Notes:

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MAINE

In re

For the past four years, the pundits, self-appointed experts, and persons with their own agendas have assessed, opined, and dissected the pending "Key Bank case" and the "secret" settlement which was finalized with Key Bank's codefendants, Bernstein, Shur, Sawyer & Nelson in 1990. The aforementioned group has attacked the validity and/or credibility of me, my associates, and some of my attorneys.

The Involuntary Bankruptcy Petition filed against me on June 4, 1993 was supposedly designed and instituted to protect creditors in the event of another settlement or jury award to me. In addition, it has also been stated that "creditors" needed to know exactly what had become of the settlement proceeds from the settlement completed on October 30, 1990, as referenced above. These issues are the reasons testified to and/or stated in court documents as to the actual reason for the filing of the involuntary Petition on June 4, 1993.

As of August 27, 1993, two months and twenty-three days after the Involuntary Petition had been filed, Attorney Stephen F. Gordon offered and authored a complete resolution to the three areas of concern stated by the petitioning creditors' attorney. They were:

1. A meeting with lawyers from Looney & Grossman and any other attorney involved in the distribution of settlement proceeds to document all expenditures;

2. Attorney Gordon filed a proposed Order to be signed by the Court whereby no proceeds either from a settlement or jury award would be forwarded to me or my attorneys until the resolution of the bankruptcy case was satisfactory to all viable creditors; and

3. An agreement whereby there would be some oversight with respect to any future settlement proposals by an independent official appointed by the Bankruptcy Court.

Therefore, the three prongs of concern were met for the benefit of all concerned.

Now, four years later, after enormous expense, repeated allegations, multitudes of innuendoes and continuous delays, I am filing this Report.

I have not consulted with any attorney regarding this Report. I have not been encouraged or intimidated by anyone to file this Report. I am not, nor do I intend to waive any legal right available to me by filing this Report.

On Friday, June 4, 1993, an involuntary bankruptcy petition was filed. John G. Connor, Esquire, on behalf of New England Mortgage Services, Inc. the petitioning creditor, filed the involuntary petition. On Saturday, June 5, 1993, an article appeared in the Portland Press Herald. (See Press Release - Exhibit 1.)

On June 7, 1993, Attorney Connor received a telephone call from the Debtor's attorney (and counsel of record in the Key Bank case) , Richard E. Poulos. (See Memorandum of telephone call- Exhibit 2.) Attorney Poulos advised Mr. Connor that appointing a trustee to take over the lawsuit was impractical and would deprive Cathy Petit and her attorneys of any incentive to pursue the lawsuit. Attorney Poulos further informed Attorney Connor that his reasoning was that her debts outweighed the value of the suit. In the third paragraph of Attorney Connor's memorandum, he wrote, "Dick then went on to discuss the Petit lawsuit. He indicated that the one count that is remaining in the lower court is of insignificant value because it claims an interference with business relationship at a time when she was already severely damaged. on the other hand, he believes that their appeal to the Law Court has a good chance of success." (Emphasis Added.) The appeal referred to was based on Key Bank's motion with respect to res judicata.

On June 14, 1993, Attorney Connor wrote to his client and advised him of the newspaper article which appeared on June 5, 1993, and reported, among other items, on his conversation with Attorney Poulos.

After an exhaustive search for a lawyer with no conflicts of interest, and after seeing first hand that every lawyer in Maine who was competent to handle what I believed to be a very dubious bankruptcy filing, I retained Attorney Stephen F. Gordon, of Boston, Massachusetts, to represent me. Attorney Gordon has had and continues to have a distinguished career in the field of bankruptcy law. He has been involved in high profile cases, and has represented debtors all over the United States.

By August 26, 1993, Attorney Gordon had spoken to Attorney Connor on several occasions. Attorney Gordon had familiarized himself with my assets, and had researched the Key Bank case. He spoke with other attorneys who represented me. By the end of August, Attorney Gordon believed he had accomplished a plan which was fair to all parties. (See letter dated August 26, 1993 from John Connor to Attorneys Gordon and Lancaster- Exhibit 3.) (See letter to Ralph Lancaster - Exhibit 4.)

During the week preceding my scheduled deposition by New England Mortgage Services, Inc. (the Petitioning Creditor), my son was admitted to a hospital in Connecticut. Attorney Gordon notified Attorney Connor of the need for me to rush to Connecticut to be with my son. During the months of November and December, 1993, and during 1994 and into 1995, my son was hospitalized on several occasions, and lived in a building adjacent to the hospital for almost two years. His problem had been diagnosed as a frontal lobe injury to the brain, as a result of an automobile accident when he was three years old.

It is due to my need to be with my son that started the accusations of my being an "obstructionist" by not being available to attend the deposition scheduled in early November, 1993. However, I did come to Maine for the deposition, and returned to Connecticut immediately thereafter.

I was deposed in November of 1993. After notice of the deposition I was informed, in writing, by the attorneys for the former defendants, Bernstein, Shur, Sawyer and Nelson, that if I disclosed anything relative to the 1990 settlement, I would be in breach of the settlement agreement. This settlement, which is repeatedly referred to as the "secret" settlement, had never been published in a newspaper until the article appeared regarding the Involuntary Petition on June 5, 1993. In March of 1996, Attorney Connor testified that Jeff Thaler (Bernstein Shur's attorney) would not tell him anything.

When,an agreed upon resolution failed to materialize, a decision was made to convert from a Chapter 7 to a Chapter ii. I did not intend to, nor did I attempt to, avoid paying valid creditors. My only concern was to be able to move forward with the Key Bank case. I had been waiting since October of 1990 for a trial, and having been advised that a trial was forthcoming within one year of October 1990, I was concerned that this process would delay a trial. we filed a motion to convert the case. We fought the appointment of an interim Trustee and a permanent Trustee based on our concern for keeping trial strategy from being divulged to Key Bank's attorneys. We now know of contacts made by Attorney Connor with Key Bank's attorneys and agents, and his attempt to speak with the attorneys for Bernstein Shur.

At the hearing for conversion to Chapter 11, I addressed Judge Votolato and stated to him that I had been told that should I disclose anything about the Bernstein Shur settlement, I would be violating the settlement agreement, and thus I needed the Court's direction as to how I should proceed. I was directed by Judge Votolato to answer the questions. Attorney Grahn advised me of letters and telephone conversations with Attorney Jeffrey Thaler, wherein Attorney Grahn was advised that if I disclosed any settlement information, I would be in violation of the settlement terms. I did not know, at that time, that the other signatories to the agreement (Key Bank and its lawyers) were disclosing information to anyone inquiring about the settlement, and, in fact, were directing individuals as to where they could find other information. (See Connor Memorandum dated November 19, 1993 - Exhibit 5.)

On Page 3 of the Motion for Approval of Compromise signed by Trustee Fessenden on June 7, 1995, Paragraph 10 11 ... New England Mortgage and its attorney have expressed a concern that (notwithstanding the apparent lack of any factual basis for a claim against them as set forth above) either the Debtor or certain creditors could attempt to assert such a claim against them once the lan is confirmed and the trustee is no longer in place in this matter. ... New England Mortgage and/or its attorney would therefore be in a position of absorbing the expense and time in having to defend a claim which has no apparent factual basis. ..." We could not have known in June of 1995 why New England Mortgage has persisted in demanding trustees and/or continued attacks on certain creditors. It is obvious, in 1997, why they continue to lead the fight as referred to on page 2, item 3 of the Motion for Approval of Compromise.

On December 27, 1993, the Maine Supreme Judicial Court rendered its decision with respect to the appeal filed in Case CV-86-608 regarding summary judgment on res judicata. The Law Court affirmed the judgment of the trial court (Superior Court), and rendered its decision in favor of Key Bank. The Law Court issued a descriptive analysis as to why I lost the appeal. This appeal is the appeal referred to in the June 7, 1993 memorandum of Attorney John Connor's telephone conversation with Attorney Richard Poulos.

In January, 1994, Key Bank filed a Motion to Dismiss the remaining count in the Key Bank case. On January 7, 1994, Attorney Stephen Gordon, Attorney Ron Caron, Professor David Gregory (Professor of Law at the University of Maine School of Law), Shirley LeBlanc and I attended a meeting at the law of f ice of Richard Grahn, of Looney & Grossman in Boston, Massachusetts. The meeting was convened to discuss the recent filing by Key Bank and the issues surrounding the bankruptcy filing. A telephone conference was conducted with the individuals in attendance at the meeting and Attorney Richard Poulos and Attorney Robert Axelrod via telephone. After the telephone conference, Attorney Ron Caron agreed to respond to Key Bank's Motion to Dismiss. During the course of the meeting, we learned that Attorney Stephen Morrell had, in fact, filed for a continuance in the Key Bank case relative to Key's Motion to Dismiss, although no Court Order had been issued appointing Joseph O'Donnell as trustee or allowing Attorney Stephen Morrell to be employed by the as yet unappointed Trustee O'Donnell. (See Letter from S. Gordon to R. Poulos - Exhibit 6.)

As a result of the January 7, 1994 meeting, Attorney Caron filed his appearance in the Key Bank case as attorney of record. In addition, during the meeting Attorney Poulos indicated he would not work "for a Trustee". Key Bank's Motion to Dismiss was ultimately responded to by Attorney Caron, assisted by Attorneys Grahn, Farrar, Gordon, and Professor Gregory, with consultation of Attorney Axelrod. Later, during the month of January, Attorney Poulos contacted Attorney Caron to offer his assistance, if needed.

It should be noted that although Count VI was the only remaining count of the original Complaint in the Key Bank case, some very important facts need to be addressed. Count VI, as allowed in the amended Complaint was and is the count praying for the largest amount of damages, both actual and punitive. The total damages originally prayed for is $35,000,000.00, and such other relief as may be just, including but not limited to interest, attorneys, fees, etc. Also, contrary to some opinions, this count most clearly outlines the outrageous conduct of the Bank, its officers, directors and employees. (See Amended Complaint - Exhibit 7.)

In February, 1994, a two-day hearing was held on the Motion to Convert the bankruptcy case from a Chapter 7 to a Chapter 11. At the conclusion of the first day of the hearing, Joseph O'Donnell and Attorney Morrell (neither of whom had been appointed by the Court) approached Attorney Gordon and suggested that I borrow $50,000.00 from Ed Simpson and Paul Richard and place the money in an escrow account so "they would be sure that they would be paid", and that they would act as a Special Receiver to report on the disbursements from the "secret" settlement, and if they found any fraud or undisclosed assets that they would be able to file actions based on these findings. The Special Receiver concept was fully agreed to by me and other parties. However, the concept that I borrow $50,000.00 from two people who were already the brunt of attacks and innuendoes, and who were implicated as "bad persons", was unbelievable.

On the second day of the two-day hearing, the case was converted to a Chapter 11 and I was allowed to remain a debtor-in-possession. During this hearing, I was ordered to file the appropriate bankruptcy schedules. At the hearing. Attorney Connor stated that they wanted to make sure that I moved forward on any causes of action I had against any party. When questioned by Judge Votolato as to what he meant by that statement, Attorney Connor responded 11 ... well, in the recent Law Court decision, someone dropped the ball ... ". Therefore, when filing the schedules, with the help of my attorney, I was told that I had to list any asset and I had to include any asset which might be recovered as a result of what I owned up through the filing of the involuntary petition on June 4, 1993. For that reason, I listed potential malpractice claims - if malpractice was committed during the tenure of the Key Bank case, those actions up through June 4, 1993 would be considered "pre-petition" assets. At the conclusion of the two-day hearing, I asked John Connor not to confer with Key Bank's counsel. Attorney Connor's response was "...How do you think I found out all about Paul Richard? From Ralph Lancaster..." This response was made in front of witnesses.

During April, 1994, a hearing was held on Key Bank's Motion to Dismiss. During that hearing, Justice Brennan invited the Plaintiffs to amend Count VI, due to the evidence which was presented in the response to Key's Motion to Dismiss. Attorney Caron addressed the Court at that hearing. During a brief break in the hearing, my attorneys in the Key Bank case, Attorney Stephen Gordon and Professor Gregory conferred with me for approximately fifteen minutes. Upon returning to the courtroom, Attorney Caron advised Justice Brennan that he would have an amended complaint filed within two weeks. We now know that Attorney Morrell knew of this amendment, as on April 7, 1994 he advised Joseph O'Donnell that he had spoken with John Aromando (Key Bank's counsel) who reported that at the hearing, I was afforded an opportunity to amend my complaint. (See letter from Morrell to O'Donnell - Exhibit 8.)

During a telephone hearing in April, 1994, Judge Votolato announced he was appointing a Trustee.

In May of 1994, a 341 Meeting of Creditors was conducted. I apprised the attendees of the status of the Key Bank case. I was questioned by Attorney Vogel as to any "settlement discussions". Shortly after this 341 meeting, Attorney Vogel joined the law firm that represents Key Bank in the ancillary case Key Bank et al vs. Verrill & Dana, et al., CV 89-864.

In June of 1994, Peter Fessenden was appointed the Chapter 11 Trustee.

On June 22, 1994, Trustee Fessenden had a telephone conversation with Attorney Connor. Trustee Fessenden was advised by Attorney Connor that Paul Richard was deposed in the Key Bank case. On June 22, 1994, Trustee Fessenden called Key Bank's attorney, John Aromando, and was advised he was on vacation. The secretary suggested that Mr. Fessenden speak with Mr. Lancaster. Approximately one-half hour later, Mr. Fessenden contacted Mr. Lancaster's office and left a message with his secretary requesting a copy of Mr. Richard's deposition. (See handwritten notes - Exhibit 9.)

On August 1, 1994, Mr. Fessenden spoke with Paul Labbe from the Internal Revenue Service. Mr. Fessenden asked Mr. Labbe - is Robert Paradis selling off shares of Key Bank suit? (See handwritten notes - Exhibit 10.)

On August 25, 1994, Mr. Fessenden had a telephone conversation with Richard Poulos. During this conversation, Attorney Poulos informed Mr. Fessenden that he would be a witness, and could not act as my attorney in the Key Bank case. During August, 1992, Mr. Poulos signed a contingency fee agreement with me regarding the Key Bank case, and, in fact, by letter dated August 3, 1992 addressed to Richard Grahn, Esquire, he directed that 11 ... we have agreed that from the share of fees received by me and my firm... n (See letter from Poulos to Grahn - Exhibit 11.) (Emphasis Added.) Also during the August 25, 1994 conversation, Fessenden notes n ... Dick feels that Lancaster can be persuaded to pay $3.9m. too. (See handwritten notes - Exhibit 12.) (Emphasis Added.)

On August 29,. 1994, Attorney Poulos wrote to Peter Fessenden. He outlined payments of fees and costs from October 31, 1990 to August 19, 1992 of $518,394.38. On page 2 of Attorney Poulos' letter, he wrote 11 ... We also represented Mrs. Petit and Bostonian North in 1987-1991 in a matter involving a deficiency claim asserted against them of approximately $800,000.00. All of the records in this case were returned to the clients about two years ago, after a jury determined that there was no liability. It is my memory that we were only paid $7,500.00 in 1987 as a retainer by Mr. Edward Simpson of Boston, Massachusetts. ... II. When this case went to trial, the defendants were Catherine Duffy Petit, Bostonian North Corporation and Edward F. Simpson - all three of us were represented by Richard Poulos of Poulos, Campbell & Zendzian. (See letter from Poulos to Fessenden Exhibit 13.) (Emphasis Added.)

During the month of August, 1994, Dr. Gordon Paine received a telephone call from Key Bank's attorney, John Aromando, asking him if he was helping me to finance the Key Bank litigation.

On September 21, 1994, Mr. Fessenden wrote to Elizabeth Hoglund, Esquire. In paragraph three of his letter he wrote 11 ... The complication arises because the general creditor was well beyond the time limitations for recovering preferences. If this transaction is construed as a transfer directly from the debtor to the general unsecured creditor, my position as trustee is entirely undercut and I can obtain no recovery.

The general unsecured creditor is New England Mortgage Services, Inc., the petitioning creditor; the "insider" is Paul Richard. Mr. Fessenden continued 11 ... Will the insider be estopped from pleading the truth since the truth seems to me to amount to a fraud. ..."

In November of 1994, Attorney Poulos contacted Attorney Caron and advised him that he did not want my house, but that he did not like all the talk about malpractice. He indicated to Attorney Caron that he would give me my house; however, he wanted a release, as he did not want to see me hurt any more than I had already been hurt. (See Poulos deposition testimony at pages 50, 51 - Exhibit 14.)

On December 21, 1994, Mr. Fessenden wrote to Assistant U.S. Attorney Gerrard Kelley. The letter starts "I am writing to ask your political advice. I will not need it in writing. I would appreciate your suggestions as to how to proceed in the future if similar situations occur in the future." Mr. Fessenden further informed Mr. Kelley that Attorney Morrell filed a fee application, to which Mr. Fessenden filed an objection as to the amount of his fees. Mr. Morrell called Mr. Fessenden "expressing shock and horror". Mr. Morrell informed Mr. Fessenden that he had never, ever had his fees challenged by anyone. He did not expect it of Mr. Fessenden and wanted to know where Mr. Fessenden got off with this kind of response. In paragraph 4 of the letter, Mr. Fessenden asks Mr. Kelly 11 ... Am I being a horsels South end by commenting at all? Is Steve Morrell a neacred cow" whose fee applications should be accepted in the absence of outrageousness." (See letter from Fessenden to Kelly - Exhibit 15.) (Emphasis Added).

On or about May 2, 1995, we received a Civil Jury and Non-Jury Trial List for the months of June and July, 1995, from the Cumberland County Superior Court.

On May 4, 1995, Judge Arthur Brennan ruled in favor of Key Bank with respect to their Motion for Summary Judgment. (See Order.- Exhibit 16.)

On May 8, 1995, the United States District Court affirmed the Bankruptcy Court order of April 26, 1994 - the much referred to "Chief Justice Carter ruling" which was based on an appeal taken from an order and a record documented thirteen months before. The record from which the ruling was made did not reflect any of the matters which had been resolved. Attorney Gordon plead with Trustee Fessenden to file a joint motion to "correct the record" and, at the same time, to show the U.S. District Court the accountings done by the persons who distributed the funds from the Bernstein Shur settlement. On Page 17 the Order states "The bankruptcy court, however, was clearly reluctant to accept the Debtor's arguments regarding the adverse impact of a trustee in the Key Bank litigation. The bankruptcy court noted that much of the Debtor's argument regarding whether the trustee could successfully pursue the action came by way of veiled threats' that the Debtor and her attorneys would not participate in he case.

I have never made a veiled or direct threat that I would not participate in the Key Bank case. In fact, throughout this bankruptcy I and some of my attorneys have moved heaven and earth to move the Key Bank case forward; including the fact that more hidden evidence, more research, and quality of product and evidence as proven by the December 31, 1996 Supreme Judicial Court decision, has been done between 1992 and 1997. The moving of documentation from state to state, the outright refusal to produce court ordered evidence in the case, which surfaced and was exhibited in the ancillary case (Key vs. Pepperell, et al) made this task much more difficult and costly. Page 15 of the Order states that the bankruptcy court held serious concerns regarding whether the Debtor could be relied upon to pursue and recover any fraudulent transfers on behalf of the remaining creditors. The Debtor and her counsel plead with the remaining creditors to allow a Special Receiver to review this very issue, and if fraud was uncovered by way of "preferential transfers", to file and litigate those issues. However, if any "preferential transfers" were made, all persons receiving those transfers should have to be pursued. On Page 14, the Order notes that the Debtor failed to maintain financial records or even bank accounts, which could have assisted the court in determining the origin and use of the enormous sums of money that her attorney forwarded to her from the BSS&N settlement. Again, Attorney Gordon plead with Mr. Fessenden to appear before the Court with the voluminous accountings provided by those who controlled the funds, and the tracing of those funds. Trustee Fessenden refused.

When Trustee Fessenden requested additional documentation with respect to the accountings previously provided, he received it. The asset (the Key Bank case and related claims) has been protected. I never expected to be a debtor in an involuntary bankruptcy proceeding; therefore, the records forwarded by those who distributed settlement proceeds were documented as to the necessity for income tax information.

Again, the constant inference regarding a plan that had been devised for me to settle certain claims, was not my plan. If I disclosed anything to do with the settlement, a settlement which I entered into based on facts I believed to be true at the time, I would be in breach of the Settlement Agreement. My attorneys, whom I believed, stated that the nucleus of the case was the Key Bank issues and the continued acts committed against me and my corporations by this multi-billion dollar institution.

After the documented payment of over two million dollars in legal fees and expenses, the settlement of outstanding debts, and sums expended to move the Key Bank case forward, it would have been an imprudent and preposterous decision to settle the case and release the law firm defendants if the remaining case against Key Bank is worth so little.

Further, neither Paul Richard nor Ed Simpson knew of the fact that there had been a settlement. Paul Richard learned about the 1990 settlement in late fall of 1992, through his attorney, who was attending a motion hearing in the Key Bank case based on Key Bank's assertions of a potential fraud committed by Paul Richard relative to the 1990 "secret settlement" with Bernstein Shur Sawyer and Nelson. Ed Simpson finally learned of the existence of an actual settlement long after it had occurred. The terms of the "secret settlement" did not allow me to disclose any particulars, or even the fact that there was a settlement. The "secret settlement" was signed by me individually and as corporate officer of my various corporations, the law firm defendants, their attorneys and agents, Key Bank, its attorneys and agents, and any other person, such as expert witnesses, who might have access to any knowledge of particulars of the lawsuit, and/or the partial settlement in 1990. Why was there such opposition to presenting all of this evidence to the Court?

On June 7, 1995, Trustee Fessenden spoke with John Aromando (Key Bank's attorney). During this telephone conversation Attorney Aromando informed Trustee Fessenden that he had not yet heard from Key Bank.. Trustee Fessenden's notes of his conversation with Attorney reflect " ... Reminded him that we need to know by Friday if KB is interested." (Friday would have been June 9, 1995, the day set for a hearing in the Bankruptcy Court on the confirmation of the Third Amended Plan, conversion, and a status hearing.) (See handwritten notes - Exhibit 17.)

On June 9, 1995, Trustee Fessenden called Attorney Aromando. Trustee Fessenden's handwritten notes of said conversation reflect " ... interest by Key Bank." (See handwritten notes - Exhibit 18.) At 8: 3 0 A.M. on June 9, Trustee Fessenden spoke with John Aromando. Trustee Fessenden's handwritten notes of the conversation reflect "... KBM is very interested... but no $ offer right now... ". During the conversation Trustee Fessenden advised Attorney Aromando of the hearing taking place at 11:00 A.M. that day; Attorney Aromando advised Trustee Fessenden that he would be at the hearing. (See handwritten notes - Exhibit 19.)

A hearing was scheduled to be held in the Bankruptcy Court on June 9, 1995. The hearing took place and was continued until 11:00 A.M. on June 29, 1995. During said hearing the Court found the Third Amended Disclosure inadequate and ordered a Fourth Amended Disclosure to be filed on June 14, 1995. The June 29, 1995 hearing was scheduled as a confirmation hearing as well as any other pending matters.

On June 10, 1995, Mr. Fessenden spoke with Attorney Poulos. Attorney Poulos asked about current payments being made to Sherrie Girard, Robert Paradis and Shirley LeBlanc. He also inquired as to where the office was located. (See handwritten notes - Exhibit 20.)

On June 15, 1995, Attorney Caron wrote to Attorney Poulos informing him " ... So that the record is straight, I represented Catherine Petit on numerous matters not related to the BSS&N settlement. At no time was I counsel to Ms. Petit regarding settlement with BSS&N. ..." (See letter from Caron to Poulos - Exhibit 21.) (Emphasis Added.)

On June 19, 1995, Mr. Fessenden had a telephone conversation with Attorney Poulos. Mr. Fessenden's notes indicate " ... He'll be here 7:30 AM on 6/26 to talk things out... ". Mr. Fessenden's notes further indicate that Poulos "... is interested in compromise of malpractice claims of estate in exchange for waiver of claims against estate. . . . " " ... Seems to me to be okay... M/P claims are worthless anyway." (See handwritten notes - Exhibit 22.)

On June 26, 1995, Attorney Poulos had an office visit with Mr. Fessenden. Mr. Fessenden's notes indicate Poulos advised him: Sherrie Girard's address is the same as Dennis Petits'; Dick Grahn said Ron Caron was always present during the settlement discussions leading up to October 30, 1990; Caron told Poulos that he did not represent CDP at all during settlement negotiations; Poulos believes that $650,000.00 to Simpson is an investment; Shirley LeBlanc worked from 1991 to 1993. It should be noted that Shirley LeBlanc was employed by the law firm of Poulos, Campbell & Zendzian from approximately 1988 to early 1993. Sometime in late 1992, Mr. Poulos was anticipating a merger with the law firm of Daniel Lilley, Esquire, as he was downsizing his office. Ms. LeBlanc came to work on the Key Bank case as a result of that downsizing. Ms. LeBlanc worked on the Key Bank case while employed at Mr. Poulos, office. She also worked with all of the attorneys at Looney & Grossman, including work on the res judicata appeal, traveling to Boston frequently. With her vast experience in the case, and her over twenty year career in the field of law, she started working after January of 1993 on all Key Bank related matters. (See handwritten notes - Exhibit 23.)

On June 29, 1995 a hearing was held in Bankruptcy Court. On the morning of the hearing, Trustee Fessenden filed a Motion for Approval of Compromise with Poulos & Campbell, P.A., Richard E. Poulos and John S. Campbell. (See Motion to Compromise - Exhibit 24.) As a result of the June 29, 1995 hearing, the Court vacated its order approving the Third Amended Disclosure Statement, deemed the Fourth Amended Disclosure Statement inadequate, and asked that a Fifth Amended Disclosure Statement be filed. The Court continued generally the Order to Show Cause.

On July 12, 1995, Attorney Poulos sent a fax to Mr. Fessenden regarding the office located at 23 Water Street. Mr. Poulos advised Mr. Fessenden "... I suggest that you meet with the U.S. Trustee and me to discuss what appropriate action should be taken to obtain records located in the Saco location. ..." (See Poulos fax to Fessenden - Exhibit 25.)

On July 25, 1995, both Attorney Richard Poulos and Trustee Peter Fessenden were deposed at the Law Offices of Ronald G. Caron in Biddeford, Maine. Trustee Fessenden was deposed in his capacity as Trustee and attorney for the Trustee. During the deposition, Trustee/Attorney Fessenden testified that although he had read the Law Court decision on the motion regarding res judicata before he was ever appointed in the case, that he had not researched and did not know the law that the Law Court was referring to in its decision. Further, Trustee Fessenden testified that he had not reviewed the Law Court decision with respect to res judicata with the attorney that he had consulted with relative.to potential malpractice claims. He further testified as to the events leading up to the Motion for Compromise relative to the estate's malpractice claims against Attorney Poulos.

On August 2, 1995 Trustee Fessenden had a telephone conversation with Assistant U.S. Trustee Gerry Kelley regarding a meeting scheduled for Friday, August 4 with Attorney Richard Poulos. Trustee Fessenden's handwritten notes of his conversation with Assistant U.S. Trustee Kelley indicate " ... our function is to listen.,, " ... Not obligated to tell him what the UST is going to do ... " " ... Suggested no communication to Poulos ... (See Fessenden handwritten notes - Exhibit 26.)

On August 8, 1995, Attorney Poulos wrote to Mr. Fessenden informing him " ... it is very clear that Mrs. Petit has been conducting extensive post-petition operations beyond having people just doing work on her case against Key Bank. ... On page 2, Mr. Poulos stated Sherri Girard, Shirley LeBlanc and Ron Caron should be deposed before any further hearings are conducted in the Bankruptcy Court. He further stated they should be subpoenaed with a request that they produce all records pertaining to their work for me, including federal income tax returns. Mr. Poulos knew the work they were doing first hand through 1993. Sherrie Girard and, occasionally, Robert Paradis worked out of Mr. Poulos, office. Further, he suggested that the testimony of the deposed individuals should provide strong evidence to support any litigation against me (Catherine D. Petit) (See letter from Poulos to Fessenden - Exhibit 27.)

On August 8, 1995, Attorney Connor wrote to Mr. Fessenden. On three separate occasions in his letter, Connor indicated - according to Mr. Poulos. Attorney Connor informed Mr. Fessenden that Attorney Poulos advised him that I am funding the Penobscot Indian Nation litigation. Attorney Connor advised Mr. Fessenden "If those funds were paid, they were probably paid by Mr. Simpson or Mr. Richard. This raises the distinct possibility that monies paid to Shirley LeBlanc (and others) in connection with the suit by the Penobscot Indian Nation are now being claimed by Mr. Simpson and/or Mr. Richards as part of their claims in this case ..." Neither Mr. Richard nor Mr. Simpson had filed a proof of claim. On page three of this letter, Connor stated "This, of course, is further buttressed by the fact that Mr. Caron and Mr. Gordon are handling that matter. " " ... it raises the possibility of out and out fraud by Ms. Petit and further defalcation on her part." (See Connor letter to Fessenden Exhibit 28.)

On August 10, 1995 Attorney Aromando (Key Bank's attorney) wrote to Mr. Fessenden stating "As you requested, you will find enclosed the package of financial documents attested to by Ed Simpson. I look forward to receiving a copy of your interim report to the Bankruptcy Court. In the event you file a claim against Mr.. Simpson, I would appreciate receiving a copy of that as well." Who forwarded and why would anyone forward a copy of Ed Simpson's financial statement to Key Bank's lawyers? Mr. Simpson has never been listed as a witness in the Key Bank case, nor did I have any financial statements of Mr. Simpson in my possession. Mr. Simpson is not relevant in any issues involved in the Key Bank case, as I did not meet him until 1985. (See Aromando letter to Fessenden - Exhibit 29.)

On August 10, 1995 Mr. Fessenden wrote to Attorney Aromando stating "Enclosed, pursuant to our agreement, is a complete copy of my interim report submitted to the Bankruptcy Court regarding my analysis of the accountings of the disposition of the Bernstein, Shur funds. I understand that you will be sending me a copy of the financial statements and affidavits of Edward Simpson. (See Fessenden letter to Aromando - Exhibit 30.)

Between August 14, 1995 and August 18, 1995, Trustee Fessenden brought adversary proceedings against Edward F. Simpson and Tweed Management Corporation Paul Richard and Ronald G. Caron, Dennis Petit, Sherrie Girard and Robert Paradis. These complaints were for the recovery of funds paid from the proceeds of the Bernstein Shur settlement in October, 1990.

After the hearing for conversion in June of 1995, Attorney Gordon approached me with an offer to resign from the case, stating that he believed that a considerable amount of the problems associated with this proceeding might be due to his being an aggressive advocate. I had been through the same situation in 1983-1984, whereby the principals of Pepperell Trust Company believed that Attorney Poulos had gone to the FBI and reported that the President of the Bank had requested or received a bribe from me in return for Pepperell's participation in the mortgage loan along with Key Bank and three other banks. I opposed Attorney Gordon's resigning from the case. As I pointed out to Attorney Gordon, I did not allow Pepperell Trust Company and Verrill & Dana to remove Dick Poulos f rom the case, and I would not let it happen to Attorney Gordon either. Attorney Gordon stepped back from the process of negotiating with Trustee Fessenden, and Joseph Bodoff, Esquire, of Hinckley Allen & Snyder, who represented Paul Richard, entered his appearance in the Bankruptcy proceeding on behalf of Paul Richard and Ronald Caron, Esquire.

Attorney Bodoff is on the Board of Directors of the American Bankruptcy Institute. Attorney Bodoff is Co-Chairman of the Trade Creditors Committee. Attorney Bodoff immediately initiated a dialogue with Trustee Fessenden. Mr. Bodoff met with Trustee Fessenden in his Brunswick office, and continued to provide Trustee Fessenden with answers to questions and information to refute allegations and assumptions being voiced. When the adversary proceedings were brought in August of 1995 against Paul Richard, Ronald Caron, Edward Simpson, Sherrie Girard, Robert Paradis and Dennis Petit, Attorney Bodoff met with each attorney representing each defendant, and pursued information from myself and others to report and document to Trustee Fessenden. Attorney Bodoff advised me and others that he repeatedly demonstrated to Trustee Fessenden the stupidity of airing the entire Key Bank case and other potential actions if, in fact, the goal of this bankruptcy was to get creditors paid money owed to them.

Edward Simpson retained the law firm of Gargill, Sassoon & Rudolph to represent him. Lou Sassoon and Pat Waters took on the representation of Mr. Simpson. Again, a law firm of high quality and with an excellent reputation in the field of bankruptcy and commercial litigation.

On October 3, 1995, Trustee Fessenden attended a meeting at Attorney Ronald G. Caron's office in Biddeford, Maine. Attending were Trustee Fessenden, Attorney Stephen F. Gordon, via telephone, Attorney Joseph Bodoff, Shirley LeBlanc and me. During this meeting, which lasted in excess of four hours, Trustee Fessenden reviewed various concerns which he had and which had been raised by other individuals. It was a candid and open conference. Trustee Fessenden questioned me and others in attendance on various matters.

On October 4, 1995, Trustee Fessenden had a telephone conversation with Attorney John Connor. Trustee Fessenden's handwritten notes indicate " ... Lengthy discussion re: his & my flip flop' on confirmation." "...He will file objections to plan & disclosure."

On October 27, 1995, Judge Votolato issued an order denying approval of the Debtor's Fifth Amended Disclosure Statement, and Sua Sponte Converting Case to Chapter 7.

On October 28, 1995, Trustee Fessenden had a telephone conversation with Lauren Parker of Berman and Simmons (Bernstein Shur Sawyer & Nelson's lawyers). Trustee Fessenden's handwritten notes indicate 11 ... They want a copy of M/P materials turned over to me by CDP." 11 ... Indicated not in my possession." 11 ... Indicated I wouldn't turn over anyway."

On October 31, 1995, Trustee Fessenden filed a Notice of Intent to Abandon, which included the abandonment of the possible attorney malpractice claims, to the Debtor. (See Notice of Intent to Abandon - Exhibit 31.)

On November 6, 1995, Trustee Fessenden had a telephone conversation with Attorney Poulos. Trustee Fessenden's handwritten notes indicate "... Lengthy discussion re: claims against him by D." "...He received info from Connor.,, (See Trustee Fessenden's handwritten notes - Exhibit 32.) (Emphasis Added.)

On November 10, 1995, David Poorvu, of New England Mortgage Services, Inc. (the Petitioning Creditor) was deposed, a deposition that an adversary had to plead with the Court in order to take. The petitioning creditor's understanding and continuation of objecting to plan of confirmation and plans of resolution are noted in his deposition testimony at pages 56, 70-75, 78, 100-131. In particular, on page 127 of said deposition, Mr. Poorvu testifies that the likely recovery (monetary recovery for him to be repaid) will come from the creditors and/or adversary Defendants Simpson, Richard, Caron, Paradis, Girard and Petit, in the adversary proceedings brought against them.

On November 20, 1995, Trustee Fessenden had a telephone conversation with Attorney Poulos. -Trustee Fessenden's handwritten notes indicate "... D has Ponzi scheme re: lawsuits - Requested info from him - Dick says wait ...

On November 21, 1995, Trustee Fessenden wrote to Attorney Poulos as follows: "... I am writing to follow up on our discussion of the 20th during which you indicated to me that the debtor was engaged in some kind of Ponzi scheme. Doing so during the course of her Chapter 11 may well constitute some kind of bankruptcy crime. Certainly, it would be a conveyance under Sec. 549 which could be avoided by the trustee." (See Fessenden letter dated November 21, 1995 Exhibit 33.) (Emphasis Added.)

On December 8, 1995, Trustee Fessenden wrote to Assistant U.S. Trustee Gerrard Kelley resigning as Chapter 7 Trustee. (See Fessenden letter to Kelley dated Dec. 8, 1995 - Exhibit 34.)

On December 11, 1995, Trustee Fessenden filed Trustee's Motion for Stay and for leave to withdraw as Counsel.

On January 2, 1996, Attorney Poulos prepared a "Memorandum to File" re: Conference with Paula Silaby/Petit criminal referral. Attorney Poulos's Memorandum indicated, in part: " ... Provide Paula with background information ..." "...My representation covered period from 2/82 through early part of 1985 ... "Outline history ... i. Global settlement November 1, 1983 ... " "... Initial Ponzi scheme involving grocery store franchises... ". (See Poulos Memorandum dated January 2, 1996 - Exhibit 35.)

On January 4, 1996, an ex parte hearing was conducted telephonically with respect to the application of Trustee O'Donnell to employ Attorney Morrell.

On January 4, 1996, Attorney Ronald Caron argued before the Maine Supreme Judicial Court with respect to the appeal from the summary judgment entered in the York County Superior Court in 'favor of Key Bank regarding the Fourth Amended Complaint.

After months of investigation and negotiations with Attorneys Gordon, Bodoff, Waters and Kurlanski, on March 21, 1996, Trustee O'Donnell entered into a settlement agreement with Paul B. Richard, wherein Richard would purchase and the Trustee would sell the assets of the estate on the terms and conditions identified in the agreement.

On March 26, 1996, the State of Maine, Department of Banking and Securities filed a Complaint against Paul B. Richard and others alleging violations of the Maine Securities Laws.

On March 27, 1996, John G. Connor, Esquire, attorney for the Petitioning Creditor New England Mortgage Services, Inc., was deposed. On Pages 117-121, and 137-139, Attorney Connor testified as to his "limited" contact with Attorney Richard E. Poulos. As the exhibit have shown, these were not casual contacts. Also, on Pages 140-148, Attorney Connor testified as to his contact with Key Bank's lawyers. Testimony at Pages 150-153 buttress the fact that Attorney Connor's persistence and insistence in various MUFTA actions, and his supposed reason for a Trustee, are not consistent with his actions.

On or before March 30, 1996, Attorney Joseph Bodoff notified Attorney Morrell of the Complaint filed by the State of Maine Department of Banking and Securities against .Paul B. Richard and others.

On April 15, 1996, Trustee O'Donnell filed an Ex Parte Motion for Allowance to Conduct Examinations Pursuant to Federal Rule of Bankruptcy Procedure 2004, in order to conduct examinations and inspect documents of representatives of the State of Maine, Bureau of Banking, Securities Division. (See Ex Parte Motion dated April 15, 1996 - Exhibit 36.)

On April 29, 1996, Attorney Joseph Bodoff and I met with Trustee O'Donnell and his attorney, Stephen Morrell, for approximately four hours.

On April 30, 1996, a hearing was conducted before Judge Votolato in the United States Bankruptcy Court with respect to, among other items, Paul Richard's Motion to Compromise.

On May 2, 1996, a hearing was held before Justice Atwood in the State's case against Paul Richard with respect to a Preliminary Injunction. Attorney Richard Poulos was present at this hearing.

On July 8, 1996, Attorney Poulos filed an Answer to Plaintiff Chapter 7 Trustee's Amended Complaint to Recover Funds Pursuant to Section 544 and Affirmative Defenses. On page 6 of Attorney Poulos, answer, paragraph 12, Poulos responds " ... None of the Defendants knew or had reason to believe that Petit was insolvent at the time of any of the payments." Attorney Poulos certainly knew of my financial condition in June of 1992; however, he did state in Exhibit 2 attached hereto, "her debt outweighed the value of the suit".

On July 9, 1996, Attorney Stephen Morrell filed a Joint Application for Authority to Sell Property and For Approval of Compromise Regarding the Disposition of the Sales Proceeds. This was, in essence, a deal between the Trustee, Attorney Poulos and P & M Associates to force me out of my home, before the case pending in the York County Superior Court was tried.

On August 8, 1996, a second settlement agreement was entered into between Trustee O'Donnell and Paul B. Richard, wherein Richard would purchase and the Trustee would sell the assets of the estate on the terms and conditions identified in the agreement. After learning of the shenanigans regarding the Joint Application for Authority to Sell which was filed on July 9, 1996, and that the estate would receive $5,000.00 with the remainder going to real estate taxes, then to Attorney Poulos and P&M Associates, Adversary Defendants Simpson, Caron, Richard, Paradis, Girard and Petit agreed to waive any claims in the bankruptcy estate that they have, if, in fact, the payment to the Trustee from the proceeds of the Key Bank litigation and any malpractice claims was less than One Million Dollars. A payment of $70,000.090 would be made at the closing, with $50,000.00 to be held in escrow in the event the causes of action were not pursued, or the Trustee decided to exercise his right to demand payment.

In August of 1996, documents from the files of Trustee Fessenden, regarding Attorney Poulos and Attorney Connor, were made available to Attorney Bodoff for review. These files were reviewed, copies were requested, and the copies were forwarded to Attorney Bodoff.

In August of 1996, Attorney Morrell contacted Attorney Bodoff. Attorney Bodoff reported that Attorney Morrell believed that Attorney Poulos was attempting to obstruct the bankruptcy procedure, and requested that we "help him in putting a stop to it".

On September 3, 1996, Attorney Morrell wrote to Attorney Bodoff regarding Attorney Bodoff's concerns that the Trustee was "working both sides of the fence". Attorney Morrell further stated that Paul Richard is bound by the agreement signed on August 9, 1996. In addition, we later learned that "blind carbon copies" of a letter from Attorney Morrell to Attorney Bodoff were sent to: Donald Clark, U.S. Attorney's Office; Linda Conte, Assistant Attorney General; Gerard Kelley, U.S. Trustee's Office; Charles Remmell, Esquire; and Richard Poulos, Esquire. (See Morrell letter dated September 3, 1996 - Exhibit 37.)

On September 9, 1996, Attorney Richard Poulos, acting loro se, filed a Motion for Trustee to Schedule Hearing And To Order the Trustee to Provide Notice of the Hearing to All Interested Persons. Attached to the Motion is a letter dated September 5, 1996 from Peter Brann to Attorney Morrell. (See Brann letter dated September 5, 1996 - Exhibit 38.)

On September 12, 1996, Attorney Morrell filed the Trustee's Opposition and Motion to Strike the September 9, 1996 Motion of Defendant Richard E. Poulos and Request for Status Conference.

On September 16, 1996, Attorney Stephen Gordon wrote to Assistant Attorney General Peter J. Brann indicating "... I was stunned to find that a letter you wrote to Steve Morrell, counsel to her Trustee in Bankruptcy (and, apparently, copied only to the trustee in Bankruptcy) on Thursday, September 5, 1996 was attached to a pleading filed in the Bankruptcy Court by Dick Poulos (not a recipient of your letter) on Monday, September 9, 1996. Apparently, Mr. Poulos somehow received your letter the same time as Steve Morrell. All of my questions concerning you would be answered if I knew whether Dick Poulos' immediate access to your letter and the filing of it with the Bankruptcy Court caused you to be outraged or gleeful. It must be one or the other and, therein lies the key to your motivation in this entire matter. ..." (See Gordon letter to Brann dated September 16, 1996 - Exhibit 39.) (Emphasis Added.)

On September 18, 1996, Attorney Zbigniew Kurlanski wrote to Attorney Bodoff advising him ... Yesterday, September 17, 1996, I encountered Richard Poulos on the street in front of my office here in Portland, Maine. I made a comment to him that he was a busy boy filing documents in the Bankruptcy Court and he responded that, 'there was more to come'. (See Letter from Kurlanski to Bodoff - Exhibit 40.)

On September 18, 1996, John Campbell, Esquire wrote to Trustee O'Donnell stating " ... Mr. Poulos and I were shocked that Mr. Steve Gordon purports to believe that we are still Mrs. Petit's counsel in the Key Bank litigation. ... As you know, this firm was constructively discharged by Mrs. Petit in 1994 when she filed bankruptcy schedules stating she had potential malpractice claims against her former lawyers⠨See Poulos letter to O'Donnell dated September 18, 1996 - Exhibit 41.) In the criminal referral memorandum of January 2, 1996, Poulos indicated " ... my representation covered the period from 2/82 through the early part of 1985 ... " (See Poulos' Jan. 2, 1996 Memorandum - Exhibit 42.)

On September 19, 1996, Attorney Poulos filed a Reply to Motion to Strike and to Opposition and Answer of the Trustee in Bankruptcy. On Page 2 of the Motion, Poulos writes "... in view of Chief Judge Carter's stinging criticism about how the administration of this case had been mishandled ...". Poulos further writes, at page 4, " ... Contrary to the further assertions of the Trustee in Bankruptcy, the correspondence between the Office of the Maine Attorney General and Mr. Morrell is not inconsistent with any order of this Court. Moreover, such letter was provided to Poulos by the Of f ice of the Maine Attorney General.

On September 23, 1996, the United States Trustee filed an Objection to Motion for Trustee to Schedule Hearing and to Order the Trustee to Provide Notice of the Hearing to All Interested Persons.

On September 23, 1996, Trustee O'Donnell filed a Notice of Opportunity to Object to Proposed Action by Trustee with respect to the Amended Application to Compromise Adversary Proceedings and to Sell Assets (the "Application to Compromise,,) and the Joint Application for Authority to Sell Property and for Approval of Compromise Regarding the Disposition of the Sale Proceeds (the "Application to Sell"). (See Notice of opportunity - Exhibit 43.)

A Status Hearing was held in the Bankruptcy Court on September 24, 1996.

On September 30, 1996 Attorney Bodoff spoke with Peter Brann. In his discussion with Mr. Brann, Mr. Brann advised him that he would object to the settlement of the bankruptcy case with Mr. Richard. He also stated to Attorney Bodoff that he did not care one way or the other whether the litigation (Key Bank case) was pursued.

On October 10, 1996, Asst. Attorney General Peter Brann wrote to Attorney Stephen Morrell "... we would appreciate it if you would provide us with whatever information in your possession concerning the source of the $70,000 that Paul Richard intends to use to effectuate the proposed settlementਓee Brann letter to Morrell dated October 10, 1996 - Exhibit 44.)

On October 10, 1996, Asst. Attorney General Peter Brann wrote to Attorney Bodoff " ... we would appreciate it if you would identify the source of the $70,000 that Paul Richard intends to use to effectuate the proposed settlement, including the source's name, address, and telephone number. Also, if you could provide us with the documents relating to any financial transaction between Paul Richard and the source, it would be appreciated. ... We understand that you have decided against seeking an in camera hearing and that you now have no objection to identifying the source of the $70,000. ..." (See Brann letter to Bodoff dated October 10, 1996 - Exhibit 45.)

On October 17, 1996, the State of Maine filed an Objection to Proposed Settlement of the bankruptcy, including as exhibit, affidavits of Laurence and Sylvia Paine. (See Maine's objection to Proposed Settlement - Exhibit 46.)

In October 18, 1996, the State of Maine filed Maine's Motion to Quash the deposition subpoenas issued on behalf of Paul Richard and Ronald Caron stating ". ...Maine adopts by reference the arguments made by Poulos and Connor on each of the four procedural defects identified in their papers. ... The deposition subpoenas are directed at obtaining the results of on-going investigations conducted by the Maine Attorney General and by the Securities Division of the Maine Bureau of Banking.* Both of these investigations are confidential by statute. ਓee Maine's Motion to Quash Exhibit 47.) (Emphasis Added.) If the investigations are so confidential, why has Assistant Attorney General Brann made portions of the investigations so public?

On October 22, 1996, Attorney Gordon filed Debtor's Objection to the Joint Application for Authority to Sell Property and for Approval of Compromise Regarding the Disposition of the Sale Proceeds, Counteroffer of Sale and request for Hearing.

On October 23, 1996 the State of Maine filed Maine's Verified Request for Contempt Proceedings with respect to the Debtor and her agents for violating the court's order dated May 10, 1996. (See Maine's Verified Request - Exhibit 48.)

On December 7, 1996, the first article to appear since March of 1996, appeared in the Lewiston Sun Journal.

On December 12, 1996, a large article appeared in the Lewiston Sun Journal. Included in this article was a colored picture of Alice Bettany of Standish, Maine. Mrs. Bettany forwarded to Paul Richard's attorney a copy of the Complaint which the State mailed to her in March, 1996. She included a notation " ... I received this in the mail. I did not ask for this to be sent to me ... ".

On December 3 , 1996, there was a meeting held at the office of Trustee O'Donnell in Portland, Maine. In attendance were Attorney Joseph Bodoff, Attorney Steven Canders, Attorney Pamela Ames, and Attorney Stephen Morrell. Also present, but not allowed into the meeting, were Catherine Duffy Petit, Paul B. Richard, John Rzasa, and Greg O'Halloran. The Trustee and his attorney, Stephen Morrell, were presented with evidence that Maine's Verified Motion for Contempt was not only faulty, but outright untruthful. The Trustee and his attorney were informed that individuals who had been pressured by the Department of Banking and the Maine Attorney Generalls Office are not victims. The Trustee and his attorney learned who was going to provide the $70,000.00 and the $50,000.00 pursuant to the settlement agreement with Paul Richard, and that the person did not want to be further contacted by Key Bank's attorneys nor the Department of Banking and Securities or the Attorney General's Office.

The Trustee and his attorney were advised by an attorney as to how any problems regarding the necessity of any state "registration" could be accomplished. Further, they heard how the documentation would be drafted to cover all of the concerns of the Attorney General's Office and the Department of Banking and Securities. They would have learned, had they-allowed the others who were waiting to attend the meeting, that information regarding the purported intimidation by the Debtor and others, information regarding the falsehood of statements that Paul Richard and Cathy Petit were out advising people they would not get their money back if they cooperated with the State of Maine, was incorrect.

Greg O'Halloran, who waited with others for admittance to the meeting, was prepared to outline in chronological order the false statements and insinuations contained in the Paine affidavits, and report about his repeated meetings during the month of November with members of the Maine Department of Banking and Securities and the Attorney General's Office, and his attempts to negotiate a resolution to the concerns of these individuals.

All of this information, which was actually given to Trustee O'Donnell and his attorney, Stephen Morrell, has never been reduced to a Motion by the Trustee and/or his attorney to the Court to remove the errors contained in the Motion for Contempt and in Maine's Objection to the proposed settlement with Paul Richard.

On December 31, 1996, the Maine Supreme Judicial Court ruled in favor of the Plaintiffs, Catherine Duffy Petit, Old Orchard Ocean Pier Company, CDP, Inc., and Whiteway Amusements, reversing the decision of the trial court with respect to Key Bank's Motion for Summary Judgment, and remanded the case back to the lower court for trial.

On January 8, 1997, Attorney Gordon and Trustee O'Donnell filed a Joint Motion of Chapter 7 Trustee and Debtor to Convert this Case to One Under Chapter 11.

In a letter dated January 24, 1997 from Attorney Stephen Morrell to Assistant Attorney General Peter J. Brann, Attorney Morrell admonishes Attorney Brann for circulating information ex parte. Further, on page 3 of this letter, Attorney Morrell states " ... the Trustee has been candid in all his communications with the State of Maine, but declines to be further manipulated, before the judge or the press, as part of the State of Maine's orchestrated publicity concerning the facts of this case. ..." (See Morrell letter to Brann - Exhibit 49.) (Emphasis Added.)

On January 28, 1997, Attorney Poulos filed an Opposition to Joint Motion of Chapter 7 Trustee and Debtor to Convert Chapter 7 Case to Chapter 11. The Motion states " ... Chapter 11 is unnecessary and will arm the Debtor with additional weapons to carry out securities fraud and further violations of the Bankruptcy Code ... Since October 17, 1996, this sordid affair has been a public spectacle. it has been the subject of banner headlines and exposes. ... It is grossly inappropriate for the Trustee to allow a Chapter 11 proceeding by such a Debtor ... " In Attorney Poulos's Objection to Amended Application, attached as an exhibit, which was filed in October, 1996, Attorney Poulos devotes much time to the issue of "champerty". He cites law on the issue and states " ... Authority to sell the pending Key Bank claim and contemplated legal malpractice claims to Paul Richard ("Richard") should be denied because the agreement would encourage the crime of champerty in violation of Maine law. . . . " Why then did he oppose the abandonment of the claims to the Debtor? It is astonishing to me that Mr. Poulos and his partner, John Campbell, who believed they may be defendants in a malpractice claim, are concerned about "champerty". They had no problem with this issue over the tenure of their representation of me beginning in 1982; they willingly accepted "fees" from Robert and Barbara York, and Ed Simpson (as stated previously herein). Also, they had no problem accepting a $25,000.00 retainer to bring a law suit in the late 1980's for a client unrelated to me - they accepted the payment, drafted the documents relating to the transaction, and cashed the check made out to them by the now, Mrs. Edward Simpson. Was it champerty then? They had no problem urging Ed Simpson to continue to assist me in the law suit and with my personal expenses over the course of the years. Was it champerty then? Further, they state in the Objection " ... As a matter of policy and legal considerations, legal malpractice claims are not assignable to a third person because, as noted in Marion, trafficking in legal malpractice claims would place an increased burden on the judicial systems and ultimately reduce the availability of competent legal services, and imperil the sanctity of the confidential and fiduciary relationship existing between an attorney and a client. ..." I COULD NOT AGREE MORE WITH THE LAST PART OF THAT STATEMENT. However, Mr. Poulos and Mr. Campbell never before seemed to shy away from bringing legal malpractice claims and, in particular, in earlier letters and court filings, are actually urging Trustee Fessenden to sue Attorney Gordon and Attorney Caron in the bankruptcy. They have participated in strategy sessions with various adversaries in a plan to bring a class action law suit against Attorney Stephen Gordon, Attorney Ronald Caron, Attorney Jospeh Bodoff, and others.

On Page 3 of Poulos's Opposition, he states " ... The value of the asset was not subject to any analysis but supported merely by speculation and an allusion to one expert' who 'supports the view, that the damages exceed $30 million ... " In footnote 2, Poulos writes " ... it is important to note that before a single dime is recovered, an offset of Almost $4 million will have to be applied. 쯐>

It would be appropriate, rather than quoting from an order which they should have vehemently argued to avoid being entered, Richard E. Poulos and John S. Campbell (who participated so actively in the case for which they received over one-half million dollars on round one of the settlement, and who obviously intended to participate in the remaining part of the case, as evidenced by the "new" contingency fee agreement signed in 1992, less than one year before the filing of the involuntary petition) , should have argued not that "this figure was illusionary", but that these figures are much lower than their public statements and in statements to those whom they encouraged to continue to support the debtor before the bankruptcy petition and after. Most shocking is the statement "an offset of almost $4 million will have to be applied". If, by some remote chance this is true and there is a set off based upon acts committed only by the Bank and/or its officers and employees which is what Count VI is all about, then the report of Special Counsel, whereby the "opinion" that the BSS&N settlement was not a fraudulent conveyance, does not hold water. In the report submitted by Special Counsel the credibility of certain individuals was a factor in their opinion. Who are the individuals referred to in that report? My "unrealistic reorganization efforts", quoted in the same motion, filed after the Maine Supreme Judicial Court decision of December 31, 1996 is even more amazing.

On January 27, 1997, Attorney Richard Poulos filed a Withdrawal of Appearance in the Key Bank case. (See Poulos, Withdrawal - Exhibit 50.)

On January 29, 1997 Peter Brann filed Maine's Brief Concerning Joint Motion to Convert. At page 2 of the Brief, Brann states " ... Although the court may ultimately conclude that their belief is correct, this conclusion should be based on facts and law, not simply a leap of faith ... I would urge again, read and reread the December 31, 1996 decision and the facts and citations of law issued by the highest court in the State of Maine. In previous letters and filings, Mr. Brann has stated - the trustee doesn't think the Key Bank case is worth anything the Trustee doesn't think that the malpractice claims are worth anything.

After the first settlement agreement signed on August 9, 1996, and it appearing that most creditors were in agreement with this settlement agreement, and since a resolution was anticipated, the following has occurred:

Persons were contacted by "State officials" relevant to the "on-going investigation", based on information provided by a current Defendant and others. Persons who did not and do not accept the statement that they are involved in a "scam", have been harassed. In some instances, these persons are the subject of "banner headlines" also. In early December, 1996, Dr. Gordon Paine and Allen Fernald responded to numerous articles and "administrative subpoenas" which were forced upon them. (See Exhibit 51.)

In February, 1997, "Maine" announced its settlement with the purported Sun Life "victims". Beginning in Marchof 1997, interviews were conducted with the purported Ilvictims" by Ms. Sandra Ross and Steven Patrizio of Sun Life Assurance Company of Wellesley, Massachusetts. Persons who have been interviewed have repeated the following:

After the "secret settlement" negotiations began between the Trustee and his attorney on January 30, 1997, I definitely plead with the Trustee and his attorney not to allow trial information to be disclosed in the Bankruptcy Court forum. Attorney Caron and I waited for weeks for the supposed meeting we were to have with Trustee O'Donnell and his attorney. I did not consent to an ex parte conference with Judge Brennan in the Key case; I insisted that all parties be represented at any conference. various of my attorneys communicated with Attorney Morrell and the Trustee. My attorneys repeatedly begged them to review all evidence on the record to determine fairly whether a settlement with Key Bank was in the best interest of all concerned. In answer to our repeated pleas for complete and full knowledge of the entire Key Bank case, Attorney Morrell wrote to Attorney Allen Rugg in late February of 1997, stating that Key Bank will portray "grandmother Petit, cloaked in a wolf's costume". Attorney Rugg responded, stating that compared to the actions that Defendant Key Bank has committed against Mrs. Petit and her corporations, any attack on me is a fight we can win.

In March, 1997. others who have refuted the term "victims" were referred to as "f---ing old Maine codgers", or mailed copies of a complaint. (See Exhibit 53.)

In April 1997, a proposed Motion to settle the Key Bank case with Trustee O'Donnell was filed with the Bankruptcy Court. Included in the Motion was a report (later disallowed by the Court) outlining the reasons for the proposed "settlement". Included in that report was the continued references to my "credibility" and, interestingly, the fact that I am now a defendant in a "large" securities case brought by "Maine".

For years I have observed how each Plaintiff who dared sue Key Bank are presented publicly by the Defendants. One Plaintiff was criminally indicted on twenty-four counts by a Grand Jury, and later vindicated. Another Plaintiff went through public character assassination before and during his trial. Potential witnesses in my Key Bank case have been interviewed, not on the merits of the case, but on the following subjects:

In continuation of the themes demonstrated by the Defendants, as outlined above, the following has occurred in the Bankruptcy case and in other recently filed proceedings:

Bringing law suits under certain legal statutes and citings of law against only those persons defined as "friends" of the Debtor is inconsistent with the very laws cited, and is judicially biased.

The misstatements, misinformation and flag waving continues in meetings and hearings with "Maine", Grand Jury proceedings with various witnesses, and in various conversations between one or more persons with their own selfserving agendas.

The still undisclosed conflicts which exist, hinder any and all unbiased judicial decisions. We are now reduced to:

Sadly, those "out to get the Debtor" have been labeled as cooperating individuals in proceedings wherein they are culprits and/or misinformants.

I respectfully submit you cannot pick and choose those whom you would like to sue based on their particular allegiance. You cannot pick and choose laws which apply to some Defendants but not to all. You cannot continue to selectively protect "sacred cows", and you cannot simply apply the laws when it is for a self-serving motive or to enhance personal bank balances.

At the introduction of this document I referred to the "pundits", etc. who have "dissected, opined", etc. as to all of the theories and actions connected with the Bankruptcy case and other pending cases. Some of these same persons as identified have stood in courtrooms, filed voluminous papers, and conducted or attended various meetings extolling their opinions as facts regarding the Key Bank case, bankruptcy laws, and other issues. It is these acts, and many more that have been, and are, designed to ALLOW KEY BANK TO PURCHASE THE LAW SUIT AGAINST THEM FOR FIRE SALE VALUE.

I, and my corporations, the Plaintiffs in the Key Bank case, are trapped in this spider web for one reason: we are the Plaintiffs in the aforementioned case.

I, and my corporations, am entitled to due process by a jury of my peers who can evaluate all of the evidence, not by a self-appointed panel of jurists.