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Valley of Lakes RICO Class Action against PNCBANK, et al.
ripped edge: exhibits
Valley of Lakes Letterhead

TO:	Ray Dongelewicz		Chris Stamatopoulos
	Joe Natale 		Larry McCutcheon
	Randy Galgon 		Tom Marcheski
	George Denke		Tom Pierson

Today, June 17, 1992, I have been provided with a copy of the June 6, 
1992 minutes of the VOLCA General Membership Meeting, held at Edgewood 
In The Pines Restaurant.  My comments and/or responses are to be 
distributed to all VOLCA Board Members, in order that they have a balanced 
report.  This is in keeping with the agreement made when a dialogue was 
initiated between myself and two (2) VOLCA board members, Ray 
Dongelewicz and George Denke and later at a meeting between myself, Ray 
Dongelewicz, George Denke, Tom Pierson and Cathy Stamapoulos.

I was both surprised and disappointed to learn that VOLCA had had two 
meetings with First Eastern Bank, without C.B.G representation.  This is 
considered both counter productive and interference in the process 
required to achieve the aims, not only of C.B.G., but most importantly, 
those of the property owners.  This common objective is and should be, 
to see to the proper and complete development of the entire property.  
Since C.B.G. was not present and/or represented at these meetings, it 
could not comment on things that are of vital common interest for 
Valley property owners and C.B.G.. For example, I would wager that 
the representatives of First Eastern Bank did not offer the 
information that they favor a Chapter 7 Liquidation to gain a rapid 
payoff of their secured position.  Nor did First Eastern Bank offer the 
information that they opposed use of funds (not theirs) that had been 
released from an escrow account in our name, for any development or 
marketing purposes, but would only agree to their use in a "bare bones" 
maintenance operation.  Both of these facts are a matter of record in 
the court proceedings, where they blocked the use of $250,000.00 of our 
own money and an emergency offer of $500,000.00 in bridge financing.  
This was in the month of May.  How much further could we have been if 
registrations were in place, marketing commenced and water and sewer 
work continuing on an unabated basis?

I agree with the comments made by Tom Marcheski relative to a class 
action suit being preferable to get more equitable real estate taxation.  
However, it would have a far greater chance of success, if led by C.B.G. 
and pursued properly, with definitive comparables and a large variety of 
classifications.  Presently, the two counties use different methods and 
are based on ridiculous classifications actually defined by the prior 
developer.  Individual suits are simply ignored and turned down.  As the 
largest taxpayer, C.B.G. shares the aim of a lower tax rate.  In 
addition, high real estate taxes discourage both sales and growth.


The completion of Lake Algonquin, as well as the completion of the 
utilities in Section E, the completion of roadwork in D, E, & EA, are all 
covered not only under the plan to be submitted, but will share equal 
importance with the golf course on a simultaneous basis.  Why?  Funds 
from sales of golf course properties will dramatically escalate the 
completion of all infrastructure, even though the remaining land values 
in the Valley alone, exceed the projected costs of the Valley area 

Additionally, income from sales of townhomes in the Arapahoe West 
Section, Townhomes on the Eagle Rock Golf Course and time-share units 
that will replace the old Eagle Rock motel, will all be used to complete 
the Valley area more rapidly, as well as the Golf Course.  C.B.G. is not 
just developing the Valley area alone, it is developing the upper 
mountain residential areas and the commercial facilities.  It is this 
total planned approach that attracted the present property owners, will 
attract future property owners and gives value to your property and 
investment.  It most assuredly adds dramatically to the lifestyle.


I regret the interference of VOLCA in the area of Arnold Palmer.  This 
is not the first time.  I will not tolerate it again.  You should be 
made aware that not only do we enjoy a very fine relationship with the 
entire Palmer organization, but that they support us far more than has 
been demonstrated by VOLCA to date.  In any event, our contract 
prohibits the dissemination of any information on our contract without 
our approval.  This is a mutual thing.  Prior to any response to VOLCA, 
I was contacted by the Palmer Organization and told them, "Just give 
them the up to date information as you know it".  They are one of the 
finest professional groups in the nation and I have made it a point to 
keep them advised every step of the way.

I believe that we have refunded all advance golf club memberships, 
except two.  However, I will check to be certain.  Upon approval of the 
court, any remaining refunds will be made.  Memberships will not be made 
available to anyone, until the first nine is completed and the back nine 
is well underway.

Another point I would like to make has to do with Maintenance Fees.  At 
the time of purchase it was explained in detail, it is also in the 
Purchase Agreement, it is on your recorded deed and inherent with the 
recorded Covenants and Restrictions.  Maintenance Fees have no 
relationship and are not contingent on whether or not you live in the 
Valley or whether or not utilities and/or roads have been installed to 
your property.  It is these fees that provide the repairs, services and 
maintenance and staffing of amenities that makes life desireable and 
gives value to the property.  Property owners that refuse to pay do a 
disservice to themselves and everyone else.  If these fees were current 
(they are presently delinquent) we would not have to divert as much 
development dollars as we have in the past.  VOLCA can do much to 
improve on this serious condition.  The same is true of the horrendous 
delinquency in P.U.C. approved and mandated water and sewer utility 


Regarding the comment made relative to the possibility that some 
lakefront lots are considered wetlands, this is just not true.  What is 
true is that a small portion of C.B.G.'s easement area in only several 
cases is considered wetlands.  This is true of both Algonquin and 
Choctaw.  It would not encroach on any lot.  However, when the lake 
contouring commences and we can visually see the entire outline, 
including the projected high water mark, I may seek a revision and give 
an even greater wetlands area on the discharge side of the dam.  This 
would be a delightfully planted, scenic ponding area, with footbridges 
and stepping stones, etc.  It would also totally eliminate any perimeter 
wetlands allocation.

Proper procedure was not followed, re: the pig roast.  A formal letter 
request for a family outing was received from Dr. Greco in March and 
approved by C.B.G. VOLCA was out of order in announcing an event that 
they had not received a clearance on.  Hovever, it may still be held, 
providing proper channels are followed.  It must be a Valley of Lakes 
property owner function and follow the procedures used last year, 
sponsored by an individual.  Both the letter seeking approval and the 
announcement must be revised.

Regarding bonds for infrastructure, C.B.G. was the first developer to 
use bonds.  Until that time, Schuylkill County never required 
sub-division bonds to guarantee infrastructure.  Therefore, the areas 
that were platted, engineered, recorded and approved prior to C.B.G. 
are not bonded.  The Arapahoe West Townhuse area is bonded (first 
phase), the Eagle Rock Estates section is bonded for the infrastructure 
for lots surrounding the first 9 holes.  The Valley Utilities Sewer 
Plant was bonded by C.B.G. Each section to be released, whether in 
Schuylkill County or Luzerne County, will be bonded.  Bonds are not 
required to complete improvements that are not to be sold, i.e.
recreational amenities, golf course, stables and equestrian center, etc.

Ken Heim's statement that $25.0 million was set aside for improvements 
is wrong.  He may be referring to the amount of money that was spent to 
that date in property improvements including buildings, amenities and 
infrastructure.  He most certainly never heard that from me and I feel 
certain he will concur.  Regarding the $5.0 million for the golf course, 
as a budgeted figure, not set aside, if he is referring to the golf 
course, together with its clubhouse, pool, tennis courts and related 
structures, he would be accurate.  If he is including infrastructure, 
he is low by 50%.

Lake Calumet was an illegally planned and executed abortion, built by 
the prior developers and dangerous as constructed.  That's why the dam 
was cut through.  However, C.B.G. has wonderful plans for the Calumet 
area which include doubling its water retention area, dramatically 
raising the surrounding area, installing park like amenities, stone 
barbeque areas, lighting, cleaning and contouring the bed interior, 
heavily stocking it with fish, etc. This is planned to compliment the 
planned Valley area country club and be the ultimate focal point of 
family activity, not open to patrons of the commercial area.


Phil Kauffman's comments are regrettable.  He would be wise to talk to 
those who have lived through that experience.  Larry McCutcheon's 
comments are very accurate.

Mr. Galgon's comments on the bank's condition, their intentions and the 
proposed disposition are all wrong.

First, the bank has been heavily criticized by the Office of the 
Controller of the Currency, as it was relayed to me by executives and 
counsel to the bank.

Second, a Federal watchdog type of committee has been set up to monitor 
and/or approve most actions.

Third, an outside consulting firm has been hired to advise them.  

Fourth, a special committee of the Board of Directors has been formed.

Fifth, most of their top executives have been either fired, resigned or 
asked to leave.  The Chairman of the Board, President, Executive 
Vice-President, Senior Vice-President and other Vice-Presidents.

Sixth, they are under an order to increase their capital base.

Seventh, they have been reported in a Wall Street Journal article, as
being in one of the worst conditions a bank can be listed in.

They are not allowed to take brokered deposits or pay incentive interest 
rates to attract money for investment or loans.  They are not even 
allowed to ask permission from the O.C.C. to do so, according to the 

If the bank could force a Chapter 7, get control of C.B.G.'s assets and 
rapidly dispose of them, their operating capital would jump by anywhere 
from $16 - 18 million and they would also free up a loss reserve.

What is the fastest way to do that?

No less than four (4) separate utilities companies are interested in 
purchasing our utilities.  This could be done rapidly.

We have definitely cut into the business of several ski areas because of 
our family oriented slopes, excellent state of the art snowmaking 
equipment, lighting, beautiful lodges, computerized ticketing, close by 
large parking areas, good staff and ski school, etc.  This year
promises to be much better, whether it snows or not due to our 
dramatically increased snow making capacity and headstart in signing up 
groups.  Anyone of a number of other ski areas could buy, finance and 
take over this facility.

The Golf Course and its surrounding lots could be sold separately, as 
could the motel, E.R. lodge, etc.  Lots could be sold at auction to 
individuals, builders, etc.  The townhouses ditto.  An appraiser 
together with a real estate auction firm have already visited the 
property twice.


In this scenario, the component parts can exceed the whole, because 
there are a thousand times more parcel buyers (who have absolutely no 
liability of the preceding developer) than there are large tract 
community builders.

Under this scenario, the new utilities owners can take all the time they 
need to install service, since only demand, actual usage, is their 
motivation.  Second, they would immediately file new rate hike requests, 
based on new proven actuals.  Their overhead would be far more 
substantial than ours and proveable.  They cannot, under the law, since 
they are a regulated industry be forced to lose money and can demand the 
profit to which they are entitled.  Neither the P.U.C., nor the Consumer 
Advocate, not even the Attorney General can order anything different to 
be done.. Any unacceptable rate would be appealed and appealed again. 
until won.

Under this scenario, your rates could be a lot closer to those suffered
by the people of Hazleton, not one-fourth, of that amount, as they are now.

The Eagle Rock Entrance would most certainly be closed off to Valley of 
Lakes property owners, since it is a separate commercial tract, with no 
relationship to the lower Valley residential area.

Special rates for property owners at the ski area and/or golf course are 
not incumbent on new owners.

The interest of all property owners and C.B.G. Limited are and must of 
necessity be one.

Regarding George DePersia's comments concerning why I have not paid 
maintenance fees on properties I and a few friends purchased 
independently at Cove Ski Village, the following is offered:

1.  Cove Ski Village's maintenance fees are $600.00 per lot per year,
for which they do practically nothing.

2.  They have misused the money for non-budgeted purposes, to satisfy
the aims of an elite group.

3.  They have applied fees retroactively to lots on which I did not have
legal title, because of illegal procedure used by the Schuylkill County 
Tax Office, in not properly notifying prior owners.  I cleaned up a 
practice which had been in place for many, many years.  As a result, we 
(the county and I) entered into an agreement where we would escrow the
funds and we would assume the expense for cleaning up the title. 88 out 
of 89 sales were illegal initially.  We spent 2 years cleaning up most of 
the titles and are still working on some.

I have stated time and again that lot sales do not make a community, 
people do.  To assist Cove Ski in developing, so they could afford paved 
roads, full time amenities and decent water delivery (they have only a 
500 gallon tank for water storage) I resold lots to builders with a 
restriction that they must build and not re-sell them for a profit.  
Those lots were sold at cost or below.  Keeping the lots out of the
hands of land sales operators was exactly what I wanted to accomplish.
Naturally, this angered the chosen few, who wanted first, a rural private
enclave and second, privileged treatment.


I will match Ned Leiby's offer of a $500.00 reward for the arrest and 
prosecution of the vandalism to the circle and destruction of the 
lighting at St. Jude's statue.

Mr. Reese might be interested to know that I led the opposition that 
defeated the dump, made the first donation to start the legal fund, 
matched the entire amount raised by all residents on the very next day, 
paid legal expenses for one law firm and for experts to testify.  That 
is a matter of public record.

Regarding the purchase of the Cove Ski Lots, myself, and three other 
persons, not connected with C.B.G, who helped me acquire these 
properties, paid more than $200,000.00 out of our pockets, plus, I 
borrowed personally $240,000 from United Penn Bank to acquire the lots, 
pay the legal and other fees to clean up their titles and carry them to 
this date.  Not one cent came from C.B.G. Limited.  Even though it is 
not the business of any property owner, for any reason, I felt you 
should know.  How many of our property owners would make such a 
disclosure of their own private ventures?  Rumor, conjecture, malicious 
gossip never helps any cause.  I have never failed to respond to any 
legitimate inquiry.  Can you noN understand how the original VOLCA 
organization degenerated into an ineffective destructive mess during 
prior administrations?

I can answer both George Morris' and Mr. Reese's questions concerning 
the holding tank in Section E. It is being maintained and will come out 
in a short time after C.B.G. takes down the 3.5 million loan.  This is 
scheduled and is a priority.  The line is to be run through EA all the 
way back to the plant.  Without C.B.G., it will not be done; the bank 
cannot be forced to do it and the property owners do not and cannot get 
the legal right to do it.

Oneida had been drinking contaminated water for years and had raw sewage 
in their drainage ditches before C.B.G. For more than 100 years - where 
was the Board of Health and D.E.R.?

Nuremberg and Sheppton have been under a D.E.R. ordered Mandate to 
install central water and sewers for 20 years.  Why in the name of God 
don't they have it yet?

With the new system recently approved, coupled with Federal Grants, 
F.H.A. and other low cost loans, their user rates are projected at more 
than double those of Valley of Lakes residents, plus they will pay a one 
time stiff assessment or connection fee.

In response to Mr. Matios question re: liability, ask those who have 
lived through a bank ownership and who spent much money to get services.  
Ask George Denke, Racobinski, Natale, Bott, Tokanets, Marcheski, Moylan, 
Sacco.  I am certain they will respond honestly.

Ken Heim's statements will either be retracted or he will face suit for 
libel.  Every single item required for disclosure has always been made, 
and kept current with our bank, our legal counsel, our registration 
counsel, H.U.D. and all state commissions.  When we encountered financial 
difficulties, due to our bank's inability to fund despite promises to 
the contrary, we communicated with all required to know and took


appropriate action without causing alarm.

I will address the issue of New Jersey Steel in a separate
communication, after consulting with legal counsel.

In closing, I want to state that it would be extremely helpful, if 
C.B.G. Limited and the property owners of the Valley of Lakes presented 
a united front to assure approval of our financing.

For those of you who were not here in the beginning, you should that 
when C.B.G first took over this then devastated property, our first 
concern was attending to the immediate needs of residents, not short 
term profits.  We then attended to the needs of those who had wanted to 
build for years but were unable to.  We were not legally or morally 
obligated to do either one.  We were not bound by the promises or 
failures of our predecessors.  We did not buy the old developer's 
corporation.  We brought property.

However, we did what I felt was right and still intend to do.  Your
support is both solicited and desireable.

Valley of Lakes RICO Class Action against PNCBANK, et al.

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