- 21 -                                         
          payments to or for Mr. Gherman or a family member by date, check            
          number, payee, amount, and description.  The accountant who                 
          prepared the family disbursements schedule made no attempt to               
          distinguish legitimate disbursements (such as for business                  
          purposes or salaries) from nonlegitimate disbursements.  The                
          family disbursements schedule was prepared by use of FIP's books            
          and records and for use in the 1988 bankruptcy proceeding.                  
               Prior to trial in the 1988 bankruptcy, Mr. Feltman proposed            
          a settlement with Ms. Walters, Shari, and Craig whereby each of             
          them would retain a residence, an automobile, furniture, personal           
          possessions, and some cash.  On the advice of Mr. Gherman,                  
          however, the Gherman family members rejected that offer.                    
          Following trial, the bankruptcy court issued a memorandum                   
          decision in favor of Mr. Feltman, as trustee, pursuant to which             
          he was awarded approximately $6.2 million in money damages and a            
          constructive trust over the homes, automobiles, boats, and other            
          assets of Mr. Gherman and his family members.  In addition, Mr.             
          Gherman was denied a discharge.  Accordingly, judgments were                
          entered against Ms. Walters in the amount of $6 million and                 
          against other Gherman family members in various amounts.                    
          Pursuant to a subsequent settlement offer, however, the Gherman             
          family members were released from the judgments entered against             
          them and were paid $35,000.  As a result of the 1988 bankruptcy,            
          however, Ms. Walters, Shari, and Craig lost their personal                  
Page:  Previous   11   12   13   14   15   16   17   18   19   20   21   22   23   24   25   26   27   28   29   30   NextLast modified: May 25, 2011