Valley of Lakes Racketeering Class Action against PNC Bank, N.A., et al.

(J) SCHEME OF FIRST EASTERN BANK TO OPERATE AND MANAGE THE RACKETEERING ENTERPRISE

212. FIRST EASTERN BANK and CBG and other defendants, on or about October 22, 1992 and continuing to the present, did knowingly and wilfully devise a scheme and artifice to defraud property lot owners and prospective lot owners, and to lull them into inaction, by placing an agent of the bank, MLA, in charge of collecting all of the maintenance fees, water fees, sewer fees, and representing that MLA, under the supervision of FIRST EASTERN BANK, would insure that the funds collected would now be expended to provide the promised services, when in truth and fact hardly any services were provided, and the real purpose of placing MLA in control was to:

(a) continue the extortion schemes of the defendants;

(b) maintain defendants' illegal control over the subdivision;

(c) conceal the racketeering activity by creating the false pretense that FIRST EASTERN BANK, a national bank, was assisting CBG in rectifying its affairs in order for the development plan to be completed as promised; and

(d) to continue to punish any association by property owners with VOLCA. The specific and particular aspects of this scheme are discussed in detail, infra.

213. In order to carry out this scheme, the defendants had an agreement approved by the Bankruptcy Court which provided that CBG would permit FIRST EASTERN BANK's chosen operating agent, MLA, to manage the essential functions of the "Valley of Lakes" subdivision, in exchange for CBG receiving seven (7) months to secure new financing, at the end of which period, FIRST EASTERN BANK would have the right to foreclose. A copy of a Stipulation for Consent Order for Relief from Stay, Adequate Protection, Lease Rejection and Cash Collateral in The United States Bankruptcy Court for the Middle District of Pennsylvania (Case No: 5-92-00525, et al.) filed October 22, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 145-1 to 145-20. At page 10 of the agreement (Exhibit 145-10) FIRST EASTERN BANK mandated that:

"The Debtor shall retain "MLA" to assist and aid the Debtor with Management Assistance, the "Management Assistant" The function of MLA shall be to review and verify previously approved budget line item expenses, verify work performed and generally monitor for Debtor's compliance with this Order, and to file reports concerning the same with Bank."

214. But for the agreement of October 22, 1992, the essential functions of the racketeering enterprise, operated and managed by CBG, VALLEY UTILITIES CO. INC, ONEIDA WATER CO., could not have continued, particularly since the Bankruptcy Court had previously denied the debtor's petition to for interim financing. (See e.g., Exhibit 141 and 142). In the agreement of October 22, 1992, (Exhibit 145-3 to 145-4) the parties expressly recited that:

"The Debtor represents it cannot absent this agreement, and the assistance of Bank, continue its day to day operations, while seeking to formulate a plan of reorganization which can be approved by this court."

215. Through the agreement of October 22, 1992, MLA and its principal FIRST EASTERN BANK gained direct managerial control of the racketeering enterprise, and from that day until the present, MLA and FIRST EASTERN BANK have operated and conducted said enterprise. A copy of "Operation Development Plan" Agreement between CBG Ltd., et al., and MLA Management Associates, Inc., dated October 22, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 146-1 to 146-19.

216. In furtherance of this scheme, CBG with the full knowledge of FIRST EASTERN BANK, issued numerous statements to the press. A copy of a newspaper article titled "First Eastern to assist Valley of Lakes owner," published on or about October 24, 1992, in the Hazleton Standard-Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 147-2. A copy of a notice distributed as a group mailing to all owners of property in the "Valley of Lakes" subdivision, by CBG Ltd., on or about October 24, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 148.

217. During this period, after the Agreement of October 22, 1992, certain properties in the Valley of Lakes subdivision were advertised and sold using the same fraudulent promotional plan. A copy of an advertisement appearing in the Hazleton Standard-Speaker, on or about October 24, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 149.

218. In furtherance of this scheme of October 22, 1992, commencing on or about November 23, 1992, and continuing to the present, MLA, FIRST EASTERN BANK, CBG, FRANK CEDRONE, and other defendants, caused numerous mailings to be placed in the U.S. Postal Service and mailed throughout the U.S. in order to carry out defendants extortion plan of (a) collecting from property owners "past due charges," which many property owners had refused to pay to CBG since they had not received the services promised for, (b) to extort from property owners fees for future periods in which MLA failed to provide the promised services, and (c) to extort a late fee of interest of 1 1/2% per month, delinquency charge of $50 per quarter. Among others, are the following:

a. A copy of a Form Letter for "Delinquent Outstanding Charges," mailed to John Miele, Box 295, Nuremburg, PA 18241, dated November 23, 1992, from Gilbert Werner, Managing Agent, on letterhead reading, "C.B.G., Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241," for CBG Ltd. "Maintenance Fund," Oneida Water Co., and Valley Utilities Co. is annexed hereto and made a part of this complaint, and marked Exhibit 150.

b. A copy of group mailing Form Letter for "1993 Maintenance Fees-- $360.00 per property Due January 15, 1993," addressed to "Valley of Lakes Property Owner," dated December 1, 1992, from Gilbert Werner - Managing Agent, on letterhead reading, "C.B.G., Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241," is annexed hereto and made a part of this complaint, and marked Exhibit 151.

c. A copy of a group mailing Statement dated December 4, 1992, from "C.B.G. Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241," addressed to John Miele, Box 295, Nuremburg, PA 18241, is annexed hereto and made a part of this complaint, and marked Exhibit 152.

219. In furtherance of the scheme hatched of October 22, 1994, MLA and FIRST EASTERN BANK did not provide the services for which they collected:, to wit;

a. MLA and FIRST EASTERN BANK failed to maintain the sewer collection system as promised thereby causing numerous leakages flooding the homes of certain property owners with raw sewage, and failed to maintain the water system, and failed to maintain the road system. See Exhibits [ ]. The use of the pool and lake were curtailed.

b. The recreational facility, known as "the equestrian center" was closed, and not provided by MLA. The use of this facility was a property interest for each property owner running with the land pursuant to the covenants and restrictions recorded by High Vista Inc. (See Exhibit 1-1 and Exhibit 2-12). Based on the "property reports" filed by CBG, this facility should have been available for a "user fee."

c. A copy of a newspaper article titled "For now, Eagle Rock slopes staying closed," by Tony Greco, Staff Writer, published on or about December 9, 1992, in the Hazleton Standard-Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 153. As of the present day, the ski slopes have never been re-opened. The use of the ski slopes was a recreational facility to which property owners in the Valley of Lakes were entitled to use for a "use fee" pursuant to the "property reports" filed by CBG (E.g., Exhibit 14-22).

d. In addition, payment of the maintenance fee included the use of "Lake Algonquin" at no additional charge according to the "property reports" filed by CBG. See e.g. 21.

e. See also Exhibit 155-6.

220. In furtherance of this scheme, FRANK CEDRONE and CBG began delegating certain functions to an unincorporated association, known as the "Friends of the Valley" in order to prepare the groundwork for the formation of a fraudulent property owners association to continue the pattern of racketeering. A copy of a letter dated October 1, 1992, from Frank M. Cedrone, General Partner, C.B.G. Limited, on "Valley of Lakes and Eagle Rock Resort" letterhead, to "Friends of the Valley," c/o Brenda Cherba, Tom Pierson and George Denke, which was distributed to property owners, is annexed hereto and made a part of this complaint, and marked Exhibit 154-1to 154-2.

221. In furtherance of this scheme, FRANK CEDRONE, CBG, continued to make numerous mass mailings containing misrepresentations and false pretenses to continue the pattern of racketeering. These mass mailings were only possible because of the Agreement of October 22, 1992, and were part of the post agreement operation. A copy of a group mailing, mailed to "All Valley of Lakes Property Owners," from Frank M. Cedrone, Managing General Partner, C.B.G. Limited, titled "Current Status Report," dated November 1, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 155-1 to 155-7. In said letter, the extortionate course of conduct to be carried out by MLA of posting the names of property owners who refused to pay for any fee to CBG, VALLEY UTILITIES CO., INC, ONEIDA WATER CO., was announced,

"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." (Exhibit 155-7)

222. As part of the extortion schemes of defendants, enforced by obstructing interstate commerce at the security check points and illegally placing liens on lots, CBG, FRANK CEDRONE, and other defendants, had charged numerous fees for services not rendered, such as for maintenance fees where no maintenance was done, and such as fees for the availability of water and sewer hookups to lots which the property owner had intended to construct a house based on the defendant's fraudulent promotional plan. Nonetheless, CBG, ONEIDA WATER CO, VALLEY UTILITIES COMPANY, INC., continued to bill such fraudulent charges, and this practice was continued after the agreement of October 22, 1992, and continues to the present. The following are specific instances, among numerous others:

a. A copy of a Final Notice-Form Letter, regarding "Maintenance Fees Due C.B.G. Limited, Lot(s) A-22, Amount Outstanding: $720.00," dated March 23, 1992, mailed to Ms. Burns from Jayant Parmar, Chief Accounting Officer, on "Valley of Lakes and Eagle Rock Resort" letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 156.

b. A copy of a Final Notice-Form Letter, regarding "Utility Charges Due Valley Utilities Company, Inc., Lot(s) A-073, Amount Outstanding: $232.84," with no date, mailed Certified Mail - Return Receipt Requested, to Ms. Burns from Susan J. Whitehair, Treasurer, on "Valley Utilities Comapany, Inc.," letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 157.

c. A copy of a Final Notice-Form Letter, regarding "Utility Charges Due Oneida Water Company, Lot(s) A-073, Amount Outstanding: $235.45," with no date, mailed Certified Mail - Return Receipt Requested, to Ms. Burns from Susan J. Whitehair, Treasurer, on "Oneida Water Co.," letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 158.

d. A copy of a Final Notice-Form Letter, regarding "Utility Charges Due Valley Utilities Company, Inc., Lot(s) A-022, Amount Outstanding: $232.84," with no date, mailed Certified Mail - Return Receipt Requested, to Ms. Burns from Susan J. Whitehair, Treasurer, on "Valley Utilities Comapany, Inc.," letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 159.

e. A copy of a Final Notice-Form Letter, regarding "Utility Charges Due Oneida Water Company, Lot(s) A-022, Amount Outstanding: $235.45," with no date, mailed Certified Mail - Return Receipt Requested, to Ms. Burns from Susan J. Whitehair, Treasurer, on "Oneida Water Co.," letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 160.

f. A copy of a Final Notice-Form Letter, regarding "Utility Charges Due Oneida Water Company, Lot(s) A-029, Amount Outstanding: $280.58," with no date, mailed Certified Mail - Return Receipt Requested, to Messrs. Pierce and Burns from Susan J. Whitehair, Treasurer, on "Oneida Water Co.," letterhead is annexed hereto and made a part of this complaint, and marked Exhibit 161.

g. A copy of a letter, dated August 13, 1992, from Jayant Parmar, Chief Accounting Officer, on "Valley of Lakes and Eagle Rock Resort" letterhead, addressed to Peter F. Hoegen, Jr., Esq., Frank Hoegen, Esq., Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, is annexed hereto and made a part of this complaint, and marked Exhibit 162.

h. A copy of a letter, dated September 2, 1992, from Francis J. Hoegen, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, to Laura Burns, 7 East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-22, Maintenance Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 163.

i. A copy of a letter, dated September 2, 1992, from Francis J. Hoegen, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, to Laura Burns, 7 East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-73, Maintenance Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 164.

j. A copy of a letter, dated September 3, 1992, from Francis J. Hoegen, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, to Raymond Pierce and Fran Burns, 7 East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-029, Maintenance Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 165.

k. A copy of a letter, dated September 3, 1992, from Francis J. Hoegen, Esquire, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes- Barre, PA 18201, to Laura Burns, Seven East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-022, Outstanding Utility Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 166.

l. A copy of a letter, dated September 3, 1992, from Francis J. Hoegen, Esquire, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes- Barre, PA 18201, to Laura Burns, Seven East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-073, Outstanding Utility Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 167.

m. A copy of a letter, dated September 10, 1992, from Francis J. Hoegen, Esquire, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, to Laura Burns, Seven East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-073, Outstanding Utility Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 168.

n. A copy of a letter, dated September 10, 1992, from Francis J. Hoegen, Esquire, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, PA 18201, to Laura Burns, Seven East Cranberry Avenue, West Hazleton, PA 19201, RE: Lot A-022, Outstanding Utility Fees, is annexed hereto and made a part of this complaint, and marked Exhibit 169.

223. In furtherance of the extortion schemes, MLA filed numerous Civil Suits to collect fees for services that CBG had not rendered, and pursuant to fraudulent covenants and restrictions, and in before local District Justices, who lacked jurisdiction to adjudicate such cases. Among numerous others:

a. A copy of a Civil Complaint (CV-377-92) filed November 6, 1992, by Gil Werner - Managing Agent, on behalf of CBG Limited - Maintenance Fund, c/o Managing Agent, P.O. Box 700, Pocono Summit, PA 19346, against John Miele, Box 295, Nuremberg, PA 18241, before District Justice Grow, 903 West Center Street, Mahanoy City, PA 17948, is annexed hereto and made a part of this complaint, and marked Exhibit 170.

b. A copy of a Civil Complaint (CV-382-92) filed November 6, 1992, by Gil Werner - Managing agent, on behalf of CBG Limited - Maintenance Fund, c/o Managing Agent, P.O. Box 700, Pocono Summit, PA 19346, against Raymond Pierce, and Fran Burns, both of 7 E. Cranberry Avenue, West Hazleton, PA 18201, before District Justice Grow, 903 West Center Street, Mahanoy City, PA 17948, is annexed hereto and made a part of this complaint, and marked Exhibit 171.

c. A copy of a Civil Complaint (CV-372-92) filed November 6, 1992, by Gil Werner - Managing agent, on behalf of CBG Limited - Maintenance Fund, c/o Managing Agent, P.O. Box 700, Pocono Summit, PA 19346, against Laura Burns, of 7 E. Cranberry Avenue, West Hazleton, PA 18201, before District Justice Grow, 903 West Center Street, Mahanoy City, PA 17948, is annexed hereto and made a part of this complaint, and marked Exhibit 172.

224. MLA mailed numerous letters throughout the U.S., to collect services not provided or made worthless by the default of C.B.G. Among numerous others:

a. A copy of a Form Letter for "Delinquent Outstanding Charges," mailed to Laura Burns, 7 East Cranberry Avenue, West Hazleton, PA 18201, dated November 23, 1992, from Gilbert Werner, Managing Agent, on letterhead reading, "C.B.G., Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241," for CBG Ltd. "Maintenance Fund," Oneida Water Co., and Valley Utilities Co. is annexed hereto and made a part of this complaint, and marked Exhibit 173.

b. A copy of a group mailing post card, dated January 11, 1993, from Gil Werner - On-site Agent, "Valley of Lakes," C.B.G. Limited, Office of Managing Agent, P.O. Box, 673, Nuremburg, PA 18241, mailed to "All Valley of Lakes Property Owners" is annexed hereto and made a part of this complaint, and marked Exhibit 174.

225. In furtherance of the scheme, as part of its course of conduct, MLA routinely threatened "embarrassment", relating to the posting of names and harassment at the security check points, as punishment for non-payment. A copy of a group mailing form letter, from Managing Agent, on letterhead reading, "C.B.G., Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241-0673, dated February 8, 1992, mailed to "Valley of Lakes Property Owner," RE: "Annual Maintenance Fees" is annexed hereto and made a part of this complaint, and marked Exhibit 175.

226. In furtherance of this scheme, FIRST EASTERN BANK provided funds to MLA to continue to operate and manage the racketeering enterprise. A copy of a group mailing form letter, titled "Valley of Lakes Update," dated February 15, 1993, "Prepared for C.B.G., Limited by MLA Management Associates, Inc. Managing Agent," sent to all Property Owners in the "Valley of Lakes" subdivision, on letterhead reading, "MLA Management Associates, Inc.," and "Valley of Lakes" is annexed hereto and made a part of this complaint, and marked Exhibit 176-1 to 176-8.

227. In furtherance of this scheme, MLA promulgated its own "General Rules and Regulations" for the common areas, and MLA asserted that it "reserves the right to refuse the use of the facility to owners not in good standing, for failure to pay outstanding maintenance fees, or property owners with outstanding violations of covenants and restrictions or rules and regulations." A copy of a group mailing Statement dated March 11, 1993, from "C.B.G. Limited, Office of Managing Agent, PO Box 673, Nuremberg, PA 18241," addressed to John Miele, Box 295, Nuremburg, PA 18241, is annexed hereto and made a part of this complaint, and marked Exhibit 177.

228. In furtherance of this scheme, for the purpose of threatening property owners, MLA mailed numerous POSTCARDS to property owners, labeling them "OWNER NOT IN GOOD STANDING", visible to postal employees and others, and threatening: "Your delinquency is subject to publication." A copy of a group mailing post card, mailed on or about May 20, 1993, from Office of Managing Agent, "Valley of Lakes," PO Box 673, Nuremberg, PA 18241-0673, mailed to "OWNER NOT IN GOOD STANDING VALLEY OF LAKES" is annexed hereto and made a part of this complaint, and marked Exhibit 178.

229. Commencing on or about January 7, 1993, in furtherance of the scheme to extort as much money as possible from the "Valley of Lakes", CBG and FRANK CEDRONE permitted dumping of waste in the common areas of the subdivision, to wit:

a. A copy of a NOTICE OF VIOLATION, dated January 7, 1993, from the Pennsylvania Department of Environmental Resources, to CBG Ltd. Developer, regarding Illegal Disposal of Solid Waste is annexed hereto and made a part of this complaint, and marked Exhibit 179.

b. Copy of photographs of illegal dumping in "Valley of Lakes" on or about January, 1993, is annexed hereto and made a part of this complaint, and marked Exhibit 180-1 to 180-2.

c. A copy of a NOTICE OF VIOLATION, dated January 27, 1993, from the Pennsylvania Department of Environmental Resources, to CBG Ltd. Developer, regarding Illegal Disposal and Storage of Solid Waste is annexed hereto and made a part of this complaint, and marked Exhibit 181-1 to 181-2.

230. On or about April 27, 1993, CBG reported property owners "in good standing" as "trespassers" for walking near a shed in a common area, to which the property owners had a right to use pursuant to the covenants and restrictions. The following are copies of the citations that were issued:

a. Copy of a Summons to Defendant Joseph F. Natale for Criminal Trespass, dated April 27, 1993, is annexed hereto and made a part of this complaint, and marked Exhibit 182.

b. Copy of a Summons to Defendant Jeffrey Martin Natale for Criminal Trespass, dated April 27, 1993, is annexed hereto and made a part of this complaint, and marked Exhibit 183.

231. A copy of a group mailing from Frank M. Cedrone, Managing General Partner, dated May 7, 1993, addressed to "All Property Owners," "RE: Current Status Report," is annexed hereto and made a part of this complaint, and marked Exhibit 184-1 to 184-2.

232. A copy of a group mailing from Frank M. Cedrone, Managing General Partner, dated June 17, 1993, addressed to "All Property Owners," "RE: Complaints," is annexed hereto and made a part of this complaint, and marked Exhibit 185.

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