Children of Synanon

An acclaimed Tucson drug-treatment program went suddenly, mysteriouly bankrupt. Administrators blame the board of directors. But others are questioning the administrators and their history at the notorious drug-treatment empire known as Synanon.

Phoenix New Times/October 10, 1996
By John Dougherty

The story sounds diabolical. For more than a decade, a Tucson nonprofit drug-treatment center called Amity, Inc., had slowly developed a glowing international reputation for helping drug addicts.

Amity's apparent success was cited in a 1995 front-page story in the New York Times. Walter Cronkite waxed eloquent about the program in a broadcast last year.

Amity's leaders have testified before Congress and been named to White House panels. Only last month, a major Japanese television network featured Amity's intense therapy, including gut-wrenching, emotional encounter sessions.

Now despite such public success, Amity has gone into bankruptcy. Its records have become the focus of a series of private and government investigations, and its management has conjured up a peculiar conspiracy theory in which Amity's own board members are accused of destroying the program in a real estate scam.

Amity's managers had commonly provided services to anyone in need, but current and former managers admit they long had been overwhelmed when it came to financial matters.

In the early 1990s, Amity's management sent out a plea for help. Tucson's business community responded, with prominent attorneys, bankers, legislators, educators, business persons, religious leaders and accountants agreeing to serve on Amity's board of directors.

At first Amity's management was delighted to have such outside expertise on its board; because of its apparent clinical success, the center had grown and was now handling an unwieldy $6 million a year in state and federal grants. But soon, the honeymoon ended.

In September 1994, Amity's top managers were told by the U.S. Department of Health and Human Services that the organization had improperly, and possibly illegally, spent about $517,000 of federal money. This was a catastrophic mistake that forced drastic reductions in staff and programs.

It was so serious that in November 1995 Amity filed for bankruptcy. Although two of Amity's three top managers have since resigned, the former leaders continue loudly to lay the blame for Amity's financial collapse on former members of Amity's board of directors.

In fact, Amity's former executive director, Rod Mullen, and his wife, former deputy director Naya Arbiter, claim several former board members and their agents executed an elaborate scheme to destroy Amity and gain control of Amity's 53-acre ranch in east Tucson.

"We are pretty convinced we were forced into bankruptcy because some developers wanted our land," Mullen says.

Arbiter filed a formal complaint with the Arizona State Accountancy Board in October 1995 accusing Tucson accountant Jon Young of misconduct in his role as a director and member of the board's finance committee. The accountancy board is continuing to investigate the charges.

Arbiter and Mullen are armed with reams of documents and an array of convincing tales to support their accusation. Even more alarming is their claim that some of the board members who supposedly undermined Amity had relatives successfully complete its drug-treatment program.

Could it be true that members of Tucson's business elite coldly executed a plan to destroy one of America's most successful drug-treatment centers--a facility that had helped some of their own children--simply out of greed? Could it be true that Tucson's business elite would choose an easily detected and hardly sure-fire accounting gambit in order to accomplish that plan?

Both are very, very unlikely. The accusation has enraged and confounded many volunteer board members who have spent years helping Amity. Most say Amity's financial collapse was caused by Mullen's incompetent management. Thousands of pages of Amity documents--and Mullen's own statements--strongly support that view.

So why raise such an outlandish accusation at this time? One reason might simply be money. Amity's financial collapse left Mullen and Arbiter unemployed.

Their best hope for a job right now is landing a $1 million-a-year California state grant to manage a drug-treatment program in a San Diego prison that Amity started in 1990. Part of the criteria for awarding the grant will be the financial acumen of the applicants.

Muddying the waters with a story outlining their conspiracy scenario could take some of the sting out of Amity's bankruptcy, says accountant Young.

Whatever the reason, Arbiter and Mullen, and to a lesser extent Amity's current executive director Bette Fleishman, have launched a powerful campaign to discredit many of Amity's former board members.

Relying heavily on character assassination, innuendo and repetition to build their case, the trio is using techniques mastered years ago while participating in another drug-treatment program that was hailed, much like Amity's is today, as a miracle cure for drug addicts.

Arbiter, Mullen and Fleishman each spent more than a decade living at the now-infamous California-based cult called Synanon. During their stay throughout the 1970s, they witnessed and participated in a program that evolved from treating drug addicts, to declaring itself a religion to avoid taxes, to developing a paramilitary organization bent on violence.

The central feature at Synanon was regular intense group encounter sessions known as the "Game." During the game, participants would viciously verbally attack each other, leveling allegations that may or may not have been true. Truth, in fact, became whatever the bullying leadership decreed.

The game was such a powerful manipulative device that Synanon's charismatic leader, Charles Dederich, used it to control nearly every aspect of Synanon members' lives.

At one point, Dederich demanded hundreds of married couples split from their spouses and remarry. Nearly every one did, including Arbiter and Mullen, who say they had already separated from their spouses.

In their current assault on the board members, Amity's former managers are using remarkably similar to the game techniques to try to rewrite history.

Smart and beautiful, Naya Arbiter returned in 1980 to Tucson, the city where a decade earlier she was running drugs across the Mexican border and stashing heroin on airplanes bound for Los Angeles.

But those days are past. Having entered Synanon for therapy in 1970, she now is dedicated to helping others kick the drug habit that forever changed her life.

In August 1981, she landed a job as director of a drug-treatment program at Tucson Awareness House, a struggling nonprofit organization dedicated to helping troubled youth.

Arbiter quickly revamped the foundering program, which was called Amity, and began expanding its staff. Among the first people she hired was Bette Fleishman.

Later that year, Tucson Awareness House hired Mullen to take over fund-raising duties. Mullen quickly raised more than $100,000 the first year.

In 1984, the director of Tucson Awareness House resigned and Mullen was named the replacement. Arbiter, Fleishman and Mullen discarded the name Tucson Awareness House, replacing it with Amity.

Amity operated at two Tucson locations, providing residential drug treatment for 75 individuals at an east Tucson ranch called Desert Willow and nonresidential services at a former downtown Tucson fire station.

Amity soon expanded its drug-treatment program into the Pima County Jail, where it was welcomed by Pima County Sheriff Clarence Dupnik.

Positive results at the jail propelled Amity's treatment model to the forefront of national drug-treatment programs. The program created a "therapeutic community" in the jail where inmates searched for the root of their drug addictions.

Arbiter was named to President Reagan's White House Conference for a Drug-Free America, and Amity was later recognized as one of the top three therapeutic communities in the nation.

Former Arizona senator Dennis DeConcini became a strong supporter of Amity, and soon federal grants began trickling in. At first they were small and manageable by Amity's unsophisticated accounting department.

In 1986, Amity received a $200,000 donation and it was used as a down payment on a 53-acre ranch that was the former Westinghouse family winter retreat. The Circle Tree Ranch became home to scores of drug addicts and parolees receiving treatment.

It also became the home for Arbiter and Mullen, who lived rent-free in one of the estate's houses.

Fleishman, meanwhile, lived across the street on Amity-leased property at Desert Willow Ranch, which provided additional live-in drug-treatment programs for women and their children.

In the fall of 1990, Amity landed four federal grants and one California state grant worth more than $6 million a year. Amity was quickly overwhelmed with money and a complex set of rules and regulations on how to spend it.

"We didn't even have a CPA," Arbiter recalls. All the grants were cost-reimbursement grants that required Amity to pay for the services first, and then seek repayment from the grants. Amity's managers made a crucial miscalculation by failing to realize they would need cash reserves to cover start-up costs that would not be reimbursed for 30 to 60 days.

"As a result, Amity began to experience severe cash-flow problems," says Fleishman.

Not only was Amity being flooded with grants, it was also expanding programs in Phoenix, Payson and Tucson plus starting a prototype drug-treatment program in a San Diego state prison.

"When all those grants hit in 1990, I thought we were going to have tremendous problems in program implementation," Mullen says.

And that is where Mullen, who as the executive director of Amity was responsible for finances, focused his attention.

"By the time I turned around, our business manager was completely over his head," Mullen says.

By the summer of 1991, it was clear Amity was having serious financial problems and was failing to comply with the grant regulations.

"We had more money than we ever had, but were losing more money than ever," Mullen says. "The numbers were different from week to week, from month to month."

By late 1991, Amity's managers--Fleishman, Mullen and Arbiter divided the duties--turned to its board of directors for emergency assistance. Two of those members, Tucson accountant Jon Young and National Bank of Arizona president John Gisi, soon emerged as the board's most active members.

"This is bigger than I am," Mullen says he recalls telling Young and Gisi. "I don't know what I'm doing and I really need a hand."

The Synanon game required participants to gather chairs in a circle. A theme was introduced--ranging from worldly philosophical questions to mundane housekeeping matters--and the attacks would begin.

The verbal assaults--physical violence was forbidden--didn't necessarily have to be based on reality. One person could launch a tirade on another with no foundation. Others in the group generally supported the attacker with comments of their own.

The goal was to dump emotional hangups during the game so people would be happy outside the game. That was the upside. The downside was that it distorted reality and inflicted emotional injury.

"You could accuse a person of anything and everyone else may join in on the attack," says David Mitchell, a California weekly newspaper publisher who shared in a 1979 Pulitzer Prize for reporting on Synanon in the 1970s.

"There could be no basis for the attack whatsoever. But everyone would keep adding made-up anecdotes to beat the guy down until he cries, even if he hadn't done anything," Mitchell says.

Everyone at Synanon played the game several evenings a week--including Arbiter, Mullen and Fleishman. They later adopted a variation of the game for use at Amity, calling it the "circle" and removing some of the game's more vicious components.

But the principle of the game--launching personal attacks on others whether true or not--appears to be at the heart of the Mullen-Arbiter-Fleishman conspiracy scenario that accuses former board members of setting out to destroy Amity.

Their sharp attacks, based on meager evidence, shift quickly from one target to another, with the common theme that all the alleged wrongdoers are friends.

The center of their furious assault is a former Amity accountant, whom the trio attempts to discredit by first besmirching the accountant's personal and professional reputation, then linking her to other board members.

The accountant, Michelle Quintenilla, joined Amity in the fall of 1991 after Mullen went to the board seeking financial help. Board members Jon Young and John Gisi selected Quintenilla, even though she had no previous accounting experience with a nonprofit business like Amity that relied on federal and state grants.

Quintenilla immediately installed a formal accounting system and instituted other reforms, which soon brought her into conflict with management.

Her personality also didn't jibe with Amity's top management, and Quintenilla soon found herself as the odd person out.

"I didn't like her," Mullen says. "I didn't trust her." Quintenilla declined to be interviewed for this story. In the spring of 1992, Quintenilla changed the way Amity received its federal grant money. In the past, Amity mailed vouchers to the government showing bills it needed to pay, and the government would later send Amity money to cover the expenses.

Quintenilla upgraded Amity's cash-flow system by tapping into a government program that allowed the funds to be transferred electronically. The change gave Amity much quicker access to cash.

This seemingly minor technical change has become the focal point in the alleged conspiracy to wreck Amity. It was this single incident that Mullen says caused Amity's financial collapse.

And, it was done purposely, he says. "I don't think that was a mistake," he says. Mullen claims that when Quintenilla switched to the electronic withdrawal system, she was supposed to change Amity's accounting method from an accrual basis to a cash basis. The two methods differ chiefly in when a business must account for its bills.

Mullen says Quintenilla's failure to make the accounting adjustment led him to believe he had funds available for spending on nonfederal programs, when, in fact, he didn't.

"We thought we had the money and could spend it how we chose. We did that," he says.

This mistake eventually led to Amity overspending its federal grants by $517,000, forcing it into bankruptcy, Mullen says.

Mullen, Arbiter and Fleishman say Quintenilla made this error with the intention of destroying Amity. And, they say, she made the mistake in collusion with certain board members--particularly Young and Gisi, since they hired her.

The conspiracy widens, Mullen says, when Amity's independent auditors--whom he claims are friends of Quintenilla's and Young's--failed to detect the cash/accrual accounting error for two years.

The failure of the auditing firm, Frizzell, Senkerick & Associates, to discover the accounting error meant that Amity sent false financial reports to the federal government for two years, Mullen says.

Fixing blame follows predictably on the heels of most controversies, but fixing blame hardly describes the conclusions drawn by Mullen and his colleagues. The ex-Synanonites' version of Amity's bookkeeping has far less to do with the facts revealed in the audits and investigations than it does with the well-learned techniques of the Synanon game.

"There is something really, really wrong with Jon Young, Michelle and Frizzell," Mullen says. "There's some kind of allegiance there," he adds, providing nothing to support the claim. Unlike the game, Young, Quintenilla and Frizzell are not included in the circle to challenge Mullen's unproven accusations.

Once the feds discovered the overspending, Amity was placed on severe restrictions that eventually forced it to transfer all of its federal grants to other nonprofit agencies. The federal government soon sent auditors to Amity to comb through its books and review past audits. It was the beginning of the end for most of Amity's programs.

In the months after the September 1994 discovery that Amity owed the government more than a half-million dollars, Mullen says Frizzell wrote a harsh audit report that shifted blame for missing the accounting mistake from itself to Amity management.

"The scheme from that point on was to hang it on me and Naya and exonerate themselves," Mullen says, painting himself and Naya as victims and invoking yet another tactic favored by Synanon in the 1970s.

"One of the ways Synanon traditionally built up support was to portray itself as the victim of discrimination," says newspaperman Mitchell.

The accusations against Quintenilla, Young, Gisi and Frizzell all have a ring of truth to them. After all, Quintenilla failed to adjust the accounting and Young and Gisi recommended she should be hired. Frizzell also missed the accounting error for more than two years.

While the accounting method used by Amity in its reports to the federal government appears to have been wrong and should have been discovered by the auditors, the error is essentially a technical problem, says Susumu Uyeda, a retired federal financial manager whom Mullen hired to review Amity's books.

But to blame Amity's financial collapse on an accounting error is ridiculous, Uyeda says.

"It is totally wrong to lay it on the auditors," he says. Basically, the accounting mistake was an error in reporting when the federal money was spent, not how it was spent.

And it was how Amity spent its federal grants that really got it into hot water with the federal government.

Amity, under Mullen's direction, improperly relied on federal grants to pay bills not associated with federal programs, records and interviews show.

Federal regulations prohibited such expenditures, says Gary Fleming, chief of grants management at the National Institute on Drug Abuse.

"Basically, it seems that money that should have been spent strictly on activities involving the federal grants was spent in a method of Peter to pay Paul," Fleming says.

Over a period of several years, Fleming says Amity relied more and more on the federal grants to cover nonfederal program expenses.

Amity's former chief financial officer, William Tisch, confirms that Amity frequently paid bills not related to federal grants with federal dollars and that this was part of Amity's "long-employed liquidity strategy." When money came into Amity from state grants or other sources, then that money would be used to cover federal programs, he says.

"If we had incurred an expense, then we had the right to draw those funds," Tisch explains. "Whether we actually paid that invoice or not was between us and the vendors."

One vendor that frequently went unpaid for many months at a time was the University of Arizona. Amity contracted with the university to conduct research at one of its programs. The contract called for UofA to be paid out of the proceeds from a federal grant.

In early 1993, Amity's east Tucson properties were flooded, causing severe damage. Amity experienced extreme cash-flow difficulties, and records indicate the agency began relying on federal funds targeted for UofA to cover immediate expenses.

"Amity developed a pattern of paying the university beyond the normal 60 to 90 day turn-around," Mullen stated in a letter to federal officials.

In January 1994, UofA suddenly demanded full payment from Amity for its services--a whopping $500,000.

Amity didn't have the money, and UofA immediately complained to the federal government.

"They called us up and said, 'Come on, we're not getting paid. What can you do to help us?'" Fleming says.

The call alerted federal-grant monitors like Fleming that all was not financially well at Amity.

"We had some little warning bells, but that was the biggest bell," Fleming says.

Less than a year later, federal granting agencies placed Amity on severe restrictions and began demanding that all federal funds be accounted for and paid to the appropriate vendor.

In December 1994, Amity controller Amy Ramm-Merkel admitted in a letter to the government that Amity had spent $517,000 on nonfederal programs to cover expenses that it expected to be later reimbursed from nonfederal sources.

It was the misapplication of federal funds, rather than Amity's incorrect method of accounting for its money, that alerted the federal government of Amity's financial problems, Fleming says.

In fact, Mullen's assertion that Quintenilla was supposed to begin reporting on a cash basis in 1992 when she began withdrawing funds electronically is incorrect, Fleming says.

Amity was always supposed to be reporting on a cash basis since it first began receiving the grants in 1990, Fleming says.

"That's one of the reasons they got messed up," he says.

Mullen's assertion that Amity's board conspired to ruin the organization has infuriated many current and former board members--especially in the face of documented misspending of federal funds by Amity's management under Mullen's direction.

Jon Young, who is the subject of a state accountancy board investigation instigated by Arbiter, is dumfounded by the conspiracy allegations.

"There was no conspiracy," he says. "Nobody here gained anything." Young, who served as board president from 1992-94, says it was a frustrating experience working with Mullen and Arbiter because they didn't seem to understand the importance of keeping Amity's finances straight.

Amity's auditors, Young says, reported that the organization was overdrawing its federal grants in 1991 and 1992, yet Mullen failed to correct the problem. Young says Mullen told him and other board members that the problem would be corrected.

But Amity continued drawing down more funds from the federal grants than it was supposed to, culminating with the 1994 UofA fiasco, Young says.

"We were lied to by management," Young says. Another former board president, Tom Chandler, says Mullen's allegation that board members were after the ranch land is absurd, especially since the ranch is still under Amity's control in bankruptcy court.

"Jesus Christ," Chandler roared over the phone from an Iowa retreat. "Who would say that? Who would have guts enough to say someone on the board wanted the land?"

Chandler says the conspiracy claim is simply an effort to shift blame from management to a volunteer board.

"They know goddamned good and well that taking money from grant A and spending it on grant B is wrong," Chandler says. "If they don't know that, they shouldn't be answering the phone."

The misappropriation of funds eventually sent criminal investigators from the Department of Health and Human Services' Office of Inspector General to Tucson to probe Amity's finances.

Another former board president, John Mahwinny, says criminal investigators interrogated him about Amity's management. Young also says he gave a taped, sworn statement to investigators about Amity managers.

"That was not a good moment," Mahwinny says. Both men say the investigators indicated that no money had been stolen. The Inspector General's Office declined to comment about Amity.

The misspent federal money appears to have gone into Amity's programs, which frequently had more people in treatment than required under the grants.

Amity's bankruptcy attorney Matthew Waterman says Amity kept providing housing, food and treatment to people, including mothers and their children, even after other funding ran out.

"Rather than throw the babies on the street, Amity continued to feed them," Waterman says.

But its managers' inability to balance federal grant rules with providing services eventually drove Amity into bankruptcy.

"They don't seem to realize the severity and the importance of keeping track of money from the federal grants," Susumu Uyeda says.

Uyeda also dismisses Mullen's contention that the accounting error played a major factor in Amity's collapse. While the auditors should have caught the mistake, Uyeda says, there were plenty of other indicators showing Amity's finances were out of control.

"The writing was on the wall," Uyeda says. Even other nonprofit drug-treatment agencies believe that management had much to do with Amity's failure.

Fred Streit, executive director of New York-based National Drug Research Institute, says Amity's managers devoted too much of their time to running their programs and not enough time keeping the finances under control.

NDRI got a close look at Amity's financial condition just prior to bankruptcy. The New York agency agreed to take over several programs that Amity could no longer afford to operate.

Streit says Amity's shortcomings could be summed up simply: "They did not, for many reasons, apply proper controls."

It's not the first time Amity's future managers saw an organization collapse because of lack of controls.

Synanon's rise and failure are testament to an organization where there were no external controls to keep its founder and charismatic leader Charles Dederich from running amok.

Synanon evolved from a handful of drunks living in Dederich's apartment to a $10 million-a-year business with more than 2,000 members. Dederich and his followers repeatedly clashed with government authorities over issues ranging from zoning, child care, education, taxes and ultimately beatings and attempted murder.

Synanon finally collapsed after the Internal Revenue Service revoked its tax-exempt status with the help of Arbiter, Mullen and Fleishman.

But that action came years after the future managers of Amity were loyal, devoted members of Synanon.

The movement, which its own attorney described as a cult, started out quietly enough.

Dederich founded Synanon in 1958 in Santa Monica, California, first as a dry-out tank for alcoholics and later as a commune to help heroin addicts kick the drug.

In 1967, Dederich expanded the role of Synanon to include nonaddicts who wanted to participate in the racially and economically integrated community.

Those joining the community donated their personal assets to Synanon in exchange for having all personal needs ranging from housing to education to health care to transportation and employment provided by Synanon.

By 1970, all three of Amity's future managers had become active Synanon members.

Mullen joined Synanon in 1967 and remained a member for 13 years where he was a director at Synanon's communal school. He donated $60,000 when he joined Synanon after graduating from the University of California at Berkeley where he studied political science.

Arbiter spent ten years at Synanon, entering the program after being arrested on drug-transportation charges as a teenager in 1970. Arbiter says she became a close friend of Dederich's daughter, who later became chairman of Synanon.

Fleishman, who remains as Amity's executive director, spent 12 years at Synanon, joining the commune the day after she graduated from Hollywood High School in 1968. The daughter of a prominent Los Angeles First Amendment attorney who assisted Synanon in a successful libel suit against the San Francisco Examiner, Fleishman donated her college-tuition funds to Synanon.

While at Synanon, Fleishman says she "apprenticed" herself to Dederich's late wife, Betty, who was a primary contributor to Synanon's philosophy and about the only check on her husband's power, which was primarily maintained by the game.

"Anything important had to be said in the game," says Richard Ofshe, a University of California sociology professor who shared in the 1979 Pulitzer Prize with Mitchell. "If you felt reservations or were opposed to what was going down in Synanon, you couldn't talk about that outside of the game.

"If you started to do that, you were being negative and needed additional education. It was your friends' obligation to rat you out. The friend would accuse you of dumping your stuff outside the game."

But raising concerns about Synanon's direction or policies in the game was also a dangerous tactic.

"The only time it is legitimate to express opposition is in a setting where the rest of the rules are designed to beat the hell out of you," Ofshe says.

Dederich frequently imposed, without warning, strict mandates that all Synanon members were required to adopt. Those who didn't were humiliated during the game or forced to leave the community. The mandates started with an edict banning cigarettes and requiring all members to shave their heads.

Before long, Dederich demanded regular aerobic exercise and elimination of sugar and white flour from members' diets and his nonstop series of self-help lectures was piped into every Synanon member's room via radio. The demands increased, including a requirement that all men who lived in Synanon for more than five years have vasectomies and for pregnant women to have abortions.

Soon after Dederich's wife died in 1977, he imposed his most drastic demand. Dederich, who had remarried, ordered all married members of the community to switch spouses. The command, known as "changing partners," was met with resistance but, remarkably, several hundred married couples agreed to the switch.

With a loyal base of supporters that he continually tested, Dederich set about building a community that he believed would be a model for the rest of the world to follow. To do this, he needed money.

Synanon raised money by hustling donations from the government and corporations using a sales pitch that emphasized the organization's service to saving junkies. The pitch worked. Millions of dollars' worth of materials and real estate flowed to Synanon.

The nonprofit Synanon also began selling pens, papers and other office supplies to Fortune 500 companies that could be used as promotional materials. That soon turned into a multimillion-dollar-a-year operation.

The booming finances of Synanon were starkly contrasted by the living conditions of its members, most of whom shared quarters in downtown boarding houses or in trailer homes scattered across rural ranches. Synanon workers were paid a few dollars a week for their services.

Dederich and the top management of Synanon, however, began to enjoy the wealth flowing into the organization. By the mid-1970s, Dederich started drawing a large salary, including a $500,000 pre-retirement bonus.

"The way Synanon operated for years was to scam whatever they needed and then do with it whatever management wanted to do," Ofshe says.

The massive accumulation of wealth soon attracted the attention of the Internal Revenue Service, which began to scrutinize Synanon's tax-free status as a nonprofit organization granted by the IRS in 1960.

Synanon declared itself a religion in 1975 to solidify its position as a nonprofit organization. In the following three years, Synanon developed a paramilitary organization including two internal police forces called the Imperial Marines and the National Guard. Strict discipline was imposed, particularly at the Synanon school where young children were trained in paramilitary maneuvers.

Synanon members began to violently clash with neighbors, and numerous beatings and assaults occurred. The violence culminated in 1978 when Dederich inspired followers to try to kill an attorney named Paul Morantz, who had successfully sued Synanon.

Dederich had fallen off the wagon and was comatose drunk when he was arrested on December 2, 1978, in Lake Havasu City. He later pleaded no contest to conspiracy to commit murder along with two other Synanon members who had planted a rattlesnake in Morantz's mailbox. The snake bit Morantz, inflicting serious injury to his hand and arm.

Dederich was sentenced to probation and Synanon's lucrative business enterprises continued in operation.

In 1982, the IRS removed the tax-exempt status from Synanon for the fiscal years 1977 and 1978. Synanon sued the IRS to regain its nonprofit status, but lost the case in 1984.

Rod Mullen, Naya Arbiter and Bette Fleishman played a crucial role in the IRS case against Synanon.

The three provided statements to the government that were used to dismiss Synanon's appeal of an Internal Revenue Service ruling revoking its tax-exempt status. The court case revealed that Dederich had transferred $2 million of Synanon funds to himself and family members. Dederich also received noncash benefits, including a residence at a 300-acre ranch near Badger, California.

Throughout the tumultuous 1970s, as Dederich gradually increased his control over Synanon members to the point of dictating their spouses, the three future founders of Amity remained loyal to the Synanon cause.

"If you had been there any length of time and were still in there by '80, '81, you were a real zealot," says Mitchell.

The trio left Synanon only after Dederich's no-contest plea in September 1980.

"Synanon went morally bankrupt," Arbiter says in explaining their departure at that time. "We were idealistic people who didn't believe in violence."

All three acknowledge in separate interviews that Synanon took a turn toward destruction. But all three maintain that for all its ills, Synanon had redeeming qualities that should be emulated.

"The sad part about the whole Synanon thing is when all is said and done, it was an organization that had done a great deal of good," Arbiter says.

Synanon has had a profound impact on drug treatment in America and throughout the world. More than 2,000 therapeutic communities created to treat drug addicts--including Amity--are modeled on Synanon.

Ironically, Dederich admitted in the midst of his organization's collapse that he had no idea how to cure addicts.

His stunning confession came in a pleading filed in federal district court in Washington, D.C., in 1982, where Dederich is quoted as saying, "I don't know how to cure a dope fiend. I never did."

During Synanon's most violent phase in the late 1970s, Dederich moved to the 300-acre ranch in the Sierra foothills east of Fresno, California. There, Dederich began building a community for Synanon's top leadership.

Among those living there for a time were Amity's future managers. At the new community, residents settled into the good life, where the mission had changed from curing drug addicts to reveling in wealth.

A quarter-million-dollar covered tennis court was constructed. A huge meeting room--with a bar as the centerpiece--was built adjacent to Dederich's home. Elaborate dinners lasting for hours concluded each day.

At one time, Synanon owned more than a dozen properties in California and elsewhere. All of the properties were later sold after the IRS revoked its nonprofit status. All of them except for the ranch.

The Sierra foothills ranch is still controlled by what's left of Synanon's board of directors. Dederich, now in his 80s, no longer lives at the ranch. He's confined to a wheelchair and lives in a Visalia, California, trailer park.

The new caretakers of the run-down Synanon ranch are Rod Mullen and Naya Arbiter.

Their living arrangements at the ranch are vague. Arbiter says the couple ran into some Synanon board members who said they could live at the ranch if they maintained the property.

Already, there are signs of Synanonlike resurgence. Buildings are slowly being restored by a handful of people living at the ranch who are trying to kick drugs or meet their parole requirements.

The large living room has portraits of Synanon's founders on its walls--and quotations of their sayings scattered about. The emerging post-Synanon philosophy clearly steers away from Charles Dederich and instead places his late wife as the heart and soul of the organization.

The couple is working furiously on developing a proposal to take over the management of a drug-treatment project at a San Diego prison. The project was started by Amity in 1990, and the contract expires later this year. Bids for the contract are due October 10.

Operating under the name Amity of California, Mullen and Arbiter hope to pick up where they left off before the original Amity's plunge into bankruptcy.

The San Diego prison contract is worth $1 million a year and is for just 200 beds. If Mullen and Arbiter land that contract, it could open the door to a far more lucrative deal.

The California Legislature is impressed with the results so far at the San Diego prison, where Amity says it has cut the recidivism rate in half. The legislature is considering expanding an Amity-type program to more than 5,000 beds during the next five years.

A daylong interview with Mullen and Arbiter at their new home slowly winds down as a full lunar eclipse covers a harvest moon hanging above the Sierras. Mullen steps out on the redwood deck outside his living room.

"The 20th century is a century of cynicism," he says. "Nobody believes anybody."

That mood, plus the reports coming out of Tucson saying he financially mismanaged Amity, threatens to destroy his means of making a living, he says.

"The first thing you need in this business is credibility," he adds. Mullen is asked whether the collapse of Amity could have been just a series of errors rather than a twisted plot to destroy the organization.

No, Mullen says. This was a plot. "At some point, they said we are going down and there is something in this for us, our partners or whoever," he says.

Mullen's and Arbiter's persistent insistence of a conspiracy to destroy Amity seems amazing given the facts surrounding Amity's collapse--facts that had largely been supplied by them.

But then again, maybe it all makes sense. At least that is what Richard Ofshe of the University of California says.

"You will never be able to tell whether they believe what they are saying or not," Ofshe says about the couple's claims. "That is the product of the Synanon game.