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

DATE:		November 1, 1992

TO:		All Valley of Lakes Property Owners

FROM:		Frank M. Cedrone, Managing General Partner C.B.G. Limited
SUBJECT:	Current Status Report

On Saturday, October 24, 1992, I attended a meeting of Valley of Lakes 
property owners, that was hosted by a group of property owners 
identified as "Friends of the Valley".

1.  The group hosting this meeting, had already proven themselves to be 
true and dedicated individuals, who were sincerely interested in helping 
maintain both the existing quality of life in the Valley and in helping 
the development achieve its maximum potential.  To help achieve those 
goals, they have given of themselves unselfishly (time, labor and even 
their own money) and have attempted to foster a caring and friendly 
relationship among all Valley property owners, both resident and 

This group provides its services and hosts "Town Meeting" style 
gatherings, which are open to "all property owners" without being 
required to pay a fee, dues or admission charges.  Any property owner 
may participate.  The Board of Directors does not conduct "secret 
meetings" and they enjoy an open line of communication with my office 
(the developer) and have been given access to all of my department 
heads.  They enjoy our full cooperation. (a copy of their Agenda and
Mission Statement are attached).

2.  I accepted the invitation to address this meeting and even offered 
Eagle Rock Lodge as the meeting facility, in order to give an up to the 
minute status report on the current condition of the developer and its 
progress towards emergence from Chapter 11 status.  I announced that 
C.B.G. had reached an agreement with First Eastern Bank, its prime 
lender with the approval of Judge John T. Thomas, the presiding judge of 
the Federal Bankruptcy Court in Wilkes Barre.  The agreement had the 
concurrence of the first position secured lien holder, J.L. Wolgin and 
no objections were registered by any creditor. (The details of that 
agreement are attached)

3.  I felt it was necessary to give full factual information, concerning 
past, present and ongoing activities of certain individual property 
owners, whose manipulation and use of a community organization, have

November 1, 1992
All Valley of Lakes Property Owners
Page 2

helped foster and spread rumors, distortions and outright lies.  Their 
actions place in serious jeopardy, not only the development itself, but 
they also threaten the fortunes of every property owner, their 
investment in the Valley, the quality of life in the Valley and Eagle 
Rock Resort, as well as its future promise to emerge as one of the 
finest residential/resort communities in the U.S. (The information on 
this group is attached)


C.B.G. Limited is presently conducting serious negotiations with a 
variety of prospective lenders, prospective equity partners and 
prospective joint venturers.  At the Property Owners Meeting, I 
introduced a Vice President from the Investment Banking Division of 
Mellon Bank, with whom we have an Agreement allowing them to represent 
C.B.G. in its search for new financing.  This Agreement was approved by 
Judge Thomas of the Federal Bankruptcy Court.  I also introduced an 
individual member of an English group who are interested in providing 
funding for C.B.G. Limited.  This individual spent two full weeks at the 
Valley of Lakes conducting due diligence on behalf of his group.  He has 
toured the property, met with all members of my management team and 
reviewed all financial details and other pertinent data requested.  He 
has also met with property owners, our attorneys and representatives of 
our bank.  He is highly enthusiastic with the prospect of his group's 
possible participation and flew home to England to accelerate 
processing, this past weekend.


We have had visits and tours from no less than four separate potential 
funding sources within the past two weeks and are scheduled for at least 
five other visits from additional sources within the next two weeks.  We 
now have a wealth of opportunities for a full and complete financial 
reorganization, that will pay off all debt and provide ample funds to 
move full steam ahead on all phases of our development.

We are currently negotiating with groups from Philadelphia, Baltimore, 
D.C., North Carolina, Georgia, Pennsylvania, New Jersey and Florida, 
here in the United States.  Abroad, we are conducting negotiations with 
interested parties in Germany, England (2), Switzerland, Scotland, Hong 
Kong, Japan, Korea, Australia and Indonesia.  While all are seriously 
interested, the enormity of the task of fulfilling the requests for 
financial and legal documentation, engineering data, planning, zoning 
and other regulatory agency information, as well as marketing data, 
construction cost data and the future proforma proposals and projections 
are being handled by myself and a severely limited staff.  The agreement

November 1, 1992
All Valley of Lakes Property Owner
Page 3

reached with First Eastern Bank allows us seven months to complete this
task, with certain conditions.

	a.  Their contribution towards meeting any cash flow "shortfalls"
is infinitesimal for a property as complex as the Valley of Lakes, with
all of its operation.  Therefore, we MUST exert maximum legal action to
collect all outstanding delinquencies in Maintenance, Water and Sewer
Fees.  Legal actions are already being filed in the various courts in
four townships, i.e. East Union, North Union, Black Creek and Hazle.
Filing fees, court costs, lawyers' fees will add serious additional
costs to the amounts owed by delinquent property owners.  All of the
suits are being handled by MLA Management Associates, Inc.  This is a
company I was forced to employ, if I wanted to come to terms with First
Eastern Bank.  While the employment of this firm will add serious
additional costs to our "bare bones" operating budget, it will be
sustainable for the short term required to obtain our re-financing,
PROVIDING arrearages are made current.  Therefore, I implore all
property owners, whatever your real or imagined grievances may be, to
bring your account current immediately.  I will promise to absorb all
legal fees and costs for suits already filed, providing payment reaches
my office within the next ten (10) days.  Simultaneously, we are
negotiating a small bridge loan in the amount of $500,000.00, which
amount will allow us to do the following:

	1.  Discharge the MLA Team (their costs for a year will exceed the
total annual income from both our water and sewer utilities and could,
in itself, create a default under the Terms and Conditions of our
Agreement).  If we can prove that we can sustain ourselves minus any
financial assistance from First Eastern Bank, they will allow is to tear
up the MLA Management agreement.  $500,000.00 is the figure we agreed

	2.  Guarantee the opening of the Eagle Rock Ski area this season.
Otherwise, it will have to be closed down and all facilities boarded up
and winterized as the bank has requested.

In the alternative, we are exploring the possibility of leasing out or
co-leasing both the ski area and all three food and beverage facilities,
i.e. Eagle Rock Lodge, Panorama Lodge and Fireside Lodge.

November 1, 1992
All Valley of Lakes Property Owners
Page 4


Reaching this agreement was no easy task.  There were hard and 
diametrically opposed positions that had to be reconciled, coming from 
two different viewpoints with totally different goals in mind.  On the 
one hand, you have a bank that has serious problems with a portfolio of 
defaulted loans and is in dire need of raising its cash balance to 
levels dictated by the office of the Controller of the Currency.  That 
means calling in Lines of Credit to raise cash.  It may mean sales of 
certain assets and/or subsidiaries to raise cash.  It definitely means 
using every tool at their disposal to collect delinquent accounts 
receivable.  It also means that they are not the least bit interested in 
continuing real estate development lending, nor are they about to fund 
normal operations of our properties.  What would make First Eastern Bank 
most happy, would be a rapid disposal of the entire property.  Whether 
it remained as one entity of whether it had to be split up among a 
variety of owners is of no concern to them.  Their only interest is in 
bringing in the cash that a sale of the assets would be certain to 
accomplish.  Naturally, there are far more prospective buyers for 
component parts of the project and their separate and distinct profit 
centers, than there are for the entire development.  The reasons are 

1.  There are large numbers of prospects who are highly interested in 
acquiring the following entities, especially as they are located in 
private communities, wherein no competition for these businesses exist.

	a.  Oneida Water Company - Water Utility
	b.  Valley Utilities Co., Inc. - Sewer Utility
	c.  Ravens Run Equestrian Center - Horse Facility
	d.  Recreational Facilities and Community Roads - Amenities 
	    (Roads, Parking Areas, Lakes, Beaches, Sports Core, Green 
	    Belts, Pavilions, Community Lighting, Open & Undeveloped areas 
	    planned for future recreational development)
	    Fireside Swim & Tennis Clubhouse, Pools, Tennis Courts and 
	    Parking Lot, together with Holiday Park Childrens Playground.
	e.  Maintenance Buildings
	f.  Eagle Rock Ski Area & Parking Lot
	g.  Eagle Rock Lodge & Parking Lot
	h.  Panorama Lodge
	i.  Fireside Lodge & Parking Lot
	j.  Eagle Rock Golf Course - West (the Palmer Course)
	k.  Eagle Rock Golf Course - East (planned to be by Lee Trevino)
	1.  Weston Hills Golf Course - (planned to be by Jack Nicklaus)
	m.  Commercial Operations Office Building & Parking Lot

November 1, 1992
All Valley of Lakes Property Owners 
Page 5

	n.  50+ acres of highway frontage on Route 924
	o.  100+ acres held in reserve for future development at the 
	    south end of the community - upper level and lower level -
	    both sides of the county road.
	p.  Bulk sales of existing recorded and planned and platted 
	    homesites, single family detached (Valley & Eagle Rock area, 
 	    including those surrounding all golf courses and the ski area) 
	    multi-dwelling and condo sites (golf courses and ski area) as 
	    well as time sharing sites.
	q.  Eagle Rock Motel
	r.  The site for the planned hotel/convention center

With a properly conducted, world wide advertising campaign conducted by 
selected major real estate brokerage houses, that specialize in 
properties of this nature and have representation here and abroad, 
hundreds of prospective buyers could be developed for individual 
components of the community, as described above.  They could buy, own 
and operate their businesses with absolutely no obligation to property 
owners of the Valley, except as it applies to their own operation.

Conceivably, this method of disposal would provide the highest rate of 
return, pay off all debts 100 cents on the dollar and give C.B.G. a 
handsome return on its investment.

I personally fought AGAINST this scenario and fought for seven months 
which I feel are adequate to gain re-financing required to complete the 
original masterplan under one ownership, one responsibility, with full 
obligation to all of our property owners.  The total community concept I 
dreamed of is and can be possible.  We have magnificent potential and 
breathtaking plans for a total lifestyle that would be second to none.  
We did not plan nor create the financial problems of our bank and the fact 
that they are unable or unwilling to help us.  However, with the 
unstinting cooperation of our property owners, we can see this dream 
come to fruition.  All I can ask is that you make an immediate effort to 
pay any delinquencies you may owe.  If however, you have any special 
expertise and are willing to offer any advice or services to assist 
C.B.G. at this time, it will be warmly received and most appreciated. (I 
am enclosing a form Questionnaire designed to measure property owner 
responses to my message and assist me in making future decisions in 
keeping with the desires of our property owners.  Please take the time 
to fill out and return at your earliest convenience.

In return for the "Grace Period" granted by First Eastern Bank, I had to 
agree to give up several crucial options available to C.B.G. These
 options were:

November 1, 1992
All Valley of Lakes Property Owners 
Page 6

1.  C.B.G. granted First Eastern Bank relief from the court imposed Stay 
of Execution, that prevented First Eastern Bank and J.L. Wolgin from 
foreclosing on the property and disposing of it as they saw fit. (In 
return, First Eastern Bank agreed not to exercise this option for a 
period of seven months)

2.  C.B.G. granted First Eastern Bank a General Release against any and 
all claims it could exert against First Eastern Bank for Lender 
Liability. (In return, First Eastern Bank agreed to fund a very minimal 
amount of cash shortfall, providing I allow their team to press legal 
collection of fees that are delinquent)

3.  C.B.G. also agreed to employ MLA Associates, Inc. and pay those 
outrageous fees, providing the C.B.G. staff remained in place to provide 
the community services and property administration.  I have also 
designated the Friends of the Valley as the responsible liaison team on 
behalf of the Valley of Lakes property owners.  I am also delegating to 
the Friends of the Valley, the sole authority to staff and operate the 
Swim and Tennis Clubhouse for the benefit of all the property owners 
that are current in the payment of all fees (Water, Sewer and Maintenance), 
as well as any other recreational facilities they wish to make available 
for special functions, after due notice to and receipt of approval from 
my office.  This is another facility that First Eastern Bank wanted to 
close down, secure and winterize. (In the event that I lost that portion 
of my negotiations with the bank, Friends of the Valley offered to lease 
the building and pay for electricity, phone and insurances.  They are a 
fine group of people and I am proud to know them - I sincerely hope that 
you get to meet and know them for I feel you will share my feelings.

First Eastern Bank also wanted to disconnect all community and sports 
core lighting and close down and winterize the Valley Administration 
Building.  This would save electricity and other utilities and lower 
insurance and maintenance costs.  If I had let First Eastern have their 
way, the Valley and Eagle Rock would resemble a Ghost Town in deep 
freeze.  The only services that First Eastern is willing to provide are: 
water, sewer, security and road maintenance, as needed.  They wanted ONLY 
ONE EMPLOYEE on the property 5 days a week, with outside contractors 
being assigned to respond to emergency requests for water shortages, 
sewer plant problems, snow removal, etc.  Our total staff would have 
been terminated.  The top of the mountain would be pitch black dark, 
because they wanted to totally cut off all power and winterize all 
buildings, i.e. lodges, motel, offices, ski buildings, etc.  Our sales 
persons and myself are paying for the operations of the Valley 
Administration Building, including all utilities and phone.

November 1, 1992
All Valley of Lakes Property Owners 
Page 7

I am scheduling a meeting of the Advisory Board and Friends of the 
Valley to have them review all of the correspondence and documents 
relating to the following:

	1.  Financing and joint-venture sources, proposals, etc.
	2.  Our negotiations leading to and the actual Agreement with FEB
	3.  Documentation of comments I have made relative to harmful 
	    activities of individual property owners.

I would hope to be able to prepare and forward an updated Status Report 
every 4 to 6 weeks, in order to keep all property owners fully advised 
on our progress towards re-financing and a full resumption of all 
activities.  During the interim period, I once again urge all property 
owners to become current in payment of all delinquencies in maintenance 
and utility fees.

Within ten (10) days, a list of all delinquent property owners will be 
posted at all security gates, the Valley Administration Building and the 
Swim & Tennis Clubhouse.  Denial of use of all recreational facilities 
will be enforced in full accordance with the Covenants and Restrictions 
and Rules and Regulations.  Violators will be prosecuted for trespass.  T
his is a regrettable but necessary action if we are to survive this 
trying period.

Your utmost cooperation in avoiding these actions would be appreciated.

Once re-financing is assured, we will respond to those requests for 
assistance from some of our property owners whose plans to build have 
changed.  Some have encountered financial difficulties.  Others have 
made relocations due to job transfers.  In any event, whatever the 
reason, we will do our best to accommodate your desire to dispose of 
your property.  There are a variety of ways that this can be 
accomplished.  We will examine each individual situation and make the 
best recommendation accordingly.


Frank M. Cedrone


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

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