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USA v. Peterson, et al. Trial



The outlines of the Government’s case against five staff members of the former Spring Shadows Glen, a Houston private mental health facility, began to take shape in the second week of trial this week in Houston. Standing accused in the U.S. District Court of Judge Ewing Werlein, Jr. are psychologist Dr. Judith Peterson, psychiatrists Richard Seward and Gloria Keraga, therapist Sylvia Davis and hospital administrator George Jerry Mueck. The dissociative unit at Spring Shadows Glen was closed by government officials in 1994. The hospital was sold and is now known as Memorial Spring Shadows Glen. Mueck continued as the administrator of the hospital under its new ownership.

A 60-count indictment has been brought against the five. It is the Government’s goal to prove that the five deliberately used coercive techniques common to brainwashing to induce false memories of extreme childhood abuse by satanic cults in seven patients in order to defraud insurance carriers of millions of dollars. All seven patients were covered by generous or unlimited insurance policies while in Spring Shadows Glen between 1991 to 1993. According to testimony by a financial analyst from the FBI, insurance claims paid out to the defendants and Spring Shadows Glen for the treatment of these seven patients amounted to just under $3.5 million over this period, $2.9M (or 80 percent) of which went to the Hospital. Several of the patients have already won substantial malpractice suits against the defendants and Spring Shadows Glen. Lynn Carl’s lawsuit, for instance, was settled out of court with all but two of the defendants, on confidential terms. A jury later awarded Carl nearly $5.8 million, against the remaining defendant psychiatrist and others. Details of a further settlement for the Carl children are confidential under terms of the settlement agreements.

The court re-convened Tuesday morning, September 15 and opened with the continuation of testimony by representatives of insurance companies. The purpose of the testimony was to determine the scope of the payments made to the defendants and Spring Shadows Glen on behalf of the patients, most of whom were diagnosed as suffering multiple personality disorder as a result of having been abused in satanic cults. Multiple personality disorder (MPD) is now called "DID" or "Dissociative Identity Disorder" and is a [highly controversial diagnosis]. This testimony continued through Wednesday morning but concluded with the testimony of the FBI’s financial analyst, Deborah Taylor.

Rusty Hardin, defense attorney for Dr. Judith Peterson, has so far led most of the defense efforts. His cross-examinations of the witnesses from the insurance companies have been directed towards establishing that:

At one point in the proceedings, Judge Werlein interrupted Hardin’s cross examinations to instruct the jury. Werlein explained that in order to establish a case for fraud, the Government must demonstrate that the defendants received excessive financial gain from the alleged fraud scheme. The direction of Hardin’s questioning, he explained, was to establish that the gain was not "excessive." Hardin’s questioning left untouched two questions, however:

In some of the Houston cases (most notably the Carl and Abney cases), several family members were in treatment contemporaneously and for long periods of time.

Although the defendants may have charged regular hourly rates,the duration of the patients’ treatment and the length of their hospital stays was unusual, according to testimony from the insurance representatives.

Representatives of the insurance companies testified that these two factors led to unusually large claims and that the resultant size of the claims brought them to the attention of the insurance carriers and caused them to review the cases.


Perhaps the most dramatic moment in the trial so far occurred immediately after the testimony of the FBI’s financial analyst. One of the prosecuting attorneys announced to the court that unindicted co-conspirators had been named. We are still trying to obtain a copy of the complete list, but we can report now that among those named were Bennett G. Braun, M.D., Roberta Sachs, Ph.D. and Corydon Hammomd, Ph.D.

Bennett Braun has been a leader in promoting the diagnosis of MPD/DID. He is a founder of the International Society for the Study of Multiple Personality Disorder, (ISSMPD) subsequently changed to The International Society for the Study of Dissociation (ISSD). Braun’s free-standing center for dissociative disorders at Rush-Presbyterian St. Luke’s Hospital was closed early in 1998. Braun and Rush-Pres. have settled several malpractice suits out of court for millions of dollars. One of the these was with the Burgus family and was settled in November 1997 for a record $10.6 million. Braun et al. recently settled with Mary Shanley, whose case is at issue in the Houston trial. Braun’s license to practice is up for review. The license revocation hearing will come before an administrative judge in Illinois on September 28.

The defense erupted after the announcement. Not all the implications of naming these co conspirators are yet known. Naming "unindicted co-conspirators" is a rare legal move. It means that anything the named co-conspirators said about a conspiracy may be admitted as evidence in this case, even if the defendants were not present when it was said. Put another way, it elevates material that might otherwise be considered "hearsay" to the status of evidence.

As the case unfolds (see below), we expect to see the relationships between the Houston case and the co-conspirators more clearly drawn. We do know that after being certified in clinical hypnosis in 1988, Peterson began regular telephone consultations with Dr. Bennet Braun. According to Bonnie Gangelhoff of the Houston Press, in a deposition for the Schwiderski family lawsuit, Peterson said that part of her education in MPD came from Braun’s recommended readings. Also according to Gangelhoff, one plaintiff in a malpractice case, Alison Roome, was "put in a straightjacket and flown by air ambulance to Chicago where she would be treated by Dr. Bennett Braun..."

The Case of Mary Shanley

September 17, 1998.

The trial, which until now had primarily concerned accounting matters and insurance policies, began to take on a more human face when testimony concerning the case of Mary Shanley began. Shanley’s friend, Meredith Schreiner took the stand first to testify to the deterioration she witnessed in Shanley and in Shanley’s marriage over the course of her treatment. Schreiner, who approached the stand with a cane, was a compelling witness and the courtroom was silent throughout her testimony. Mary Shanley herself took the stand after Schreiner.

Mary Shanley, 47, is a small, attractive woman. As she took the stand, defendant Judith Peterson pulled her chair into the aisle up close to the witness stand. Throughout Shanley’s testimony, Peterson glared at Shanley with a fixed, hard, cold stare. "That’s some stare!" remarked one court watcher. Until now, Peterson has sat at the defense desk taking copious notes. Her back has generally been to the jurors.

Mary Shanley is one of six children raised in Colorado by two alcoholic parents. She received her B.A. degree in elementary education and, in 1979, married Joe Shanley. In 1981, she gave birth to Ryan, her son and only child. Shanley took a maternity leave to care for her son immediately following the birth. Also following the birth, Shanley began to experience what she referred to as "blackouts." She was subsequently diagnosed with seizure disorder. She had a toxic reaction to the first drugs prescribed.

Shanley’ s husband, Joe was an alcoholic. In 1984, the Shanleys joined a Marriage Encounter Group comprised of other couples dealing with alcoholism. Here they met William and Meredith Schreiner. According to Schreiner’s testimony, both Shanleys were wonderful parents. Shanley was teaching elementary school and Joe was working for Motorola at the time. Despite their difficulties, Schreiner testified that the Shanleys had a close relationship. They lived in a Chicago suburb. The Shanleys and the Schreiners generally met at least once a week.

In 1987, Shanley had a hysterectomy. Shortly after the hysterectomy, Shanley was attacked in a hallway by one of the parents at her school, her face scratched. Joe Shanley was not supportive to his wife after the attack. And he was unhappy that the couple had lost the capacity to have more children. Shanley began to fall into a depression that deepened noticeably and rapidly, according to Schreiner. Some of the depression seemed to be related to the hysterectomy, and to the fact that Mary had been contacted by the lawyer for a daughter she had given up for adoption. The pregnancy was the result of a violent rape when Shanley was nineteen.

In 1989, Shanley re-established a prior relationship with a therapist associated with Alexian Brothers Hospital outside Chicago. She sought treatment for depression, anxiety, and panic attacks from the therapist, who was in training. As part of her treatment, Shanley was put in group therapy. In the group. there were frequent reports of physical and sexual abuse. Shanley began to have nightmares about abuse which her therapist insisted were memories of real abuse though Shanley said she could remember no such events from her childhood. In addition, Shanley began to have episodes which her therapist said were symptoms of "dissociation," probably the result of having been severely abused in a satanic cult. Despite the fact that the therapist ought to have been aware of Mary’s seizure disorder and that several physicians had diagnosed the seizure disorder as "reactivated" in 1989, no additional medical tests were administered. Furthermore, Shanley’s real life problems received little attention in the therapy.

At one time, the therapist shared these beliefs that Shanley had been abused in a cult with a psychiatrist at Alexian. The psychiatrist disagreed and refused to participate in treatment that proceeded from this assumption. The psychiatrist, however, made no further attempt to interfere with Shanley’s treatment.

In 1990, the therapist made arrangements for Shanley to enter Forest Hospital, though Shanley’s first therapist was also involved in her continuing treatment. Again without adequate medical testing, and despite the fact that Shanley’s seizure disorder was entered on her admission chart, Shanley’s treaters diagnosed her as "dissociative." Over time, as Schreiner testified, Mary’s condition worsened. Shanley was eventually diagnosed as suffering from MPD and told she had been a member of "satanic cult." Shanley’s husband, Joe, also became utterly convinced by the treaters that his wife was a member of a satanic cult.

Shanley’s treaters referred her to the Dissociative Disorders Unit of Rush-Presbyterian St. Luke’s Hospital on the grounds that the staff there were recognized experts in the treatment of satanic cult victims. Shanley’s therapist in particular referred Shanley to Roberta Sachs, one those named as an unindicted co-conspirator in the Houston trials. In the first five minutes of the intake interview, Sachs diagnosed Shanley as suffering MPD as a result of cult abuse. She justified this diagnosis on the basis of "finger signals." The Dissociative Disorders Unit at Rush was filled to capacity, but Shanley was hospitalized at Old Orchard, Though under separate management, Old Orchard was in the same building as Rush-Presbyterian and Shanley was treated by unindicted co-conspirators Dr. Bennett Braun and Roberta Sachs until she could be admitted to Rush-Presbyterian. The facilities were so close that when Shanley was admitted to Rush-Presbyterian it was simply a matter of taking an elevator to another floor.

According to Schreiner’s testimony, Shanley called her friend from Rush in April of 1990 to ask for help in getting out of the facility. Schreiner contacted Joe Shanley who informed her that, under her doctor’s orders, no one was to contact Mary. Schreiner did not follow up and she did not hear from Shanley again until Thanksgiving of 1993. Schreiner testified that she wondered if Shanley had died.

Shanley remained at Rush-Presbyterian until February of 1991. She was given high dosages of medications prescribed by Braun, including high dosages of Inderal, a heart medication. Sachs’s therapy with Shanley consisted of thrusting upon her the diagnosis of MPD and encouraging Shanley to get in touch with her alters. Sachs hypnotized Shanley and urged her to get in touch with her alters by reacting to photographs from magazines. In addition. both Braun and Sachs had numerous sessions with Shanley in which Shanley was encouraged to name other contacts from the cult. These included friends, other teachers, people from her church and her social life, Shanley testified. Braun had little interest in her or her case except when she was forthcoming with these names or he wanted to prescribe additional medication, according to Shanley. Little or no attention was paid to Shanley’s seizure disorder or to any of her real life issues such as the impact of her hysterectomy or contact from her daughter’s attorney, the attack in a school hallway, her husband’s drinking or the impact of these upon Shanley’s marriage.

In February of 1991, Sachs asked Shanley to meet with Dr. Corydon Hammond who was in Chicago to attend a conference. Hammond asked Shanley a number of questions that absolutely mystified her, including a series of questions about the Greek alphabet. He asked her, for instance, if she knew any letters of the Greek alphabet. When Shanley named "Gamma" Hammond diagnosed her as having a cult alter that was a danger to herself, her therapists, and other patients. Shanley was flown to Spring Shadows Glen to be "deprogammed" without knowing her destination and without an opportunity to say good-bye to her husband.

Shanley’s testimony continues on September 22.

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