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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
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