Dozens of residents of the Heavenly Mountain subdivision are suing the Spiritual Center of America and its agents for unspecified financial restitution that if carried forward could put Watauga County’s largest tract of privately-held landowner into receivership.
In a lawsuit filed last fall, property owners and full-time residents at the luxury spiritual retreat alleged that defendants David and Earl Kaplan, brothers and officers of the Spiritual Center of America, had “turned their attention from the best interests of the Spiritual Center to their own economic interests . . . antithetically to the purposes of the Spiritual Center and to other people such as the Plaintiffs who were involved in the Spiritual movement.”
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Specific allegations include “endangering the tax status of the Center and thereby acting contrary to its well-being by causing it to engage in private benefit transactions with them, in violation of Section 4958 of the Internal Revenue Code.”
The complaint cites “defendant David Kaplan’s breach of fiduciary duty,” and that “Plaintiffs are entitled to recover punitive damages in an amount determined to be appropriate at the trial of the matter.”
Listing donations of over $2 million from the plaintiffs themselves, the complaint said that the donations were required “as a condition to building a home in Heavenly Mountain and solicited by David Kaplan” while he served as both spiritual leader of the resort and its primary landowner and developer.
A source close to the complaint said “this is less about money than about the direction” that Heavenly Mountain is taking.
“The Spiritual Center was formed with the express purpose of creating a home for world peace professionals practicing the Transcendental Meditation” and other programs to “create world peace and harmony,” the complaint said.
But “David and Earl Kaplan have repudiated their pledges (to direct all development profits to the Spiritual Center) . . . insisting that the Spiritual Center must raise revenues from activities inconsistent with its purpose.”
Section 78 states that “the Court should excercize its inherent equitable powers to appoint a receiver for the Spiritual Center to require rescission of the conflict of interest transactions, and to require an accounting of all funds contributed directly or indirectly to the Spiritual Center, including loan guarantees and contributions that the individual Defendants caused to be made to the company.”
The source stated that “the community has grown over the years and differences developed in its direction,” differences between the Kaplans and “a consensus of the homeowners.”
“This is not an adverserial situation,” the source said; the suit “was necessary to formalize the situation. We are now in discussion and hope to resolve this amicably.”
Currently the complaint is due to be heard by jury trial in Watauga County Superior Court as the unspecified damages sought exceeds $10,000.
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