When Old Phoenix and Schwemler chose to lie about the representations regarding the curing of the real estate loan prior to the confirmation and acceptance of the plan by the bank, Conrad was forced to place me on the witness stand to enter evidence under oath as to some of the "shady deals" that the conspirators had concluded during the months that they controlled the business.

I stated to the court under oath that many representations were made to John Argiry and me that gave both of us the commitment that the real estate deal was a "done deal."

So much so that both John and I had waived our Secured Liens against the company because of those commitments.

Now, after the conspirators had defrauded us out of our standings with the representations that John and I both relied upon, the conspirators were denying everything and anything to avoid the sale of the real estate to Bedell and Angona.

Hallman and Bramley wanted the real estate for Old Phoenix through the foreclosure since the $1,000,000 value would be a large feather in their hats.

As the First National Bank of Akron had earlier purchased Old Phoenix Bank, both Hallman and Bramley were afraid of losing their jobs.

Bedell and Angona had stated through their attorney, Newman, that my employment agreement was unfair to the company and that I should not have be paid the $25,000 per year to work as a consultant to the company!

While I had been selling for Pro Arts, I had brought in over $2 million per year in non-commissioned sales to the company during the Recession!

Bedell, Stewart and Angona had taken one of my "house accounts," (Spencer Gifts) and had given this account to a representative that would be paid a commission on all sales from that account!

Spencer Gifts was doing about $300,000 per year with Pro Arts (during the Recession) and the 5% commission to the Representative was $15,000 per year in "out-going cash" that the company could have used to pay my $25,000 fee.

Additionally, Stewart had hired a man in the poster industry named Dick Calieo to develop a poster line that I had developed five years earlier without compensation. They decided to pay Calieo $48,000 per year!

My value to Pro Arts on the K-Mart, the Hustler, the Presley, and Mihalik lawsuits was invaluable. Since I was totally aware of all aspects of those pending lawsuits, my time to win those suits would have more than paid them back for the $25,000 they were going to pay me for working for Pro Arts.

Yet, they complained that the $25,000 was too much compensation to me.

While I was testifying on the stand, I volunteered to resign from Pro Arts immediately and not take any money from the company in order to be released from any contracts that I had agreed to honor as part of the confirmation.

Judge White accepted my resignation immediately noting that my pending employment agreement was null and void and that I would not be part of the company after the plan was confirmed.

Needless to say, Bedell, Angona, Stewart and Newman were not prepared for my resignation and they immediately objected to it.

Since I had resigned, I also stated under oath that there were transactions between Penvest (Bedell's company) and Pro Arts that were not totally disclosed to the court during the bankruptcy.

In fact, I stated that Angona had charged credit on his girlfriend's American Express and later denied that the charges were his. Angona's girlfriend, Kathy Moore, objected to the charges on her card after the bill was received and the Conrad Hilton Hotel in Chicago as well as the Blackhawk Restaurant tried to collect the money directly from Pro Arts even after Angona had been reimbursed by Pro Arts for those same expenses! During the testimony that I gave while on the witness stand, Conrad had clearly stated that the new management was running Pro Arts in such a poor manner that

"their management is so inadequate and incompetent the plan can't survive."

Throughout the hearing, Judge White became confused and could hardly remember what was being stated in his court.

Conrad was making a great deal of sense as he examined me on the witness stand. After his questioning, White allowed Dietrich to cross-examine me. This is where Dietrich showed his true colors.

Dietrich began by trying to discredit me. He tried to make me look as if I was looking solely out for myself. Each time he questioned me regarding what I had previously testified to, he tried to twist my testimony in order to make me look like a liar.

Even though Morganstern objected, White told him to "hold" his objections!

This gave Dietrich a free hand in trying to convince White that I was not a truthful person.

When Conrad had asked me about the Billie the Bear project and its potential value, Dietrich took the time to question me as to the where-abouts of the original art.

Dietrich implied that I had possession of it. When I told him that John had the art and that I did not have it, Dietrich made me swear on the stand that I would deliver the art immediately after the hearing to Pro Arts.

It was becoming clear to me that Morganstern was getting our position established in the Court. Conrad had indicated that unless the Real Estate deal was part of the Plan, Conrad would appeal any plan until the "cows came home." This caused the conspirators to re-think their treachery.

No one outside of the conspirators actually knew the true financial condition of Pro Arts at the time of this hearing. Old Phoenix, Hallman and Bramley were aware of nearly $50,000 in "bounced" checks that the bank had honored prior to the hearing (a bounced $25,000 check had been given to Hallman on June 9th, the day before this hearing!)

Old Phoenix was not only out the Equipment Loan money, ($580,000) but an additional $50,000 in bounced checks sitting at their bank!

During the past nine months, the conspirators had lost $900,000 in Net Worth of Pro Arts and no one knew this because the D.I.P. Reports to the court were totally falsified!

There was no money in the New York Bank or the New York Law Firm's escrow account to clear the bogus $600,000 check Dietrich had placed as Debtor's Exhibit 1 at the time the Hearing was opened!

White had stated his dissatisfaction with the photocopy of the bogus check when Dietrich presented the photocopy and fraudulent attorney's letter to the court as the Exhibit. In fact, White stated:

"After looking at that letter and the check, it does not meet the requirements that the Court outlined. In all due respects to consul, I have had cases where clients have given their checks and they've bounced and there I would have to have, as I indicated, a letter from the bank that controls the escrow account that those funds have cleared and they're on deposit. So a check can be easily writ- ten by anyone..."

"The reason I very quickly, I just had a lawsuit involving two banks where they were in- volving about a million dol- lars worth of checks that had more rubber than Goodyear Tire & Rubber Company has in their tires."

This statement was so funny, everyone in the courtroom laughed.

It is funny to look back and see that White was also talking about the $600,000 check Dietrich had presented to the Court, and White did not know it at that time!

Dietrich was so pressed to get the Confirmation of the Plan finalized that he stated to White that an order could be written so that the Confirmation of the plan was predicated upon verification of the funds of that check being on deposit!

White agreed with Dietrich's statement and ordered Dietrich to proceed with the presentation of his Plan.

Later, I discovered that Dietrich or Dietrich's office, Roetzel & Andress, prepared the Order confirming the Plan and omitted the part where verification of funds on deposit had to be included in the order to confirm the plan.

This illustrated Dietrich's knowledge about the bogus check.

If Dietrich had included the "verification" aspect of the Order, then he perhaps did not know about the bogus check.

BUT TO DELIBERATELY EXCLUDE THE VERIFICATION ASPECT OF THE CHECK WAS TO COVER HIS ASS IN THE EVENT IT WAS LATER DISCOVERED THAT THE CHECK WAS INDEED BOGUS! (Which, of course, it was...) Morganstern and the conspirators had discussed the Real Estate sale and John's employment agreement and finally came up with an agreement that protected our family in the Plan.

After Conrad had entered the terms and conditions of the Real Estate sale and John's employment agreement, the conspirators allowed me to keep the 1978 Mercury Station Wagon for resigning from the company.

At the end of the hearing, Dietrich and the conspirators forced my family and me to stand and swear under oath that no one from our family would appeal this plan if it were confirmed.

They wanted absolute assurances that the Confirmation of their fraudulent plan would go unappealed.

John felt that I had sold him out after the Confirmation even though he did not tell me this until much later.

John felt that I should have stayed with Pro Arts and he tried to convince me that my resignation was not a good idea.

Looking back, I can say without hesitation that it was probably one of the best decisions of my life second to marrying my wife.

Dietrich and the conspirators had bribed nearly everyone that could appeal the plan by promising each potential appealing party something that they desperately wanted after they came out of the Chapter 11.

Greg Happ (as I later learned) received his personal claim against Pro Arts for $21,069.95 even though his real claim was only $1,069.95! Happ also received assurances that his mother would receive the Billie the Bear project without having to pay anything for it.

All Happ had to do was have his office, the Prosecuting Attorney of Medina County, not appeal the County's objection to the plan. Needless to say, Medina County did not file an appeal.

Mihalik and his cronies received a $500,000 pre-petitioned claim with a "promise' that their $225,000 Final Judgment against them would be off-set against it! (This was never disclosed to anyone outside of the conspirators!) Treffinger and Macon were also given a $500,000 pre-petitioned claim for their frivolous lawsuit that would mean at least $25,000 in cash if the plan truly worked.

Old Phoenix National Bank, Hallman and Bramley were given assurances that they would not only receive the $160,000 payment of the equipment loan as represented in court, but an additional $76,500 on the Real Estate Loan.

Later I discovered that an additional $112,000 from a Court Ordered Lock Box would be transferred to the Equipment Loan without anyone knowing about this!

This created $140,000 in damages against John and me when Pro Arts finally went into Chapter 7 nearly eight months later! Dietrich not only got his attorney's fees (estimate to be $25,000 to $30,000 when I interviewed him in December 1981) which was nearly $90,000, but his firm continued to represent Pro Arts charging them excessive fees while they were coming out of Chapter 11 prior to going into Chapter 7.

The Unsecured Creditors got screwed! They had $1,000,000 in legitimate claims that was diluted to $2,000,000 claims with Mihalik and Treffinger's now added to it.

Though the Creditors were told that they would share Mihalik's $225,000 Final Judgment, Dietrich and Roetzel and Andress deducted the Judgment on November 1, l983 AFTER THE FIRM HAD SENT A LETTER ON OCTOBER 28 TO THE UNSECURED CREDITORS STATING THEY WOULD SHARE THE $225,000 FINAL JUDGMENT OF MIHALIK thereby erasing any claims Pro Arts had against Mihalik.

Cantwell, Mihalik's attorney, extinguished the Final Judgment against his clients erasing any potential malpractice suit that his clients had against him for bungling their defense in failing to answer the lawsuit against his clients.

Bedell and Angona had a reprieve now that Roger Faherty was promising to put $600,000 in cash into Pro Arts with an additional $400,000 to come in another few months.

With no debt and nearly $1,000,000 in equity capital, Pro Arts should have gone on to be the strongest and most powerful poster company in the world.

What was to transpire after this Confirmation Hearing will illustrate the depth of the frauds and gross misrepresentations that were made at the hearing and the reports that were later filed with the court.