I will briefly digress at this point to show the significance of the $298,000 false testimony in the January 10, l983 Hearing.

Unknown to either John or me, Bedell, through Penvest, had loaned $1,000,000 to the New York Mafia prior to Pro Arts filing Chapter 11.

Penvest, Bedell's Pension Fund Company, had received $1,000,000 in Retirement Contributions from the Teamster's Union in New York City.

A business associate of Bedell's named Jesse "Doc" Hyman, had convinced the Teamsters to put their retirement fund under the control of Bedell. After Bedell obtained this money, Hyman "asked" to borrow the $1,000,000 from Penvest for a "real estate investment."

It was difficult for Bedell to deny to Hyman that he did not have the funds since Hyman was responsible for getting Penvest the $1,000,000 shortly before Hyman's loan "request."

I am sure that Hyman promised Bedell a "better return" on the loan than Bedell could get from safer government investments, especially since the interest rates prior to December 31, l981 were on a steady increase!

After Bedell had made the loan to Hyman, Bedell received one $10,000 payment and then NOTHING THEREAFTER!

Now, Penvest was "out" $1,000,000 with no manner or expectation of ever getting the money. (It is very difficult to turn the MAFIA over for collection, if you know what I mean...) and additionally, Bedell still showed the loan as a good loan that was accruing interest on the Teamster investment!

Bedell did not know that Hyman was under F.B.I. investigation. Hyman received his nickname, "Doc", because he was an unlicensed dentist in Buffalo, New York! There were two F.B.I. informants that ultimately wound up in body bags in the trunks of two cars. One was found in the trunk of a rented car at Kennedy Airport and one was found in the trunk of a rented car at the Buffalo Airport.

Bedell's Penvest company filed Chapter 11 in December of 1983 while Pro Arts was struggling to meet its rent payments to JMT Associates. It was one of the many primary factor in Pro Arts final destiny to Chapter 7.

In l985, Bedell was convicted of an ERISA violation and he testified against "Doc" Hyman. Hyman became part of the Federal Witness Protection Program after he received a 30-year sentence for Racketeering and Loan Sharking! It was discovered that Doc had been loaning the money to individuals at 2% interest PER WEEK!

Bedell had lost over $3.5 Million in Penvest money that did not belong to Penvest. His knack for finding the wrong investments for his clients was unbelievable. Most of the retired clients were financially ruined and Newsday Magazine had several stories regarding the Penvest/Bedell scam.

In December of l981, Pro Arts' Chapter 11 was like an answer from Heaven to Bedell. With Angona having knowledge of the poster industry, Bedell could make false loans to Pro Arts and "pad" Penvest's real loans sufficiently to hide the $1,000,000 loss to the Mafia.

The fact that Stewart and Bedell's "creative bookkeeping" established$298,000 in four months proved this! Here, they had added over $193,000 to their actual $105,000 loan. At this rate, providing Pro Arts' Sales were increasing, Bedell could replace the $1,000,000 loss in 12 additional months!

Unfortunately, Bedell let Stewart run the Pro Arts business. Sales were not forth coming. In fact, sales diminished to a point that the company was losing $100,000 Net Worth each month that they continued to run the business!

Because Bedell and Stewart were "creatively working the books," this was never reported to the Bankruptcy Court and the creditors.

When Old Phoenix sold my family and me "down the river," they were aware of Pro Arts' poor sales, but the allure of the $287,000 principal pay down on the equipment loan at confirmation time made them continue to support Bedell and the other conspirators.