Scientolgists, became officers of Nationwide Title Clearing.

In 2006, the Palm Harbor Chamber of Commerce named it "Large Business of the Year,'' citing its "outstanding presence'' in the community and its Hurricane Katrina relief efforts that collected more than 2,000 pounds of food and other essentials. The company also conducted food and clothing drives for local charities.

During the real estate boom, NTC grew as millions of loans were sold and resold, creating an avalanche of documents to be processed. But it was not until the bubble burst that notoriety hit.

With millions of Americans facing foreclosure, defense lawyers pored over mortgage-related documents for any hint of errors or fraud that could be used to defend a foreclosure case.

In 2008, Chris Hoyer, a Tampa lawyer who runs the online Consumer Warning Network, noticed that the names "Bryan Bly'' and "Crystal Moore'' appeared on documents filed all over the country. Sometimes they signed as notaries, sometimes as vice president of various banks.

Hoyer discovered that both worked for NTC. Neither had any background in real estate or banking. Bly's previous jobs included remodeling an Eckerd drugstore and working for a carnival operator.

"These pieces of paper are very important,'' said Hoyer, "and the problem with signing as vice president is that they're not.''

As criticism mounted, NTC said its procedures were legal and standard in the document-processing industry. It noted that it had corporate resolutions in which banks authorized Bly and other employees to sign on their behalf.

But in November, Sarasota lawyer Christopher Forrest posted on YouTube videotaped depositions he had taken of Bly, Moore and a co-worker in a foreclosure suit he was defending. The trio stumbled over common terms like "assignment of mortgage'' and described a factory-like process in which they signed hundreds of documents at a time.

Asked if she ever read any of the documents she signed, Moore replied: "No.''

Asked how much time she spent with each document, she said: "A few seconds.''

Unique work culture

The depositions were embarrassing, and NTC quickly moved to stem the damage.

With bloggers pouncing on the depositions as more evidence of alleged "robo-signing,'' NTC got a court order forcing Forrest to remove them from YouTube. It also sued St. Petersburg lawyer Matthew Weidner in a case that was settled after he deleted from his blog statements that the company called false and libelous.

All 50 state attorneys general are investigating allegations of errors and fraud in documents that banks need to foreclose. NTC does not prepare foreclosure documents like lis pendens and affidavits of lost note, and is not among the companies under probe.

But NTC is being sued in federal court by a Wisconsin couple facing foreclosure. They allege that NTC prepared thousands of assignments of mortgage, which transfer ownership of a loan from one party to another, as part of a scheme to make it appear that Deutsche Bank owned their loans and those of other homeowners.

In none of the depositions made public so far have lawyers asked about NTC's ties to Scientology. But in a deposition last year in a Duval County foreclosure case, the company's senior vice president of administration — Erika Lance — referred to "the organizing board'' that shows the company's various divisions.

"Org Boards'' — as they are usually called — are common in businesses that use Hubbard's organizational and management techniques.

Lance joined NTC in 2004 and was making nearly $84,000 as of late 2009, unusual for someone with a GED. She previously worked for other Scientologist-owned companies and in a Web posting wrote about "My Success in Scientology.''

"It has given me the opportunity to get an education by the use of the study technology,'' wrote Lance, now 37. "Scientology has enabled me to start a career early and advance up the corporate ladder and earn 4x the amount someone my age normally makes.''

NTC said Lance posted her comments before joining the company. But it acknowledged it has a training center where employees can take courses based on what NTC called the "nonreligious principles'' of WISE — the World Institute of Scientology Enterprises. An arm of the church, WISE brings Hubbard's management "tech" to the business world and attracts new members to Scientology.

NTC's employment applications carry an acknowledgement that the company uses Hubbard's management system. His ideas are everywhere at the company's campus:

• The training center offers Hubbard management courses such as "How to Effectively Handle Work'' and "Formulas for Business Success.''

• Some NTC staffers keep Hubbard's management books on their desks for ready reference. The company also displays WISE "training materials of all kinds and types,'' the NTC statement said. The materials cover topics such as managing by statistics and analyzing trends.

• Workers are paid their regular hourly wages to attend the in-house training sessions, which are made available to Scientologists and non-Scientologists alike. The company said it kept no record of the "varying faiths of our personnel that took these courses.''

None of this puts non-Scientologists at a disadvantage, the company said. "NTC practices equal opportunity employment and does not discriminate against employees on the basis of race, sex, creed, color, national origin or religion.''

NTC estimated that about 85 percent of its 196 employees are non-Scientologists.

Workers' complaints

Over the years, the church's involvement in the business world has sometimes caused confusion and debate, leading to lawsuits in Pinellas and several states that allege the presence of Hubbard's teachings in the workplace violated labor laws. (NTC has not been sued on such grounds.)

While Scientologist-owned companies say they use a secular version of Hubbard's management "tech," the distinction is not always clear to non-Scientology employees, some of whom have reported what they view as workplace discrimination and proselytizing.

In December, WorkNet Pinellas received complaints about NTC and its Scientology ties.

"Be careful about applying for any job at this company,'' one woman wrote. "The turnover is very high for a reason. This conduct must be condoned by Scientology since it has been going on for years.''

A recruiter for WorkNet Pinellas called the company, according to e-mails obtained by the Times through a public records request.

"Of course they swear the company is legit and welcomed me to interview any of their staff,'' the recruiter told WorkNet colleagues in an e-mail. "Still skeptical but not sure what rule I can go by to close the orders (job postings).''

NTC is among hundreds of companies that post job openings on Employ Florida Marketplace, a state-run jobs site. WorkNet decided to leave up the only job NTC had posted at the time, the e-mails show.

Ed Peachey, president of WorkNet Pinellas, wouldn't comment on the complaints. "You're not going to drag WorkNet into any lawsuit,'' he told a reporter.

Since NTC moved to Florida in 2003, Eileen McQuown has sent hundreds of temporary workers there. "I know they are Scientologists,'' said McQuown, owner of Accord Staffing in Palm Harbor.

Most of the temporaries had good experiences, and several took permanent jobs, she said.

But she also heard gripes, especially about the workload: "It was a very high-pressure place, super busy at times.''

Some temporary employees also complained about the presence of Scientology in the workplace, McQuown said, though she said she had no evidence NTC asked them to take Scientology-related courses. But some who became permanent told her they were encouraged to pursue study programs.

"I heard from people that in order to move up in the company you had to take their classes," McQuown said. She also noted she has heard the opposite from other former temps who were hired on and haven't taken the courses.

McQuown said she never took any of the complaints to NTC management.

At Select Staffing, a competing temp service, area manager Tommy Tsaousis said he had only good experiences placing temporaries at Nationwide and would be eager to work with the company again.

"If there is a newsworthy story relating to NTC,'' the company said in its statements to the Times, "it should focus on the quality services and ethical practices of NTC … not the religious beliefs of any of its leadership or employees.''

Times researchers Shirl Kennedy and Carolyn Edds contributed to this report. Susan Taylor Martin can be contacted at susan@sptimes.com, Joe Childs can be contacted at childs@sptimes.com. Thomas C. Tobin can be contacted at tobin@sptimes.com

Scientology founder's tenets drive Pinellas title company, under fire for rapid document processing 01/29/11 [Last modified: Saturday, January 29, 2011 10:29pm]

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