Two dozen former employees of a nationwide chain of popular yoga studios have filed a federal lawsuit claiming financial and emotional distress caused by the leader's "psychological manipulation and indoctrination."

In the 53-page lawsuit, filed May 20, the former exployees detail a litany of allegations, from fraud and labor code violations to sexual assault and "thought reform" against Dahn Yoga and Health Centers Inc., and its founder, Ilchi Lee.

Dahn Yoga - which utilizes mind and body training methods - has scores of studios around the country, including locations in Reseda, Valencia and West Los Angeles.

The lawsuit, filed in U.S. District Court in Arizona, claims that the plaintiffs were coerced into taking out student and personal loans and incurring credit card debt to pay for Dahn Yoga programs, workshops and retreats and to "donate all the money they possess or can borrow."

The lawsuit, which seeks unspecified damages, also claims the plaintiffs were forced to undergo arduous physical exercises, such as performing 3,000 bows, and had to drink toilet water. Their indoctrination also required them to repeat they would "die for Ilchi Lee and his `Vision"' to disseminate Dahn Yoga practices worldwide.

A Dahn spokesman dismissed the lawsuit as "lies from the pit of hell," saying the former employees filed the suit to denigrate Dahn and for their own monetary gain.

"They're adults and make their own choices," said Mike Paul of Dahn Yoga. "Saying they were `coerced' is ridiculous. Their lawsuit is frivolous and unethical."

Bay Area attorney Ryan Kent, who represents all 24 plaintiffs, said Dahn derailed the lives of his clients, some of whom are now more than $50,000 in debt.

"These are mostly college students, kids, that don't have any money and they've maxed out their student loans. Dahn takes money out of you until they can't get any more."

Kent said the plaintiffs enrolled as students in Dahn Yoga centers and later went to work for the company. While some of the fees they paid went toward training, he said, those sessions were used to entice students into paying for more and more classes.

"Dahn Masters will accompany you to the bank to watch you open new credit cards, or sit next to you at the computer while you fill out Fannie Mae forms," Kent said. "They laugh at the law and take horrible advantage of young kids."

The plaintiffs include Alana Lee of Sherman Oaks. Neither she nor any of the other plaintiffs were available for comment, Kent said.

But Paul disputed the allegations, saying they simply demonstrate a lack of financial responsibility on the part of the plaintiffs, including one whom Paul said embezzled from the company.

"They were asked or told to give personal money? That's ridiculous," he said. "These people are on the verge of bankruptcy because of the idiocy of their money mismanagement."

The lawsuit claims that plaintiffs had to work "excessive hours... without reasonable or lawful compensation." Kent said some of them worked up to 100 hours a week without reporting their hours.

But Paul said enthusiasm for Ilchi Lee's "Vision" simply encouraged employees to work hard.

"Just like if you worked for IBM, no one makes you stay until 7:30, but if the average worker isn't leaving at 5:01 you will stay," Paul said. "And the majority of Dahn employees are very passionate."

Paul said disputed allegations that Ilchi Lee sexually assaulted one of the plaintiffs.

"These things are there to damage the reputation of Dahn Yoga and, quite frankly, to get money," Paul said.

Dahn Yoga has become a controversial practice, with some critics equating it with a cult. Paul denied that the company is anything other than a legitimate business.

"We consider `cult' a very toxic term that immediately causes people to have fear," Paul said. "We are a health and yoga facility."

However, Steve Hassan an author who has studied cults, said the followers of Dahn Yoga displays eerie similarities to the "moonies" who followed Sun Myung Moo, founder of the Unification Church back in the 1970s.