CHAPTER 40: PENVEST'S CHAPTER 11 AND THE END OF PRO ARTS

After Conrad had received the money from Beckman and Scheetz had established the escrow account for the Real Estate transfer, Mike insisted upon a debate involving John and me.

It was Mike's contention that both John and I were not worthy of an equal three-way division of the $80,000 as well as the Real Estate deal.

Mike blamed both John and me for Pro Arts' final demise into Chapter 11 and since Mike always considered himself the smartest man in the world, his logic dictated that he should receive the "lion's share" of everything gleaned from the Real Estate deal.

Both John and I disagreed.

In fact, I felt personally entitled to the major portion of whatever was to be divided, but I was willing to accept one third of it since I felt that I could always make money and anything now was better than nothing.

I had lost nearly $400,000 in cash that I had loaned to Pro Arts during the time that I had run the company prior to the filing of the Chapter 11.

Though John was owed $65,000 and Mike was owed about the same, my personal Net Worth had been considerably more than both of their Net Worth's combined.

My wife's farm was mortgaged in excess of $230,000 and the foreclosure on it was pending. I lost my personal stamp collection which I valued at about $300,000 and all the money I borrowed to loan Pro Arts brought my personal lost to nearly a half a million dollars.

To clear the air and settle the matter once and for all, John and I agreed to debate Mike in front of three attorneys that would decide whether or not Mike was entitled to more than one third of the money.

To be totally fair, John and I chose Roger Ingraham. Roger was not only Mike's, John's and my attorney, but he was a friend to all of us. We respected Roger and felt him to be a fair man.

John and I agreed to allow Mike the opportunity to choose the other two attorneys! In this manner, Mike could not claim an unfair final decision. Mike chose Vince Trecini, his personal friend and attorney. Trecini chose another attorney that Trecini knew and respected.

In mid-December, while Scheetz and Morganstern were preparing the final papers, Mike, John and I met on a Saturday morning in the Medina Courthouse and debated the issues.

Mike began first. He made all kinds of wild accusations and tried to establish premise after premise as to how he was not only responsible for the success of Pro Arts, but his superior intellect dictated that he should receive most of the money and John and I very little.

Both John and I listened while Mike blamed both John and me for everything from his poor health and ruined "golf swing" to the loss of two poker pots that he did not win because John and I had mentally destroyed his mind.

It was during this debate that I discovered that Mike had used marijuana and that he had smoked this drug while running Pro Arts from January 1, l978 to June 6, 1979 when he resigned from the company.

Whether John was aware of this, I did not know. But it was a revelation to me.

John began to debate Mike's points bringing attention to Mike's current mental attitude. John was very direct and tried not to belittle Mike even though he stated many facts that Mike neglected to mention. John was very thorough and covered most of the obvious reasons why the money should be divided equally.

When I addressed the three attorneys, I started with the accomplishments that I had made that contributed to the success of Pro Arts.

As Pro Arts had published several of my own poster designs which were very successful (nearly three million copies of the "Note to Young Lovers, a million "Peace Flag", one half million "Believing", and one half million "Ode To A Fallen Star" were sold).

I had not received one penny in royalties on any designs sold by the company. Even at a dime per copy, I was owed over $600,000 in royalties!

I further related the "discoveries" of several product lines and marketing decisions: I created the Flock Poster Business for Pro Arts; I designed the Mother Nature's Picture Packages; I had set up North American Trading in posters to exchange velvet Zodiac Posters for Screw-in Blacklight Bulbs which we sold to Zayre Corporation; I licensed several million dollar designs: Cheryl Tiegs, Lynda Carter, Cheryl Ladd, Dallas Cowboy Cheerleaders, Shawn Cassidy, NOT TO MENTION THE FAMOUS FARRAH FAWCETT POSTER THAT GRACES THE COVER OF THIS BOOK! I licensed designs from Pro Arts to other companies, established the Canadian marketplace as well as the Color-in poster line sold to England. I was involved with winning the largest Canadian Copyright lawsuit in Canadian history and obtained payment (nearly $200,000 in U.S. Funds.)

I stated that I had the largest loses which dwarfed both Mike and John collectively, yet I was satisfied with one third of the funds that were to be received very shortly. After I had spoken, the debate ended and the three attorneys met to discuss the outcome.

It was obvious to Trecini and his associate from Akron that both John and I were clearly entitled to any money that was to be divided and that the division should be equally among the three of us.

All three attorneys had decided that.

As I was managing a Country Western Singer named Ray Golden, I had to leave the debate immediately to travel to Nashville on business.

I assumed that Conrad would conclude the filing of the documents and give John a check to be divided among the three of us. This was not to happen! I returned to Medina in three days only to discover that Scheetz's escrow money had been returned to New York!

While I was away, Bedell's pension company, Penvest, had been audited by a federal agency with regards to its present cash disposition and the accounts were in serious trouble. It forced Bedell into taking Penvest into a Chapter 11.

Beckman had requested the return of the $80,000 in Conrad's escrow account, but Conrad stood his ground.

Conrad indicated that his clients had met the "settlement" and that the $80,000 was no longer the property of the deal.

To further press this issue, Conrad filed a Motion in the Cleveland Court to establish the fact that the $80,000 was indeed the money due Conrad's clients and his Motion was upheld by the Ohio Court.

Though the Motion took nearly a year to resolve, the money was finally paid out to Mike, John and my wife. The money had increased with interest to about $90,000. Morganstern had decided to keep $45,000 of the $90,000 and only $15,000 was given to each of the three parties.

Conrad had made out very well. With the $5,000 John and I paid him to take the case in May of 1983 and the $10,000 Bedell and Beckman paid him in the bankruptcy hearing, Conrad gleaned $60,000 while the three individuals he represented only got collectively $45,000.

I have not really spoken to Conrad since this last situation, but I learned later that he had become a federal bankruptcy referee. This I have been told is the next step to becoming a federal bankruptcy judge.

From mid-December, l983 to March 7, l984, Beckman, Faherty and the New York investors tried to pay off the back rents due our partnership.

It appeared that a few major players were coming in and out of the picture. In the end, it never materialized. Pro Arts had closed its doors by the end of December shortly after Penvest filed its Chapter 11, and only a few employees remained at the company to obtain financial information for the New York investors.


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