Joseph S. U. Bodoff, Esq.

Hinckley, Allen & Snyder

One Financial Center

Boston, MA 02111-2625

September 3, 1996

Re: Paul Richard

Dear Joe:

I write following our telephone conversation on August 23, 1996 concerning the content of the amended application to compromise adversary proceeding and to sell assets. The amended application refers to the settlement agreement executed by the Trustee and Paul Richard. After we spoke, there were three issues which remain unresolved.

The first centers upon paragraph S of the amended application which contemplates consideration of the pending offer of P&M Associates to purchase the estate's interest in the debtor's residence. should the amended application to compromise be denied by Judge Votolato. The P&M Associate's offer remains open in the event the amended application is denied, but only if consideration of the offer is not delayed. Further delay in the consideration of the P&M Associate's offer would jeopardize the Trustee's ability to proceed in the event that the amended application is denied. The Trustee is fully capable of informing the court that his preference is to proceed with the amended application. However, the Trustee will not agree to postpone consideration of the P&M Associate's offer in the event that the amended application is denied.

The second issue involves the manner in which evidence will be presented to the Bankruptcy Judge on the issue of Paul Richard's good faith. You have indicated that the $70,000 payment contemplated by the compromise will come from a third parry. You have indicated that that third parry wishes to remain anonymous. The anonymity of the source of the $70,000 really does beg the question and we're going to have to give careful consideration as to how the Judge can be assured by the parties that the $70,000 payment is not the proceeds of money transferred to Mr. Richard by those who claim to be victims of a fraud.

Joseph S. U. Bodoff, Esq.

September 3, 1996

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The third issue involves the granting of releases to counsel to the debtor and counsel to Paul Richard. Such a release is inconsistent with the signed - settlement agreement, which reserves to the Trustee the right to pursue hidden assets and post-petition transfers. The Trustee intends to proceed and enforce the terms of the settlement agreement. If the Trustee can be convinced in a relatively short period of time that neither you nor Steve Gordon have received undisclosed assets of the estate, then a release may be negotiated on its merits. However, in the meantime, the compromise must go forward as the vehicle by which Mr. Richard's present contractual obligations to the Trustee may be approved by the Bankruptcy Judge.

SGM:pab

Eaton, Peabody, Bradford & Veague, P.A.

Joseph S. U. Bodoff, Esq.

September 3,1996

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bcc: Donald Clark, U.S. Attorney's Office