CHAPTER 39: THE CONSPIRATORS SCRAMBLE TO SCREW THE NEW INVESTORS

The hearing finally ended late in the afternoon with the Plan being confirmed by Judge White.

All that remained was for Conrad Morgenstern to prepare the final papers as to the Real Estate Deal, the new Amended Disclosure Statement and Amended Plan stating all the changes made in Court.

Dietrich's Office had to prepare the Order confirming the Plan with the changes and it had to be signed by Judge White.

John had become a consultant to the new Pro Arts. During the few months prior to the hearing and shortly after the confirmation of the Plan, John had been involved as an apprentice to a Real Estate company in Medina and he had decided to become a real estate broker.

With John's ability and high regard for learning, his desire to become a real estate broker was finally materializing.

With his part-time consulting to Pro Arts and his payout on the real estate deal, John could not only save his home, but also establish his real estate business successfully if given the time and opportunity.

I left Pro Arts the next day taking all my personal files and all the projects I had begun without Pro Arts. Though I had intended not to compete with Pro Arts (this was one of the clauses in my nullified employment agreement), I felt an urgency to get back into the poster business.

John, Mike and I had started Fan Club Corporation of America and the Dynamic Publishing Company as separate corporations in which John, Mike and I each owned one third of the corporations' stock.

I had started the Philatelic International Exchange (PIE International, Inc. as its was later to be re-named) in March of l979 with 100% of that stock in my wife's name.

I immediately transferred the ownership of PIE to my mother-in-law and asked her if she could loan PIE a few thousand dollars to start the business. As I could not collect unemployment compensation (I resigned in Court!), and as I needed working capital to start making money, my mother-in-law loaned PIE the money.

John, Mike and my wife, Io, were to receive monthly payments from Bedell and Angona on the real estate sale.

Though the first payment was not expected until August 1, I needed to generate income and I began by asking John and Mike to transfer their personal stock in Fan Club and Dynamic Publishing to PIE in exchange for paying all the money that we had owed to Cohen & Company and Bill Gagliano.

Dynamic and Fan Club had few assets. Though Dynamic controlled about 30 copyrights and Fan Club had out dated fan club kits of movie stars, the little value gleaned from these corporations became the base of PIE's potential.

Conrad continued to represent me personally while the conspirators continued to evade paying anything on the real estate deal or finalizing the transfer of the real estate.

I tried to get all the Dynamic Publishing and Fan Club property from the conspirators and with an additional lawsuit filed by Conrad in bankruptcy court, eventually the conspirators had to settle with Fan Club and Dynamic Publishing to rid themselves of my presence.

I had taken control of Fan Club's warehouse that was leased to Fan Club by our Real Estate partnership.

Since Fan Club and Dynamic were never part of the bankruptcy of Pro Arts, the only claim against Fan Club was a Pro Arts debt that was settled as part of the litigation that transpired after the Confirmation Hearing.

With PIE in my mother-in-law's ownership, and PIE the owner of Fan Club and Dynamic Publishing, I began operating the corporations as their president and Chief Executive Officer. (I was the only employee and though it seems funny now, other businesses outside of the area viewed PIE as a multifaceted large corporation with many divisions!)

I immediately traveled to Crafthouse Corporation in Toledo, Ohio and met with Tony Anton, its president.

Tony and I had become friends since it was I that had licensed Tony's company the Farrah Copyright for his product lines and continued to give Tony information regarding "hot" licensed properties.

Tony was a very knowledgeable merchandiser and his ability to pick licensed winners was amazingly high. He was one of the few people in the industry that I respected and admired.

When I told Tony that I wanted to license the designs that he had allowed Pro Arts to produce without a license, he immediately agreed to do this and we confirmed a license agreement only a few days after the confirmation hearing.

With the exclusive license to Crafthouse's designs and the Dynamic Publishing Co.'s copyrights, I began a copyright lawsuit against Pro Arts to force them to relinquish all the property they refused to relinquish in order to prevent me from competing with Pro Arts.

By September 1, I had initiated enough pressure on the conspirators through Conrad's efforts to cause Stewart to agree to a settlement on all PIE's claims in exchange for PIE moving out of the Fan Club warehouse which was attached to Pro Arts' art department in Medina.

Stewart on the other hand had continued to run Pro Arts much the same as he did when Pro Arts was still trying to confirm its Plan.

The only problem with this for Stewart was the fact that new investors were now reviewing (almost daily) the company's progress while trying to satisfy the terms and conditions of the Plan.

As sales became sparse and stagnated, the lack of cash flow coupled with the company's continued costly overhead was much more than the new investors had anticipated.

The false forecast created by Stewart, Bedell and Angona to lure Beckman's and Faherty's investors into the company caused the new board of directors of Pro Arts to call Stewart to New York and fire him the first week of September after I had settled the PIE lawsuit with Pro Arts.

When I left Fan Club's warehouse in Medina and moved to the Chippewa Lake buildings, I had hoped Stewart to still be the President of Pro Arts.

I stripped the Fan Club warehouse of everything that wasn't nailed down permanently to the floor or building. I was almost tempted to take the toilet and restroom sink, but it was too much bother and I was running out of space at the new buildings.

I know Stewart was unaware of the New York investors' intentions of terminating him from Pro Arts because he later wrote a letter to Faherty after being fired and exposed many of the frauds that I later discovered in my RICO lawsuit.

Stewart told Faherty about Bedell and Angona's false transactions with Pro Arts and tried to get Faherty to re-support him in getting back into the company.

More important than that, Stewart admitted that it was both Dietrich's and his belief that all the back Pro Arts rents due John, Mike and me would "be forgiven." He did not anticipate having to pay the $94,500 in rents that were to be paid under the new plan.

This confirmed my belief that Dietrich, Bedell, Angona, Schwemler, Hallman, Bramley and Old Phoenix National Bank had plotted to steal the Real Estate from John, Mike and me.

In reading the transcripts from the Confirmation Hearing, I discovered that Stewart, while being questioned by Dietrich on the Witness Stand, testified under oath that Old Phoenix was to only receive $160,000 of the money paid to the bank at the time of the confirmed plan became unappealable.

Dietrich never made any references in the court record for payments to John, Mike and me for any back rents that were itemized on the monthly D.I.P. Reports.

Under Bankruptcy Law, the post-petitioned rents due the landlord (John, Mike and me) must be paid at the time of confirmation of the Plan OR THE DEBTOR MUST HAVE ARRIVED AT AN AGREED WRITTEN UNDERSTANDING AS TO HOW THE DEBTOR WILL PAY THE RENTS AND CONTINUE AFTER THE PLAN WITH REGARDS TO LEASING THE PREMISES.

So it became evident that Stewart and Dietrich must have had an agreement with Old Phoenix to throw John, Mike and me into receivership and try to take the property without due process of the law and enter into a new lease for the premises with the bank.

Faherty did not re-hire Stewart. In fact, Bedell had convinced the new board of directors that Stewart was the real problem with the company's failure (which is mostly true) and Bedell was able to have his son, David Bedell, made the new "operating officer" of the hurting Pro Arts.

It was like the farmer asking the fox to guard the hen house!

I had only met David Bedell once or twice, but he seemed like a nice person. I have no opinion of him.

He really came into a mess at a very late date and was trying to put as many of his fingers into the dike as he could not realizing that his efforts would eventually be in vain.

With the buildings I obtained in Chippewa Lake through PIE, I moved there soon after David Bedell came to Pro Arts to run the company.

Dietrich had continued to defend the conspirators refusing to allow anything to be given to me.

About five years later, I discovered a memo from Stewart to Michael Beckman, Pro Arts' new Chairman of the Board of Directors (and the attorney in New York that wrote the fraudulent letter confirming the bogus $600,000 check deposit in his firm's escrow account).

This letter stated that both Dietrich and Stewart were going to try and keep me from getting anything to sell or any money to operate so that I would eventually "give up on the poster business and pursue something else." This memo was never surrendered to me during my Racketeer Influenced and Corrupt Organization (RICO) lawsuit that I later filed in federal court.

I also discovered a letter on Roetzel & Andress's letterhead written by Dietrich to Beckman in October of 1983 regarding Dietrich's suggestion to Old Phoenix to press the pending foreclosure on the real estate that had never closed.

Dietrich and Roetzel & Andress also suppressed this letter since in Dietrich's own words he states that the damages the partners would suffer as a result of the foreclosure would be "substantial." Though Dietrich and Stewart tried to prevent me from succeeding, Conrad finally convinced them that it was in the new Pro Arts' best interest to give up the material and property that they illegally retained with regards to Fan Club and Dynamic.

I can recall the day that I went to my former warehouse to pick-up the materials. No one would let me enter the building. They made me stand outside in the parking lot as they loaded the material into my truck.

While I inventoried the property, very little was spoken. Former employees of mine, hired by me and supported by me were now looking at me as an enemy. Little did I know that six months from that date they would be unemployed and Pro Arts would be forever out of business.

John and I continued to meet and discuss the Real Estate deal that had never been finalized. Though John was receiving an income from Pro Arts under the new Plan, I was not yet making a great deal of money.

John loaned me money to survive. It was to be repaid when the real estate deal had started paying the mortgage payments.

Mike on the other hand was receiving nothing. He was borrowing from his friends in order to survive until the Real Estate finally closed. This was not to happen.

The manner in which the Real Estate agreement had been written stated Bedell and Angona would be in default on their agreement after two months of non-payment of their obligation.

This meant that the soonest we could call a breach on the real estate agreement was October 10th.

Mike, John and I had assumed that the $76,500 that was to be paid to Old Phoenix three days after confirmation of the plan had actually transpired by Pro Arts. This was also fraudulent.

On October 10, 1983, four months after the hearing, Conrad sent notice of breach of the agreement and began action in bankruptcy court stating that the terms of the Plan had not been met.

As I stated earlier, Beckman had received a letter from Dietrich about two weeks after Conrad began his action in bankruptcy court indicating Dietrich's distress concerning the real estate matter.

In this same letter, Dietrich stated that all Conrad really had to do was to file an eviction notice in Ohio Common Pleas Court to remove Pro Arts from the buildings since Pro Arts had not paid any rents to our partnership since May of 1982!

It was apparent that Pro Arts did not have the money to meet its reorganization requirements.

Conrad continued to press White to act, but White had no intention of acting. White had always favored Dietrich in Court and White's apparent slowness was allowing Beckman, Faherty and Dietrich the opportunity to come up with money to re-float the sinking Pro Arts.

Since I was actively speaking with Mike, John and Conrad to obtain the necessary funds to exist, Mike had become extremely abusive to John and me.

Mike was now threatening to kill my wife, my mother-in-law, and me because he had no money and the conspirators were trying to avoid payments that were promised in June.

Conrad continued to work with Beckman directly. It appeared that Beckman was willing to settle the real estate deal and provide for additional damages that our family sustained during the delays.

I had the opportunity to speak with Beckman and sincerely felt that he was not trying to hurt our family.

Beckman, as well as Faherty, had been fraudulently led down the path by Stewart, Angona, Bedell, Dietrich and the bank in order to have Beckman's and Faherty's investors come up with the money to fund the ruptured Pro Arts at Confirmation time.

Beckman finally agreed to meet all of Conrad's demands in late November 1983.

In December, Beckman sent nearly $80,000.oo to Conrad to place in Conrad's escrow account.

Additionally, nearly $140,000 was sent to Stanley Scheetz, a Medina escrow attorney dealing in real estate.

Once the final settlement papers had been recorded in the Medina county Courthouse and the deeds transferred to Bedell and Angona, Conrad would divide up the $80,000 after his attorney's fees had been deducted and Old Phoenix Bank would receive the money Scheetz was holding to reduce the mortgage and bring the loan current with the bank.


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