When John and I first discussed the Confirmation Plan with Dietrich, Bedell and Angona, Dietrich told us that a "cram down" might be necessary to confirm the plan.

The term, "cram down," is used to infer that in the event one or more classes of creditors is not satisfied with their lot in the Confirmation Plan, that creditor may object to the plan's confirmation.

The court can force that creditor into accepting the plan by "cramming it down their throats," if it can be illustrated that the creditor would not receive more from the Debtor if the Debtor was forced into Chapter 7 which is liquidation.

In this fashion, the other creditors would not suffer at the hands of this "unhappy creditor" that might be objecting on a personal level.

The problem with a cram down as told to John and me was that none of the current shareholders would be allowed to retain any stock ownership in the new company.

In this manner, Bedell and Dietrich were able to strip John, Mike and me of our shares of Pro Arts. It was John's and my decision not to settle the Mihalik case or the Treffinger case in the September 1982 meeting that prompted Dietrich to suggest the cram down.

It was agreed by Bedell and Angona that Mike, John and I could purchase new stock in the new Pro Arts three years after the confirmation of the plan. We could purchase up to 60% of the company if we felt that the company was a good investment three years later.

The stock purchase was to be tied to the real estate sale to Bedell and Angona.

If they elected not to sell us the stock, the note on the real estate would be due and payable thereafter.

If they elected to sell us the 60% of the company three years after the confirmation, and we declined their offer to purchase stock in Pro Arts, we would have to allow the note on the real estate to continue for its full term.

I thought that this "option" was a fair option on both parties' part.

What John and I did not know was the intention of the bank to press its foreclosure and Bedell and Angona to back out of this agreement at the last minute! There were several bankruptcy hearings, which transpired from January 1, l983 and May 1, 1983. Most of which neither John nor I were aware of their occurrence.

The conspirators kept John and me deliberately in the dark.

By their secret meetings and their access to the court hearings without either John or I being there, the conspirators could have motion approved and our rights were waived by our absence.

In March of 1983, I had the opportunity to talk to Attorney Phil Lloyd of Brouse & McDowell. He had attended one hearing in place of John Schwemler representing Old Phoenix.

Lloyd told me that it was decided that Old Phoenix would receive payments on the equipment loan, which would bring the loan balance to about $400,000.oo on the principal.

As I found out later, Old Phoenix actually received $287,000 in August of 1983 when Hallman applied the $112,000.oo Lock Box money to the loan!

Since no one had gone to Judge White for approval of this transfer and representations at the confirmation by Stewart indicated only $160,000.oo was to go to Old Phoenix, both John and I were damaged with this secret act.

The IRS was to have received the $112,000 against the Pro Arts withholding tax and the FICA tax for which we were liable!

In retrospect, I can see that Dietrich and Bedell used the bank to keep John and me "in line." Since Old Phoenix held the first mortgage on the real estate as well as the Secured Lien holder of the equipment loan, the bank controlled the First Class of creditors in the bankruptcy plan.

Mike, John and I had perfected liens and were secured creditors of Pro Arts by virtue of our loans to the company.

Dietrich and the conspirators made us relinquish our standing in the First Class of creditors and we were forced into accepting an "insider's" position even though our argument for standing was never heard by the court.

Since John and I felt that Bedell and Angona were "honorable" men, and our reliance on Dietrich to represent the corporation in an honorable manner was the reason we hired him and Roetzel & Andress, little did we know that these individuals would conspire to defraud each of our families and us.

Their "cram down" tactics, their Disclosure Statements, their Plan with deadlines for objecting to these filings were designed to wear us down and beat us into submission.

When we tried to save our homes and what little we wanted to salvage for our families, these unscrupulous "pillars of society" were plotting our demise.

Mike, John and I trusted Old Phoenix National Bank.

We had paid the bank hundreds of thousands of dollars in interest since we had moved to Medina.

You would think that a customer doing business with the bank for over 12 years might have been shown one tiny bit of compassion.

The bank, Hallman and Bramley were totally ruthless in their dealings with us and not only did the bank want to get all its money, they wanted to get everything John, Mike and I had earned over the twelve year period.

On May 4, 1983, the Pro Arts Shareholders' Meeting was held at the Pro Arts office on Industrial Parkway in Medina.

John and I asked Roger Ingraham, our attorney in the Mihalik case and in the Treffinger case to chair the meeting.

Since Roger had a 40% interest in the Mihalik $225,000.00 Judgment, he was very interested in any deals Best and Roetzel & Andress made regarding that judgment.

Mike appeared with his wife, Sandra and they were represented by Akron attorney Vince Trecini.

John and I were there as well as Stewart, Dietrich, Best, Hallman and Lloyd.

Stewart had "suggested" to Bedell and Angona not to come to the meeting even though we had requested their presence.

Several questions were directed to everyone concerning the affairs of Pro Arts.

Dietrich made representations about Rooney Pace being the new investor in Pro Arts that Bedell and Angona had found in New York.

Best tried to justify his settlement offers with the Treffinger group and the Mihalik group, but Mike, John and I were extremely upset for two reasons.

Best had not settled their actions against John, Mike and me.

Additionally, Best knew about our desire to have those cases heard by White in bankruptcy court, but decided that the "best solution" for Pro Arts was to settle the cases and save Pro Arts additional money by its settlement.

When Best was asked what was to happen to the $225,000 Final Judgment against Mihalik, Best lied through his teeth.

Best stated, "It would be up to the judge (White) to determine what was to happen to that judgment, not Best or Dietrich.

Dietrich told John and me at the very beginning that he was knowledgeable in bankruptcy law. That is why John and I hired Roetzel & Andress and Dietrich!

Dietrich and Best both knew that under bankruptcy law, the $500,000 settlement they gave Mihalik would be off-set against Pro Arts' claim of $225,000! And as there was a Motion in front of White to Vacate the Judgment, Mihalik might not even have to offset the $225,000 if White approved that request by Mihalik's attorney!

When Roger Ingraham asked about the settlement, Best stated that any decision on that $225,000 judgment would be left entirely up to the bankruptcy court. Later, I found evidence that Stevenson, Roetzel & Andress, had offset the $225,000 Judgment prior to the court making a final ruling on that decision!

Even though Stevenson had sent a letter to the Unsecured Creditors on October 28, 1983 stating that they would "share" in that $225,000 judgment, on November 1, 1983, Roetzel & Andress had sent a letter to Cantwell, Mihalik's attorney, off-setting the $225,000 judgment.

Stevenson paid Mihalik and his group the first installment of their $500,000 pre-petitioned money stating that if White vacates the judgment, they would receive a higher percentage than what was being paid out at that time.

Each time a letter was sent to a creditor with the representation that they would share the $225,000 judgment as stated in the Disclosure Statement and Plan was a Mail Fraud violation. So 300 creditors would be 300 violations.

Additionally, each representation in that letter was a single act of Bankruptcy fraud! Another 300 violations, which would fall into the RICO statute.

To compound this fraud and to deceive the creditors, Dietrich filed a Status Report in Bankruptcy Court on December 30, 1983 stating that the Mihalik Judgment was still pending! This was nearly two months after Roetzel & Andress had offset the judgment with their November 1, 1983 letter to Cantwell! Hallman from Old Phoenix was asked about the bank's position regarding the reorganization of Pro Arts.

Hallman replied that he relied on the D.I.P. Reports filed with the bankruptcy court in determining the bank's position.

When he was asked about re- financing personal loans to John, or me Hallman was evasive. He said that pending the outcome of the reorganization, he would evaluate us at that time.

While it might be considered a "typical banker's response," you must realize that both John and I wanted at least an assurance that the bank was not going to foreclose on John's house after we had agreed to do everything to confirm the plan including giving up all our stock in Pro Arts.

Hallman was very coy to say the least. He reminded me of the "cat that had swallowed the mouse." He knew Pro Arts' financial position. He was aware of the new unpaid Withholding Taxes and the new unpaid FICA taxes, he was also aware of the Kedd money that had been diverted to New York from Canada.

Hallman was working behind our backs to get more than what the bank deserved. I feel that he wanted to raise himself in the bank management and his handling of Pro Arts would feather his nest.

As the events of the Mihalik Set-off transpired after the May 4th Shareholders' Meeting, I will show you how these conspirators lied to my family and me.

Their total disregard for the truth will be more apparent as I discuss the June 10, 1983 Confirmation Hearing in bankruptcy court.

Vince Trecini requested all the papers regarding the new New York investors prior to the June Hearing.

As Trecini was to be out of town for two weeks, Dietrich assured Trecini that the papers would be in Trecini's office when Trecini returned. The papers were never sent to Trecini!

Dietrich's continued delay tactics was a plan to continue the march towards the Confirmation Hearing by promising everything and not delivering anything.

While we were being encouraged by the promise of saving our homes, these conspirators were plotting behind our backs to steal the real estate, foreclose on our homes and to throw us all into personal Chapter 7!

We were all told at the meeting that Rooney Pace was a publicly held company.

We were told that Rooney Pace was putting in $400,000.00 in Cash on Confirmation of the Plan with an additional $500,000.00 three to four months after the Plan was confirmed!

We were told that Old Phoenix was to have their $580,000 equipment loan reduced to $360,000.oo and an additional $64,000.00 would be paid on the Real Estate Loan bringing it current with the bank!

Old Phoenix stated at the meeting that they did not like Bedell's collateral.

Lloyd, attorney for Old Phoenix, stated that Bedell and Angona were now "out" now that Rooney Pace was "in" meaning that Rooney Pace would be running the new Pro Arts after it was out of Chapter 11.

The IRS was to be paid $45,000 on confirmation of the Plan and the balance of $45,000 due to the IRS, which John and I would owe if Pro Arts failed, would be paid in the next six years with Bedell and Angona guaranteeing the money to John and me if Pro Arts did not pay-off the balance.

Stewart also admitted at the Shareholders' Meeting that he had not submitted a Profit and Loss Statement to Old Phoenix over the eight months that Bedell and Stewart were running the company.

While John, Mike and I controlled Pro Arts, the bank insisted upon regular Profit and Loss Statements. It was part of our original loan agreement with the bank!

It is very important that the bank knew the status of Pro Arts every month in order to evaluate the bank's collateral.

Hallman and Bramley did not request or insist upon this information from Stewart or Bedell!

A few years after Pro Arts had been converted to Chapter 7 and was liquidated, I found the original Profit and Loss Statements of Pro Arts for the months of September 1982 through December of 1983.

Pro Arts lost an average of $100,000.oo per month ($900,000.oo for the nine months Stewart and Bedell were in control) prior to the Confirmation of the Pro Arts Plan!

This is very significant because it illustrates that Old Phoenix National Bank lost $900,000.oo in collateral during the time the bank conspired with the rest of the conspirators.

Old Phoenix needed to have the Confirmation Plan approved as badly as Bedell, Angona and Dietrich needed it approved.

Since the Real Estate Loan was 90% guaranteed by the S.B.A., the bank had no real liability in the $1,000,000.oo value of the Pro Arts buildings.

The Equipment and Asset Loan was another matter! If the $500,000.oo equipment loan fell short in a liquidation of the assets, there was $900,000.oo less in assets at Pro Arts in June of 1983 then there was in September of 1982 when the conspiracy was in its infancy.

With new owners of Old Phoenix consolidating their management in their acquisition of the bank, both Bramley and Hallman would not fair to well if the bank lost $900,000.oo in assets while the new management was running the company. Especially if both Bramley and Hallman were not insisting upon regular Profit and Loss Statements from the new directors and officers!

Hallman was aware of many circumstances which Stewart and Bedell had created and never voiced any opposition to these events.

In February of 1983, Stewart had given Hallman a personal check on Stewart's Maine account to "hold" until the beginning of the next week.

Stewart then wrote pay-roll checks to the Pro Arts employees against that check which was to be deposited on Monday morning by Hallman to cover Pro Arts' pay-roll checks. Since both John and one of Pro Arts' Office Managers told me this after its occurrence, I was surprised at the bank's willingness to help Stewart "kite" a check.

Stewart returned to Maine Friday night before the Monday deposit of Hallman and put a Pro Arts check for $5,400.oo in his personal account to cover the check Old Phoenix was holding for the Monday deposit.

Now, all Stewart had to do was pray that Pro Arts received payments from its customers on Monday or shortly thereafter to cover the $5,300.00 that was "floating" in the banking system.

When a check is "kited," the term is used to say that it is "floating through the banking system without funds to cover it.

In 1983, the electronic banking system was not what it is today.

It often took seven to ten business days for out of state checks to clear the banks. Hallman was aiding Stewart in an illegal act. Since the practice is prohibited by federal and state laws.

Both Stewart's check and the Pro Arts' check bounced. No money happen to come in as it was needed and Bedell was running out of money and could no longer be relied upon to meet the pay-roll in the event this situation transpired.

Another situation to which Hallman and the bank were helpful in aiding Stewart and Bedell was the Kedd Distribution Canadian Account.

When Judge White wrote the Order for the Pro Arts Lock Box to be held by Old Phoenix, White ordered that all accounts receivable due Pro Arts by its customers prior to Bedell taking control of Pro Arts was to be deposited in this account.

When Bedell began scrambling for money to feed the Pro Arts machine as early as December of 1982, Bedell and Angona contacted Ed Mauro of Kedd Enterprises.

As Kedd was my Pro Arts exclusive distributor for Canada, Ed had become a very "over-due" account receivable to the company.

In order for Ed to continue his poster distribution in Canada, he had to have posters from Pro Arts.

Bedell and Angona agreed to sell Ed posters so long as he sent post-dated checks to cover his past due bills.

Ed agreed to do this and as those check were part of the pre-Bedell period, those checks were given to Old Phoenix for deposit in the Lock Box account by Hallman when each check was to be deposited.

Bedell and Angona instructed Kedd to stop payment on four checks. There were three checks for $3,000.00 each and one check for $4,000.oo, which did not clear the banks because of this stop payment.

Bedell had received new checks in New York for the $13,000.oo and used the money illegally to fund his financing of Pro Arts.

Hallman and Schwemler were aware of the stop payment on the checks because the checks were returned by the Canadian bank with the notation of Stop Payment attached to each check.

Hallman and Schwemler discussed the $9,000.oo Kedd checks in a secret meeting and they were assured by Bedell that the $9,000.oo would either be paid by Kedd or by Bedell.

The stop payment on the fourth check for $4,000.oo had not yet been received by Hallman so the amount of this check was not part of this meeting's discussion.

However the $4,000.oo check did show up at the bank with Stop Payment attached to it.

Bedell never gave the $13,000.oo to Old Phoenix to deposit in the Lock Box account and the bank never requested it again after the January 5, 1983 secret meeting!

The Lock Box should have had $125,000.oo in it instead of the $112,000.oo that was in it went the bank secretly took the money out of that account without the Court's knowledge or permission. This event occurred on August 12, 1983 and was done directly by Hallman.