[Page 1 of 11] 5/5/01 Page 1 of 1 From: Bennetta Slaughter's Office Date: Monday, May 07, 2001 2:57 PM Subject: SEC Survey --------------------------------------------------------------------- READ THIS EMAIL IN IT'S[sic] ENTIRETY. Some of you may have received a survey from the SEC. It is a voluntary survey. I have asked Cindy (the group attonrey) whether you should fill it out or not. She wishes to see it before anyone does fill it out. She said it is voluntary and no one needs to rush to fill out and let her look it over and she'll advise. I'm sending it to her, I have a copy. Everyone who has recieved[sic] one please advise in the following way: 1. email me 2. put SEC in the subject line of your email (or fax) 3. In the body of the email state you received an SEC survey 4. put your name at the end of the body of the email. I will then forward to her in one compiled list. SEND THIS TO ME WHETHER YOU HAVE PREVIOUSLY TOLD ME YOU RECEIVED IT OR NOT. I WANT IT IN THE ABOVE FORMATE[sic] FOR RECORDS AND REPORTS TO HER. [Page 2 of 11] Page 1 of 3 From: Bennetta Slaughter's Office Date: Monday,May 07, 2001 8:07 PM --------------------------------------------------------------------- May 7, 2001 Re: Review of current situation and strategy on legal counsel. I want to make sure that each of you understands the basic set up and premise under which we are pursuing our legal representation at this juncture. Please, read this in its entirety. Per Cynthia Cohen: The current bankruptscy filing is a Chapter 11. First, there is a motion that has been filed with the bankruptcy court to have a trustee appointed. This motion is currently set to be heard on May 31. It is her belief that in fact a trustee should be appointed or the debtor has control he should not have. She does not believe it should be converted to a Chapter 7 but should stay an 11 with a trustee and a creditors committee. Second, it was negotiated to have records and computers copied and downloaded by Deloitte & Touche. There were 150 some banker boxes of papers and two computers. As of today the judge had not signed the order so there has been no turn over but that is expected to happen soon. Third there is a meeting set for this Thursday on the matter of a creditors committee. As per what Cindy told us the basic structure appears that it will be: Trustee Trustee's counsel to pursue any needed litigation Investigative firm Creditors Committee Creditors Counsel As a group: Our objective is to have legal representation that can help to get the best possible body of firms and individuals set up in the system described above. That body will then locate, pursue and acquire the money whether here or abroad. Second, someone who can represent us and our interests at the various hearings and meetings that will occur over the next weeks as the court and body are set. There is no Trustee yet, nor any of the rest of the [Page 3 of 11] Page 2 of 3 body set up. [Page 4 of 11] Page 1 of 1 From: Bennetta Slaughter's Office Date: Friday, May 04, 2001 4:50 PM Subject: re: retainer and instructions --------------------------------------------------------------------- Hi. Following are your instructions as regards your portion of the retainer/legal fees. 1. I need your check on Monday, Tuesday at the very latest. It cannot arrive in my offices any later than that, so overnight it if you need to. 2. The check is made out to: Paul, Hastings et al 3. The amount is $250. If you have an account that is over 7 million I must speak to you as soon as possible. You can email me at _ceo@agentmediacorp.com_ on how I can reach you. The reason we need to talk is taht I want to discuss the attorney applying for you to be on the creditors committee. Even if you can't physically sit on the committee you can appoint a designee so I still have to talk to you. We should get as many spots on that committee as we can. So, please respond with how I can reach you over the weekend. The meeting on this is already scheduled for next week. I will shortly be sending how we will be operating in the future for the most efficiency, accomplishment and holding our costs down as well. I will also have to have a written agreement from you on our group, but I have to do that over the weekend. Next, please write up any questions that you have so that I can start a compilation and we can get answers. We have a CPA in our group who has sent me some data that I will be passing on to you as regards taxes and IRS filing. It will give you someplace [sic] to start and to take to your tax preparer or directly to an IRS office if you wish. Please send your checks overnight either through a service or the post office, do not rely onthe mail to get it to me. I just factually don't have the time to chaise anyone up so please do act on this right away. If you haven't sent me your conference checks then please take this opportunity to include them. I have about $8,000 in bills but only a little over $4,000 in checks from phone [Page 5 of 11] [Page 6 of 11] Page 1 of 2 From: Bennetta Slaughter's Office Date: Monday, May 07, 2001 8:48 PM Subject: Data from a CPA firm in our group --------------------------------------------------------------------- I'm passing on this data from a CPA firm in our group. The disclaimer to this is that it is a place for you to start and data tohelp you seek your tax professionals [sic] or local IRS office help. He is not advising you, but passing on data to help you in seeking your tax professionals [sic] assistance and making it easier to do so. He spoke to a person in the IRS and she referred him to a case in S. Ca. from a few years ago called Pioneer Mortgage. This was a case where investors lost their money and filed to obtain refunds. The section of the IrS that handles refunds referred them to their local IRS offices for examination. The local IRS offices often disallowed the claim as there wasn't sufficient evidence that losses had been incurred since the case had not been completed. This forced the investors to individually sue the IRS. After the case with Pioneer Mortgage was finally settled a few years later, the IRS adopted a uniform settlement policy. It is the IRS's internal policy to refer to the district office where the individual resides any ammended [sic] returns asking for refunds on an investor fraud type case. So any individual who is trying to obtai fast refunds needs to know this may be virtually impossible. You can however protect your right to refunds by filing protective claims with the IRS. You have three years from the date you filed your returns. the [sic] correct form for such a federal claim is 1040x for individuals. You write protective claim across the top of the form. Additionally according to Katherine you can attach a note demainding immediate examination. This would speed up the time of examining the claim. However it would not necessarily speed up the time of refunds as the IRS may want to wait until the Slatkin case is completed before completing the examination of cases. This is meant only to give you data that you can take to your accountant, tax expert etc. One other thing he found out is that ther eis a code Section 6311 d that increases the statute of limitations for refund claims to 7 years in the case of ok [Page 7 of 11] deductible in the year that the security becomes worthless. [Three words cut off] what a security is. Just having money on account with Slatkin might not fall under the definition of a security, also the IRS might not agree with the [Page 8 of 11] From: Bennetta Slaughter's Office Date: Friday, May 11, 2001 8:07 PM Subject: Update from yesterday's meeting --------------------------------------------------------------------- Hi. I'm sorry I'm late on this, got really behind and am just now surfacing. Wonder why?! Anyway, I received reports not only from the attorney but from several of you who were there. This is a compilation of those. I do not see a reason to have a conference call at this point. The US Trustee Maureen Tighe and another attorney from her ofice Brian Fittipaldi ran the proceedings with Brian acting as Chair. Reed's attorneys Richard Pachulsky (bankruptcy attorne), Brian Sun (criminal attorney) and Jay Michaelson, with whom I'm not familiar were there. There were more than 80 people in attendance. Reed was not one of them. There were several people from our group there and Cindy was there to represent but more specifically anyone she could get on the Creditors Committee. Reed's bankruptcy attorney presented the following data: There are 20 million in liquid assets (cash, securities etc) There are 100 million in hard assets (real estate, ownership in private companies, aircraft leases, Earthlink futures etc) He may owe as much as 6 million to the IRS The creditors are divided into roughly two classes: One which had put in 240 million more than they have withdrawn and One which had withdrawn 120 million more than deposited. This is from the very beginning to date. This does not include payments to his family. (Please see my note in regards to this at the bottom) There has been roughly 25 million paid out since January 1 2001. Miscellaneous statements Reed's attorney made: He has seen no evidence that large amounts of money were sent overseas (doesn't mean it hasn't, its [sic] just he has seen no evidence of it). He has seen no evidence of large losses in the stock market. A list of the partnerships will be presented to the creditor's committee. He has no idea if Reed's reported Gains/Losses are accurate. He could not say whether it has been a Ponzi scheme or not. 5/11/01 [Page 9 of 11] He explained that the reason he cannot answer questions is that he will not provide data unless he can speak to it from personal knowledge [several words cut off]. [Page 10 of 11] Creditors Committee: Seven people were chosen for the Creditors Committee Normally a Creditor's Committee consists of 5 or 7 people. Michael Azeez - $42 million Stuart Stedman - $32 million Greg Abbott - $32 million John Poitras - $15 million Arlo Gordin - $15 million Anthony Podell - $14 million George Christie - $1.2 million The way the creditors committee was chosen was by taking the top 6 out of the top 20 unsecured creditors and one member at large. This was pretty standard and normal procedure. Rick Wynne, which [sic] was Stedman's attonrey was appointed Creditors Committee counsel. The Creditors Committee met (Cindy sat in this meeting representing Arlo Gordin) and were primarily briefed on their duties. They were asked about a trustee, but they did not vote on that yet. They did not elect a Chairman yet. The creditors committee does have as one of their main functions to represent the Interest [sic] of the entire body of investors and creditors not their personal positions. Also it is done by majority rule. Also they are there to see that the monies don't go flying out of the estate by reason of unreasonable expenditures. From Cindy specifically: She says there is at least some evidence that there may have been trading because the $20 million liquid is at Smith [Ba]rney in a trading account. The next hearing is May 16 and it is a [mo]tion to approve the stipulation of the appointment of Deloitte and Touch[e] as investigative accountaints. It is possible that at that hearing the US Trustee could bring a motion to appoint a trustee. Otherwise the hearing on the matter of the appointment of a trustee is May 31. Note: The hearing Reed appears at is the Debtors Examination. Thi is not the same as the May 31 hearing. I have not heard the date on this being set 5/11/01 Page 3 of 4 yet and have no data that it is being done on the same day as the Trustee hearing. I will get that data to you when I have confirmation on it. Additional miscellaneous info: [Page 11 of 11] [one line cut off from top] and Touche has 70 of the boxes and the attorneys have the other 100. All will ultimately go to the forensic accountants. Anyone can file a Request for Special Notice and you would then be notified about hearings. The attorneys will also keep us apprised so its[sic] your choice. (Sandy, one of our group has the form so if you want it then send an individual email with "special notice request" in the subject line and we'll get you one) Ultimately we'll have to file Proof of Claim forms with the bankruptcy court but Cindy tells me until it is established what occurred there is no way to know how to file them and that they [sic] court will give us the basis under which we can figure our claim. Notes from me: I realize that some of you may fall into the category of having withdrawn more than deposited. If you do, best go ahead and notify me now. Send me an individual email (not appended to this one) with "withdrawn more" in the subject line and give me the scoop. That way I can start building a file, and we'll have to get the attorney to advise us on what to do. Based on what Cindy has told us before there is not thing that has to be done instantly as they still have to establish what the situation was before they will know what actions they need to do or how things fall. Early next week we will try to complete the interview processon the attorney/attorneys we will be switching over to. We're going to try and research enough to know if we go ahead and start splitting up into smaller groups or not. That may not be clear by the time we need to move off to the new attorney, if it is clear, then we will propose that we go ahead and do that then. Lastly, if you haven't sent me: 1. your questions for the attorney 2. your money for retainer 3. your faxed or written agreement Please do so. I want to complete the files. Once I've received all the questions then I'll give everyone the compilation of general questions. Thank you also so much for all your goodwill, your kindness and communication. I know this is hard on lots of you, but you have a group here and together we'll work our way through this mess. Also, remember 5/11/01 Page 4 of 4 who you really are and what you really are, you will prevail. ML, [end of document]