Jerry and Patricia A. Dixon, et al - Page 63




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          wished to settle a project case on grounds different from the               
          official project settlement offer.  Mr. Sanchez considered Mr.              
          Bakutes his key executive staff person and had directed all                 
          District Counsel, including Mr. Sims, to discuss any unusual or             
          novel matters with Mr. Bakutes.                                             
               Mr. Bakutes and Mr. Cantalupo immediately informed                     
          Mr. Sanchez about the Thompson settlement.  This was the first              
          time Mr. Sanchez heard of the Thompson settlement.  No one in the           
          Western Regional Counsel's Office knew of the unusual settlement            
          of Kersting cases before May 22, 1992.  No one in the Western               
          Regional Office had approved the settlements.                               
               Mr. Sanchez immediately called Mr. Sims, who admitted the              
          basic facts regarding the Thompson settlement arrangement.                  
          Mr. Sims stated that his motivation for the settlement was to               
          prevent Mr. Kersting from perpetrating a fraud on the Court.                
          Mr. Sims stated that the best way to do this was to have at least           
          one attorney not paid by Mr. Kersting participate in litigating             
          the test cases.                                                             
               After discussing the matter with Mr. Sims, Mr. Sanchez                 
          contacted Mr. DeCastro and learned more of the details                      
          surrounding the settlement.  Mr. DeCastro informed Mr. Sanchez              
          that Mr. Sims and Mr. McWade had agreed to a proposal to keep the           
          Thompsons in the litigation by rebating to the Thompsons an                 
          amount sufficient to pay their legal fees.  Mr. Sanchez told                





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