menu bar

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

DATE:	  July 28, 1993

TO:	  All Property Owners - Valley of Lakes & Eagle Rock Resort

FROM:	  Frank M. Cedrone - Managing General Partner, C.B.G. Limited

SUBJECT:  Current Status Report

Approximately 2 1/2 months ago, I forwarded to all property owners, 
a Status Report.

	- This communication will serve to update that report -


The pledge of a Loan Guarantee from a foreign bank, in the form of a 
Standby Forward Takeout Commitment, has been documented in writing and 
samples of all the enabling documents have been furnished to our 
attorneys and the prospective Lender.  The tedious process of document 
preparation, was made more difficult and time consuming for several reasons:

	a. - The banks, insurers and re-insurers involved, together with 
their respective law firms, had to read, review and/or revise the 
documents, as required to meet their criteria, then re-transmit to all 
participants for approval.

	b. - Time zone differentials between countries virtually precluded 
immediate responses, For example, when our work day commences on the 
East Coast of the U.S., it is mid-afternoon in Europe. When our work day 
commences on the West Coast of the U.S., it is already quitting time in 
Europe (5:00 P.M.)

	c. - Translation and proper wording of the legal documents was 
required, so as to have the same meaning and legal effect in the 
languages of the various participating countries.

	      - All of the above have now been completed -



1.  The actual purchase of the initial guarantee instrument is expected
to be consummated during the next week,

2.  Immediately thereafter, we will meet to prepare contracts between
all of the participants, i.e.
	Between the Guarantor Bank and C.B.G, Limited
	Between the Guarantor Bank and Actual Lender
	Between the Lender and C.B.G. Limited
	Between C.B.G. Limited and First Eastern Bank
	Between C.B.G. Limited and Unsecured Creditors

3.  C.B.G. Limited has already entered into an agreement with First 
Eastern Bank on the dollar amount required to satisfy all obligations 
due the bank by C.B.G. Limited and all affiliated companies.  This payment 
must be accomplished prior to September 3, 1993.  If for any reason, 
preparation of paperwork causes delays, an Irrevocable Guarantee will be 
put in place to assure payment upon completion and execution of the required 
documents, This would also cause cancellation of any foreclosure 

We do not expect the recent announcement of PNC's pending acquisition of 
First Eastern Bank to have any impact on our plans.


The work scheduled to commence within the first 30 days after emergence 
from Chapter 11 proceedings, has now been expanded, based on the exposed 
need and the agreements C.B.G. has made with cooperating suppliers and 
contractors, with the approval of our Guarantor:

	a. - Resumption of utility line installations will now include the 
following improvements to plant and equipment:

		(1)  Installation of 60,000 gallons water storage tanks in the 
		     Huron Section to replace the existing 10,000 gallon tank.  A 
		     500% increase in water storage capacity, This will 
	 	     eliminate intermittent shortages and/or low pressure 

		(2)  The new and deeper well that has already been drilled in 
		     the Huron Section will be put into service, dramatically 
		     increasing delivery volume and recovery rate capacity.


		(3)  Two (2) new sewage pumping stations with vastly larger 
		     capacity will replace the pumping station located at the 
		     Lake Susquehanna Bath House and eliminate the holding 
		     tank in Section "E".  These pumping stations have already 
		     been designed, built and are stored in our supplier's
		     warehouse, ready for installation.  This will allow for
		     connection of Sections "E" and "EA" to the treatment
		     plant and allow for full resumption of homebuilding
		     activities in these areas.

	b. - Repairs to all existing roads, followed by full scale road
work as utility lines are completed, will now include a widening of 
certain existing roads and shoulders, together with improvements to 
drainage paths and culverts.

	c. - Clearing of all trees, brush and debris from the entire 
lakebed of the new Lake Algonquin area (already permitted under our 
Soil, Sedimentation and Erosion Control Permit) followed by commencement 
of the dam construction once that final permit is issued.

Simultaneous with the commencement of the above work, C.B.G. will award 
a contract for design of marinas, which are planned to be built on each 
of the three (3) lakes - Choctaw, Susquehanna and Algonquin.  This will 
allow all property owners (lakefront and non-lakefront owners) 
accessibility and availability of boating privileges.


Planned Special Promotional Events are planned to commence within 60 
days after Re-organization and a full scale return to marketing, 
including all major media advertising will commence within 90 days.  
This time schedule will allow time for completion of all new required 


During the past and current economic crisis, C.B.G. was not the only 
casualty.  A number of our property owners suffered business reverses, 
loss of position and income, etc.  Still others have experienced a 
necessity to relocate to different areas of the country.  C.B.G. Limited 
intends to present proposals to all such property owners that are 
intended to give them assistance, relief and preservation of equity.  
These proposals have been discussed with our Loan Guarantor and will 
receive their full support.

To update the above paragraph, the following information is given:

	a.- C.B.G. has successfully intervened on behalf of more than 
forty (40) property owners, responding to their individual requests.  We 
have halted legal proceedings threatening their ownership, absorbed 
legal costs, wiped out imposed penalties and interest, arranged payment 
schedules, etc.  We have prevented actual foreclosure proceedings by 
First Eastern Bank in three (3) cases.


	b.- Upon re-organization, C.B.G. will offer total re-financing 
without penalties, to property owners who are currently in default but 
wish to retain their properties.

	c.- Upon re-organization, C.B.G. will list for sale those 
properties currently in default, wherein property owners do not wish to 
or are unable to retain their properties.  Lot sales during the first 90 
days after reorganization will be strictly limited to those resales of 
property owner lots.  They will not be "distress sales".

	d.- in those cases wherein immediate relief is requested or 
required, C.B.G. will accept a "Deed Back" without foreclosure 
proceedings.  There will be no negative impact on the property owner's 
credit rating.  In addition, C.B.G. will extend a Credit Certificate for 
the full amount of any equity the property owner may have had in the 
property prior to Deed Back, which could be applied at any time in the 
future towards a new purchase.

Additional solutions to extend relief are also under consideration.


While the overwhelming majority of property owners have expressed strong 
support for C.B.G. both in writing and via personal visits or telephone 
calls, there still exists a small handful of highly active detractors.  
Their actions have contributed to rumors, malicious mischief, acts of 
vandalism and even outright criminal conduct.  It is extremely important 
that you make an intelligent evaluation of where your best interests 
lie.  Are they best served by C.B.G. Limited in a unified overall 
comprehensive development of this property and your lifestyle?  Or would 
your interests be better served by a bank takeover, auction type sales 
of fragmented parcels of the property to separate individuals and/or 
companies, while the remainder would be left to a disorganized group of 
individual property owners to finance, manage and maintain?

This happened once before.  Property values declined 90%.  Maintenance 
and security virtually disappeared.  Years of decline and decay 
destroyed the quality of life and owners abandoned their properties. 
Ask those who went through that experience.

C.B.G. Limited alone reversed all that and built the beautiful lifestyle 
that most of you love and enjoy.  C.B.G. Limited, with your support, 
promises to bring even greater benefits to all concerned, We need your 

To update the above Information, you should be aware of the following:

Numerous property owners have responded to C.B.G.'s call for cooperation 
and assistance.  Several hundred letters of support and dozens of phone 
calls poured into our office, making it impossible to respond to each, 
despite our best efforts. A considerable number personally visited and 
met with me.  All expressed admiration for the herculean efforts being 
expended by C.B.G. with its greatly reduced staff and limited funds.


However, a number of property owners remain delinquent in their payment 
of fees for maintenance and utilities.  If anything could impact 
negatively on C.B.G.'s efforts at this crucial time, it would be a lack 
of cash flow to maintain operations.  Therefore, I urge all property 
owners to immediately pay these past due fees and avoid an interruption 
in services which could lead to intervention by the bank or the courts.

It is regretful that civil proceedings had to be instituted against the 
most flagrantly defiant delinquents.  More than 200 judgments were 
awarded in favor of C,B.G. Limited, Oneida Water Company and Valley 
Utilities Company, Inc., adding substantially to costs for legal and 
filing fees, that must now be paid by delinquents.  Do not let this 
happen to you.  Everyone must pay their fair share.

A successful re-organization of C.B.G. will lead to unparalleled
benefits for everyone.  Imagine if you will -

	* Completion of Lake Algonquin
	* Marinas on all lakes
	* Completion of the Palmer designed Golf Course and Clubhouse
	* Completion of two additional golf courses
	* Completion of shopping center, professional office complex, 
	  service station and car wash - all on Route 924
	* Completion of a hotel/convention center
	* Completion of additional swimming pools, tennis courts (outdoor 
	  and indoor) with clubhouse facilities
	* Completion of townhous@s, condominiums and garden apartments

These are just the highlights of our future plans.  Please help us to 
achieve them.


Frank M. Cedrone
Managing General Partner


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

Home | Court Decisions | News Articles | RICO Complaint | Exhibits