CCA 1992

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FD-302 (REV. 3-10-82)
- 1 -
FEDERAL BUREAU OF INVESTIGATION
Date of transcription 2/18'/92
On the afternoon of January 13, 1992, a conference was
held at thelPffices gf Feldman. Waldman and Kline, bankruptcy
counsel for. 1trustee in the bankruptcy of
Hamilton Taft Corporation (HTC). The law firm's offices are
located at 235 Montgomery street, suite 2700, San Francisco,
California, 94104. Present at this meeting werel I
I
Esw1;re, representing Feldman, Waldman and Kline, at cetera. Mr .
. CPA, accQuntant fOr the bankruptcy trustee, and
the trustee These individuals thereafter
provided the following information:
I 'stated that he has recently received certain
accounting reports from representatives of CHIP ARMSTRONG in
Dallas, which begin reporting on the period from
November 1, 1990 through June 15, -1991. This accounting work was
generated using the Quicken Software and chronicles CHIP
ARMSTRONG's personal finances.
I stated that in July, three reports became
available to him. Wated that only copies Of!Som: CberkS
were duplicated by per a restriction put on_ _ . and
apparently agreed 0 y the for the frus ee y
Mr. ARMSTRONG's representatives. L advised that the
Quicken summary was in fact a pub11C record and that, in
addition, the law firm had filed a motion for conternpt·against
CHIP ARMSTRONG for his having allegedly violated a temporary
restraining order issued by the bankruptcy court.
I I stated that his preliminary report indicates
that approximately four million dollars of Hamilton Taft funds
have been traced· directly to CHIP ARMSTRONG, that is, four
million dollars of HTC funds have been traced to going directly
to Mr. ARMSTRONG. I Istated that ARMSTRONG had or has five
bank accounts. Any payment that was made to CHIP from either
Hamilton Taft or one of the subsidiaries controlled by ARMSTRONG
are accounted for, that is, they are covered by explanations.
These explanations are usually in the form of a note receivable
or an account receivable notation. These entries to the books
and records of Hamilton Taft or anyone of these subsidiaries
b7C
- ..
-.]ID
Invesligationon at Sa);} Caloi.;fornil
ile
11 J96A-SF-93255 Sub C
I b7C
by SA f,YNN HATCHER PKM la an Dale dictated 2 11 0 192
I ; I
IfThis document neither recommendations nor conclusions of the FBI. It Is the property of the FBr and is loaned to your agtncy;
1\ and ils contents are not to be c1blrlbuted outside your aaency.
----------------'------'--_._- ..._-- ..._---
FD-302a (B:ev. 1l-lS-83)
f:>A-SF-93255 Sub C
Con tlnua tion of FD-302 01 -J I ' On 2/10/92
, Page __
controlled by ARMSTRONG were to pay for clothing for
Mr. ARMSTRONG or for a truck for his personal use. Succinctly
stated, these documents provided a paper trail for a trloan" or
"advance
ll
to ARMSTRONG to account for the payments to him.
I that an enormous portion of
ARMSTRONG's standard of living was booked by the various
comptrollers as advances to CHIP ARMSTRONG.
I Istated that during the period March 20th
through April 4th, 1991, CHIP ARMSTRONG liquidated three assets
which were not in Hamilton Taft's name. The first asset to be
liquidated was a helicopter, apparently owned and/or leased by
Winthrup Corporation for 1.1 million dollars. The second asset
and/or payment was a $700,000 payment to CHIP ARMSTRONG's
criminal. lawyer in Dallas. Finally,1 lindicated that
$300,000 went to was possibly in turn
repaid to a law firm of Long and Leavitt in San Francisco.
. With to the helicopter transaction and
liquidation indicated million dollars was
transferred to on the same day and on the same day, CHIP
ARMSTRONG wired transferred $700,000 to his Dallas based criminal
IWith respect to this $700,000 'wire
transfer, Istated that $400,000 of the lawyers' fees were
returned toJthe Again, with respect to the helicopter
transaction indicated that three million dollars had
originally been wire transferred to another one Bridge
companies and then in turn to winthrup Realty. I I stated
that ARMSTRONG has few sources of income other than the sale of.
assets purchased with Hamilton Taft funds. Among the assets that
ARMSTRONG purchased, apparently with Hamilton Taft funds, are two
stadium boxes for the Dallas Cowboys football team and these
apparently were purchased for $140,000 and $125,000,
respectively. A third box is still owned by ARMSTRONG.
Approximately 1.1 million to 1.3 million went to various lawyers.
Seven hundred and thirty-five thousand dollars went to criminal
lawyers and one hundred seventy-five thousand, two hundred
thousand and eighty thousand dollars, respectively, went to civil
attorneys.
---_... _-- ----
b7C
FD-301a 11-15-83)
Sub C
b7C
Continuation of FD-302 of -J I ·On 2/10/92 · Pagc_..lI
3
"'----
All records for Hamilton Taft and any of trmstrOnq/S
companies are currently domiciled in San Francisco.
indicated that some records are missing and those records are for
the company known as Winthrup Realty and CHIP ARMSTRONG's
personal financial records.
Additionally,l that her law firm is in b7C
possession of winthrup's ledgers· through May of 1991. b7D
------ .' -------------"'---- ---_.-_.--"-----

ly,
Feldnlan
Waldman
& Kline
A I'ROFE5SIONAl CORPORATION
Attorneys at Law
MUMY WALDMAN
LEL....ND I\.. SEWA, JR.
MARC H. MONHEIMEit
IIt1CHAEl L kURDHOLZ
HDIl'AFJ) III. WEXLER
JEFFREY 11,( SHOl'QFF
PATIlJOA 5. MAR
KENNETH W JONES
DEtiNIS WHITE
GEORGE V HAKTMANN
MICHAEL K. DEYEl\.
GEJtALD A. SHERWIN
PAUL} mON
VEllN S. IlOIliWEl..l
J.. 1· CHRIS
"''ENNE'IH A. Fl\.EED
GEORGE W.1'1.JTRJS
MAImIA JE....NNE SHAVER
SIlOVrn K. DENEllElM
lAIJR.A GRAD
NICK A ElOOOJUJOKAS
CAROL P.. CAltlE
PAUL C KOZLOW
JUUEJONES
CAllOL SUilEAU
DAVID L KANEL
MAUREEN A. SHEEHY
M1ClIArl Il ADlHl
JOHN It. CAI'IlON
MEOhN n SMJ1l-I
"!.liN J ZACHAlUN
A. lODD !!ERIIIAN
II GRAY CHAPMAN
GFCOUNSH
ffWMAN
ALUN E. KU:-':E
ltlCHAJUJ L JAEGER
SlOCK1DN OFFICE
Sf'ERRY BUILDING
J.16-H!l WEST 'WEDER AVENUE
STOCKTON, CALIFORNIA 95202
(2()9) 943·2001
fAX (2t>9) 9U--090S
TWENTY-SEVENrn flOOR RUSS BUILDING
Z35 MONTGOMERY STREET
SAN FRANCISCO, CAlifORNIA 94104
TELEPHONE (415) 931·1300
FAX (115) 394·0iZl
February 19, 1992
I I b7C
SpeclaI Agent
Federal Bureau of Investigation
450 Golden Gate Avenue
sixth Floor
San Francisco, CA 94102
Re: Hamilton Taft & Company
Dear Pat:
I enclose a copy of a handwritten memo froml I
to Chip Armstrong dated September 27, 1990, which may be of
interest to you. It was found in a Remington file.
b7C
We expect to be issuing
Report this week and will send you
PSM:dl
Enclosure
CC: b7C
fP
:
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..
1 II FELDMAN, WALDMAN & KLINE
A Professional Corporation
2 II PATRICIA S. MAR
L. J. CHRIS MARTINIAK
3 II 2700 Russ Building
235 Montgomery street
4 II San Francisco, CA 94104
Telephone: (415) 981-1300
5
Attorneys for Frederick S. wy1e,
6 " Trustee
7
16
HAMILTON TAFT & COMPANY
14 II KNIGHTSBRIDGE COMPANIES I INC.
THE REMINGTON COMPANIES, INC.
15 II DRESDNER PETROLEUM, INC.
DRESDNER ENTERPRISES, INC.

t
8
9
10
11
12
13
In re
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Chapter 11
SUbstantively Consolidated
or Jointly Administered
No. 91-3-1077 LK
No. 91-3-2448 LK
No. 91-3-2449 LK
No. 91-3-2450 LK
No. 91-3-2451 LK
..



Debtors.
17
18
19
20
21
22
23
24
25
26
SECOND INTERIM REPORT OF
FREDERICK S. WYLE
1
TRUSTEE
February 20, 1992
..

1
2

3
SECTION
4
I.
S
II.

6
7
8
9
• 10
II
III.
11
12
13
"
IV.
14
15
.,
16
II
v.
17
18

19
20
21

22
23
24

25
26

TABLE OF CONTENTS
PAGE
INTRODUCTION AND SCOPE OF THIS REPORT........•........ 1
STATUS OF THE BANKRUPTCY CASES ••••.••.•....•..•......• 2
A. Entry of Order for Relief ..•..................... 2
B. Appointment of Creditors Committee 3
c. The Texas Debtors and Substantive
Consolidation 3
D. Appeals by Hamilton Taft, as Debtor •............. 6
STATUS OF OPERATIONS 6
A. Hamilton Taft ••••••••••..•........•••.....•.••.•. 6
B. Texas Debtors •.•••.••••..••••..••••••.••••••••••• B
FINANCIAL CONDITION OF THE ESTATES 10
A. Consolidated Estate ~ ......•........• 10
B. Dresdner Petroleum 12
RECOVERY AND LIQUIDATION OF ASSETS •.............••... 12
A. Physical Assets ...•.•.......................•... 13
1. Double C Cattle Ranch 13
2. Seventh of Sonterra............•.•.•....... 16
3. Whispering Meadows and Glade
Meadows ••..••• tI ••••••••••••• " •••••••• 41 ••••• 18
4. oil and Gas Leases ..........•.....•........ 18
5. Luxury Automobiles ............•............ 19
B. Promissory Notes and Guarantees 20
1. Mohamed Hadid = •••••••••••••••••••• 20
2. Stanley Rosenberg 22
-i-
Other Claims Against Third Parties 26
1. Rodeo Interests 31
Assets still-in Armstrong's Possession )1
2. Texas Stadium Box 32





1
2
3
4
5
6
7
8
9
c.
D.
3.
1.
2.
3.
J •
Parker Automotive 23
Criminal Defense Legal Fees 26
McCall Notes 27
Potential Recoveries To Be
Investigated.........•.......•......•...... 29
Coffea International ...•................... 33
LITIGATION AGAINST ARMSTRONG....................•.... 35
t
,

10
11
12
13
14
15
16
VI ..
A.
B.
c.
4. Plaza Realty Note 33
5. Personal Possessions 35
Analysis of Armstrong's Personal
Financial Transactions 35
Status of Litigation and Settlement 40
Injunctions and contempt Proceedings 41
Criminal Investigation.........•.•.............. 44

17
18
19
D.
1.
2.
TROs and Preliminary Injunctions 41
Contempt Proceedings 43
20
VII. OTHER CLAIMS AND LITIGATION...........•.............. 45



21
22
23
24
25
26
A.
B.
c.
D.
E.
Fidelity Bonds to 45
Preference Claims 46
Sandia Refund 47
Tax Penalties 49
other Potential Claims: ............•.......•.... 50
-ii-
(I

1
VIII. CREDITORS CLAIMS ANALySIS 50

2
3
4
A.
B.
c.
Claims Against Consolidated Estate 51
Claims Against Dresdner Petroleum.............•. 52
steven Solodoff Claim.........••.....•.......... 52
5
IX. CONCLUSION AND FUTURE ACTIVITIES ............•.......• 54
6

7
APPENDICES
8
APPENDIX A: STATEMENTS OF CASH RECEIPTS AND DISBURSEMENTS
FOR THE DEBTORS AS OF DECEMBER 31, 1991
9

APPENDIX B: ACCOUNTANT'S REPORT ON SOURCE AND APPLICATION
10
OF FUNDS FOR CONNIE C. ARMSTRONG, JR.
JANUARY 1, 1989 - JULY 15, 1991
1111 APPENDIX C: CREDITORS CLAIMS
12
13
14
15

16
17
18

19
20
21

22
23
24
25

26
-iii-

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e e



"



1
2 1\ I. INTRODUCTION AND SCOPE OF THIS REPORT
3 II On May 28, 1991, Frederick s. Wyle, trustee of Hamilton
4 II Taft & Company ("Hamilton Taft
n
), filed a First Interim Report.
S II At that time the Hamilton Taft bankruptcy case was two months old.
6 II The report focused on the background and business of Hamilton
7 II Taft, the diversions of Hamilton Taft funds from customers'
8 II payroll tax deposits to the Texas enterprises of Hamilton Taft's
9 II principal, connie C. Armstrong, Jr., the resulting $90 million in
10 II unpaid payroll tax liabilities, and the preliminary analysis of
11 II the trustee's accountant as to how Armstrong used over $50 million
12 II of Hamilton Taft funds for his other business ventures and for
13 personal expenditures.
14 II At the time of the filing of the First Interim Report,
15 II only Hamilton Taft was under the control of the trustee. This
16 II Second Interim Report .is filed by Frederick s. Wyle as trustee not
17 II only of Hamilton Taft, but also of Knightsbridge Companies, Inc.
18 1\ ("Knightsbridge") f The Remington companies, Inc. ("Remington"),
19 II Dresdner Petroleum, Inc. ("Petroleum") and Dresdner Enterprises,
20 II Inc. (nEnterprises
fl
), whose bankruptcy cases are now either
21 1\ sUbstantively consolidated or jointlY administered with the
22 II Hamilton Taft case. The Second Interim Report will provide
23 1\ information on the status of the bankruptcy cases, the trustee's
24 II efforts to reCover and liquidate assets, the multi-faceted
25 1\ litigation that has been undertaken to pursue claims from various
26 "parties, and the financial status of the estates.
.,
SECOND INTERIM REPORT -1-


..


..



1 II This Second Interim Report will also contain an analysis
2 (I by the trustee's accountant of the personal financial transactions
J 11 of Connie C. Armstrong, Jr., from January 1, 1989 to June 15,
4 II 1991, which includes the period that he was in control of Hamilton
5 II Taft. At the time of the First Interim Report, the trustee did
6 II not have access to any of the personal financial records of
7 II Armstrong, which had been withheld on Fifth Amendment grounds.
8 II certain financial records of Armstrong have now been made
9 II available to the trustee, which enables the trustee and his
10 II accountants to trace the disposition of Hamilton Taft funds
11 II through Armstrong personally, as well as through his corporations.
12 " During the first few months of the Hamilton Taft
13 II bankruptcy case, much of the focus of the trustee's attention was
14 " on learning what Armstrong did with Hamilton Taft's money and on
15 II recovering assets under Armstrong's control that had been acquired
16 II with Hamilton Taft's money. Although that program' has not yet
17 II been completed, by the end of 1991 the focus of the bankruptcy
18 1\ case had expanded to pursuing claims against other parties, and to
19 \I realizing on assets that have already been recovered from
20 II Armstrong.
21 n II. STATUS OF THE BANKRUPTCY CASES
22 11 A. Entry of Order for Relief
23 II On May 31, 1991, the Bankruptcy Court issued an order
24 II for relief in the Hamilton Taft bankruptcy case, which was
25 II commenced through the filing of an involuntary Chapter 11 petition
26 II on March 20, 1991. In granting a motion for summary judgment

SECOND INTERIM REPORT -2-









e
1 II filed by the petitioning creditors, Federal Express Corporation,
2 II Stanford University and Stanford University Hospital, the
3 II Bankruptcy Court rejected the arguments of Hamilton Taft as Debtor
4 II that a "bona fide" dispute existed as to the petitioning
5 "creditors' claims against Hamilton Taft.
6 II B. Appointment of Creditors Committee
7 II After the order for relief was entered, the Office of
8 II the u.s. Trustee appointed a Committee of Unsecured Creditors
9 II ("Creditors Committee
ll
) consisting of the following 11 creditors:
10 II Federal Express corporation (chair), Scott Paper co., Signetics
11 II Company, R.R. Donnelley & Sons, Castle & Cook (now Dole Foods),
12 II Stanford university Hospital, Neiman-Marcus Group, Tandem
13" computers, Advo-Systero, Inc., Cavia partnership, and Blue Cross
14 II and Blue Shield of Texas. The members of the Creditors Committee
15 collectively hold claims of approximately $67 million against
16 II Hamilton Taft, or about two-thirds of the total claims. The
17 II Creditors committee has employed Murphy, Weir and Butler of San
18 II Francisco as its counsel •
19 c. The Texas Debtors and Substantive Consolidation
20 II The bankruptcy cases of Knightsbridge, Remington,
21 II Enterprises and Petroleum (sometimes collectively referred to as
22 II the "Texas Debtors"), were commenced by voluntary Chapter 11
23 II petitions filed in the Bankruptcy Court for the Northern District
24 " of Texas, Dallas Division, on April 19 and 29, 1991. On June 7,
25 II 1991, on motion of the trustee, the Bankruptcy Court in San
26 II Francisco ordered the bankruptcy cases of the Texas Debtors

SECOND INTERIM REPORT -3-


.,

41




1 II transferred to the Northern District of california, pursuant to
2 II Bankruptcy Rule 1014(b), which provides that bankruptcy cases of
3 II affiliated entities may be transferred to a single court .
4 II Following the change of venue of the Texas cases, the
5 II trustee on June 26, 1991 filed a motion for substantive
6 II consolidation of the Knightsbridge and Remington cases with the
7 II Hamilton Taft case. This appeared to be the most expeditious
8 II means of recovering for the Hamilton Taft estate the assets which
9 II had been transferred from, or acquired with funds transferred
10 II from, Hamilton Taft to the Texas Debtors. The motion was based on
11 II a showing that all of the assets of the Texas Debtors were
12 " traceable to Hamilton ~ a f t funds, and their liabilities were
13 II primarily intercompany payables, which ultimately ended up as
14 " payables to Hamilton Taft. Knightsbridge and Remington owned the
15 II stock of the other Texas Debtors, Enterprises and Petroleum, as
16 1/ well as other SUbsidiary entities. Therefore, substantive
17 II consolidation of Knightsbridge and Remington with Hamilton Taft
18 /I would enable the trustee of Hamilton Taft to control not only the
19 II entities being consolidated, but all of their subsidiaries as
20 "well. Alternatively, the trustee sought appointment of a Chapter
21 II 11 trustee for all four Texas Debtors.
22 On July 22, 1991, the Court, with the consent of the
23 II Texas Debtors, ordered the intermediate step of appointment of
24 " Frederick s. Wyle as interim trustee of Knightsbridge, Remington,
25 II Petroleum and Enterprises. The intermediate step was taken at the
26 \I request of the Creditors Committee, so that a claims bar date

SECOND INTERIM REPORT -4-



..

..



1 II could be established and claims reviewed before a substantive
2 consolidation decision was made. The Court set september 30, 1991
3 II as a claims bar date for all five Debtors, Hamilton Taft as well
4 as the Texas Debtors. (See Section VIII.)
5 II The trustee subsequently amended the substantive
6 II consolidation motion to include Enterprises in the consolidation.
7 II Petroleum was not included in the consolidation, because the oil
8 II and gas operations of Petroleum contain at least some inherent
9 II risks of liability such that consolidation of Petroleum's assets
10 II and liabilities with those of the other Debtors would not be
11 prudent.
12 II On November 4, 1991, the Court ordered substantive
13 II consolidation of the Hamilton Taft, Knightsbridge, Remington, and
14 II Enterprises estates, effective October 31, 1991. The
15"11 consolidation was not opposed by any party, including any of the
16 II Debtors. Frederick s. Wyle was appointed trustee of the
17 consolidated estate, and his appointment as trustee of Petroleum
18 II was made permanent.
19 As a result of substantive consolidation, all assets and
20 liabilities of the four consolidated Debtors were combined and are
21 now treated as if the Debtors were a single entity. Petroleum's
22 II assets and liabilities remain separate, but its bankruptcy case is
23 II jointly administered with that of the consolidated estate. The
24 II trustee believes that substantive consolidation has resulted in
25 significant savings to the consolidated estate in administrative
26 II costs, as well as substantial savings in litigation costs that

SECOND INTERIM REPORT -5-


1 II otherwise would have been required to obtain the assets of the
2 II Texas entities.

3
D. Appeals by Hamilton Taft. as Debtor





4 II Hamilton Taft, as Debtor, filed appeals to the District
5 II Court from the order appointing a trustee entered on March 26,
6 /I 1991, from the order approving the appointment of FredericJc S.
7 " Wyle as trustee entered on March 26, 1991, from the order for
B n relief entered on May 31, 1991, and from the order authorizing the
9 II trustee to shut down Hamilton Taft's business entered on June 21,
10 ,,1991. The appeals were all assigned to Judge John P. Vukasin of
11 II the District Court.
12 " On February 13, 1992, the District court dismissed all
I
13 II the appeals as moot, on motion of the appellees (Federal Express,
14 II stanford University and Stanford University Hospital as to three
15 II of the appeals and the trustee as to the fourth appeal). The
16 II District court ruled that the Debtor's failure to seek a stay of
17 II the orders and the sUbstantial changes of circumstances that had
16 \I occurred in the bankruptcy case since the orders were entered made
19 II it inequitable to consider the appeals. The Debtor, Which claims
20 II to be acting on authority of Armstrong as "Chairman of the Board
ll
21 " of Hamilton Taft, has indicated that it plans to appeal the
22 II dismissals to the Ninth Circuit.
23
III. STATUS OF OPERATIONS
24
A. Hamilton Taft

25 Following a hearing on May 16 f . ~ ; . ~ 1 , ! 1 the Bankruptcy
,.,..-........,.... __._.,,,.... vv ,': '
~ . J t : ~ , ~ .,-
26 II Court authorized the trustee to close Hamilton Taft1s business

SECOND INTERIM REPORT -6-
-,----/,,-






fa


1 "operations. Hamilton Taft had not conducted any significant
2 " payroll tax processing business since the public disclosure of the
3 " missing funds, the consequent abrupt cessation of funds
4 II transferred to Hamilton Taft by its customers, and the filing of
5 the Chapter 11 petition on March 20, 1991. The trustee requested
6 " authority to close the business after canvassing the Hamilton Taft
7 " clients and ascertaining that few clients would continue a
B II business relationship with Hamilton Taft even under the
9 II supervision of a court-appointed trustee.
10 II After the Court approval was obtained, the trustee
11 \I commenced an orderly shutdown of Hamilton Taft's operations which
12 lI'took place over the next several months. The trustee ceased
13 II operations and terminated employees progressively, at a rate that
14 II would permit the processing of client records, establish what
15 II deposits were made and what taxes were paid and not paid, respond
16 II to inquiries from tax agencies, organize and store records to
17 II enable them to be retrieved as needed, secure· computer records,
18 II and dispose of tangible assets of the company.
19 II Hamilton Taft closed its 1 Market Plaza, San Francisco
20 II offices on June 30, 1991, and moved its remaining staff to smaller
21 II offices. Most of the office equipment, furniture and other
22 II tangible assets of Hamilton Taft were sold at auction on
23 II August 17, 1991. At present Hamilton Taft maintains a small
24 II office staff of three full-time employees in San Francisco, for
25 II accounting purposes, to perform data studies, to monitor
26 II activities in Texas, and to provide support services for the

SECOND INTERIM REPORT -7-


-1 II bankruptcy case and litigation. Four additional employees are
2 II maintained in Texas, three of them at the Double C Ranch.

3
B. Texas Debtors

4 II At the time of the ,trustee's interim appointment on
5 1/ JUly 22, 1991, Remington maintained a large suite of offices with
6 II some 16 employees at 3811 Turtle Creek Boulevard in Dallas .
7 II Remington provided administrative, accounting and payroll services

8 II for all of the Armstrong entities in Texas. Without the continued
9 II infusion of Hamilton Taft money to pay its operating costs,
10 II Remington was running out of money and unable to pay even its
11 II Chapter 11 trade debts.
12 II Remington had not paid its rent or insurance premiums
13 II since the filing of its Chapter 11 petition in April, 1991, and
14 II was under a Bankruptcy Court order, obtained by the landlord, to
CIt
15 "vacate its offices by July 31, 1991. No plans had been made
16 II relocating the offices. Within one week after the trustee's
17 "appointment, new offices had to be found and a move of Remington's
18 II offices arranged and completed .

19
The trustee within days of his appointment reduced the
Remington payroll from 16 to 10, and further staff reductions took
conducted by the Texas Debtors was Enterprises' efforts to sell
It was apparent that Remington
operations requiring the level of staff and administrative
)'
\,i
,
it _
If \
\ -b""'\>.\',
acti ve \1' "\'"
'1\ .<1'
\}J \. \\" '\Il
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'11'-

\]
The only ongoing activity
place over the next three months.
expenses that Remington had maintained.
and the other Texas Debtors did not have, and had not had,
20
23
22
21
25
24


26

SECOND INTERIM REPORT -8-









1 II townhouses in San Antonio (See Section V.A.2) and Petroleum
1
s
2 II unprofitable oil and gas operations (See Section V.A.4) .
3 II The trustee determined that Petroleum's operations could
4 II be more economically managed by an. outside management company;
5 II that Enterprises required" only one employee on site in San
6 II Antonio; and that the rest of Remington's administrative and
7 II accounting services could be combined Mith that of Hamilton Taft
8 II in San Francisco, thereby eliminating the need for a Dallas office
9 II and aChieving sUbstantial savings. On October 31, 1991,
10 II Remington's offices in Dallas were closed.
11 II Remington's office equipment, furniture and furnishings
12 II have been sold or moved to the Double C Ranch, which was taken
13 over by the trustee on August 1, 1991. Remington's records and
14 II files have been, or will be, moved to San Francisco. sorting out
15 II the voluminous files and records located at Rernin9ton's offices
16 II and at a storage facility has taken and continues to take
17 II substantial effort. It also required negotiations with Armstrong
18 II over which records belonged to Armstrong personally or Armstrong
19 II entities not under the control of the trustee.
20 Records retained by Armstrong have been made available
21 II to the trustee for copying, except for documents which have been
22 II withheld by Armstrong's criminal defense counsel as sUbject to a
23 II Fifth Amendment or attorney-client privilege. The trustee is
24 II seeking to work out with Armstrong's counsel any remaining
25 II disputes over documents claimed to be privileged. Any unresolved
26

SECOND INTERIM REPORT -9-









1 II disputes will be submitted to the Bankruptcy Court for resolution
2 II pursuant to an order previously obtained by the
3 II IV. FINANCIAL CONDITION OF THE ESTATES
4 II A. Consolidated Estate
5 II Appendix A contains schedules of the postpetition
6 II receipts and disbursements of the Debtors in the
7 II estate, i.e., Hamilton Taft, Knightsbridge, Remington and
8 II Enterprises, as of December 31( 1991. Separate schedules have
9 " also been prepared for receipts and disbursements during the
10 II period of the trustee's administration, which commenced on
11 II July 22, 1991 for the Texas Debtors.
12 II The postpetition revenue of the Debtors comprising the
13 nconsolidated estate totalled $2,193,513, as of December 31, 1991.
14 II For the period of the trusteets administration, total revenues
15 II were $2,097,101. (The difference is due primarily to the sale of
16" a townhouse by Enterprises prior to the trustee's appointment.)
17 II The major sources of postpetition receipts have been sales of
18 II townhouses ($651,438), livestock at the Double C Ranch ($331,623),
19 II and luxury automobiles, office equipment, furniture and
20 II furnishings ($342(048); a settlement with Armstrong's criminal
21 II defense counsel for recovery of legal fees ($400,000); and bank
22 II account interest ($183,741). Details of these receipts and the
23 II activities producing them are provided in other sections of this
24 II report.
25 11 Postpetition disbursements by the Debtors comprising the
26 II consolidated estate totalled $2,837,484, as of December 31, 1991.

SECOND INTERIM REPORT -10-
..







..
1 " Disbursements during the period of the trustee's administration
2 II totalled $2,699,129. (The difference is due primarily to
3 II operating expenses paid by Remington prior to the trustee's
4 II appointment.) Of the total postpetition disbursements, $1/357,741
5 II were for operating expenses, including sUbstantial employee
6 II salaries, primarily for Hamilton Taft operations in the early
7 II stages of the bankruptcy case before the trustee closed the
8 II Hamilton Taft business. The operating expenses include the
9 II sUbstantial continuing costs of the Double C Ranch since August 1,
10 II 1991, when the trustee took over the ranch.
11 Professional fees of the trustee and his attorneys and
12" accountants account for $1,080,891 of the post-petition J{fh
13 II disbursements. Additional professional fees were paid to
14 II appraisers and consultants employed by the trustee, and attorneys
15"1\ employed by the Creditors Committee and the Texas Debtors. The
16 II professional fees do not include fees accrued but not paid as of
17 II December 31, 1991.
18 The beginning cash balances for the Debtors in the
19 II consolidated estate, at the commencement of their respective
20 II bankruptcy cases, totalled $5,930,642, of which $5,856,509 was for
2111 Hamilton Taft and $74,133 for Knightsbridge, Remington and
22 II Enterprises combined. With total disbursements exceeding receipts
23 " by $643,971, the consolidated estate had a cash balance of
24 II $5,288,401 as of December 31, 1991.
25 II The trustee's goal is maintain a level of operating
26 II expenses (i.e., rent, employee salaries and other office expenses)

SECOND INTERIM REPORT -11-



1 II for the consolidated estate, if possible, on a level which could
2 " be funded from current interest income. Such exp'enses would not,
3 II however, include the professional fees and expenses, which will be
4 II the primary Chapter 11 costs in the future, and which will in time
5 II diminish the existing funds of the estate unless sUbstantial new

6
recoveries are had, and sales are made.
7
B. Dresdner Petroleum
8
A summary of Petroleum's postpetition cash receipts and
9 II disbursements through December 31, 1991, is also contained in

(
10 II Appendix A. The postpetition revenue from oil and gas production
11 II totalled $667,915 through December 31, 1991. While Petroleum's
12 II total cash receipts exceeded total disbursements by $22,136 for
13 " the postpetition period, the cash receipts include $60,000
14 II advanced from Remington. Without the adva.nce
f

15 II Petroleum had a negative cash flow from operations during the

16 II postpetition period, through December 31, 1991. (However, see
17 II section V.A.4 below for current situation.) Petroleum's cash
18 II balance, as of December 31, 1991, was $47,159.

19
v. RECOVERY AND LIQUIDATION OF ASSETS


20 II Through substantive consolidation, most of the assets
21 II acquired by Armstrong and his companies with Hamilton Taft funds
22 II have been recovered, to the extent that they are available to be
23 11 recQvered. As discussed in the First Interim Report, a
24 " substantial portion of the funds diverted from Hamilton Taft were
__'_" __..__,,_v,__ .• ,._.. __" .. _
25 1\ spent for investments which became defunct within months of the
26 " investments or for other reason have no realizable value, for

SECOND INTERIM REPORT -12-









_._-----
1 1\ unrecoverable operating costs of Armstrong's Texas operations, and
2 II for personal expenditures of Armstrong. In addition to the assets
3 1\ held by the Texas Debtors or their sUbsidiaries, the trustee has
4 II also recovered the major asset that had been held by Armstrong
5 II personally, the Texas ranch. (The assets remaining in Armstrong's
6 II control are discussed in section V.D below.)
7 II The assets that have been recovered are a collection of
8 physical assets which Armstrong bought with Hamilton Taft funds as
9 II "investments," and promissory notes and other contract right"s
10 II against third parties. All of the assets other than physical
11 II assets are expected to require litigation to collect. At this
12 II time, the trustee cannot provide any estimate of the amount that
13 II will be realized from the assets which have been turned over by
14 II Armstrong or through the takeover of the Texas companies. Much
15 II will depend on the outcome of litigation against third parties to
16 II whom Armstrong and the Armstrong entities transferred funds
17 \I through 11 investments, 11 loans and other advances, and on the
18 II financial ability of these third parties to respond to jUdgments.
19 II Most of the necessary litigation has been commenced and the
20 II remainder will be commenced shortly. Investigation into potential
21 II third party liability continues.
22 " A. Physical Assets
23 " 1. Double C Cattle Ranch
24 " The single most expensive acquisition by Armstrong was a
25 " 1,700 acre ranch, which he called the "Double C Ranch. 11 It was
26 " purchased by Armstrong in FebruaryI 1990 as a IIhobby ranch, JI by

SECOND INTERIM REPORT -13-


,.


e
1 II Armstrong's own description, meaning a combination cattle and
2 Il horse operation and personal residence. The residence is over
3 1113,000 square feet in size, with indoor swimming pool, sauna, and
4 II exercise facilities. Armstrong spent over $9.3 million of
5 II Hamilton Taft
l
s funds on the ranch, including $6.5 million for the
6 1/ purchase price, $1.1 million for capital improvements, $600,000
7 II for livestock and equipment, and $1 million to fund operating
8 II def icits of the cattle operation.
9 II To acquire the ranch, Armstrong had Hamilton Taft
10 II advance $9.8 million to Winthrop Realty Company ("Winthrop"), one
11 1\ of his Texas companies. winthrop, in turn, simultaneously loaned
12 II the $9.8 million to Armstrong, who acquired the ranch in his own
13 "name. Armstrong gave Winthrop a note for $9.8 million, secured by
14 II the ranch. Winthrop, in turn, executed a $9.8 million note to
15 II Hamilton Taft, secured by a lien on Armstrong's note to Winthrop.

16 In June, 1991, the trustee declared a default on
17 II Winthrop's note to Hamilton Taft and foreclosed on the collateral,
18 1\ namely Armstrong's note to Winthrop. As holder of the Armstrong

19 II note to Winthrop, the trustee then commenced foreclosure
20 proceedings on the ranch, which secured the note. Facing


21 "foreclosure, Armstrong offered to transfer the ranch to the
22 II trustee through a deed in lieu of foreclosure. He also
23 II transferred the livestock on the ranch, consisting of
24 II approximately 600 head of cattle and 25 horses collateralized to
25 II Hamilton Taft, ranch equipment and vehicles and other personal
26 II property associated with the ranch, and the ranch bank accounts.

SECOND INTERIM REPORT -14-


..






I
1 1\ The trustee took possession of the ranch effective August 1, 1991,
2 1\ although title was not recorded until September.
3 " The cattle operations on the ranch operated at a
4 II substantial deficit, which was funded by Hamilton Taft money
5 " funnelled through Winthrop. During the IS-month period that
6 II Armstrong owned the ranch, the operating deficit of the ranch, not
7 " counting the household expenses for Armstrong's residence,
8 II totalled over $1 million.
9 After acquiring the ranch, the trustee sold the cattle
10 II and horses over a several month period, obtaining net proceeds,
11 II after direct costs of sale, of $331,623. The trustee also intends
12 II to sell ranch equipment and vehicles not needed for full
13 1\ maintenance. Furniture and furnishings in the main residence and
14 II other structures will not be sold until the ranch is sold.
15 In December [ 1991, the trustee signed an exclusive one
16 " year listing agreement with Town and country Estates of Center,
17 II Texas, to serve as broker far the sale of the ranch. Because of
18 II the nature of the property, and the economic conditions and
19 II depressed real estate market in Texas, the trustee cannot predict
20 II when, or for what price, the ranch will be sold.
21 Jl The carrying costs of the ranch are estimated at
22 II approximately $300,000 per year, of which half is for insurance
23 " and property taxes and half for maintenance costs. Proper
24 II maintenance of the ranch grounds and improvements is costly, but
25 II essential for the sale of the ranch. In addition to the main
26 residence of more than 13,000 square feet, the ranch improvements

SECOND INTERIM REPORT -15-



"



tit
1 II include a guest house with 3,400 square feet, three foremen's
2 II residences each with three bedrooms, and a large "state of the
3 II art" show horse arena, which also contains large offices and a
4 II saloon replica. Approximately 75,000 square feet of improvements,
5 II as well as several miles of fencing and other ranching facilities,
6 II require m a i n t e n a n c e ~ While the ranch staff has been reduced
7 II considerably, three employees remain at the ranch for maintenance
8 II and security purposes. The trustee is negotiating to exchange
9 II grazing rights for consulting services currently paid by the
10 II estate.
11 Armstrong also owned a 121 acre adjoining parcel, known
12 II as the Stiefer property, which he purchased from Julius D. Stiefer
13 II in December, 1989 for $72,429 cash (from Hamilton Taft funds) and
14 II a $181,912 note, secured by the property. The trustee determined
15 II that the probable value of the stiefer property was less than the
16 II balance owing on the note, and ownership of the small parcel would
17 II not enhance the sale value of the larger ranch. The trustee
18 II therefore declined to take title to the Stiefer property and
19 II consented to Armstrong executing a deed in lieu of foreclosure to
20 II return the property to Stiefer.
22 II The Seventh of Sonterra project consists of 23 single-
23 " family townhouses and 28 developed single family pad sites near'
24 " the seventh hole of the Sonterra Country Club in San Antonio,
25 "Texas. The project was purchased by Enterprises from the
26 1/ Resolution Trust Corporation for $1.9 million in January, 1991.


21
2. Seventh of Sonterra

SECOND INTERIM REPORT -16-
.,



--
(




1 II The acquisition was financed with Hamilton Taft funds, funnelled
2 1\ through Knightsbridge. At the time of the Trustee's appointment
3 \I on July 22, 1991, only two townhouses had been sold.
4 II The trustee has continued to sell the single family
5 II townhouses individually to retail buyers, having determined that
6 II the net revenue to the estate would probably be greater than from
7 II a bulk sale, although a bulk offer for the entire project would
8 1\ also be considered. The townhouses have been individually
9 II appraised at $118,000 to $142,00 each, after repair and buildout
10 II work (at $8,000 to $15,000 per townhouse) are completed. Of the
11 II 23 townhouses, eight have been sold, seven of them post petition.
12 II Several more townhouses are under contracts for sale. In
13 November, 1991, the t r ~ s t e e obtained a Bankruptcy Court order for
14 II general authority to sell the townhouses, without the necessity of
15 II a court order for each sale, provided that the gross sales price
16 II is for an amount not less than 90 percent of the appraised value
17 II of the particular townhouse.
18 " During the post petition period, net proceeds from
19 II townhouses sales, after deduction of direct selling costs, total
20 II $651,438 through December, 1991, representing proceeds of six
21 II townhouses. Selling costs include the $8,000 to $15,000 of finish
22 " out work and repairs required for each townhouse, which work is
23 II performed by subcontractors of Enterprises at the time of sale.
24 " The townhouse sales program and construction work are supervised
25 II by one remaining Enterprises employee on site in San Antonio.
26

SECOND INTERIM REPORT -17-









1 II 3. Whispering Meadows and Glade Meadows
2 " Whispering Meadows and Glade Meadows are undeveloped
3 II residential tracts located in Arlington and Grapevine,
4 II respectively, near Dallas. The properties were both purchased by
5 II Enterprises from the-Resolution Trust Corporation, Whispering
6 II Meadows in April, 1990, and Glade Meadows in May, 1990. A total
7 n of $1.1 million was spent on the projects.
B II Both properties are for sale. There has been
9 II considerable interest in the properties, and several offers have
10 II been made and accepted, sUbject to court approval after
11 II contingencies are removed. However, all the offers have included
12 II feasibility or financing contingencies which have not been met.
13 II Thus, the two projects, while again under contract, remain unsold.
14 n 4. oil and Gas Leases
15 II Dresdner Petroleum owns oil and gas leasehold interests
16 lion a 560 acre tract in Howard county, and on a 1,000 acre tract in
17 II Fisher County, in Texas. The Fisher County interest is primarily
18 \1 an exploration project, with minor production to date on one
19 II producing well. Continuing the exploration program would require
20 II substantial new investment. The trustee intends to sell the
21 Fisher County property if a reasonable price can be obtained.
22 II The Howard County property is a leasehold which has had
23 II its primary recovery. The profit potential of the field is
24 11 dependent on the results of an ambitious tI secondary recovery"
25 " program to be accomplished by water injection into the underlying
26 II area. Meanwhile, there is some production at this time, which

SECOND INTERIM REPORT -18-






.,


1 II provides gross revenue of $75,000 to $100,000 per month.
2 II Petroleum had operated at a loss since its inception; the
J " continuing operational loss, the trustee believes, was due largely
4 II to excessive overhead and salary costs (including a salary of
5 II $200,000 per year for the president of Petroleum).
6 II Effective November 1, 1991, when the Remington offices
7 II were closed, the trustee turned over management of Petroleum's oil
8 II and gas operations to an outside contractor, ReM Management, Inc.,
9 II of Dallas. KCM is providing production, accounting, contract
10 II administration, reporting, tax and other services at a
11 II sUbstantially lesser cost than Petroleum was incurring in
12 (I performing these services with in-house employees. with the
13 II savings in administrative costs, the trustee expects Petroleum to
14 II show a small operating profit, except for professional fees. The
15 II delinquent post-petition trade debts have now been retired out of
16 /I the savings of administrative costs, except for professional fees.
17 II Petroleum also has not yet repaid Remington for $60,000 in
18 II postpetition advances.
19 II The "secondary recovery" water injection program is
20 " expected to be completed in six months to a year. After the
21 1\ completion of that program, when the flow of oil resulting from it
22 II can be properly evaluated, the trustee intends to sell the Howard
23 " County property.
24 II 5. Luxury Automobiles
25 II At the time Armstrong deeded the ranch to the trustee,
26 II he also transferred two automobiles, a 1990 Rolls Royce Silver

SECOND INTERIM REPORT -19-









1 II Spur II and a 1990 Jaguar XJS, both of which were purchased at
2 II charity auctions with Hamilton Taft funds and used by Armstrong as
3 II personal vehicles. The trustee also took possession of a 1989
4 II Lincoln stretch limousine owned by Remington. The three vehicles
5 \I were sold by the trustee for a total of $139,000.
6 II B. promissory Notes and Guarantees
7 II 1 . Mohamed Hadid
8 II The trustee has filed an adversary proceeding in the
9 II Bankruptcy Court against Mohamed Hadid, a Washington, D.C. real
10 II estate developer, and other persons and entities, arising out of
11 II loans totalling approximately $8.8 million by Hamilton Taft and
12 II Remington to Hadid.
13 II In March, 1988, when Hamilton Taft was owned by
14 II MaxPharma, Inc., Hamilton Taft loaned $3 million to Hadid, which
15 II was to be repaid in 30 days, but was never repaid. Armstrong, in
16 II the same lawsuit against MaxPharma through which he acquired
17 II ownership of Hamilton Taft in 1989, also sued Hadid, claiming that
18 II Hadid had conspired with other defendants to convert funds from
19 II Hamilton Taft by, among other things, borrowing the $3 million
20 JI from Hamilton Taft.
21 I In September, 1990 Armstrong settled the litigation
22 " against Hadid for cash of $50,000 and a new $1.75 million note,
23 " with principal payable in two installments in September, 1991 and
24 "september, 1992. Armstrong also agreed in September, 1990 to lend
25 n Hadid an additional $6.5 million, notwithstanding his failure to
26 " repay the earlier $3 million loan.

SECOND INTERIM REPORT -20-






4)
6)
..
-
1 \I Hadid executed a promissory note dated September 11,
2 " 1990 to Remington for $6.5 million, which was guaranteed by his
3 "wife, Mary Butler Hadid. To secure the $6.5 million note, Hadid
4 II and his wife executed a security agreement pledging all of their
5 II interests in numerous corporations and partnerships which
6 II purportedly owned, among other real property, four Ritz Carlton
7 II hotels located or under construction in Washington, D.C., New York
8 1\ City, Houston and Aspen, Colorado. However, Hadid never executed
9 II UCC-l financing statements for the security interests, despite his
10 II representation that he would do so.
11 II Despite Hadid's refusal to execute and deliver financing
12 II statements, Armstrong authorized the funding of the $6.5 million
13 II promissory note. In a series of transfers, the last of which
14 " occurred on March 13, 1991, Remington advanced a total of
15 II $5/796,300 to Hadid. No repayment has been made by Hadid of
16 II either these advances or the $1.75 million note.
17 The trustee has filed suit against Hadid, Mary Butler
18 II Hadid and certain Hadid entities to collect on the $6.5 million
19 note, the $1.75 million and the original $3 million and to enforce
20 II Remington's lien rights under the security agreement. The trustee
21 "has learned that in June, 1991, Hadid may have transferred his
22 II interest in the collateral to a business associate, Abdulaziz bin
23 Ibrahim AI-Ibrahim of Saudi Arabia, commonly referred to as the
24 II "the Sheik". The trustee has joined the Sheik as a defendant and
25 II seeks a determination that any rights of the Sheik in the property
26 II transferred by Hadid are subject to Remingtonts security interest.

SECOND INTERIM REPORT -21-

-
\, .1




e
1 II Media reports as well as reports of the trustee's
2 II investigators indicate that Hadid is being pursued by numerous
3 II creditors, his Washington, D.C. office has been closed, certain of
4 II his real property interests (including his Washington, D.C. horne)
5 II have been foreclosed, and he may no longer be residing in the
6 II United states. Mary Butler Hadid appears to be residing in the
7 II United states, but the trustee does not have any information as ,to
8 II whether she has independent assets to satisfy a jUdgment.
9 II The trustee is seeking to effectuate service on all of
10 II the defendants through various means. None of the defendants have
11 II yet responded to the lawsuit. The trustee also intends to seek
12 II discovery from third parties to obtain information on the assets
13 II in which Hadid purportedly held an ownership interest and granted
14 II Remington a security i n t e r e s t ~ At present, the trustee cannot
15 II estimate what recovery, if any, will be obtained on the Hadid
16 II notes.
17
2. stanley Rosenberg
19 II stanley Rosenberg, a San Antonio attorney and businessman, on a $1

18
The trustee has filed an adversary proceeding against

..
20 n million guarantee he executed in favor of Remington on
21 II September 19, 1989. Rosenberg was involved in promoting and
22 II developing a combined restaurant and gambling facility known as
23 II River City Fair in San Antonio. Through Remington, Armstrong
24 II invested $2 million in the project, of which $1 million was for
25 II purchase of a 49% interest in the stock of River City Fair, Inc .
26 II (URFer") and $1 million for a loan to RFCI, guaranteed by

SECOND INTERIM REPORT -22-









1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
e
Rosenberg. The restaurant failed and RFCI filed a Chapter 7
petition.
In response to the trustee's lawsuit, Rosenberg has
denied liability on his guarantee. He claims that Armstrong
agreed to release him from the guarantee, that Armstrong agreed to
and failed to subsidize all necessary expenses to keep the project
operational, and that Rosenberg advanced additional money to the
project in reliance on Armstrong's representations, all of which
t
Rosenberg contends, discharges his obligations under the
guarantee. Rosenberg has also filed a motion requesting that the
Bankruptcy Court abstain from jurisdiction over the claim on the
ground that it should be filed as a state court action in Texas.
The trustee cannot predict at this time the likely
outcome of the Rosenberg adversary proceeding. In addition to the
defenses he has asserted, Rosenberg has communicated to the
trustee that there are other claims and judgments against
Rosenberg and that he will not be able to satisfy any jUdgment
obtained by the trustee. However, despite a request by the
trustee, Rosenberg has not provided any documentation of his
financial condition.
3. Parker Automotive
In February, 1991, Armstrong invested $3 million,
through Remington, in Parker Automotive corporation, a pUblicly
traded company in Costa Mesa, California, which manufactured and
distributed a machine and chemical compound designed to clean
automobile engines, and which was in serious financial

SECOND INTERIM REPORT -23-









111 difficulties. Remington received "a convertible note, secured by a
2 1/ lien on all assets of Parker, junior to a lien for approximately
3 II $700,000 owed to Home Bank. Remington was also granted certain
4 II stock options and voting rights which gave it immediate control of
5 " Parker and the right to acquire up to 66 percent of the stock of
6 II the company. Upon the closing on February 14, 1991, Armstrong
7 became chairman of the board and chief executive officer of
8 Parker.
9 Despite Remington's infusion of $3 million in cash,
10 II Parker remained in financial difficulty. In June, 1991, Armstrong
11 II resigned as CEO, and he and other Remington nominated
12 II representatives resigned from the Parker board. On JUly 26, 1991,
13 II facing numerous lawsuits by unpaid vendors, Parker filed a Chapter
14 II 11 petition in the Bankruptcy Court far the Central District of
15 II California. A Chapter 11 trustee was appointed in September, and
16 1/ closed Parker's business shortly thereafter.
17 II The Parker trustee has contracted for sale of most of
18 Parker's assets, including its manufacturing equipment, domestic
19 II inventory located in the united states and patent and trademark
20 "rights, for $1.5 million, payable $500,000 at closing and the rest
21 II over a one-year period, secured by the assets to be sold.
22 II Inventory located in Europe and accounts receivable are not
23 " included in the sale and may bring additional revenue.
24 " If the pending sale is completed, and the maximum amount
25 " is collected under the sale, Remington could realize up to
26 II $700,000 from the sale proceeds, based on its second priority lien

SECOND INTERIM REPORT -24-




..




1 /I on Parker assets. Additional amounts may be realized from the
2 II sale of the foreign inventory. Furthermore, Remington may be in
3 II first position with respect to the Parker patent, without which
4 " Parker's tangible assets have SUbstantially reduced value, as Home
5 II did not perfect a security interest in the patent.
6 II However, Remington's secured position is being
7 II challenged by the Parker trustee, who seeks equitable
8 n subordination of Remington's interest on the ground of inequitable
9 II conduct by Armstrong in acquiring Remington's interest and/or in
10 /I managing the company. The Parker trustee also claims that
11 II Remington may not be s e c u r ~ d as to part of its debt (Which is of
12 II little importance as Remington's debt exceeds the likely value of
13 /I Parker's assets), and may not have perfected a security interest
14 II in the inventory located in Europe.
15 II The parties have agreed to expedited discovery and
16 " resolution of Remington's claim in the Parker bankruptcy case
17 II through relief from stay proceedings that have been filed on
18 II behalf of both Remington and Horne Bank. Remington and Home Bank
19 /I have reached a tentative agreement, which has not been finalized
20 II or approved by the Bankruptcy Court, on allocation between them of
21 II any proceeds received by either of them from the Parker assets.
22 " An agreement between Remington and Horne Bank would eliminate any
23 II disputes between them on lien priorities or the allocation of sale
24 II proceeds to the patent, and enable Remington and Home to cooperate
25 1/ in pursuing their mutual interest as secured creditors.
26
49
SECOND INTERIM REPORT -25-









1 II The trustee cannot estimate at this time what, if
2 anything, the estate will recover from the Parker investment.
3 " Protecting the estate's interest in Parker has consumed
4 " substantial time and legal expense, and has been one of the most
5 II costly activities of the estate in relation to the potential
6 II recovery. Nevertheless, because the Parker asset does have the
7 \I potential for significant recovery for the estate, the trustee
8 II believes that the time and resources devoted to Parker is
9 necessary and justified.
10 " C. Other Claims Against Third Parties
11 " 1. Criminal Defense Legal Fees
12 II On September 4, 1991, the trustee filed an adversary
13 II proceeding against Armstrong's criminal defense attorneys, the
14 " Dallas firm of Meadows, Owens, Collier, Reed and Coggins, for
15 II recovery of $735,000 in legal fees paid to the firm, of which
16 " $700,000 was paid on March 27, 1991, the day aftei the trustee was
17 II appointed. The trustee traced the $700,000 payment to the
18 II proceeds of a sale of a helicopter by Winthrop, an Armstrong owned
19 II company, on March 25, 1991. Winthrop had purchased the helicopter
20 II less than a month before, with funds advanced by Knightsbridge,
21 II which in turn obtained the funds from Hamilton Taft.
22 The trustee sought recovery of the payments to the
23 II Meadows firm on the ground that the payments came from fraudulent
24 " conveyances from Hamilton Taft and Knightsbridge and were
25 II recoverable from the law firm as a subsequent transferee of an
26 II avoidable transfer under Section 550 of the Bankruptcy Code.

SECOND INTERIM REPORT -26-
"



.,




1 II Under section 550, the trustee may recover fraudulently
2 II transferred property not only from the initial transferee, but
3 II also from a sUbsequent transferee who received the property
4 II without consideration and with knowledge of the fraudulent
5 II transfer.
6 After the adversary proceeding was filed, the trustee
7 II agreed to a settlement of the claim for $400,000 cash, which was
8 II paid by the Meadows firm in December, 1991.
9 II 2. McCall Nates
10 II On January 25, 1991, Knightsbridge transferred a total
11 11 of $600,000 to three members of the McCall family, David McCall,
12 II Jr., and his sons, David McCall, III and Brian McCall. Each of
13 the McCalls executed a $200,000 note to Armstrong personally, with
14 /I a maturity date of January 25, 1992. David MCCall, Jr. also
15 \I guaranteed the notes of his sons. All three notes are secured by
16 II certain real estate interests in Plano, Texas, as well as stock in
17 II an insurance agency owned by David McCall, Jr. The McCalls are
18 II personal friends of Armstrong and his family.
19 II The trustee recently learned that on November 27, 1991,
20 II in violation of a preliminary injunction then in effect (See
21 II Section VI.C.l), Armstrong executed an agreement to transfer the
22 II $600,000 McCall notes to David McCall, III in return for payment
23 II to Armstrong of $275,000, which Armstrong received and retained
24 II for his own benefit. The $275,000 was paid as follows: $120,000
25 /I in July, 1991 to Chenal Corporation, a new company under which
26 \I Armstrong now conducts business, $55,000 in October, 1991 to

SECOND INTERIM REPORT -27-





nds (




1 II Armstrong, and $100,000 in November, 1991 to Armstrong. (The form
2 II of the transaction was that Armstrong and Chenal gave David
3 \I McCall, III notes for the $175,000 transfers in July and October
4 ,,1991. In November, 1991, Armstrong obtained another $100,000 from
5 II McCall, and the $175,000 in notes were cancelled.)
6 II A letter agreement of November 27, 1991, signed by
7 II Armstrong and David McCall, III memorializing the transaction,
B II conditioned the transfer of the $600,000 notes on Armstrong
9 II reaching a settlement with the trustee. That settlement did not
10 II occur. (See section VI.B.) Armstrong nevertheless received the
11 II cash and returned the notes to David McCall, III at the time the
12 II letter agreement was signed, when obviously no settlement with the
13 II trustee had been reached. Armstrong also signed documents
14 II purporting to extend the maturity date of the McCall notes from
15 11 January 1992 to January 1994.
16 II Upon learning of the transactions between Armstrong and
17 II David McCall, III, the trustee commenced contempt proceedings on
18 II February 10, 1992 against Armstrong for violation of the
19 II preliminary injunction and obtained a temporary restraining order
20 II prohibiting any further transfers of funds or assets by Armstrong
21 II and Chena1, except for certain limited expenditures, pending the
22 II contempt hearing. (See section VI.C.l.) The trustee has
23 \I sUbpoenaed the financial records of Armstrong and Chenal to
24 II determine what Armstrong did with the $275,000 obtained from
25 II McCall in return for the McCall notes.
26
T ~

SECOND INTERIM REPORT -28-





..



1 II interest in Rodeo Partners. Both entities are located in
2 Mesquite, Texas, near Dallas.
3 II Pro Rodeo is controlled by a rodeo performer, Don Gay,
4 II and its primary business is supplying livestock for rodeos,
5" principally at the Mesquite Arena" a rodeo arena serving the
6 " Dallas area. Armstrong invested $350,000 of Hamilton Taft's money
7 II to acquire a 49% percent interest in Pro Rodeo in January, 1991.
8 II Rodeo Partners is a closely held limited partnership which awns
9 \I the Mesquite Arena. Armstrong invested $1.5 million, also
10 \I obtained from Hamilton Taft, in Mesquite Partners in September,
11 11
1990
.
12 The trustee has obtained financial and operating
13 1/ information on Pro Rodeo and Rodeo Partners through the subpoena
14 " process available under Bankruptcy Rule 2004. Both entities have
15 II operating businesses, but their current profitability and value
16 II are uncertain.
17 2. Texas Stadium Box
18 \I In March, 1990, Remington purchased three stadium boxes
19 1/ at Texas Stadium, home of the Dallas COWboys football team, from a
20 II bankruptcy estate for a total of $390,000. Armstrong took title
21 II to the stadium boxes personally, and the purchase price was booked
22 " as a loan from Remington to Armstrong. After the acquisition,
23 " Remington also paid for improvements for the stadiuIn boxes.
24 11 In March and April, 1991, Armstrong sold two of the
25 II stadium boxes for a total of $265,000, which was paid to
26 II Remington. Armstrong retained the third box, which, according to

SECOND INTERIM REPORT -32-
1 " deposition testimony of his assistant, Teri Robins, he treated as
2 II his "personal" box. Based on information from a broker who sells
3 II Texas Stadium boxes, the trustee understands that the remaining
4 II box has a resale value of at least $ ~ 5 0 , O O O .
5 " 3. Coffea International
6 II In 1989 and 1990 Remington loaned a total of $89,000 to
7 "Armstrong's brother, Robert Chad Armstrong, and to Coffea
8 II International, Inc., a distributor of imported coffee beans
9 " controlled by Robert Chad Armstrong. On February, 11, 1991,
10 /I Knightsbridge advanced an additional $250,000 to Chad Armstrong or
11 II COffea International. The $250,000 advance, plus the prior
12 1\ advances of $89,000 with interest, were then booked as a $341,225
13 " investment by Remington in the stock of Coffea International. The
14 II stock appears on the books of Remington as an asset of Remington,
15 " but the trustee has been advised that Armstrong also claims the
16 II stock as his personal asset. The trustee is in the process of
17 II obtaining information on the financial status and operations of
18 " Coffea International through the subpoena process, and does not at
19 "this time have information on the value of Remington or
20 II Armstrong's interest in Coffea International.
21 U 4. Plaza Realty Note
22 R CCAJ corporation, an Armstrong company still under the
23 " control of Armstrong, holds a $5 million note of Plaza Realty
24 "Company ("Plaza Realty"), an affiliate of Gulftex Financial
25 \I Corporation and its principals, Jimmy E. Nix and Richard F.
26 II Watkins. Armstrong (through CCAJ) and MaxPharma, prior owner of









..
SECOND INTERIM REPORT -33-







.,

e
1 II Hamilton Taft, invested a total of $6 million of Hamilton Taft
2 II funds in 1989 in a joint venture with GUlftex, called Professional
3 II Investment Fund ("PIF"), which owned shopping center interests.
4 II In February, 1990, CCAJ sold its interest in PIF to Plaza Realty
5 II for $1 million in cash and a $5 million note executed by Plaza
6 II Realty and .secured by certain stock and partnership interests
7 II owned by Nix and Watkins. Plaza Realty defaulted on the note
a II after making one $4 00, 000 payment.
9 II In 1990, CCAJ corporation filed suit in Texas state
10 II court against Plaza Realty on the note and against Gulftex, Nix
11 \I and Watkins and related entities for fraud arising out of the
12 II original investment in PIF. After filing the suit, CCAJ
13 II Corporation did little to prosecute the action. In December,
14 II 1991, with a trial date imminent but no capacity or intention in
15 II CCAJ Corporation to prosecute the action, and no standing by the
16 II trustee to take over the litigation, CCAJ Corporation, with the
17 II trustee's consent, filed a dismissal without prejudice of the
18 II Plaza Realty lawsuit. Under Texas law, the lawsuit can be refiled
19 II within the statute of limitations period.
20 II The trustee has been advised that the prospects of
21 II recovering from Plaza Realty or the collateral securing the Plaza
22 II Realty note are not promising. However, the trustee has not yet
23 II independently investigated the financial condition of Plaza Realty
24 II or the value of the collateral. Nor has the trustee yet
25 II investigated the background or merits of the fraud claim against
26 II Gulftex, Nix and Watkins.

SECOND INTERIM REPORT -34-


1
e
5. Personal Possessions
3 II of his luxury automobiles, he still retains two personal

2
Although Armstrong has turned over to the trustee most


4 II automobiles purchased by Remington and booked to Armstrong as
5 II "advances". They are a 1989 Jaguar (not to be confused with a
6 II 1990 Jaguar returned to the trustee) and a 1990 Ford Lariat pickup
7 II truck, which were appraised in mid-1991 at $37,000.
B " Armstrong also has furniture and home furnishings which
9 " Knightsbridge purchased for $35,000 for a four bedroom Aspen,
10 II Colorado condominium which Armstrong had contracted to purchase
11 II jointly with Mohamed Hadid (See section V.B.l.) The condominium
12 II purchase was not completed, Armstrong forfeited $300,000 in down
13 II payments (paid by Remington), and shipped the furniture and
14 " furnishings to Dallas.
LITIGATION AGAINST ARMSTRONG

IS-
16
VI.
A. Analysis of Armstrong's Personal Financial
Transactions



17
18
19
20
21
22
23
24
25
26
,At the time of the First Interim Report, the trustee did
not have access to any of Armstrong's personal financial records,
as compared to those of corporate entities controlled by him.
Armstrong had refused to produce any personal records on Fifth
Amendment grounds.
In late July and August, 1991, Armstrong produced his
personal bank account records and certain supporting documentation
for the period of January I, ~ 9 8 9 through June 15, 1991.
(Armstrong acquired Hamilton Taft in March, 1989.) With the

SECOND INTERIM REPORT -35-

4&

,.





e
1 II personal financial records, together with the records of the
2 II Armstrong entities which show transfers of funds to or on behalf
3 II of Armstrong, the trustee's accountants have prepared an analysis
4 II of Armstrong's personal receipts and expenditures for January I,
5 II 1989 through June 15, 1991. The analysis is contained in
6 II Appendix B.
7 II During the two and a half year period, which covers the
8 II period of Armstrong's ownership of Hamilton Taft, over $16.5
9 II million of Hamilton Taft funds, mostly routed through
10 II Knightsbridge, Remington or Winthrop, was paid to Armstrong or by
11 II the Armstrong entities to third parties for Armstrong's benefit.
12 II Of the $16.5 million, about $4.7 million was cash paid to
13 "Armstrong. The remaining $11.9 million was paid by the Armstrong
14 II entities for assets, investments and other expenditures which
15 II Armstrong held in his own name, including over $9 million related
16 II to the Double C Ranch.
17 Of the $4.7 million in cash transferred to Armstrong,
18 II $1.2 million was booked as compensation or directors' fees
19 II ($852,385 net of withholding taxes) or reimbursement of expenses
20 II ($396,703). Most of the money, over $3 million, was recorded as
21 II cash "advances" from Remington, Knightsbridge or winthrop, which
22 II Armstrong has never repaid, or as repayments to Armstrong of a
23 II $1.5 million "loan" he purportedly made to Remington in February,
24 II 1990. Armstrong made the "loan" to Remington with funds he
25 II obtained from winthrop, which in turn obtained the funds from
26 II Hamilton Taft. In the first three months of 1991 alone, just
..
SECOND INTERIM REPORT -36-




,.




1 II before the pUblic disclosure of Armstrong's diversions of Hamilton
2 II Taft money, over $1 million in cash was transferred from
3 11 Knightsbridge to Armstrong's personal accounts.
4 II Armstrong's personal financial records verify that he
5 " had no significant source of income or receipts, other than
6 " Hamilton Taft money, during the two and half year period. Of
7 II $4.8 million in total cash flow through his personal bank accounts
8 II over the two and a half year period, all but $127,606 can be
9 " definitely traced to Hamilton Taft and the Armstrong entities who,
10 n in turn, received their funds from Hamilton Taft. Even the money
11 II he received in the first quarter of 1989, before he acquired
12 " Hamilton Taft, can be traced to Hamilton Taft funds. As discussed
13 n in the Accountant's Report, during the first quarter of 1989, as
14 " well as earlier, Remington, which was the primary source of
15 \I Armstrong's funds, obtained its money from loans which were repaid
16 II with Hamilton Taft money after Armstrong's acquisition of Hamilton
17
11 Taft.
18 Likewise, all but an estimated $78,000 of the
19 II approximately $4.7 million that Armstrong received in cash from
20 II Hamilton Taft and the Armstrong entities appears to have been
21 11 deposited into and can be traced through his personal accounts.
22 II On January 1, 1989, he had $528 in his accounts. On June 15,
23 II 1991, the last date for which the trustee has bank account
24 II information for Armstrong, he had an estimated $85,000 in his
25 II account. Between those dates, nearly $4.7 million of Hamilton
26
..
SECOND INTERIM REPORT -37-




«I




1 II Taft funds went into and out of his accounts for personal
2 II expendi tures .
3 II The withdrawals from Armstrong's personal accounts
4 II include substantial cash withdrawals ($175,138) and credit card
5 II payments ($465,398) for which supporting documentation has not
6 II been provided and the trustee's accountants therefore cannot
7 II provide further analysis. However, most of the transfers and
8 II expenditures from Armstrong's personal accounts were by check
9 II transactions or wire transfers, for which the payee is identified.
10 II Among Armstrong's significant personal expenditures,
11 II paid from his personal accounts during the January 1, 1989 through
12 II June 15, 1991 period out of funds traceable to Hamilton Taft,
13
11 were:
14 1. Political and charitable contributions totalling
15 II $964,701. Of this amount, $603,701 was for charitable
16 II contributions and $361,000 was for political contributions.
17 II Payments characterized as charitable contributions in Armstrong's
18 II records include $200,000 paid at a charity auction for a 1990
19 II Rolls Royce and $100,000 paid to the Dallas Opera Ball. The
20 II largest political contribution was to Texas gubernatorial
21 II candidate Clayton Williams, who received $100,000.
22 II 2. Professional fees of $742,735, of Which $735,000
23 II was paid in March and April, 1991, to Meadows, Owens, Collier,
24 II Reed and Coggins, Armstrong's criminal defense attorneys. (See
25 11 section V.C.l.)
26

SECOND INTERIM REPORT -38-









e
1 II 3. Investments totalling $494,017, of which $350,000
2 II was f or purchase of a 49% interest in Pro-Rodeo, Inc., a company
3 II which supplies livestock for rodeos. (See Section V. D. 1. ) Also
4 II classified as an II investment expense" was a payment for a $105,000
5 II cashier's check dated November 5, 1990, the recipient of which was
6 II not identified in the Armstrong records made available to the
7 II trustee.
S 4. Gifts, loans and other transfers to friends,
9 II relatives and employees totalling $295,571, including $70,301 to
10 II his ex-wife (exclusive of payments identified as child support or
11 II child care), $46,575 for an automobile loan and other payments to
12 II his personal assistant at Remington, $42,500 to his fiance, and
13 II $37,186 for his mother I s medical expenses.
14 II 5. Household expenses totalling $274,089 for
15 II Armstrong's personal residence, including $79,352 for repairs and
16 II maintenance, $56,121 for domestic payroll, $40,734 for utilities,
17 II $15,354 for interior decorating, $22,883 for groceries and
18 II beverages and $10,329 for flowers.
19 II 6. Purchases from jewelers, clothiers, furriers,
20 II boutiques and other retailers totalling over $183,000, not
21 II counting purchases which may have been made with credit cards.
22 " Acquisitions, investments or expenditures financed by
23 II the $11.9 million which Armstrong entities paid for Armstrong's
24 II benefit with Hamilton Taft funds included, in addition to the
25 II ranch, $847,738 for costs associated with his acquisition of
26 II Hamilton Taft (consisting primarily of $615,000 paid to Stanley

SECOND INTERIM REPORT -39-






..


1 II Rosenberg, a former MaxPharma shareholder, as part of the
2 \1 MaxPharma settlement, and $232,730 for legal fees), $390,000 for
3 II the Texas Stadium skyboxes, $600,000 for loans to the McCalls,
4 II $335,000 for the down payment and furniture for a condominium in
5 II Aspen, Colorado (which Armstrong did not ultimately purchase),
6 " $295,000 for investments in Coffea International, Armstrong's
7 " brother's company, and $132,767 for automobiles.
8 II B. status of Litigation and Settlement
9 " commencing in June, 1991, the trustee has had
10 II sUbstantial and ongoing discussions with Armstrong regarding
11 " settlement of the Hamilton Taft estate1s claims against Armstrong.
12 " Such settlement discussions have generally involved a framework
13 " under which most assets still remaining in the possession of
14 " Armstrong and entities under his control would be returned to the
15 II Hamilton Taft estate, and Armstrong would stipulate to a
16 II nondischargeable jUdgment for a specified amount, with forbearance
17 II on execution if Armstrong paid an agreed upon portion of his
18 II future income and receipts to the estate for a specified period of
19 II years.
20 " While the parties appeared close to reaching a
21 II settlement from time to time, the settlement discussions were
22 II terminated in late January, 1992. The trustee and Armstrong were
23 II unable to reach agreement on several aspects of the settlement
24 II that were of importance to one party or the other.
25 II No further settlement discussions are planned. The
26 II trustee intends to proceed with the pending adversary proceeding

SECOND INTERIM REPORT -40-



..





e
1 nagainst Armstrong to seek recovery of all remaining assets in
2 II Armstrong's possession traceable to Hamilton Taft funds, or to
3 II transfers from any of the other Debtors. In addition, the trustee
4 1/ will seek a money jUdgment against Armstrong for the full amount
5 II of Hamilton Taft's 10s5, after adjustment for any amounts realized
6 II from recovered assets .
7 Armstrong sought to remove the adversary proceeding from
B II the Bankruptcy Court to the District court on the ground that he
9 II had demanded a jury and the Bankruptcy Court could not conduct
10 II jury trials. The District court, on Armstrong's motion for
11 II withdrawal of reference, rUled that the Bankruptcy Court could
12 II conduct jury trials in "core" proceedings, which included the
13 II trustee's main claims for fraudulent conveyance, constructive
14 II trust, turnover orders and injunctive relief. However, the non-
15' II core claims included in the trustee t s complaint, namely the breach
16 II of fiduciary duty, conversion and breach of contract causes of
17 II action, were removed to the District Court.
18 " c. Injunctions and contempt Proceedings
19 II 1. TROs and Preliminary Injunctions
20 II On April 4, 1991, after the adversary proceeding against
21 " Armstrong and related entities was filed, the Bankruptcy Court
22 II issued a temporary restraining order ("TRO" ) prohibiting any
23 II transfers, encumbrances or other dispositions of assets by
24 II Armstrong or any Armstrong companies "except to meet day to day
25 \I ordinary operating The TRO was extended by agreement
26 II several

SECOND INTERIM REPORT -41-






,.

,.
1 II On July 22, 1991, when the trustee was appointed interim
2 II trustee of the Texas Debtors, Armstrong agreed to entry of a
3 "preliminary injunction against him, with the TRO continued as to
4 II the remaining Armstrong entities not under the control of the
5 II trustee. The preliminary injunction differentiated between assets
6 II existing as of July 22, 1991, and any proceeds and products
7 "thereof (called the "pre-existing assets"), and future earnings or
8 II income of Armstrong, and assets acquired from future earnings
9 II (called the II new assets"). The preliminary injunction provided an
10 II absolute prohibition against any transfers, encumbrances and
11 II dispositions of pre-existing assets, except that Armstrong was
12 II allowed to use his remaining cash, up to $100,000, for "ordinary
13 II day to day operating expenses and reasonable living expenses".
14 II Armstrong's future earnings and income, and assets acquired with
15 " future earnings and income, were released from the TRO and not
16 II SUbject to the preliminary injunction.
17 II On November 4, 1991, the TRO against the remaining
18 II Armstrong entities (which for practical purposes consisted of
19 II Winthrop), was converted to a preliminary injunction. The
20 II preliminary injunction against the entities was SUbstantially the
21 11 same as the TRO, i.e., it prohibited all transfers of assets
22 II except for "ordinary day to day operating expenses." The two
23 II preliminary injunctions, the July 22, 1991 injunction against
24 II Armstrong personally and the November 4, 1991 injunction against
25 II the remaining Armstrong entities, are currently in effect.
26

SECOND INTERIM REPORT -42-





(


.,

1 II On February 22, 1992, on application of the trustee, the
2 II Court issued a new TRO against Armstrong, which supplements but
3 II does not replace the July 22, 1991 preliminary injunction. The
4 11 new TRO prohibits all transfers, encumbrances or other disposition
5 II of assets, including any so-called "new assets", by Armstrong, his
6 II new company, Chenal Corporation, and any other companies
7 II controlled by Armstrong, except for a specified list of approved
8 II expenditures and other expenditures approved in advance of payment
9 II by the trustee or the Court. The TRO, which is in place until a
10 II preliminary injunction and contempt hearing scheduled for
11 II March 13, 1992, was imposed after the trustee learned that
12 II Armstrong and Chenal had received and likely spent $275,000 in
13 II promissory note proceeds which were subject to the July 22, 1991
14 II prel iminary inj unction. (See Section V. C. 2. )
15 II 2. Contempt Proceedings
16 II The trustee has filed two contempt motions for
17 II Armstrong's violation of the April 4, 1991 TRO and the July 22,
18 II 1991 preliminary injunction.
19 II In December, 1991, the trustee and the creditors
20 II Committee jointly filed a motion to hold Armstrong in contempt for
21 II violation of the TRO. The motion challenged several personal
22 II expenditures by Armstrong as not for "ordinary day to day
23 II operating expenses," including $9,000 to his fiance, $8,000 to his
24 II brother, $5,715 to a women's dress designer for merchandise
25 II ordered by his fiance, and $4,000 for the glasses of a country
26 II music star purchased at a charity auction. The trustee also

SECOND INTERIM REPORT -43-









e
1 II sought recovery of $11,000 from proceeds of cattle sales which
2 II Armstrong transferred from the ranch operating account to his
3 II personal account.
4 II After a hearing on January 24, 1992, the Bankruptcy
5 II Court ruled that Armstrong had violated the TRO and ordered him to
6 II pay $37,725 to the trustee over a 90 day period. The order
7 II provides that if payment is not made, the Bankruptcy court will
8 II recommend that the District court issue an order of contempt.
9 II The second contempt proceeding was filed by the trustee
10 " on February 10, 1992 arising out of Armstrong's transactions with
11 II respect to the McCall promissory notes. (Section V.C.2.) The
12 " trustee contends that Armstrong violated the preliminary
13 II injunction by (i) spending or otherwise disposing of $275, 000
14 II received from David McCall, III, (ii) executing an agreement to
15 II sell the notes, which total $600,000, to David MCCall, III in
16 II exchange for the $275,000 he received from MCCall, and (iii)
17 II executing an agreement to extend the maturity date on the notes by
18 II two years. On February 11, 1992, the Bankruptcy court issued an
19 II order requiring Armstrong to show cause on March 13, 1992 why he
20 II should not be held in contempt for violating the preliminary
21 1I injunction.
22 II D. Criminal Investigation
23 II The trustee has been advised that the u.s. Department of
24 II Justice is conducting an investigation to determine whether
25 II criminal charges should be filed against Armstrong or other
26 II persons on account of the transfers of Hamilton Taft funds. The
..
SECOND INTERIM REPORT -44-





(




tit
1 II trustee has cooperated with law enforcement officials in their
2 II investigation, by providing information and documents in his
3 II possession or under his control, when and as requested by such
4 II officials. trustee over the
5 results or t1m1ng of the cr1m1nal 1nvest1gat10n.
6 II VIi. OTHER CLAIMS AND LITIGATION
7 II A. Fidelity Bonds
8 II The estate's largest potential recovery is on fidelity
9 II bonds issued by Underwriters of Lloyd's covering loss to Hamilton
10 II Taft from theft by employees. The policies contain $20 million
11 II primary coverage and $30 million umbrella coverage, for a total of
12 II $50 million, subject to certain deductibles. The fidelity bonds
13 II were a requirement of most of Hamilton Taft's contracts with its
14
11 customers.
15 The trustee gave written notice of a claim to the
16 II underwriters on April 25, 1991. Discussions with the underwriters
17 II commenced, through their San Francisco attorneys, in November,
18 II 1991. The underwriters have neither admitted nor denied coverage.
19 II They have requested access to voluminous records of Hamilton Taft
20 II and the Texas Debtors to investigate the claim, and the trustee is
21 II in the process of responding to these requests. If coverage is
22 II denied or not acknOWledged after the underwriters have had a
23 II reasonable opportunity to investigate, the trustee intends to file
24 II suit on the bonds.
25 The trustee cannot predict at this time the likely
26 II outcome of the claim on the fidelity bond. Substantial legal

SECOND INTERIM REPORT -45-







.,

e
1 II issues are likely to be raised relating to coverage or the amount
2 II of recovery under the bonds.
3 1\ Reflecting the importance of the fidelity bond claim to
4 11 the estate, both the trustee and the Creditors committee have
5 II retained special insurance counsel. The trustee has retained the
6 II law firm of Mound, Cotton and Wolan of New York City to assist in
7 II pursuing the claim. The Creditors Committee has retained Bronson,
8 II Bronson and McKinnon of San Francisco.
9 . B. Preference Claims
10 II The trustee has commenced an analysis of potential
11 II preference actions against customers of Hamilton Taft for whom
12 II payroll tax deposits were made under circumstances that the
13 II payments would constitute preferential transfers under section 547
14 II of the Bankruptcy Code. Because of the exclusion for transfers in
15 II the "ordinary course of business", the trustee is analyzing only
16 II delinquent payments made by Hamilton Taft during the 90 days prior
17 II to the filing of the involuntary petition on March 20, 1991. Such
18 II delinquent payments were generally made in two time periods, on·or
19 II about January 31, 1991, when Hamilton Taft paid over $50 million
20 1\ in tax liabilities which were due in the first part of october,
21 II 1990, and on or about March 8, 1991, when customers learned that
22 n Hamilton Taft had diverted tax deposits to the Armstrong entities
23 II and made demands on Hamilton Taft for confirmation that their
24 taxes had been paid. While the trustee's analysis is not
25 II complete, the trustee estimates that transfers meeting the
26

SECOND INTERIM REPORT -46-

II
~
1 II preference criteria may exceed $40 million, after deduction of
2 II "new value" payments.
C. S a ~ d ; a Refund
The trustee has settled a dispute with a former Hamilton
Taft Client, Sandia Corporation, also known as Sandia National
The trustee has thus far made demands for return of
payments from, and has filed adversary proceedings against, two
parties, Volume Shoe corporation (aka Payless ShoeSource) for $3.4
million and S&S Credit Co., Inc. (aka Shop and Save) for $12.5
million. Delinquent taxes were paid on behalf of these customers
in both January and March, 1991. They were among the first
customers to confront Hamilton Taft on March 8, 1991, as a result
of which Hamilton Taft covered the shortfall on their delinquent
taxes, and they have relatively small claims against Hamilton Taft
for unpaid taxes.
Additional preference actions are expected to be filed
by the trustee on a case by case basis. No adversary proceedings
will be filed against any customer without the trustee first
communicating a written demand.
Because of the circumstances under which Hamilton Taft's
bankruptcy was filed, the trustee does not expect any significant
preference claims to be asserted on account of payment of vendor
debts during the 90 day preference period. Hamilton Taft was
generally paying its trade debts as they became due, and the
"ordinary course of business" exception will likely apply to most
payments to vendors.
-47- SECOND INTERIM REPORT
II
~ . 3
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5
6
7
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10
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IS
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18
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21
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..


~ .




1 II Laboratories, over a $938,007 IRS refund for payroll taxes paid by
2 II Hamilton Taft on Sandia's behalf. Under the settlement, the

3 "trustee received $744,198 from Sandia on February 6, 1992, and is
4 expected to receive an additional sum of approximately $187,000 on
5 " or about March 8, 1992, for a total of approximately $931,200,
6 II including interest. (The $744,198 payment already received is not
7 II reflected in the cash receipts and disbursements schedules shown
8 " in Appendix A, which covers only transactions as of December 31,

..
• 10
The dispute arose out of a $917,876 payment which

11 II Hamilton Taft paid to the IRS on Sandia's behalf on March 8, 1991.
12 II On that day, pursuant to its contract with Sandia, Hamilton Taft
13 II initiated an electronics funds transfer from Sandia's bank account
14 to cover the Sandia, however, reversed the payment on
15 II the same day, and made its own deposit with the IRS, which
16 II resulted in duplicate payments for Sandia's
17
Sandia applied for and obtained a refund from the IRS of



18 II $938,007, which included $20,131 in interest. While Sandia did
19 II not dispute that the refund belonged to Hamilton Taft, Sandia
20 II claimed the right to offset against the refund any amounts
21 II Hamilton Taft owed to Sandia for unpaid taxes, interest and
22 11 penalties. Sandia wanted to retain the IRS refund until it had
23 II completed an internal audit and received confirmation, direct from
24 II the taxing agencies! of all payroll taxes Which it had remitted to
25 II Hamilton Taft during the life of Sandia's contract with Hamilton
26 II Taft. The trustee was unwilling to wait indefinitely until Sandia

SECOND INTERIM REPORT -48-





1 received confirmation from each taxing agency, which may never
2 occur. Hamilton Taft's own records show that the only unpaid
3 taxes for which Hamilton Taft was responsible were $22,051 in
4 state taxes which were not due at the time Sandia terminated its
I
5 contract, but for which Sandia had advanced funds to Hamilton
6 Taft.
7 The trustee and Sandia reached a settlement, under which
8 Sandia agreed to pay to the trustee all of the IRS refund,
9 including any interest accrued thereon since Sandia's receipt,
10 except for $22,051 for the unpaid taxes, which Sandia will retain,
11 and $180,106, representing the yet unconfirmed state tax payments,
12 which will be kept in an interest bearing account until March 8,
13 1992. If Sandia is able to find any additional unpaid taxes
14 and/or interest and penalties, it will be allowed to pay such
15 liabilities from the IRS refund. On March 8, 1992/ all remaining
16 funds from the IRS refund, and accrued interest, which is expected
17 to total approximately $187,000, will be released to the trustee,
18 regardless of whether Sandia has received confirmation of Hamilton
19 Taft's payment of its taxes.
20
D. Tax Penalties
22 bankruptcy petition in March, 1991, Hamilton Taft paid over $7

21
During the period of December, 1989 to the filing of the

23 million in penalties to the IRS on account of late payment of
24 customers' payroll taxes, which resulted from Armstrong's program
25 of diverting tax deposits to his Texas entities. I ~ h e trustee is
I
26 analyzing whether such penalties may be recoverable by the trustee

SECOND INTERIM REPORT -49-
On July 22, 1991, the Bankruptcy Court set a deadline of
September 30, 1991 for filing proofs of claim against the five
Debtors. Notice of the bar date was sent to all known creditors
of the Debtors and was pUblished in the Wall street Journal
(National Edition), the San Francisco Chronicle and the Dallas
Morninq News.
or the customers under the Internal Revenue Code, which provides
that penalties may be excused if the failure to make timely
payment was due to reasonable cause and not willful neglect. The
trustee believes that the unusual circumstances surrounding the
late payment of taxes gives rise to a reasonable argument that
penalties already paid should be recoverable, as well as unpaid
penalties abated.
The trustee also believes that any penalties paid within
90 days of the filing of the involuntary petition against Hamilton
Taft may be recoverable by the estate as preferences.
Approximately $1.5 million of the tax penalties were paid during
the 90 day preference period.
E. other Potential Claims
The trustee and his attorneys are continuing to analyze
potential claims against persons and entities which may be liable
to the estate for participating in, contributing to, or failing to
disclose information relating to the improper transfers of money
from Hamilton Taft. The trustee has not reached any conclusions
about such claims.









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VIII. CREDITORS CLAIMS ANALYSIS

SECOND INTERIM REPORT -50-






1 A. Claims Against Consolidated Estate
2 Proofs of claim totalling $205.3 million, unduplicated,
3 were filed against the Debtors constituting the consolidated
4 estate, i.e., Hamilton Taft, Knightsbridge, Remington and
5 Enterprises. When non-duplicative scheduled claims (i.e., claims
6 the Debtors acknowledge are liquidated, non-contingent and not
7 sUbject to dispute) are added, the maximum potential claims
8 against the consolidated estate total $210.2 million. A list of
9 all claims against the consolidated estate is contained in
10 Appendix c.
11 However, the claims total is distorted, because one
12 claim, filed by steven Solodoff, Hamilton Taft's former
13 controller, accounts for $110 million of the total. The trustee
14 believes that Solodoff's claim is not meritorious. (See Section
15 VIII.C below.) If Solodofffs claim is disregarded, the maximum
16 potential claims against the consolidated estate total $100.2
17 million. This compares to scheduled claims for the four Debtors of
18 $94.4 million, or a difference of only 6 percent.
19 Claims of Hamilton Taft customers for unpaid taxes
20 account for $95.1 million of the $100.2 million total claims
21 (compared to $91.9 million acknowledged in Hamilton Taft's
22 schedules). Total potential claims of Hamilton Taft trade vendors
23 and employees total $1.7 million.
24 For the Texas Debtors, claims against Remington total
25 $970,665, including both proofs of claims and scheduled claims,
26 unduplicated, as compared to $505,932 in scheduled debts. Claims

SECOND INTERIM REPORT -51-





1 against Enterprises total $47,332. No claims were filed against
2 Knightsbridge, other than duplicates of claims filed against other
3 Debtors. All claims totals exclude intercompany claims, including
4 claims of affiliated entities which are not included in the
5 consolidated estate.
6 B. Claims Against Dresdner Petroleum
7 Proofs of claim filed against Petroleum total $651,060.
8 Scheduled claims total $371,376. The maximum potential claims
9 against Petroleum, ~ i t h duplications deleted, total $731,286. The
10 claims against Petroleum consist almost entirely of vendor claims
11 for goods and services provided to Petroleum's oil and gas
12 operations. A list of all claims against Petroleum is contained
13 in Appendix c.
14
c. steven Solodoff Claim

15 steven Solodoff, the Hamilton Taft controller whose
16 public disclosure to customers and the news media of the diversion
17 of Hamilton Taft funds led to the filing of the bankruptcy, has
18 filed a $110 million proof of claim against Hamilton Taft and the
19 other Debtors based on the federal False Claims Act. The False
20 Claims Act allows a private citizen to bring actions on behalf of
21 the United states for fraud committed against the government, with
22 the private citizen retaining up to 30% of any recovery. Solodoff
23 claims that Hamilton Taft violated the False Claims Act by
24 knowingly using false records or statements to conceal or avoid an
25 obligation to transmit money to the United states and fraudulently
26 converting government trust funds. Salodoff also alleges that he

SECOND INTERIM REPORT -52-







1 was wrongfully terminated by Hamilton Taft because he notified the
2 FBI about Hamilton Taft's diversion of tax deposits.
3 Prior to the commencement of the Hamilton Taft
4 bankruptcy case, Solodoff filed a False Claims Act complaint in
5 the u.s. District Court. The united states government not only
6 declined to take over the lawsuit, as it is entitled to do, but
7 the u.s. Attorney filed a brief recommending that Solodoff's
8 complaint be dismissed because any claims stated would be income
9 tax claims, which are expressly excluded from the False Claims
10 Act.
11 In November, 1991, Saladoff filed a motion for relief
12 from stay in the Bankruptcy Court seeking a determination that his
13 District Court lawsuit was exempt from the automatic stay as an
14 exercise of the "police power". The Bankruptcy Court denied
15 Solodoff
1
s motion, ruling that Soladoff was not a ttgovernmental
16 unit
ll
entitled to assert the "police power" exception under
17 Section 362 of the Bankruptcy Code.
18 The denial of relief from stay to pursue a District
19 Court action does not affect Solodoffos proof of claim in the
20 Bankruptcy Court. However, the trustee does not believe that
21 Solodoff's claim, purporting to assert relief on behalf of the
22 united states, which has suffered no loss, has any significant
23 likelihood of success. The trustee believes that SolodoffJs
24 personal claim for wrongful termination is barred by a release he
25 executed at the time of his termination, for which he received
26 four months of severance pay.

SECOND INTERIM REPORT -53-








1
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7
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22
23
24
25
26
IX. CONCLUSION AND FUTURE ACTIVITIES
Identification of the main problems, claims, potential
assets and litigation requirements of the estate is now
substantially complete. The next six months to a year will see
heavy litigation activity, as the claims brought by the estate are
pursued, and presumably also resisted. Additional claims will
also be brought by the estate.
The trustee expects that a liquidating Chapter 11 plan
will ultimately be filed and confirmed for the consolidated
estate, there being no possibility of a rehabilitation of the
business. (Whether a plan will also be filed for Petroleum will
depend upon the prospects of the disposition of its assets.) From
the point of view of creditors, the questions are, obviously, how
much of their claims they will receive, and when they will receive
any funds.
From this report, creditors and other parties in
interest will understand that the trustee cannot now provide very
specific answers to these questions. Some comments may be made,
however, on the determinants of the amount of potential recovery.
Based on the proofs of claim filed against the estate,
it does not appear that resolution of claims against the estate
will be a major concern. Except for the Selodoff claim, the
proofs of claim filed and the estate records do not appear to
differ sUfficiently so as to make any major difference in the
potential percentage of payment to creditors on their claims. The
trustee will in due time review the claims in greater detail, and
SECOND INTERIM REPORT -54-

-.
1.,,1

1 file objections as appropriate, but on the basis of a first review
2 and current information, there does not appear to be any
3 likelihood of a major impact on percentage of recovery from any
4 potential correction and disallowance of claims (except for the
5 Solodoff claim).

6
The physical assets of the Hamilton Taft estate together


7 with the cash on hand, while substantial, would in themselves be
B unlikely under the best of assumptions to yield any more than 10
9 cents on the dollar for prepetition unsecured creditors, perhaps
10 sUbstantially less. The key to what creditors will receive will
11 be the recovery on the estate's claims, primarily the claims on
12 the fidelity bonds and for return of preferences, and to a
13 substantially lesser extent, on the success and collectibility of
14 various claims against transferees of Hamilton Taft funds and
15 possibly other third parties. It is not possible to predict the
16 outcome or degree of success on the claims at this time. What is
17 certain is that litigation and pursuit of claims will be expensive
18 and time consuming. The claims will be vigorously pursued by the


19
trustee.
20
21
Dated:
22
23
~ 4
25
25
This is the major task for the estate in the future.
February 20, 1992
SECOND INTERIM REPORT -55-






.'


APPENDIX A
STATEMENTS OF CASH RECEIPTS AI\ID
DISBURSEIVIENTS FOR THE DEBTORS AS OF
DECEMBER 31 J 1991



HemmingMofselnc
Certified Public Acco/J!1fi/,-!:
- - - -'- .. _- .. _... _... _._----- - .. _--_.__.. _.---
I Son MalaD Office
liill 8011=1
fourth tloo'
San M1llea. CA 9t4D2
1n1ephone if, 13l 57A·190[l
I' EI






\./
Frederick S. Wyle, Trustee for
Hamilton Taft & Company
ACCOUNTANT'S REPORT
We have compiled the accompanying consolidated statements of cash receipts and
disbursements of Hamilton Taft & Company (a California corporation in banlcruptcy),
Knightsbridge Companies, Inc. (a Texas corporation in banlauptcy), Remington Companies,
Inc. (a Texas corporation in bankruptcy), and Dresdner Enterprises, Inc. (a Texas corporation
in bankruptcy) and the statement of cash receipts and disbursements of Dresdner Petroleum,
Inc. (a Texas corporation in bankruptcy) for the Post-Petition and Truslee periods ended
December 31, 1991 in accordance wi th standards established by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting, in the form of financial statements, information that is
the represenUltion of management. We have not audited or reviewed the accompanying
financial statements and, accordingly, do not express an opinion or any other form of
assurance on them.
9(\c
San Mateo. California
February 19, 1992

I'
I
A-Ol

CONSOLIDATED HAMILTON TAFT & COMPANY AND TEXAS DEBTORS
(A Group of Affiliated Companies In Bankruptcy)

Statement of Cash Receipts and Disbursements
For the cumulative Post-Petition periods ended December 31 t 1991
(See Accountant's Compilation Report)
Cumulative for Post-Petition Periods
.,
Hamilton Taft Texas Debtors Consolidated Consolidated
To 10/31/91 To 10/31/91 Since 11/01J91 Total
Receipts:
Gross real estate sales 711,250 120,000 831,250
Less sales costs (158,875) (20,937) (179,812)
Net proceeds from sale of real estate 552.375 99,063 651,438
.. Net proceeds from sale of Hvestock-HTCRanch 192,174 139,449 331,623
Net proceeds from sale 01 other assets 156,956 167,412 17,680 342,048
Interest received 169.054 284 14,403 183,741
Meadow Owens settlement 400,000 400,000
Other receipts (See Detailed Schedule) 186,380 78,793 19,490 284,663
Total Receipts 704,564 798,865 690,085 2,193,5t3

Disbursements:
Employee costs: Ranch (Since 8/01/:31) 37.136 20,179 57,315
Employee costs: Other 445,270 268,805 21,415 735,490
Subtotal: Employee costs 482,406 268,805 41,594 792,805
Other operating costs (See Detailed Schedule) 469,098 16,829 79,009 564,936
Professional Fees: Trustee and Trustee's Professionals
Trustee's Attorney & Accountant 634.4.04 342,399 976,803
Trustee's Appraiser and Consultants 20,811 7,570 13,664 42,045
Trustee's fees 104,088 104,088
Professional Fees: Creditors' CommITtee 14,536 23,394 37,930
Professional Fees: Debtor-in-Possession 13,516 6,435 19,951

Ranch operating costs 16,114 20,380 36,494
Settlement: Bank One furniture lease 188,945 188,945
Trustee's administrative costs 5.B3S 452 6,287
Trustee's bond 600 600
U.S. Trustee fees 4,500 2,100 6,600
Disbursements for operations 1,940.737 309.420 527.327 2,n7,484
Net transfers to Petroleum 60,000 60,000

Tctal disbursements 1,940,737 369,420 527,327 2,837,484
Excess of Disbursements over Receipts (1,236.173) 429,445 162.758 (643,971)
Beginning Cash and Cash Equivalent Balances
Balance as of bankruptcy petition 5,856,509 74,133 5,930,642

Ranch cash balance as of August 1, 1991 ',730 1,730
Transfer of Texas Debtors' cash balances 503,Sn (503,577) 0
Ending Cash and Cash Equivalent B.slances $5.125,643 $0 $162,758 $5.288.401

A-02

CONSOLIDATED HAMILTON TAFT & COMPANY AND TEXAS DEBTORS
(A Group of Affiliated Companies In Bankruptcy)
Statement of Cash Receipts and Disbursements
For the cumulative Post-Petition periods ended December 31.1991
(See Accountant·s Compilation Report)
Cumulative for Post-Petition Periods
Hamilton Taft TeKBS Debtors Consolidated Consolidated

To 10/31/91 To 10/31/91 Since 11/01/91 Total

Monthly service fees $32,109 $32,109
Returned customer checks (Pre-Petition) 97,455 97,455
Net customer funds (Tax Agency funds) 24,974 24,974

Other receipts 31,842 78,793 19,490 130,125
Total Other Receipts $186,380 $78.793 $19.490 $284,663
Detail of Other Operating Costs Paid:
Equipment leases $9,979 $4,947 $14,926
Insurance 78,741 $7,885 86,626
Utigation costs 1,411 234 10,98B 12,632
Office supplies & expenses 0 30,699 6,375 37,074
Other costs of operations 51,006 36,397 124 87,527
Outside services 0 5,814 15,398 21,212
Postage,freight & shipping 4,283 518 4,801
Publication costs 12,961 12,961
Relocation costs 15.905 15,905
Rent 72,658 35,327 13,699 121,684
Supplies 11,873 11,873
Telephone 15,573 9,875 1,573 27,021
Travel & auto expenses 17,453 855 18,308
Work-In-Process: Real Estate 14,147 20,550 34,697

Affiliate expenses paid 2,946 2,946
Accrued liabilities: Post-Petition 127,426 609 128,035
Costs allocated to other affiliates (143,554) (143,554)
Prepaid expenses & deposits 62,522 5,490 68.012
Property and equipment 1,814 435 2,249

Total other operating costs $469.098 $16,829 $79,009 $564.936



A-03
.,
CONSOLIDATED HAMILTON TAFT &COMPANY AND TEXAS DEBTORS
(A Group of Affiliated Companies In Bankruptcy)

Statement of Cash Receipts and Disbursements
For the cumulative periods of Trustee Administration ended December 31,1991
(See Accountant's Compilation Report)
Cumulative Trustee Periods
Hamilton Taft Texas Debtors Consolidated Consolidated

To 10/31/91 To 10/31/91 Since 11/01/91 Total
Receipts:
Gross real estate sales $593,750 $120,000 $713,750
Less sales costs (134.192) (20,937) (155,129)
Net proceeds from sale of real estate 459,558 99,063 558,621
Net proceeds from sale oflivestock-HTCRanch 192,174 139,449 331,623
Net proceeds from sale of other assets 156,956 167,412 17,680 342,048
Interest received 169,054- 284 14A03 ,183,741
Meadow Owens settlement 400,000 400,000
Other receipts (See Detailed Schedule) 186,380 75,197 19.490 281,067
Total Receipts 704,564 702,452 690,085 2,097,101

Disbursements:
Employee costs: Ranch (Since 8/01,191) 37,136 20,179 57,315
Employee costs: Other 445,270 195,523 21,415 662,208
Subtotal: Employee costs 482,406 195,523 41,594 719,523
Other operating costs (See Detailed Schedule) 469,098 (58,645) 79,009 489,463
Professional Fees: Trustee and Trustee's Professionals
Trustee's Attorney &Accountant 634,404 342,399 976,803
Trustee's Appraiser and Consultants 20,811 7,570 13,664 42,045
Trustee's fees 104,088 104,088
Professional Fees: Creditors' Committee 14,536 23.394 37,930
Professional Fees: Debtor-in- Possession 13,416 6,435 19.851
Ranch operating costs 16,114 20,380 36,494

Settlement: Bank One furniture lease 188,945 188,945
Trustee's administrative costs 5,835 452 6,287
Trustee's bond 600 600
U.S. Trustee fees 4,500 2,100 6,600
Disbursements for operations 1,940,737 160,565 527,327 2,628,629
Net transfers to Petroleum 70,500 70,500

Tatal disbursements 1,940,737 231,065 527,327 2,699,129
Excess of Disbursements over Receipts (1 ,236,173) 471,387 162,758 (602,028)
Beginning Cash and Cash Equivalent Balances
Balance as of appointment of Trustee 5,850,509 32,190 5,888,699
Ranch cash balance as 01 August 1, 1991 1.730 1,730

Transfer of Texas Debtors' cash balances 503,5n (503,577)
0
Adjusted beginning balances
Ending Cash and Cash Equivalent Balances $5.125.643 $0 $162,758 $5,288,401


A-04

CONSOLIDATED HAMILTON TAFT & COMPANY AND TEXAS DEBTORS
(A Group of Affiliated Companies In Bankruptcy)

Statement of Cash Receipts and Disbursements
For the cumulative periods of Trustee Administration ended December 31. 1991
(See Accountant's Compilation Report)
Cumulative Trustee Periods
Hamilton Taft Texas Debtors Consolidated Consolidated

To 10/31/91 To 10/31/91 Since 11/01/91 Total
of Other
Monthly service fees $32,109 $32,109
Returned customer checks (Pre- Petition) 97,455 97,455
Net customer funds (Tax Agency funds) 24,974 24,974

Other receipts 31,842 75,197 19,490 126,529
Total other receipts $166,380 $75.197 $19.490 $281.067
Detail of Other Operating Costs:
Equipment leases $9,979 $9,979
Insurance 78,741 7,885 86,626
Utigation costs 1,411 10,988 12,399
Office supplies & expenses
°
27,382 6,375 33,757
Other costs of operations 51,006 261 124 51,391
Outside services 0 15,398 15,398
Postage,freight &shipping 4,283 518 4,801
Publication costs 12,961 12,961
Relocation costs 15,905 15,905
Rent 72,658 31,994 13,699 118,351
Supplies 11,873 11,873
Telephone 15,573 4.291 1,573 21,437
Travel & auto expenses 5,507 855 6,362
Work-In-Process: Real Estate 12,735 20,550 33,285
Affiliate expenses paid 2,946 2,946
Accrued liabilities: Post-Petition 127,426 (143,554) 609 (15,519)
Costs allocated to other affiliates
Prepaid expenses &deposits 62,522 2,740 65,262
Property and equipment 1,814 435 2,249
Total other operating costs $469,098 ($5B,645) $79,009 $489,463



A-OS

DRESDNER PETROLEUM, INC.
(A Texas C?orporation in Bankruptcy)

Statement of Cash Receipts and Disbursements
For the cumulative Post-Petition Period and the cumulative
period of Trustee Administration ended December 31, 1991
(See Accountant's Compilation Report)

Post- Petition Trustee
Period: Period:
4/29/91 7/22/91
Through Through
12/31/91 12/31/91
Receipts:

Oil and gas revenues $667,915 $415,613
Less costs of production 416,422 332.750
Net proceeds from oil and gas revenues 251,493 82,863
Interest received from Affiliates 151 151
Other receipts 5,341 1,850
Refund of legal fees 7,159
1.7
59

Receipts before transfers from Affiliates 264,742 92,622
Transfers From Affiliates:
Transfers from Knightsbridge 60,000 60,000
Repayment of Petroleum transfer to Remington 10,500 10,500
Total receipts 335,242 163,122
Disbursements:
Employee costs 259,421 134,331
Insurance 9,941 9,941
Interest paid to affiliate 78 78
Office expenses 767 746
Property taxes 403 403
Purchase of field equipment 6.633 6,633
Rent 14,887 8,220
Telephone 6,995 597
Travel and entertainment 182 182
Trustee's bond 300 300
U.S. Trustee fees 3.000 2,250
Disbursements for operations 302,607 163,681

Transfers To Affiliates:
Transfer to Remington 10,500
Total disbursements 313,107 163,661
Excess receipts (disbursements) 22,136 (559)

Beginning cash balance 25,023 47,718
Ending cash balance $47.159 $47.159

.,
A-06



CONSOLIDATED HAMILTON TAFT' & COMPANY AND TEXAS DEBTORS
(A Group of AffIliated Companies in Bankruptcy)
and
DRESDNER PETROLEUM, INC.
Notes to Statements of Cash Receipts and Disbursements
For the period ended December 31, 1991
Note 1: Consolidated Hamilton Taft & Company and Texas Debtors
The accompanying consolidated statements of cash receipts and disbursements
include the accounts of the following companies:
1) Knightsbridge Companies, Inc. (Knightsbridge);

2) Knightsbridge's wholly owned subsidiaries including Hamilton Taft &
Company (Hamilton Taft) and The Remington Companies Inc.
(Remington);



3) Remington's wholly owned subsidiaries including Dresdner Enterprises,
lnc. (Enterprise) and Remington Corporate Financial Group, Inc.;
4) Enterprise's wholly owned subsidiaries including DEI, Inc., Chayson
Mortgage and Investment Company, Cal-Pacific Management Corp.,
and Suisse Texas, Inc.
Non-Consolidated Operations: Knightsbridge also owns a controlling interest in
Dresdner Petroleum, Inc. (Petroleum) and Remington also owns a controlling
interest in Parker Automotive (also known as Carbonclean). The operations of
neither Dresdner Petroleum, Inc. nor Parker Automotive have been included in the
consolidated financial statements.
The term "Texas Debtors
"
as used in these statements of cash receipts and
disbursements means Knightsbridge, Remington and Enterprise. Petroleum's
statement of cash receipts and disbursements is presented separately.
Several of the affiliated companies have filed for protection under Chapter 11 of
the United States Bankruptcy Code. On March 20, 1991, an involuntary petition
was filed in San Francisco for Hamilton Taft and on March 26, 1991, Frederick S.
Wyle was appointed as trustee in bankruptcy.
A-O?








CONSOLIDATED HAMILTON TAFf & CO:MPANY AND TEXAS DEBTORS
(A Group of Afflliated Companies in Bankruptcy)
and
DRF5DNER PETROLEUM, INC.
Notes to Statements of Cash Receipts and Disbursements
For the period ended December 31, 1991
<Note 1 Continued)
Knightsbridge filed for protection under Chapter 11 of the United States
Bankruptcy Code on April 19, 1991 and Remington, and Dresdner Enterprises
filed on April 29, 1991, all in Dallas, Texas.
On July 22, 1991, Frederick S. Wyle was appointed as interim trustee in
banlauptcy for Remington, Enterprises and Knightsbridge. His appointment was
made permanent on November 4, 1991.
On November 4, 1991, the Banlcruptcy Court ordered the substantive consolidation
of Hamilton Taft & Company, and the Texas Debtors including Remington,
Enterprises and Knightsbridge. Frederick S. Wy]e was appointed trustee for the
consolidated estates.
The accompanying statements of cash receipts and disbursement include both the
Post-Petition periods and the periods of Trustee administration for each debtor.
For Hamilton Taft, the Post-Petition period and the period of Trustee
administration date from March 20. 1991 (even though the trustee was not
appointed until March 26, 1991). The Post-Petition period for the Texas Debtors
dates from April 19
t
1991 for Knightsbridge and April 29, 1991 for Remington
and Enterprises. The period of Trustee administration for the Texas Debtors dates
from July 22, 1991, the date of the appointment of the interim trustee.
Note 2: Dresdner Petroleum, Inc.
Dresdner Petroleum filed for protection under Chapter 11 of the United States
Bankruptcy Code in Dallas, Texas on Apri129, 1991. On July 22, 1991,
Frederick S. Wyle was appointed as interim trustee in bankruptcy. His
appointment was made pennanent on November 4, 1991. For the accompanying
statement of cash receipts and disbursements, the Post-Petition period for Dresdner
Petroleum dates from April 29, 1991 and the period of Trustee administration dates
from July 22, 1991.
A-08
-
' ,1







APPENDIX B
ACCOUNTANT'S REPORT ON SOL'RCE AI\ID
APPLICATION OF FUNDS FOR
CONl\lIE C. ARMSTRONG, -..IR.
JANUARY 1, 1989 - JUNE 15, 1991


e
HemmingMorselnc
Certified Public
Frederick S. Wyle, Trustee for
Hamilton Taft & Company
I Son MatoD (Jffjec
160 BUVCl ROilU
Fourth floor
San CA 9j4G2
TelEphone 14151
i Fc;I: 141:.:
ACCOUNTANTS'REPORT


We have applied certain procedures, as discussed below, to the accounting
records of Connie C. Armstrong, Jr. and of the Armstrong Affiliated Entities, including
Hamilton Taft & Company, Remington Companies, Inc. and Knightsbridge Companies, Inc.
Our study was made solely to assist you in your duties as Trustee and our report should not
be used for other purposes. The procedures we performed are summarized as follows:
a) Evaluated Connie C. Armstrong) Jr. 's source and application of funds during the
period January 1, 1988 through June 15, 1991 as described in the documents prepared
by Larry D. Gillilan and further described in Note 1 to the Source and Application of
Funds.
b) Traced payments to and receipts from Mr. Armstrong, as recorded in the Affiliated
Entities accounts of employee receivables owed by Connie C. Armstrong, Jr. and
notes payable to Connie C. Armstrong. Jr., to the corresponding deposits and
disbursements in Mr. Armstrong's personal accounts.


c)
d)
Segregated and identified the payments on behalf of Mr. Armstrong by the Affiliated
Entities that were included in accounts of employee receivables owed by Connie C.
Armstrong, Jr. and notes payable to Connie C. Armstrong
t
Jr.
Reconciled compensation paid during the ]989 through 1991 periods to
Mr. Armstrong by Hamilton Taft & Company and Remington Companies, Inc.
(Remington) to the corresponding deposits in Mr. Annstrong's personal accounts.
e) Reconciled reimbursed expenses paid by Remington during 1989 to the corresponding
deposits in Mr. Armstrong's personal accounts.
f) Reconciled the acquisition of identified assets to the respective acquisition funding
identified in accounts of the Affiliated Entities and of Mr. Armstrong.
• I
I
8-01


Frederick S. Wyle, Esq.
Accountants' Report
Page 2
Our findings are presented in the attached Source and Application of Funds for the period
January 1, 1989 through June 15, 1991, which describes a total source of funds amounting to
$16,670,032 and an application of funds amounting to $16,585,263. This schedule is further
described by the following schedules and notes:


Schedule 1:
Schedule 2:
Schedule 3:
Payments To or On Behalf of Connie C. Armstrong, Jr.: 1989
Payments To or On Behalf of Connie C. Armstrong, Ir.: 1989-1991
Application of Funds: January 1, 1989 through June 15, 1991
Notes to Source and Application of Funds

..

Because the above procedures do not constitute an examination made in accordance with
generally accepted auditing standards, we do not express an opinion in accordance with those
standards. In connection with the procedures referred to above, except for the discrepancies
discussed in !.he notes to the Source and Application of Funds, no matters came to our
attention that causen us to believe that the attached statement and schedules required further
adjustment. Had we performed an examination in accordance with generally accepted
auditing standards, other matters might have come to our attention that would have been
reported to you. This report relates only to the accounts and items specified above.
I Y
February 19, 1992
B-02
I Hemming Morse
f'sJJt::
".'1D


8-03
..

Schedule 1
CONNIE C. ARMSTRONG, JR.
SOURCE OF FUNDS
Payments To or On Behalf of Connie C. Annstrong. Jr. - 1989
(See Accompanying Notes and Accountant's Report)
[$565,173.24 $928,882.731 $1.494,055.971
16,531.10 I
58,688.21 I
19 9 P
9,662.90
2,500.00
1,886.33
2.481.87
58,688.21
16,531.10
B syments
r
To On Behatf
CCA Jr. afeCA Jr. Total
$55,046.89 $55,046.89
152,052.20 152,052.20
5,000.00 5.000.00
212,099.09 212099.09
65,811.93 65,811.93
25,184.71 25.184.71
90,996.64 90,996.64
169,005.00 169,005.00
232,730.19 232,730.19
615,008.12 615,008,12
49,945.27 49,945.27
31199.15 31.199.15
169,005.00 928,882.73 1,097,887.73
3,853.20 3.853.20
1,000.00 1,000.00
8,000.00 8,000.00
5,000.00 5000.00
186.858.20 928,882.73 1115740.93
I
489,953.93 928,882.73 1,418,836.66

A Payments from HTe and Affiliated Entities:
1 Compensation
a) 1989 Hamilton Taft salary, net 01 withheld taxes
b) 1989 Remington salary, net otwithheld taxes
c) Director Fees

Subtotal: Compensation
2 Payments Booked As Reimbursement Of Expenses
a) Remington payments
b) Hamilton Taft payments
Subtotal: Payments booked as reimbursement of expenses

3 Other Payments From Affiliated Entities
a) Remington payments booked as advances --
1) Cash paid to Armstrong
2) Legal fees reclassified as advance
3) Hamilton Taft purchase costs reclassified as advance
4) Payment to IRS
5) Other transactions, net of adjustments and repayments
Subtotal: Remington payments booked as advances
b) Cash advanced by Chase PULEC
c) Cash advanced by Chase Condo
d) Cash advanced by Gulftex (PIF)

1) Cash advanced by River City
Subtotal: Other payments 'from Affiliated Enttties
Total Payments from HTC and Affiliates
B Payments from Other Identified Sources:

1 Rental earnings
2 Loan repayments
3 Interest earned
4 Other receipts
Total payment from other identified sources

C Payments from unidentified sources (See note 2 c)
Total 1989 payments to or on behalf of CCA, Jr.

8-04


Schedule 2
CONNIE C. ARMSmONG, JR.
SOURCE OF FUNDS
Payments To Or On Behalf Of Connie C. Armstrong, Jr. 1990-1991
(See Accompanying Notes and Accountanfs Report)


.'
A Payments from HTC and Affiliated Entities:
A-1 Compensation
a) 1990-91 HTC salary, net of withheld taxes
b) 1990-91 RemIngton salary, net ofW/H taxes
d) 1991 Parker salary, net of withheld taxes
Subtotal: Compensation
A-2 Director Fees and Other Compensation
a) Remington Director Fees
b) CCAJ Director Fees
c) River City Director Fees
d) Remington "bonus" received 4/16/90
Subtotal: Director fees and other compensation
A-3 Proceeds from sale of 2 Stadium Boxes
A-I!. Payments Booked As Reimbursement Of Expenses
a) Remington paymenls
b) Hamilton Taft payments
c) Combined deposits of both Remington end HTC
payments which have not been distinguished
Subtotal: Payments booked as reimbursements
A-5 Other Payments From Affiliated Entities
a) Remington/Knightsbridge payments (Sch.2-A)
b) Winthrop Payments:
1) Payments to or for Double C Ranch
2) Payments to Armstrong
c) Payments from Ranch accounts
d) Payment from Chase Development
Subtotal: Other payments from Affiliated Entnies
Total payments from HTC and Affiliates
1990-91 Payments
I
To On Behalf of CCA. Jr.
CCA, Jr. I Ranch Other Total
$173,397.84
351,088.38
17,200.32
541,685.54 $541,686.54
12,500.00
16,000.00
5,000.00
65,100.00
98.600,00 98,600.00
265,000.00 265,000.00
223,732.68
48,261.97
33,713.15
305,707.80 305,707.80
2,008,100.00 367,250.00 1,856,948.89 4.232,298.89 1
8,729.000.00 8,729,000,00
868,000.00 868,000.00
48,295.21 48,295.21
35000.00 35,000.00
2959,595.21 9,096,250.00 1 656,948.89 13,912,594.10
I
4,170,389.55 9,096,250.00 1,656,948,69 15.123,5e8.44

B Payments From Other Identified Sources:
B-1 Receipt noted "OEP FROM 1969 SALA GFS"
8-2 Loan repayments received
B-3 Dividends received
8-4 Interest received
8-5 Reimbursements for travel expenses
8-6 Other reImbursements
Total payments trom other identified sources
13,348.73
5,SOO.00
4,180.22
3,012.78
8,641.96
17,603.56
52.387.25 52.367.251

Total 1990-91 payments to CCA, Jr. I $4,222,nS.eO $9,096,250.00 $1.856,948.891 $15,175,975.691
• 8-05


CONNIE C. ARMSTRONG, JR.
SOURCE OF FUNDS
Payments To Or On Behalf Of Connie C. Armstrong, Jr. 1990-1991
Detail Of Schedule 2 A-5 (a): Other Remington/Knightsbridge Payments
(See Accompanying Notes and Accountant's Report)
Schedule 2-A
1990 91 P ts - avman
I
To On Behalf of CCA, Jr.
CCA Jr. Ranch Other Total
$995.100,00 $995,100,00
367,250.00 367.250.00
1,013,000.00 1,013,000.00
30,000.00 30,000.00
600,000.00 600,000.00
335,000.00 335,000.00
390,000,00 390.000.00
as 20,631.44 20,631.44
105,000.00 105,000.00
s 6,626.25 6,626.25
27,767.68 27,767.68
295,000.00 295,000.00
3:3,923.52 33,923.52
2,008,100.00 367,250.00 1,843,948.89 4,219,298.89
13,000,00 13,000.00
13.000.00 13,000.00
$2 OOB 100.00 $367250.00 $1 856948.89 $4 232 29B.B9
14 Other Payments per Armstrong
Unidentified entry in eCA, Jr. Transaction Report
Subtotal
Tota' other Remington/Knightsbridge payments
Other Remington/Knightsbridge Payments:
1 1990 cash transfers to Armstrong
2 1990 cash transfers to Ranch accounts
3 1Q91 cash transfers to Armstrong
4 Remington 10/29/90 check to David McCall
5 Knightsbridge 1/25/91 checks to McCalls
6 Knightsbridge payments for Aspen Condo
7 Remington purchase of 3 stadium Boxes
8 Remington payments for improvements to Stadium Box
9 Payment to American Cancer Society for Red Jaguar
10 Payment to Overseas Motors for personal auto expense
11 Payment for Ranch truck
12 Cash advanced toltor Coffea International
13 Other expenses paid on behalf of eCA, Jr.
Subtotal: cash transactions


..
• 8-06

Schedule 3-A
CONNIE C. ARMSTRONG, JR.

APPLICATION OF FUNDS
For the period January 1, 1989 through June 15, 1991
(See Accompanying Notes and Accountant's Report)
Payment Payment
From eCA, Jr. From Affiliate

Date Account Account Total
1 Double C Ranch:
a) Acquisition at Property:
1} Purchase of Stiefer Parcel (see Note 4) 12/04/89 $72,429.04 $72A29.04
2) Purchase of Williams Parcel 02/09/90 6.500.000.00 6,500,000.00
b) Advances for Ranch operations Various 57
1
969.88 1,023,439.21 1,081,409.09

c) Payments for Ranch improvements Various 42,152.00 1,060,797.25 1,102,949.25
d) Purchases of livestock & equipment Various 90,979.00 512.013.54 602.992.54
Total payments associated with C Ranch $9,096.250.00 $9,359.779.92
2 Investment Costs and Expenses:
a) Acquisition of Hamilton Taft &Co. (See Note 3):
1) Payment to Stanley Rosenberg 05/01/89 $615,008.12 $615,008.12
2) Legal fees paid by Remington 232,730.19 232.730.19
3) Armstrong purchase of stock 06/20/89 33,000.00 33,000.00
Subtotal 33,000.00 847,738.31 880,738.31
4) Other payments to Hamilton Taft & Co.
(No purpose designated} 4,000.00 4,000.00
Total payments to or for HTC acquisition 37,000.00 847,738.31 884,738.31
b) Investment In Pro-Rodeo. Inc. Jan-91 350,000,00 350,000.00
In addition toto this investment in Pro-Aodeo, Inc., Winthrop paid
$1,5 million. in september 1990, for an investment in Rodeo Partners.
c) Investment in Coffea. Intemational 295,000.00 295,000.00
d) Other Investment Payments:
1) Armstrong's payments for Winthrop Realty Company,
Knightsbridge Guarantee Companv, Knightsbridge
Company, and CCAH,lnc. 1,030.00 1,030.00

2) Bank One Cashiers Check dated 11/05/90
(Classified as an investment expense) 105,102.50 105,102,50
3) Other payments classified as investment expenses 884.63 884.63
Subtotal: Other investment payments 494,017.13 1,142,738.31 1,636,755.44
e) Trading Losses
Losses experienced by Armstrong with

investments through Merrill Lynch account Various 6.010.55 6,010.55.
Total investment costs and expenses $500,027.68 $1,142,738.31 $1,642,765.99

• B-07


CONNIE C. ARMSTRONG, JR.
APPLICATION OF FUNDS
For the period January 1,1989 through June 15, 1991
(See Accompanying Notes and Accountanrs Report)
Schedule 3-8


"



Date
3 Acquisitions of Personal Property
a) Payments for Aspen Condo
b) Payments for 3 Stadium Boxes
c) Payments for improvements to Stadium Boxes
d) Payments associated with the purchase of vehicles
e) Purchase of furniture
f) Purchase of artwork
Total acquisition of personal property
4 Charitable and Political Contributions:
a) Charitable Contributions:
American Cancer Society
Cancer Research
Cattle Baron's Ball
Christian Service
Contributions to churches
Dallas Opera Ball
Family Gateway
Institute for Policy Innovation (IPI)
Multiple Sclerosis Society
St. Judes Research
Yellow Rose Gala
Other charitable contributions
Subtotal: Charitable contributions
b} Political Contributions:
Beau Boutter
Senator Buster Brown
Doman for Congress
Kent Hance
Warren Harding
Rob Mosbacher
Senator David Sibley
Clayton Williams
Other political contributions
SUbtotal: Political contributions
Total charitable and pDlitical contributiDns
8-08
Payment
From CCA, Jr.
Account
66,079.41
14,656.84
6,564.47
$87.300.72
$33,050.00
10,000.00
4,200.00
10,000.00
68,500.00
100,000.00
5,000.00
75,000.00
275,800.00
5,000.00
10,000.00
7,151.68
603,701.68
41,000.00--
80,000.00-
2,000.00
54,000.00·
10,000.00
60,000.00 -,
10,000.00
100,000.00
4,000.00
361 ,000.00.
$964.701.68
Payment
From Affiliate
Account
$335,000.00
390,000.00
20,631.44
132,767.68
$878,399.12
Total
$335,000.00
390,000.00
20,631.44
198,847.09
14,656.84
6.564.47
$965,699.84
$964,701,68

Schedule 3-C
CONNlE C. ARMSrnONG. JR.

APPLICATION OF FUNDS
For the period January 1,1989 through June 15, 1991
(See Accompanying- Notes and Accountant's Report)
Payment Payment
From CCA, Jr. From Affiliate

Date Account Account Total
5 Payments for Professional Services:
Meadows Owens (Criminal Defense) 03/22/91 25,000.00
Meadows Owens (Criminal Defense) 03/26/91 700,000.00
Meado\NS Ovvens (Criminal Defense) 04/04/91 10,000.00
Subtotal 735.000.00

Eppright & Gorembeck 3,306.00
Goodwin Carlton 1,117.25
Other professionals 3,312.50
Total payments for professiona' services $742.735.75 $742.735.75
6 Loans and Advances to Third Parties:

a} Payment to David McCall 10/29/90 $30,000.00 $30,000.00
b) Loans to McCalls 01/25/91 600,000.00 600,000.00
Totalloan5 and advances to third parties $0.00 $630.000.00 $630.000.00
7 Credit Card Payments:
Payments on American Express card $384,439.39
Payments on VISA card 80,959.28
Total credit card payments $465,398.67 $465,398.67
8 Repayments af Loans and Advances:
a} Repayments to Remington:

') Payment to Remington 04/30/90 $8.225.00
2) Payment to Remington 05/31/90 3,nS.00
3) Payment to Remington (Stadium Box Sales) 03/25/91 140,000.00
4} Payment to Knightsbridge (Stadium Bx Sales) 04/19/91 100,000.00
5) Payment to Remington (Stadium Box Sales) 04/19/91 25,000.00
Subtotal: Repayments to Remington 277,000.00
b) Repayments to Julius D. Stiefer
Monthly principal and interest payments during the
period January 1, 1990 through June 15, 199' 47,12.2.20
Total repayment of loans and advances $324,122.20 $324.122.20
9 Payments to Friends, Relatives & Employees:
Payments Characterized As Loans --
Connie C. Armstrong, Sr. (Father) $5,121.00
Honey Gregory (Fiance) 42,500.00
J.J. Kissee (Remington Employee) 2,000.00
Terri Robbins (Remington Employee) 32,407.57

Subtotal: payments characterized as loans 82,028.57

B-09

Schedule 3-D
CONNIE C. ARMSTRONG, JR.

APPLICATION OF FUNDS
For the period January 1. 1989 through June 15. 1991
(See Accompanying Notes and Accountanfs Report)
Payment Payment
From CCA, Jr. From Affiliate

Date Account Account Total
(Payments to Friends, Relatives & Employees - Continued)
Payments Characterized As Gifts --
Harriette Armstrong (Mother) (Medical Expenses) 37,186.67
Whitney Fische (Noted as RMiss Texas
R
) 11,000.00
Nancye Meyer (Ex-Wife) 35,768.29
Punk Carter 10,000.00

Susan Stelter (Friend) 23,400.00
Subtotal: payments characterized as gifts 117,354.96
Other Payments - -
Boone Armstrong (Brother) 8,000.00
Ed Ballard (Remington Employee) 5,316.12

Christine Grambling (Hamilton Taft Officer) _6,45Q.OO
Nancye Myer (Ex-Wife) 34,533.32
Patti Montague (Remington Employee) 20,420.05
Tim McCall 4,800,00
EmieMcCoy (Remington Employee) 2,500.00
Terri Robbins (Remington Employee) 14,168.24
Subtotal: other payments 96,187.73
Total payments to friends, relatives & employees $295,571.26
10 Household Expenses:
Cleaning $2,702.26
Domestic salaries & payroll taxes 56,121.89
Flowers 10,329.70
Groceries and beverages 22.883.75
Interior decorating 15,354.74
Landscaping 10,541.42
Reimbursements paid to other individuals 13,321.27
Repairs and maintenance 79,352.41
Telephone expenses 7,369.08
Utilities 40,734.21
Other miscellaneous house expenses 15,379.12
Total payments for house expenses $274.089.85 $274,089.85
11 Taxes Paid:

Income Taxes $75,042.84 $49,945,27 $124,988.11
Penalties paid to IRS 3.543.00 3,543.00
Payroll taxes paid 3,639.67 3,639.67
Property taxes paid 7AOB.OB 7.408.08
Total payment of taxes $89,63359 $49.945.27 $139,578.86


8-10
.,
Schedule 3-E
CONNIE C. ARMSTRONG, JR.

APPUCATlON OF FUNDS
For the period January 1. 1989 through June 15, 1991
(See Accompanying Notes and Accountant"s Report)
Payment Payment
From CCA, Jr. From Affiliate

Date Account Account Total
12 Other Personal Expenses:
Payments to Identified Retailers -
Ashford- Trent (Manufacturing Jeweler) $19.714.36 $19,714.36
Neiman Marcus 15,979.20 15,979.20
Victor Costa (Woman's Boutique) 20,356.40 20,356.40
Tom James (Men's Clothier) 29,000.49 29,000.49

Stanley Korshak 98,391.64 98,391.64
(Furrier: furs purchased as Christmas gifts)
Subtotal: Payments to identified retailers 183,442.09 183,442.09
Other Personal Expenses -
Automobile expenses 12,198.44 6,626.25 18,824.69
Cash withdrawals 175,138.00 175,138.00
Child care and support payments 30,975.00 30,975.00 -
Dallas Cowboys tickets 5,562.00 5,562.00
Dues payments 12,771.28 12,771.28
Payment to aFanuous" 6,250.00 6,250.00
Medical expenses 8,278.74 8,278.74
Rental property expenses (Identified as The Shetton) 27,874.38 27,874.38
Settlement paid to Eppright & Golombeck 18,278.00 18,278.00
Triad Artists payment 12,500.00 12,500.00
Travel expenses 13,958.07 13,958.07
Other payments characterized as gifts 27,760.81 27,760.81
Other miscellaneous personal expenses 64,393.28 78,122.67 142,515.95

Total other personal expenses $599.380.09 $84,748.92 $684.129.01
Grand total of items 1 - 12 $4,606.491.41 $11,882,081.62 $16,488,573.03
Funds with uncertain applications (see note 2 a) 77,833.34 77,833.34
,.
Payments to unidentified payees (see Note 2 d) 18,856.41 18,856.41
Total application of funds $4,703.181.16 $11.882,081.62 $16,585.262.78

B-11
..


CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
Note 1: Sources of Information
The infotmation in the Source and Application of Funds is based on documents provided to
Frederick S. Wyle, Trustee in Bankruptcy for Hamilton Taft & Company by larry D.
Gillilan, accountant for Mr. Armstrong. These documents include the following:

a) Report of 1989 Cash Received and Cash Disbursed
This report was compiled by Mr. Gillilan. Mr. Gillilan reconstructed this report
during 1991 and it includes cash transactions in the following accounts:
1) Guaranty Federal Savings Bank checking account #6-0427617 for the period
May 31, 1989 (date of initial deposit) through December 31, 1989 (date of
report).
2) United Bank and Trust checking account #105953 for the period January 1,
1989 (this account reflected a balance forward from 1988) through December
31, 1989 when this account reflected a balance of $332.96.

3) Texas American Bank checking account #0164590 for the period February 13,
1989 (dale of initial deposit) through August 3, 1989 (date of closing
withdrawal) .

b) Transaction Reports for the period January 1, 1990 through June 15, 1991.
These Transaction Reports summarize cash receipts and disbursements through five
personal accounts kept by Mr. Armstrong as follows:
I) Bank One checking account 11102056389 for the period March 1, 1990 (date of
initial deposit) through June 15, 1991 (date of Transaction Report). This
account is noted as the "Personal" checking account.
2) Bank One checking account 6102070992 for the period March 20, 1990 (date
of initial deposit) through June 15) 1991 (date of Transaction Report). This
account is noted as the "Expense" checking account.


3) Guaranty Federal Savings Bank checking account #6-0427617 for the period
January 1) 1989 (inception of Transaction Report) through May 3, 1990 (date
of closing withdrawal).
8-12



CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
4) Lindale State Bank checking account 612-0724-5 for the .period March 7, 1990
(date of initial deposit) through June 15, 1991 (date of Transaction Report).
This account is noted as the "Household
tl
checking account.

5) Merrill Lynch Cash Management Account, #425-19374, for the period January
I, 1990 (inception of Transaction Report) through June 15, 1991 (date of
Transaction Report).

In addition to these reports, copies were provided of supporting documentation kept by Mr.
Gillilan for each account during the 1990 through June 15, 1991 time period. This
supporting documentation typically included bank statements, bank reconciliations and
selected copies of issued checks, checks received and deposited, and various documents
supporting those receipts and disbursements. In some instances, this supporting
documentation included infonnation about 1989 transactions although these early documents
were not complete.
Note 2: Discrepancies Observed In Reported Transactions:



a) Funds With Uncertain Applications - $77,833.
Deposits for identified Affiliate payments to Mr. Armstrong amounting to $77,833,
have not been identified in Mr. Annstrong's personal fmancial records.
Compensation paid by Remington and Hamilton Taft amounting to $37,697 and
reimbursed expenses paid by Remington of $40,136, for total payments of $77,833
were not identified as deposits in Mr. Armstrong's records. During 1989, Remington
and Hamilton Taft's accounting records reflect compensation of $212,099 as having
been paid to Mr. Annstrong. However, Mr. Armstrong's 1989 records reflect
corresponding deposits of only $174,402, which represents a difference of $37,697.
In addition, RemingtonI s accounting records reflect payments of reimbursed expenses
during 1989 of $65,812, whereas Mr. Annstrong's records reflect conesponding
deposits of only $25,676, which represents a difference of $40,136. The combined
difference of $77J 833 is presented in the Source and Application of Funds as funds
with uncertain applications .
8-13








b)
c)
d)
CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
Other payments made by the Affiliated Entities to Mr. Armstrong have been traced to
deposits in his personal accounts. These traced payments include: a) the 1990 and
1991 compensation reported by Remington and Hamilton Taft; b) payments to Mr.
Annstrong classified as advances to Mr. Armstrong; and c) payments to Mr.
Armstrong classified as repayments under notes payable. At this timet RemingtonI s
reimbursements for 1990 and 1991 and Hamilton Taft's reimbursements for 1989
tl1rough 1991 have not yet been analyzed.
Missing 1989 transactions for the Merrill Lynch Cash Management Account.
The scope of Mr. GillilanI s report does not include 1989 trnnsactions in Mr.
Annstrong's Merrill Lynch Cash Management Account, although this account is
included in the 1990-91 Transaction Reports. Mr. Gillilan does identify 1989
transfers of $100,000 to the Merrill Lynch account and a transfer of $50,000 received
from the Merrill Lynch account for net transfers to Menill Lynch of $50,000.
The supporting documentation includes sufficient information on the 1989 transactions
in the Merrill Lynch account to reconstruct the 1989 activity in this account. This
analysis identifies 1989 interest earnings of $1,181 and expenditures for VISA card
payments of $29) 136, withdrawals for service fees of $90 and withdrawals for losses
experienced on trading activity of $4,205. The remaining balance of $17,750
represents the outstanding balance of cash and investments earned forward to the
January 1, 1990 balance for the Merrill Lynch account in the Transaction Report.
This reconstructed activity has been included in the Source and Application of Funds
under the relevant headings.
Unidentified 1989 Deposits of $58,688.
Severa11989 deposits amounting to $58,688 are listed by Mr. Gillilan with no payor
or other source of funds indicated. The largest unidentified deposit is a December 15,
1989 deposit to the Guarantee Federal Savings account in the amount of $33,288.68.
These deposits often represent the receipt of severn! checks, which makes it difficult to
identify them through comparison to payments by the Affiliated &ttities.
Consequently, these receipts are labelled as payments from unidentified sources
without distinction between third party or Affiliated Entity sources.
Payments to Unidentified Payees
Payments by Mr. Annstrong amounting to $18,856.41 have not been identified in the
Armstrong accounting records as to payee or classification of expenditure. These
payments include a $5,000 wire transfer on April 18, 1991 and a May 20, 1991 cash
withdrawal for a cashier's check in the amount of $4,000.
8-14



CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
In addition to these unidentified applications, there was a November 5, 1990
withdrawal for a cashier's check in the amount of $105,102.50. This cashier's check
was classified in the Transaction Report as an "Investment Expense Other" and
consequently, it has been included in the Source and Application of Funds under the
heading "Investment Costs and Expenses
t
' at Schedule 3-A in Item 2 (d) (2),
Annstrong's personal accounting records also show cash withdrnwals amounting to
$175,138 (See Schedule 3-E). Although the subsequent application of these funds is
not accounted for in the Mr. Armstrong accounting records, they are typically
characterized in those records as personal expenditures or advances for reimbursed
business expenses. The cash withdrawals were typically in the amounts of $2,000 to
$7,000 each. The largest single cash withdrawal was for $15,000.

e) Unrecorded Expenditures (April 1991 Through June 1991) of $9,419.82.
The Transaction Report indicates a June 15, 1991 balance in the Lindale checking
account (the Household account) of $9,467.15, whereas the last bank statement
provided for this account reflects a balance of $47.33 as of May 31, 1991. Further
evaluation of the Transaction Report indicates that checks written after mid-April 1991
had not been entered in the Transaction Report. Consequently, the ending balance for
this account, as shown on the Transaction Report, overstates the ending cash balances
by approximately $9,420. Since this account was used primarily for household
expenses t this difference has been included in the Source and Application of Funds as
expenditures for groceries and beverages under item #10 "Household Expense" on
Schedule 3-D.



"
Note 3: Afflliates' Characterization of Payments to Connie C. Armstrong, Jr.
The transfers by Remington and Knightsbridge to Mr. Armstrong are recorded in the books
of these entities as either advances to Mr. Annstrong or as repayments of a note from
Remington to Mr. Armstrong for $1.5 million dated February 9) 1990. The Remington and
Knightsbridge payments for the 1990-1991 period totals $4,232,299, as shown for item A-5
(a) in Schedule 2. This amount includes cash payments to Mr. Armstrong's personal
accounts of $2,008,100 and payments to the Double C Ranch accounts of $367,250.
The note payable arose from a $9.8 million loan from Hamilton Taft to Winthrop Realty,
which Winthrop Realty in tum loaned to Mr. Annstrong, for the purchase of Double C
Ranch. Out of the total loan proceeds, $1.8 million was not required for the February 1990
purchase of Double C Ranch and was instead transfened from Winthrop to Remington.
Remington accounted for these funds by crediting $300,000 against Mr. Annstrong's
8-15


CONNIE eft ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
employee receivable account and by executing the $1.5 million note to Mr. Annstrong.
Total cash payments of $1,937,100, consisting of $1,717,100 paid to Mr. Armstrong's
personal accounts and of $220,000 paid to Double C Ranch accounts, were classified as loan
repayments. When the payments classified as loan repayments exceeded the amount of the
loan during March 1991, this excess was reclassified and combined with other advances
included in Mr. Annstrong's employee receivable account.
Note 4: Hamilton Taft & Company Acquisition Costs:





a) Purchase of Additional Hamilton Taft & Company Stock
On March 29, 1989, in settlement of the MaxPhanna UtigatiOD, Mr. Annstrong
acquired 100% of the capital stock of CR Acquisitions, Inc., which in tum
beneficially owned 100% of the capital stock of Hamilton Taft. Mr. Annstrong, s
personal accounts reflect no payments associated with this acquisition.
On May 25I 1989 Hamilton Taft authorized a 1 for 1,000 reverse stock split of the
Company's common stock and set the par value at $1 per share. Hamilton Taft also
authorized 10,000 shares of Class A preferred stock. Mr. Armstrong purchased
additional shares of common and preferred stock with two checks dated June 20, 1989
in the total amount of $33,000. These checks cleared the bank on July 24, 1989, the
same day that the bank records a deposit of $33
t
OOO.
The July 24, 1989 deposit of $33,000 represents the proceeds of a loan from Dresdner
Investments, Inc., an Annstrong company which appears to have been used for about
six months in 1989. This loan was characterized in Dresdner Investment's accounting
records as a "loan to Chip for HTe stock". This loan receivable was
transferred to Remington where it was included with other transactions categorized as
an employee receivable from Mr. Annstrong.
Dresdner Investments received cash transfers from Hamilton Taft of $3,248,000
during the period April 6, 1989 through July 31, 1989. These transfers represented
the only material source of funds to Dresdner Investments.
8-16



CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
b) Payment to Stanley Rosenberg - $615,008.12
On May 1, 1989) a cashier's check in the amount of $615,008.12 was purchased with
a Dresd.ner Investment check number 1002. As part of the MaxPhanna settlement
agreement, under which Mr. Annstrong acquired Hamilton Taft, he agreed to pay a
promissory note, with a principal amount due of $600,000, owed by MaxPharma to
Mr. Rosenberg. The payor shown on this check is titled "Dresdner Investment &
Capital Corp.; Hamilton Taft Operations".
This payment by Dresdner Investment was characterized as an advance to Mr.
Armstrong. This receivable balance was subsequently transferred to Remington where
it was included with other transactions categorized as an employee receivable from
Mr. Annstrong.
c) Legal Fees Paid By Remington ~ $232,730.19
On October 31, 1989, a journal entry on Remington's books reclassifies legal fees of
$232,730.19 as a receivable from Mr. Armstrong. These legal fees are characterized
as having been incurred prior to April 1989 and they are subsequently included as a
component of the Hamilton Taft acquisition costs.

d) Subsequent Disposition of Hamilton Taft Acquisition Costs
The Hamilton Taft acquisition costs, which amounted to $880)738, were subsequently
transferred to CCAB Corporation, which later became Knightsbridge Company, Inc.
Knightsbridge (as CCAH) purchased the stock of Hamilton Taft from Armstrong in
March of 1990 for a promissory note of $880,738.




Note 5: Acquisition of Stiefer Property
The Double C Ranch includes two parcels: a) a smaller Stiefer parcel; and b) a larger
Williams parcel. The Williams parcel was purchased by Armstrong through a $9.8 million
loan from Hamilton Taft to Winthrop Realty Company. This purchase is accounted for in the
Transaction Report, but the 1989 purchase of the Stiefer parcel has not been accounted for in
the 1989 accounting records provided to the Trustee.
The cash down payment for the Stiefer parcel appears to have occurred through a withdrawal
from Mr. Annstrong's Guarantee Federal Savings account in the amount of $72,426.04 for a
cashier's check payable to Smith County Abstract Co., on December 4, 1989. Mr.
Armstrong's supporting documents characterize this payment as for the "purchase of
property".
B-17








CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15,1991
Mr. Annstrong's supporting documents also include a Promissory Note in the amount of
$181,912. This note is signed by Connie C. Armstrong, Jr., as purchaser, on November 17,
1989 and is payable to Julius Doyle Stiefer as seller. This note is secured by a Deed of Trost
on 121.862 acres in Smith County, Texas. Mr. Annstrong made periodic payments of
principal and interest to Mr. Stiefer during 1.990 and 1991 from his personal checking
account. In 1991, Mr. Armstrong requested the Trustee's consent, which was given, to
eXe(;ute a deed in lien of foreclosure on the Stiefer parcel, returning the property to
Mr. Stiefer.
Note 6: Cash Transactions Prior to March 29, 1989:
Prior to Mr. Annstrong's acquisition of Hamilton Taft, loan proceeds represented the primary
source of funds in Remington, and Remington used Hamilton Taft funds to make payments
on these loans after Mr. Armstrong acquired control of Hamilton Taft.
During the period October 1, 1988 through March 31, 1989, Remington's general ledger
reflects cash receipts net of returned funds of $649,636. These receipts include loan proceeds
amounting to $646,009 which were comprised of: a) $300,330 from United Bank & Trust
loans; b) $185,000 from an October 28, 1988 Hamilton Taft loan; and c) $160,679 from Jim
Lindsey Insurance Agency loans. During this period, Jim Lindsey Insurance Agency was
paid $29
l
117.50 against the outstanding loan balances but there were no cash payments to the
other lenders reflected in Remington's general ledger.
As described in Note 3 above, Dresdner Investments began to receive cash transfers from
Hamilton Taft on April 6, 1989. The cash transfers from Hamilton Taft in Dresdner
Investment's account were in some instances used to pay prior expenses of Remington.
During Apri11989, Dresdner Investments made payments of $303,353 against these prior
loan balances including an April 14, 1989, payment of $253,335 to United Bank & Trost and
an Aprill7, 1989 payment of $50,000 to Jim Lindsey Insurance Agency.
Other prior expenses paid with Hamilton Taft funds include fees paid to Godwin, Carlton and
Maxwell, the law fum that represented Mr. Armstrong in his litigation against MaxPharma.
Prior to March 31, 1989, no payments to Godwin, Carlton and Maxwell were made from
Mr. Armstrong's personal accounts or from the accounts of Remington. The first payment
observed occurs on April!7, 1989 with a $130,000 payment to Godwin, Carlton and
Maxwell with a check drawn on the Dresdner Investment's cash account.
Neither Remington nor Mr. Armstrong had significant cash resources immediately prior to
the acquisition of Hamilton Taft. Remington began this period with a cash balance of
8-18




..



CONNIE C. ARMSTRONG, JR.
NOTES TO SOURCE AND APPLICATION OF FUNDS
January 1, 1989 Through June 15
t
l991
$19.046 on October 1, 1988 and ended this period with a cash balance of $16,264 on March
31, 1989. The personal cash accounts identified by Mr. Annstrong reflect a beginning cash
balance of $529 on December 31, 1988 and a cash balance of $413 on March 31, 1989.
During the first quarter of 1989, his receipts and disbursements were only $22,475 and
$22,491) respectively. His receipts and disbursements increased substantially after his
acquisition of Hamilton Taft .
B-19








APPENDIX C
CREDITORS CLAIMS


SUMMARY OF CREDITORS CLAIMS
CONSOUDATED ESTATE

Proof of Maximum
Scheduled Claim Potential
Amounts Amounts Claims
Hamilton Taft Customer Claims $ 91 ,925,180.61 $ 90,790.426.62 $ 95,123,932.26

Hamilton Taft Employee Claims 82,975.21 198.393.09 204,873.85
Hamilton Taft Trade Claims 1,894,052.76 1,346,135.60 1.535.519.13
Other Hamilton Taft Claims 0.00 , 12,298,770.21 112,298,770.21
Remington Claims 505,932.59 574,288.22 970.665.90
Dresdner Enterprises Claims 10,007.25 46.992.66 47,332.57
TOTAL $ 94,418,148.42 $ 205,255,006.40 $ 210,181,093,92
TOTAL CLAIMS EXCLUDING SOLODOFF $ 100,151,093.92

DRESDNEA PETROLEUM



Dresdner Petroleum Claims
covsht.doc
Scheduled
Amounts
371,376.03
C-1
Proof of
Claim
Amounts
651.060.93
Maximum
Potential
Claims
731,286.55







NOTES TO LISTS OF CLAIMS
1. The list of claims includes all claims and
amendments filed on or before October 18, 1991. The listing of a
claim or amendment filed after the bar date of September 30, 1991
does not constitute a waiver of the trustee's right to object to
the claim on the ground that it was untimely filed.
2. nScheduled Amount" means the amount stated to be
owing to the creditor in the Schedules of Assets and Liabilities
filed by the respective Debtors. The "Proof of Claim Amount
n
is
the amount claimed to be owing by the creditor in a proof of claim
filed with the Court. If no proof of claim was filed, the
"Maximum Potential Claim
u
is the Scheduled Amount. If a proof of
c l a i ~ was filed, the uMaximum Potential Claim
u
is the uProof of
Claim Amount", regardless of whether the proof of claim amount is
higher or lower than the Scheduled amount. The HMaximurn Potential
Claim" does not constitute any admission by the trustee that the
claim is allowable in the amount stated, and all objections are
reserved.
3. All duplicate claims have been eliminated for the
purpose of the list. If a proof of claim was filed against more
than one Debtor, it appears only once.
4. The list of claims does not include any
intercompany claims of any Debtor against another Debtor, or of
any non-Debtor affiliate against a Debtor.
5. The list of claims does not include any
classification as to priority.

tlTSZ19.DDC
C-2

CONsOLIDAmD ES'rATE
HAMILTON nJl'T CUSmMER CIJ\INS






CREDITOR
------------------------------
ACTION INSTRUMENTS CO., INC.
ADVO-SYSTEM, INC.
AIR CABLE, INC.
ALLEN FOAM CORPORATION
AMERICA WEST AIRLINES, INC.
AMERICAN MICROSYSTEMS, INC.
AMERICAN NUKEM CORPORATION
AMERICAN RESIDENTIAL ESCROW
AMERICAN RESIDENTIAL MORTGAGE
ANALYTI KEM
ARRAY TECHNOLOGY CORP.
COIN AMUSEMENT CO
ATLAS HOTELS INC.
BALCOR PAYROLL COMPANY
BARCLAY HOLLANDER ,CORP
BEEBE ORCHARD CO.
3LCE CROSS & BLUE SHIELD OF TX
BLUE GOOSE GROWERS INC,
BLUE GOOSE GROWERS, INC.
BOARD OF TRUSTEES, STANFORD
BOSTON & HAINE CORPORTATION
BOSTON &. MAINE CORPORTAT!ON
BOYLE MIDWAY INC,
BOYLE-MIDWAY'
BRINKMANN INSTRUMENTS
BRUNSWICK SEAT COMPANY
BUD ANTLE, INC.
BUD ANTLE, INC.
BW I IP INTERNATIONAL, INC.
C &. R CLOTHIERS
CALIFORNIA PACIFIC MED. CTR.
CARTEX CORPORATION
CASTLE &. COOKE
CASTLE & COOKE PROPERTIES
CASTLE & COOKE RESIDENTIAL
CASTLE COOKE
J
INC.
CASTLE COOKE RETAIL, INC.
CITY OF PIEDMONT
CITY OF PINOLE
CITY OF PINOLE
CORPORATION
CLEVITE BRIDGESTONE CO.
COAST FEDERAL BANK
caVIA PARTNERSHIP
CYANOKEM
CORPORATION
DEL MANUFACTURING COMPANY
DELAWARE SEAT COMPANY
DELHI GAS PIPELINE CORPORATION
DIAMOND WALNUT GROWERS
DOLE FOOD COMPANY, INC.
OONNELLEY RECEIVABLE INC.
DUBLIN/SAN RAMON SRVCS DSTRCT
ELECTRIC POWER RESEARCH INST.
ENSR CORPORATION DELAWARE
02/19/92
SCHEDULED
i
l r if
AMOUNT ,,'hit!!'.
________ ___ __f£!:.,·
$92,092.84
$1,779,836.08
$24,966.22
$3,:226.23
$834,725.41
$267,401. 62
$32,798.85
$849.68
$156,040.21
$31,184.29 .
$35,106.01
$8,407.32
$167,024.91
$12,211.47
$3,617.50
$14,489.18
$1,156,576.76
$274,931.33
$6/285.72
$845.20
$5,572.54
$4/314.91
$7,618.24
$72,034.16
$1,096.88
$229,477.87
$890,046.07
$370,69'7.23
$324,523.13
$1,106,353.90
$24,663.04
$1,889.86
$28,848.13
$74,588.42
$223,640.91
$27,522.14
$3,578.58
$2,843.17
$164/318.45
$2,733.94
$1,793,303.81
$49/063.07
$746,680.78
$22,552.14
$14,905.38
$47,209.72
$5,986.84
$1,592,062.34
$106.26
$45,012.29
$117,950.60
$710,506.19
C-3
I lid
PROOF OF CLAIM Jl'
AMOUNT D
$96,654.31
$1,796,288.32
$268,237.64
$32,798.85
$175,862.00
$31,184.29
$10,218.74
$166,607.00

$296,991.48
$386,932.78
$1,102,264.05
$1,211.71
$3,232.54
$164,332.89
$7,476.29
$1,792,401.81
$49,063.07
$977,077.10
$22,851.14
$50,209.72
$7,421.34
$3,142,906.64
$45,352.57
$138,982.22
$710,506.56
MAXIMUM
POTENTIAL
CLAIM
$96,654.31
$1,796/288.32
$24,966.22
$3,226.23
$834,725.41
$268,237.64
$32,798.85
$849.68
$175,,862.00
$31,184.29
$35,106.01
$10,218.74
$166,607.00
$12,211.47
$3,617.50
$14,489.18
$1,257,623.47
$274,931.33
$6,285.72
$296,991.48
$845.20
55,572.54,........,
$4,314.91
$7,618.24
$72,034.16
$1,096.88
$229,477.87
$890,046.07
$386,932.78
$324,523.13
$1,102,264.05
$24,663.04
$1,889.86
$28,848.13
$74,588.42
$223,640.91
$27,522.14
$3,578.58
$1,221.71
$3,232.54
$164,332.89
$2,733.94
$7,476.29
$1,192,401.81
$49,063.07
$977,077.10
$22,851.14
S14,905,3B
$50,209.72
$7,421.34
$3,142,906.64
$108.26
$45,352.57
$138,982.22
$710,506.56 .\.
",I'"
BSTATE
HAMIL'1'ON TAFT CUSTOMER CLAIMS






CREDITOR
FEDERAL EXPRESS CORPORATION ,=:,J I ocl
FIRST CAPITAL LIFE INSRNCE co.
GENSTAR STONE PRODUCTS COMPANY
GLENDALE ADVENTIST KED. CTR.
GUCKENHElMER ENTERPRISES, INC.
GUCKENHElHER OF TEXAS, INC.
H.D. HUDSON MANUFACTURING co.
HBO & COMPANY OF GEORGIA
HEALTHQUEST LTD.
J.E.G. INC.
JBB SPIRITS INC.
JIM BEAM BRANDS co.
KAYTEA ROSE, INC.
KEMPER SECURITIES GROUP
LANAI COMPANY I INC.
LANAI COMPANY, INC.
LONG BEACH TERMINAL
LUCASARTS EN!ERTAINKENT CO.
LUCASFILM, LTD.
MABON, NUGENT & COMPANY
MABON, NUGENT & COMPNAY
MAINE CENTRAL RAILROADS co.
MCCUTCHEN,DOYLE,BROWN& ENERSEN
MC! TELECOMUNICATIONS CORP.
METROMEDIA COMPANY
MILLS COLLEGE
MONROE SYSTEMS FOR BUSINESS
INC
MT. DIABLO HOSPITAL
NATIONAL DATA CORP.
NATIONAL DATA PAYMENT SYSTEMS
NEC ELECTRONICS, INC.
NEIMAN-MARCUS GROUP, INC.
NORTHLAND PLASTICS INC.
NORWEST PUBLISHING CO.
NUKEM ACQUISITION CORPORATION
NUKEM TECHNOLOGIES CORPORATION
OAHU TRANSPORT CO., LTD.
OAKLAND ATHLETICS BASEBALL CO.
aBS FINANCIAL SERVICES
OCEANIC CONSTRUCTION COMPANY
PAYLESS SHOE SOURCE
POLYTECHNIC UNIVERSITY
R.R. DONNELLEY & SONS COMPANY
RECKITT & COLEMAN INC.
RECKITT & COLEMAN INC.
RICHMOND WHOLESALE MEAT CO.
RIVERSIDE SEAT COMPANY I INC.
RKO GENERAL INC.
RM MARKETING INC.
ROCHESTER INSTITUTE OF TECH.
ROOT-LOWELL MANUFACTURING co.
ROSS STORES, INC.
S & S CREDIT COMPANIES, INC.
S.D. WARREN CO.
02/19/92
SCHEDULED
AMOUNT
S30,432,796.91
$127,193.73
$518,023.25
$625,353.80
$95,403.19
$9,072.69
$100,556.49
$420,317.80
$203,803.91
$1,027.79
$894.46
$157,862.79

Sl,078.73
$114,888.19
$3,550.91
$9,899.80
$218,065.99
$21,432.34
$954,798.68
$2,000.00
$411.01
$99,993.14
$102.95
$60,685.10
$2,163.98
$660,777.55
$146,033.47
$68,911.30
$14,454.42
$285,282.60
$2,686,127.26
$7,234.95
$45,237.26
$79.62
$24,700.27
$2,209.85
$90,365.04
$4,779.92
$38,607.53
$271,349.37
5581,564.39
$4,243,286.64
$1,888,208.34
$246,309.1'7
$43,424.27
$16,828.57
$4,420.63
55,231.14
$105,673.57
$35,745.10
$701,843.46
$158,929.53
$3,206,607.6B
C-4
PROOF OF CLAIM
AMOUNT
$28,319,089.05
$139,054.00
$603,'765.00
$625,709.80
$98,091.81
$9,474.00
$101,862.64
$421,924.80
$230,626.01
$894.46
$15'7,862.79
$16,814.98
$1,078.73
$9,786.79
$231,857.32
$22,175.84
$985,407.53
$100,959.51
$61,317.00
$11,508.89
$660,777.55
$160,724.60
$84,147.82
$330,591.69
$553,250.70
$7,690.18
$24,700.27
$90,499.42
$1,052,856.30
$640,704.98
$5,143,366.45
$2,471,860.77
$45,222.87
$4,643.63
$36,340.00
$701,843.46
$3,206,607.68
MAXIMUM
POTENTIAL
CLAIM
$28,319,089.05
$139,054.00
$603,165.00
$625,709.80
$98,091 .. 81
$9,474.00
$101,862.64
$421,924.80
$230,626.01
$1,027.79
$894.46
$157,862.79
$16,814.9B
$1,078.03
$114,888.19
$3,550.91
$9,786.79
$231,857.32
$22,175.84
S985,407.53
$2,000.00
$411.01
$100,959.51
$102.95
$61,317.00
$11,508.89
$660,777.55
$160,724.60
$84,147.82
$14,454.42
$330,591.69
$553,250.70
$7,690.18
$45,237.26
$79.62
$24,700.27
$2,209.85
$90,499.42
$4,779.92
$38,607.53
$1,052,856.30
$640,704.98
$5,143,366.56,
$2,471,860.77
$246,309.17
$45,222.87
$16,828.57
$4,643.63
$5,231.14
$105,673.57
$36,340.00
$701,843.46
$158,929.53
$3,206,607.68

CONSOLIDATED ESTATE
HAMILTON TAPT CUSTOMER CLAIMS









CREDITOR
SANDIA NATIONAL LABORATORIES
SCM CHEMICALS, INC.
SCM METAL PRODUCTS, INC.
SCOTT CONTAINER PRODUCTS GROUP
SCOTT PAPER COMPANY
SCOTT PAPER COMPANY
SCOTT POLYMERS
SCOTT WORLDWIDE, INC.
SIGNET ARMORLITE, INC.
SIGNETICS COMPANY
SINAI HOSPITAL OF DETROIT
SINAI MANAGEMENT SERVICES co.
SITKA CORPORATION
SONY AVIATION SERVICES
SONY CAPITAL CORP.
SONY CHEMICAL CORP. OF AMERICA
SONY CLASSICAL
SONY CORPORATION OF AMERICA
SONY USA INCORPORATED
SONY USA, INC.
SOS CALIFORNIA DIVISION
SOS ENVIRONMENTAL TCHNLG, INC.
SOSTAR
SOUTHLAND CORP. EMPLOYEES TRU.
SUGAR & PRDCTS CO.
SPRINGFIELD TERMINAL RAIL. CO.
SPRINGFIELD TERMINAL RAIL. CO.
STANFORD UNIVERSITY HOSPITAL
STATE OF ARKANSAS
SUN MICROSYSTEMS FEDERAL, INC.
SUN MICROSYSTEMS OF CALIFORNIA
SUN MICROSYSTEMS, INC.
SUN MICROSYTEMS EUROPE, INC.
SUN-MAID GROWERS OF CALIFORNIA
SUNSELT BEVERAGE CORP.
SUNSWEET GROWERS, INC.
SYBRON TRANSITION CORPORATION
T.D.S. FOODS, INC.
TANDEM COMPUTERS, INC.
TANDEM TELECOMMUNICATIONS SYST
TEXAS OIL & GAS CORPORATION
THE ALL AMERICAN GOURMET CO.
THE CHRONICLE PUBLISHING CO.
THE COOPER COMPANIES, INC.
THE EVB COMPANY
THE KENDALL COMPANY
THE KENDALL COMPANY OF NEVADA
THE PULLMAN COMPANY
THE STATE BAR OF CALIFORNIA
THE VINTAGE CLUB
THERHALKEM
TRANS-ADVO SYSTEMS, INC.
UNGERMANN-BASS, INC.
UNITED SAVINGS BANK
VALLEY FIG GROWERS
02/19/92
SCHEDULED

$206,809405
$49,341.49
$53,553.33
$7,086,801.47
$44,471.81
$6,294.42
$830.33
$50,105.99
$6,212,016.45
$1,377,666.01
$17,195.19
$12,04'7.50
$2,539.67
$982.72
$967.24
$420.24
$414,189.15
$5,978.17
$1,590.29
-S675.53
$3,836.03
$176,993.18
$351,368.47
$51,705.83
$188,420.35
$3,512,722.32
S23,660.37
$3,085.14
$801,887.97
$528.51
$7,814.25
$235,422.69
$13,141.02
$8,671. 81
$11,306.08
$1,960,838.18
$40,708.11
$30,581.22
$830.74
$1,088,632.47
$18,316.15
$11,455.66
$1,018,911.86
$331. 74
5687,920.28
$36,787.19
$20,328.05
$57,303.54
$11,169.40
$1,030,844./7
$95,731.15
$5,988.90
C-5
PROOF OF CLAIM
AMOUNT
$300,000.00
$207,834.04
$65,785.93
$53,553.33
$7,086,801.47
$44,4/1.87
$6,294.42
$830.32
$6,212,016.45
$1,567,207.70
$17,773.73
$12,588.32
$2,838.13
$1,572.72
$967.24
$1,010.24
$541,129.92
$10,347.03
$2,366.56
$8,362.82
$6,306.52
$178,993.14
$446,261.18
$296,014.77
$3,512,722.32
$50,011.56
$24,071.78
$3,070.86
$791,227.64
$991.44
$9,163.44
$239,938.37
$14,925.70
$8,803.44
$12,235.50
$2,794,142.85
$53,299.35
$33,974.00
$1,163,471.01
$18,289.24
$32,566 .. 74
$1,320,460.00
$736,111.75
$23,613.57
$57,303.54
$1,101,703.57
$96,675.75
$7,22/.26
MAXIMUM
POTENTIAL
CLAIM
$300,000.00
$207,834.04
$65,785.93
$53,553.33
$7,086,801.47
$44,471.87
$6,294.42
$830.32
$50,105.99
$6,212,016.45
$1,567,207.70
$17,773./3
$12,588.32
$2,838.13
$1,572.72
$967.24
$1,010.24
$541,129.92
$10,34/.03
$2,366.56
$1,590.29
$8,362.82
$6,306.52
$178,993.14
$446,261.18
S51,705.83
$296,014.77
$3,512,722.32
$50,011.56
$24,071.78
$3,070.86
$791,227.64
$991.44
$9,163.44
S239,938.37
$14,925.70
$8,803.44
$12,235.50
$2,794,142.85
$40,708.11
$53,299.35
$33,974.00
$1,163,471.01
$18,289.24
$32,566.74
$1,320,460.00
$331.74
S736,111.75
$36,78'7.19
$23,613.57
557,303.54
$11,169.40
$1,101,703.57
$96,675.75
$7,227.26

CONSOLIDATED ESTATE
HAMILTON T ~ CUSTOMER CLAIMS





CREDITOR
VERBATIM CORPORATION
WAHIAWA WATER CO., INC.
WAIALUA SUGAR CO., INC.
WAIALUA SUGAR CO., INC.
WASTE CHEM CORPORATION
WBF TECHNOLOGIES
WILLIAM MARSH RICE UNIVERSITY
WILLIAM MARSH RICE UNIVERSITY
WINCUP, INC.
WOODBRIDGE CORP.
WOODBRIDGE FOAM FABRICATING
WOODBRIDGE HOLDINGS, INC.
WOODBRIDGE INOAC, INC.
WOODBRIDGE SALES & ENGINEERING
= = = ~ = = = = = = = = = = = = = = = = = = = = = = = = = =
Total:
02/19/92
SCHEDULED
AMOUNT
$391,051. 78
$473.90
$46,407.38
$43,377.27
$22,385.78
$421.44
$34.26
$829,167.24
$980.19
$88,031.42
$18,528.81
$458.41
$30,799.40
$4,285.96
================
$91,925,180.61
C-6
PROOF OF CLAIM
AMOUNT
$451,398.96
$22,385.78
$829,201.50
$980.19
$209,353.81
=============::=
$90,790,426.62
MAXIMUM
POTENTIAL
CLAIM
$451,398.96
$473.90
$46,407.38
$43,377.27
$22,385.78
$421.44
$34.26
$829,201. 50
$980.19
$88,031.42
$18,528.81
$209,353.81
$30,799.40
$4,285.96
=========::::=====
$95,123,932.26

CONSOLIDATED ES1'ATE
HAMILTON TAP'".r BMPLOYEE CLAIMS






CREDITOR
AFLAK, ZIBA
ARABIA, JAIME
ARMSTRONG, BOONE
ASDOURIAN, JEANNE
BENIPAYO, CONSUELO
BERNSTEIN, MATTHEW
BEWLEY, ELIZABETH LABRADO
BLACHARSKI, OAN
BRISCOE, EDWARD E.
BULDA, ERLINDA
BURKHARDT, DlANE
BUSENBARRICK, DIANA
CALLAHAN, PATRICIA
CARRIZALES, JUAN-JOSE
CATAM, RaDEL
CHANG, ALBERT
CHENG, MELODY
CONOVER, SALLY
CORPUS, ANDREW
CROWE, CINDY
DANCEL, JUNE
DAVIS, ELIZABETH
DAVISSON, ROBERT
DE LA CRUZ, DANIEL
DlMALANTA, VICTORIA
DUNN, DORA E.
ERESE, JR., JOAQUIN
ESPIRITU, AUREA
FELCZAK, JOHN
FIFIELD, THOMAS B.
FITCH, URSULA
FITCH, URSULA
FaNG, MICHAEL
FORESTI, JAMES
GAINES, BRIAN
GAYO, MICHELLE
GOFMAN, ROZALIA
BARRI S, DARRELL
HOLLOWAY, FREDERIC
HUNPHRIES, THOMAS
JAHJA, RACHMAT
KEEL, JAMES
KLEINBERG, JERRY
KRAUTHAMER, KURT
KWOK GLORIA
LAFLIN, ROBERT
LANDIG, MICHAEL
LAU, STEVEN
LEE, CINDY
LILLEF, JOHN
MAGEE, ELIZABETH
MANLEY, PAUL
MATHERS, LINDA
MENDOZA, ARACELI
MILLER, MARILYN
02/19/92
SCHEDULED
AMOUNT
Sl,340.06
$558.68
$7,078.58
$724.78
$821.76
$708.77
$1,606.80
$1,003.89
$6,767.64
$574.74
$527.81
$580.03
$160.35
$334.88
$335.62
$1,120.66
$2,050.65
$439.87
$416.60
$2,255.22
$561.07
$341. 60
$1,624.08
$674.45
$2,094.36
$1,709.85
$634.00
$759.73
$500.68
$634.94
$974.88
$1,117.83
$784.93
$751.14
$470.64
$1,946.10
$29B.64
$690.34
$2,366.80
$67-.01
$1,623.93
$3,674.74
$1,646.86
$744.03
$2,119.46
$453.44
$1,189.50
$1,643.53
$988.10
$288.54
$432.88
$38.86
C-7
PROOF OF CLAIM
AMOUNT
$1,340.06
$558.58
$2,684.89
$724.78
$3,903.90
$708.77
$1,606.80
$1,003.89
$71,397.01
$574.74
$527.80
$643.28
$160.35
$334.89
$335.62
$1,120.66
$2,050.65
$439.87
$416.59
$2,255.22
$561.07
$101.09
$2,986.56
$2,094.36
$7,211. 85
$634.00
$1,670.13
$634.93
$1,583.33
$974.B8
$1,117.83
$784.93
$751.14
$470.64
$1,946.10
$298.64
$5,908.82
$2,366.80
$67.01
$1,623 .. 92
S2,OOO.OO
$1,646.86
$1,391.83
$16,000.00
$453.44
$3,321.45
$1,643.53
$988.10
$288.54
$432.88
$38.86
MAXIMUM
POTENTIAL
CLAIM
$1,340.06
Sssa.S8
$2,684.89
$724.78
$3,903.90
$708.77
$1,606.80
$1,003.89
$71,397.01
$574.74
$527.80
$643.28
$160.35
$334.89
$335.62
$1,120.66
52,050.65
$439.87
$416.59
$2,255.22
$561.01
$101.09
$2,986.56
$674.45
$2,094.36
$7,211. 85
$634.00
$1,670.13
$500.68
$634.93
$1,583.33
$974.88
$1,117.83
$784.93
$751.14
$470.64
$1,946.10
$298.64
$5,908.82
$2,366.80
$67.01
$1,623.92
$3,674.74
$2,000.00
$1,646.86
$744.03
$1,391. 83
$16,000.00
$453.44
$3,321.45
$1,643.53
$988.10
$288.54
$432.88
$38.86





I)


CREDITOR
MILLS, TOBY
MONTANO, IRENE
MUNIZ, BETTE J.
MURPHY. KATHLEEN
NG, DON
OBERHOLTZER, DONNA
PADAOAN, EDWIN
PATERA, JENNIFER
QUIGLEY, JOHN
ROY, JOHANNA
SAHAROFF, BASIL
SANCHEZ, LORENE
SARMIENTO, ROMULO
SCHORA, BARBRA
SHEEHAN, RICHARD
SIKIN, ROBERT
STRUTZ, STEPHEN
SUSHANSKY, ANATOLY
TABANGCURA, TONY
YEVGENIYA
TURLA, FLORA MIERKEY
TUTT, GEORGE:
TYLER, JAMES WM.
VIRAY, (DEBBIE)
WATSON, KATIE
ZAMBRANA, LILLlJill

Total;
02/19/92
CONSOLIDATED ESTATE
HAMILTON TAFT EMPLOYEE CLAIMS
MAXIMUM
SCHEDULED PROOF OF CLAIM POTENTIAL
AMOUNT AMOUNT CLAIM
--------------- --------------- ---------------
$1,462.40 $1,462.40 $1,462.40
$310.75 $370.75
$378.13 $463.90 $463.90
$564.14 $564.14 $564.14
$414.70 $414.70
$884.84 $884.84 S884.84
$3B7.54 $387.54 $387.54
$411.98 $411. 98 $411.98
$240.52 $240.52 $240.52
$1, all. 59 $2,09B.8a $2,098.a8
$620.14 $620.14 $620.14
$1.39 $1. 39
$453.98 $1,703.33 $1,703.33
$1,818.71 $11,715.17 $11,715.17
$1,298.45 $1,298.45 $1,298.45
$737.70 $737.70 $737.70
$1,882.10 $1,882.10 $1,882.10
$667.20 $667.20 $667.20
$793.00 $793.00 S793.00
$100.02 $100.02
$427.20 $427.20 $427.20
$346.37 $346.37 5346.37
$2,043.44 $14, SOL 77 $14,501.77
$721.56 $721. 56 $721. 56
$848.00 $848.00 $848.00
$835.03 $835.03 $835.03

=======:::=======
$82,975.21 $198,393.09 $204,873.85
ti' I L f
Ie:)'..:::'.,'
C-8
CONSOLIDAmD BSi'ATE
BAMILroN TAFT TRADE CLAIMS








CREDITOR
191 ASSOCIATES
191 ASSOCIATES
ACCOUNTANTS, INC.
ALCATEL FRIDEN
ALHAMBRA NATIONAL WATER co.
ALLNET COMMUNICATION SERVICES
APOLLO COMMUNICATIONS
APTITUDE TESTING
ARA CORY
ARTHUR ANDERSEN
ASSOCIATED LIMOUSINES
ASSOCIATED LOOSE LEAF
AT&T
AT&T
AT&T
AT&T
BANe ONE LEASING CORP.
BANK OF HAWAI I
BEKINS
BOISE CASCADE OFFICE PRODUCTS
BROOK FURNITURE RENTAL
CALHOUN GUMP SPILLMAN & STACY
CATAPULT
CELLULAR ONE
COCORlCO PATISSERIE
COMPUTOWN
CONTRACT OFFICE GROUP
DUPLEX PRODUCTS, INC.
EATON FINANCIAL
ENTRE COMPU1ER CENTER
EQUITABLE LIFE ASSURANCE
EQUITABLE LIFE ASSqRANCE SOC
ERNA PRESS
EVANS RENTS, INC.
EXECUTIVE COURIER NETWORK
EXPERTLY DONE
FEDERAL EXPRESS CORP.
FIRST INTERSTATE BANCORP
FOX HARDWARE
GENERAL ELECTRIC CAPITAL CORP
GILTSPUR!SAN FRANCISCO
GOLDEN GATEWAY CENTER
GOODWIN, THOMPSON W.
HAMILTON MANAGEMENT
HEADQUARTERS COMPANIES
HI-TIMES DISCOUNT OFFICE
HYATT REGENCY S.F. HOTEL
INMAC
INNOVATIVE OFFICE SYSTEMS
INTELLIGENT ELECTRONICS, INC.
INTERNAL REVENUE SERVICE
INTRANATIONAL COMPUTER
WILLIAMS & ASSOC.
KESTREL RECORDS MANAGEMENT
KIRK PAPER co.
02/19/92
SCHEDULED
AMOUNT
$3,250.00

$640.00
$144.45
$148.10
$3,455.30
$119.51
$875.00
$426.56
$1,598,525.00

$851. 33

$55.31
$542.28
$1,475.39
$7,390.40
$1,360.25
$110.13
$428.31
$17S.00
$400.83
$158.39
$651.65
$134.B4
$3,270.14
$22,669.50
$11,822.75
$4,233.52
$2,665.21
51,264.42
$4.90
$150.00
$3,309.85
$62.36
$30,000.00
$83.81
$211.05
$1,368.07
$130.81
$223.00
$6.44
$13,640.00
$24,204.22
$43.56
$365.41
C-9
PROOF OF CLAIM
AMOUNT
$2,837.82
$119.57
$875.00
$439.05
$432,397.00
$779.76
$851.33
$571.53


$10,270.94

$175.00
$3 .. 270.14
$5,660.40
$1,943.22
$3,222.35
$306,126.58
$62636
$962.64
$6,620a96
$B15.91
$700.00
$2,131.08
$11,811.75
$11,640.00
$34,977.47
MAXIMUM
POTENTIAL
CLAIM
$3,250.00
$1,236.35
$640.00
$144.45
$148.10
$2,837.82
$119.57
$875.00
$439605
$432,297.00
$779.16
$851. 33
$1,759.09
$55.31
$542.28
51,475.39
$7,39Q.40
$571.53
$1,360.25
$170.13
$10,210.94
$8,027.47
$175.00
$400.83
$158.39
$651.65
$134.84
$3,270.14
$22,669.50
$11,822.75
$5,660.40
$1,943.22
$2,665.21
$1,264.42
$4.90
$150.00
$3,222.35
$306,126.58
$62636
$962.64
$6,620.96
$815.91
$700.00
$30,000.00
$83.81
$211.05
$2,131.08
$130.81
$223.00
$11,811675
$6.44
$11,640.00
. $34,977.47
$43656
$365.41
CONSOLIDATED ESTATE
HAMILTON TA.P"T ~ E CLAIMS




..



CREDITOR
LE REGENCY
LEWIS ASSOCIATES
LIBERTY MUTUAL INSURANCE CO.
LLOYD'S COMPUTER SERVICE
LONG & LEVIT
LOOKS FURNITURE LEASING
LVG PROPERTIES
MEADOWS OWENS COLLIER
HINDENB STATIONERS
MOORE BUSINESS PRODUCTS
MORTGAGE SECURITY ADVISORS
MUNICIPAL MOTOR OFFICER
NEW MEXICO TAX & REVENUE
OFFICE CLUB
ONE MARKET PLAZA
ONE MARKET PLAZA
PA BOARD OF FINANCE & REVENUE
PACIFIC BELL
PACIFIC BELL
PACKAGED BUSINESS
PILLSBURY, MADISON & SUTRO
PITNEY BOWES
PLANT DESIGN
PROFESSIONAL TRAINING ASSOC
RAYZBERG, DDS, ALEXANDER G.
REMEDY TEMP, INC.
ROBERTS OF SAN FRANCISCO
S.F. NEWSPAPER AGENCY
SAN FRANCISCO TOM SNACKS
SECURITY PACIFIC NATIONAL BANK
SNET
SOUTHERN BELL
STANSBURY BORAGINE & ASSC
STATE BOARD OF EQUALIZATION
STATE OF CALIFORNIA
TAB PRODUCTS CO.
THE MARK HOPKINS HOTEL
THE VERY LAST WORD
TRANSAHERICA INS. FINANCE
TRANSPORTABLE SOFTWARE
UARCO, INC.
US SPRINT
VULCAN BINDER & COVER
WEINBERG, DORaN
WESTCQRP SOFTWARE SYSTEMS, IN.
WORD POWER
= = = = ~ = = = = = = = ~ = = = = = = = = = = = = = = = = =
Total:
02/19/92
SCHEDULED
AMOUNT
$530.00
$2,060.52
$112.50
$1,670.30
$220.00
$1,033.91
$899.34
$45.00
$2,000.00
$17.42
$54.06
$88,822.38
$1,433.95
$575.11
$27.91
$10,451.25
$6,497.00
$104.37
$176.55
$4.00
$662.39
$117.00
$728.40
$340.08
$24.71
$89.60
$1,302.40
$500.00
$1,919.17
$58.01
$971.65
$266.43
$25,161. 67
$1.87
$84.40
$293.92
=============:::==
$1,894,052.76
C-10
PROOF OF CLAIM
AMOUNT
$2,140.77
$220.00
$112.50
$14,716.50
$973.72
$340,000.00
$10,143.49
$6,497.00
$72,862.69
$3,600.00
$2,978.73
$728.40
$0.00
$74.62
$1,302.40
$20,350.90
$3,B97.58
$166.62
$16,000.00
$549.97
===============
$1,346,135.60
MAXIMUM
POTENTIAL
CLAIM
$530.00
$2,140.77
$220.00
$112.50
$14,716.50
$1,670.30
$220.00
$1,033.91
$973.72
$45.00
$340,000.00
$2,000.00
$17.42
$54.06
$88,822.38
$1,433.95
$575.11
$27.91
$10,143.49
$6,497.00
$72,862.69
$104.37
$176.55
$4.00
$3,600.00
$662.39
$2,978.73
$728.40
$340.08
$0.00
$24.71
$74.62
$1,320.40
$500.00
$1,919.17
$58.01
$971.65
$266.43
$20,350.90
53,897458
$166.62
$1.B7
$84.40
$16,000.00
$549.97
$293.92
===================
$1,535,519.13
CONSOLIDATED ESTATE
OTHER HAMILTON TAFT CLAIMS









CREDITOR
SECURITY PACIFIC NATIONAL BANK
STEVEN SOLODOFF
= = = = ~ = = = = = = = = = = = ; = = = = = = = = = = = = =
Total:
02/19/92
SCHEDULED
AMOUNT
=================
. $0.00
C-l1
PROOF OF CLAIM
AMOUNT
$2,268,770.21
$110,030,000.00
============:::=:=
$112,298,770.21
MAXIMUM
POTENTIAL
CLAIM
$2,268,770.21
$110,030,000.00
========='======
$112,298,770.21
CONSOLIDATED
REMINOroN CLAIMS




I)


,.
CREDITOR
AMELIA MAR'l'IN TRAVEL
AMERICAN EXPRESS
ARENA PROMOTIONS
ARTS & FLOWERS
AT&T
BAL.LARD, WILLIAM E.
BANK ONE, TEXAS, NA
BITUMINOUS CASUALTY CORP.
CALHOUN,GUHP,SPILLMAN & STACEY
CCAJ
CHASE THIRD CENTURY LEAS ING
CITY WIDE DELIVERY
CLEVELAND, GENE
CONNIE C. ARMSTRONG, JR.
CUMMINS-ALLISON CORP.
DALE SIMPSON & ASSOCIATES
DALLAS MORNING NEWS
DALLAS TIMES HERALD
DELUX BUSINESS FORMS
EATON FINANCIAL CORP.
EPPRIGHT & GOLOMBECR
EQUITABLE LIFE ASSURANCE
EVANS PRINTING COMPANY
EVANS PRINTING COMPANY
EXCELSIOR LEGAL SOUTHWEST
EXECUTIVE COFFEE SERVICE
FAIRCHILD COMMUNICATIONS
FEDERAL EXPRESS
FOUR SEASONS HOTEL
GROCHOWSKI, GREG
HUMPHRIES, THOMAS
INNOVATIVE LEASING
INNOVATIVE OFFICE SYSTEMS
JET EAST, INC..
JOHN F. WILLIAMS & ASSOC.
LANIER WORLDWIDE, INC.
LINCOLN NATIONAL LIFE INS. co.
LLOYO'S COMPUTER SERVICE
LONG & LEVIT
LOOKS FURNITURE LEASING
LUSK &ASSOCIATES PERSONNEL
MARGULIES COMMUNICATIONS
MATTHEW BENDER COMPANY
MCCALL, MCBRIDE, ROBERTS
MCCOY, ERNEST S.
MCCOY, ROBERT
MCCOY, ROBERT
MERRILL PIERCE
NAIL, HEATHER
OFFICE CO., INC.
OIL &GAS JOURNAL
PAYCHEX
PEAT HARWICK MAIN & CO
PILLSBURY, MADISON & SUTRO
PITNEY BOWES
02/19/92
SCHEDULED
AMOUNT
$2,834.89
$43.33
$39.00
$286.32
$67.91
$9.40
$213,015.97
$8,164.00
$254.50
$322.48
$104.74
$251.00
$6,411.33
5112.95
$1,494.33
$22.50
$111. 09
$113.66
$1,723.60
$197.12
S87.63
$326.78
$5,604.98
$645.00
$43,704.78
$1,108.83
$52.60
$3,951.47
$1,374.48
$44,968.85-
$34.61
$150.00
$24,984.73
$405.29
$8,750.00
$2,500.00
$431.65
$29.30
$69.38
$1,616.74
$5.20
$668.53
$95.00
$228.78
$39,000.00
$87.68
C-12
PROOF OF CLAIM
AMOUNT
$2,218.89
$18,080.00
$1,661.52
$4,937.79
$3,565.46
$224,074.90
$147.22
$225.05
$3,691. 40
$7,925.10
$41,536.59
$150.00
$126,437.35
$8,750.00
$3,461.50
$69.38
$600.00
$5.20
$58,841.00
$37,572.66
MAXIMUM
POTENTIAL
CLAIM
$2,21B.89
$43.33
$39.00
$286.32
$67.91
$9.40
$273,015.97
$18,080.00
$254.50
$322.48
$104.74
$251. 00
$1,661. 52
$6,411.33
$112.95
$4,937.79
$1,494.33
$22.50
$111.09
$3,565.46
$1,723.60
$224,074.90
$147.22
$225.05
$87.63
$326.78
$3,691.40
$645.00
$43,704.78
$1,108.83
$52.60
$3,951.47
$1,374.48
$44,968.85
$7,925.10
$34.61
$41,356.59
$150.00
$126,437.35
$405.29
$8,750.00
$2,500.00
$437.65
$29.30
$3,461.50
$69.38
$600.00
$1,616.'74
$5.20
$668.53
$95.00
$228.78
$58,841.00
$37,572.66
$87.68
CONSOLIDATED BSTATE
REMINGTON CLAIMS


..



CREDITOR
PROFESSIONAL SECURITY COMPANY
ROSADO, ROSA A.
SIERRA SPRING WATER
SOUTHWESTERN BELL MOBILE
STRASBURGER & PRICE
TEXAS EKPLOYMENT COMMISSION
THE GASS COMPANY
THE MANSION
THE MARK HOPKINS
THE TRAVELERS
THOMPSON & KNIGHT
TODAY'S TEMPORARY
TRANSAMERICA I N S U ~ C E
TU ELECTRIC
WALTERS, KIM
WELSH'S GREAT CAKES, INC.
WHEEL COMPONENTS, INC.
ZENO SYSTEMS
~ = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Total:
02/19/92
SCHEDULED
AMOUNT
$75.78
$33.25
$827 .. 45
$90.00
$395.00
$363.86
$2,221.83
$1,600.00
$18,797.99
$249.10
$2,481.33
$97.28
$22.36
$18.00
$2,126.00
$64.95
================
$505,932.59
C-13
PROOF OF CLAIM
AMOUNT
$1,052.32
$275 .. S5
$399 .. 51
$2,501.72
$25,859.01
$249.10
===========.!:!!:===
$5'74,288.22
MAXIMUM
POTENTIAL
CLAIM
$75.78
$1,052.32
$33.25
$827.45
$275.55
$399.51
$395.00
$2,501.72
$2,221.83
$1,600.00
$25,859.01
$249.10
$2,481.33
$97.28
$22.36
$18.00
$2,126.00
$64.95
===============
$970,665.90

CONSOLIDATED ESTATE
DRESDNER ENTERPRISES CLAIMS






CREDITOR
AMERICAN EXPRESS
ARLINGTON UTILITIES
BRACEWELL & PATTERSON
COUNTY OF DALLAS
FOREMOST TUBULAR PDODUCTS
FOREMOST TUBULAR PRODUCTS
FOSTER, LEWIS, LANGLEY, ET.AL.
GREENLEAF LAWN MAINTENANCE
HARWIN, MR. & MRS. ROBERT B.
THIRD CENTURY INC
TV ELECTRIC
UNITED BANK & TRUST
=:=================;==========
Total:
02/19/92
SCHEDULED
AMOUNT
$61.90
$2,831. 36
$5,535.98
$225.00
$1,300.00
$53.01
::::=:::=============
$10,007.25
C-14
PROOF OF CLAIM
AMOUNT
$17,594.90
$259.75
$643.19
$174.35
$2,831.36
$6,171.62
$3,800.00
$2,827.98
$12,689.51
= = ~ = = = = = = = = = = = =
$46,992.66
MAXIMUM
POTENTIAL
CLAIM
$17,594.90
$61.90
$259.75
$643.19
$174.35
$2,831.36
$6,171.62
$225.00
$3,800.00
$2,827.98
$53.01
$12,689.51
===============
$47,332.57
.,
DRESDHBR PETROLEUM CLAIMS

·e





CREDITOR
A & B ELECTRONICS, INC.
AAA TUBING TESTERS, INC.
ABLE COATING SYSTEMS, INC.
ACE TRANSPORTAION, INC.
ARCO OIL & GAS COMPANY
AT&T
ATCO SERVICES, INC.
B.K. DRILLING FLUIDS
BERGSTEIN OILFIELD SRves, INC.
BRADLEY SUPPLY COMPANY
CHAMPION TECHNOLOGIES
CITATION OIL & GAS CORP.
CLARK COMMUNICATIONS, INC.
CLINTON, G. C.
COLORADO RIVER MNCPL WTR DST
COMMERCIAL RADIO SERVICE
D&H TRANSPORTS, INC.
D.F.W. DEVELOPMENT CORP.
DALE MARTIN & SON TIRE
DANIEL, GLENN E.
DAVIDSON, ROGER E.
DRINNON, STEPHEN W.
DST SYSTEMS, INC.
E.L. FARMER & CO.
EASTMAN, TRUSTEE, FRANK A.
ELROD WlRELlNE SERVICES
ENERGY ELECTRIC CONTRACTING
FEDERAL EXPRESS
FIRESTONE SERVICES
FLO C02, INC.
FOWLERS TEXACO SERVICE STATION
G & L TOOL COMPANY
G&W DANIEL CONSTRUCTION CO
GOODWIN, THOMPSON W.
GOOL OFFICE EQUIPMENT CO.
GRAUMAN'S, INC.
H & P RENTALS
HALLIBURTON LOGGING SERV., INC
HALLIBURTON SERVICES
HANOVER COMPRESSOR CO.
HARDING WELL SERVICE CO.
HAWKIN'S DOZERS
HENDERSON, CHARLES H.
HIGm..AND PUMP COMPANY
HINSLEY, MICHAEL
INSTRUMENT MAINTENANCE CO.
JIMCO ELECTRONICS AND
JOHNCO SALES COMPANY
JOHNSON, LLOYD E.
K-l TANK RENTALS
LAIN WELL SERVICE COMPANY
LANE, JR., SAM
LAUDERMILK, D.V.N., BOBBY
LEAMCO-RUTHCO
LIBERTY ANCHOR SERVICE
02/19/92
SCHEDULED
AMOUNT
$324.52
$6,688.00
$1,136.63
$2,089.16
$900.00
$49.71
$948.36
$7,049.09
$348.79
$283.84
$570.03
$1,043.57
$873.78
$22,798.18
$14,846.65
$151.56
$1,188.60
$660.00
$116.73
$'700.00
$1.56
$970.97
$107.50
$995.12
$3.26
$2,900.00
$1,309.04

$487.65
$4,213.85
$3,341.86
$1,025.43
$301.50
$1.05
$42 .. 02
$366.38
$1,218.75
$37,688.78
$3,899.89
$2,461. 42
$19,787.50
$1,838.73
$12,861.73
$1,074.53
$1,447.99
$2,749.79
$4,930.72
$3,297.70
$1,012.14
$22,631.38
$1.05
$158.80
$1,968.56
$546.50
C-15
PROOF OF CLAIM
AMOUNT
$6,688.00
$900.00
$570603
$1,595.88
$1,037.83
$23,023.98
$14,846.65
$151656
$1,188.60
$660.00
S115.00

$3,300.00
$1,002.48
$995.12
UNKNOWN
$2,900.00
$2,431.42
$3,342606
$1,025.43
$301.50
$1,218.75
$5,711.54
$31,977.24
$11,869.00
$2,461.42
$19,787.50
$1,889661
$14,341.11
$2,505.16
$8,498.70
$5,407.56
$22,736.37
MAXIMUM
POTENTIAL
CLAIM
$324.52
$6,688.00
$1,"136.63
$2,089.16
$900.00
$49.71
$948636
$7,049.09
$348.79
$283.84
$570.03
$1,595.88
$1,037.83
$23,023.98
$14,846.65
$151.56
$1,188.60
$660.00
$115.00
$1,350.00
$3,300.00
$1,002.48
$107.50
$995.12
UNKNOWN
$2,900.00
$2,431.42
$'114.00
$487.65
$4,213.85
$3,342.06
$1,025.43
$301. SO
$1.05
$42.02
$366.-38
$1,218.15
$5,711.54
$31,977.24
$11,869.00
$2,461.42
$19,787.50
$1,889.61
$14,341.11
$1,074.53
$1,447.79
$2,505.16
$8,498.70
$5,407.56
$1,012.14
$22,736.37
51.05
$158.80
$1,968.56
$546.50
DRESDHBR PETROLEUM CLAIMS





..




CREDITOR
M & P DRILLING SERVICE INC.
HOH CORPORATION
MICKLER, JAMIE
MIDWEST ELECTRIC COOP
MIKE BYRD CASING CREWS
NALCO CHEMICAL COMPAN:i
NATIONAL OIL WELL
NORTHGATE COMPUTER SYSTEMS
OFPlCEMART SUPERSTORE
PACKER SALES & RENTAL, INC.
PARONER WELt SERVICE, INC.
PENA WELDING
PERMAIN OIL FIELD ELECTRIC
PETROLEUM INFORMATION
PETROLEUM INFORMATION
PETROWARE SYSTEMS, INC.
POLLARD CHEVROLET
PORTER, WILLIAM S.
PREFERED PACKERS, INC.
PRIDE PETROLEUM SERVICES
PRO WATER SERVICE
RALPH H. VINEY & ASSOCIATES
ROBERTS AUTO SUPPLY
ROTARY OIL & GAS CO., INC.
S&S HOT OIL SERVo INC.
SCOTT FUEL, INC.
SHELF ENERGY
SMALL FISHING & RENTAL
SOUTHWEST TOOL COMPANY
STEPHEN J. KROUGH & ASSOCIATES
STONEWALL ELECTRIC CO.
SUBSURFACE SPECIALTY COMPANY
SUNWEST MUD COMPANY
TEXAS UTILITIES ELECTRIC CO.
THE REEVES COMPANY
THE TRAVELERS INSURANCE
THE WESTERN COMPANY OF
TRAC POWER RENTAL
TRANSAMERICA InSURANCE
TV ELECTRIC
TURNER BIT SERVICE, INC.
TWO DRAW WELDING
TYRELL REAL ESTATE
WEAVER SERVICES, INC.
WES-TEX TELEPHONE COOP
WEST TEXAS WELDERS SUPPLY
WIGGINS, MARK
WINSTEAD, SECHREST & MINICK
= ~ = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Total:
02/19/92
SCHEDULED
AMOUNT
$43,688.25
$136.32
$970.97
$458.62
$1,345.72
$11,818.80
$6,943.50
$310.00
$370.48
$2,075.29
$12,537.46
$11,469.70
$372.14
$157.92
$363.43
$2,649.96
$154.92
$2.61
$716.81
$808.12
$537.50
$158.31
$7,036.47
524.2.50
$264.36
$7.16
S10,828.75
$1,774.98
$170.00
$2,508.04
$13,614.37
$5,519.62
$853.00
$3,681. 58
$107.25
$3,365.40
$10,280.84
$458.49
$850.00
$1,600.00
$1,649.88
$301.75
$56.08
$100.00
$9,534.33
===============
$371,376.03
C-16
PROOF OF CLAIM
AMOUNT
$51,387.38
$1,002.48
$448.07
$1,345.72
$19,895.47
$7,367.51
$12,537.46
$10,707.39
S520.99
$300,000.00
$4,495.00
$7,928.97
$242.50
$262.78
$1,714.98
$2,508.04
$13,548.81
$7,049.09
$950.79
5107.25
$850.00
$301.75
$9,999.00
=================
$651,060.93
MAXIMUM
POTENTIAL
CLAIM
$51,387.38
$136.32
$1,002.48
$448.07
$1,345.72
$19,895.47
$7,367.51
$310.00
$370.48
$2,075.29
$12,537.46
$10,.107.39
$372.14
$157.92
$520.99
$2,649.96
$154.92
$300,000.00
$716.81
$808.12
$537.50
$4,495.00
$158.31
$7,928.9,
$242.50
$262.78
$7.16
$10,828.75
$1,7/4.98
$170.00
52,508.84
$13,548.81
$7,049.09
$950.79
$5,519.62
$853.00
$3,681.58
$107.25
$3,365.40
$10,280.84
$458.49
$850.00
$1,600.00
$1,649.88
$301.75
$56.08
$9,999.00
$9,534.33
===:::.:::::===========
$731,286.55
Memorandum
To
From
SAC, San Francisco ((Q(,J}-SF-Cf1}S"5)(P) 3/8/92
I b7C
Subject Connie Chip Armstrong, et al
dba, Hamilton Taft and Company, et al
San Francisco, Ca.
FBW (B); Mail Fraud, Bankruptcy Fraud, (A);
OO:SF
712
On the afternoon of March 5, 1992 a meeting was held at
the office of AUSA Michael Yamaguchi to discuss __
strategy in the above referenced matter. Present
ESQ. representing the bankruptcy trustee. Also present was Mr.
Ronald Smetana, Deputy Attorney General, Major Fraud unit of the
california state Attorney General's office. SA's will Hatcher and
re resented the FBI.
i u.
J
-, .
iJ{'! i.e.· J


;oA-
(I) It-SF-cr)aS,
(
I
Oa I - J
b7C I
/C) lL1l (.! t:-::: ?h
2
On February 27, 1992 the accountant for the trustee
finished his second interim report for the bankruptcy which
includes among other thing a tracing of over $4,000,000 directly
into the pockets of Armstrong himself. The report cites payments
by Armstrong using Hamilton Taft funds to a stripper' and the use
of over $225,000 to purchase Dallas Cowboy "skyboxes
lt

The next investigative step is to apply for an ex parte
order for Armstrong's personal tax returns for 1988, 1989, and
1990. Also several interviews of former Armstrong associates will
be conducted in Texas.
Finally due to the continuing effort being expended by
SA Will Hatcher and his anticipated involvement in this matter it
is requested that he be designated co-case agent for the
remainder of the investigation of this case.
2
FD-36 (Rev
FBI
TRANSMIT VIA:
00 Teletype
o Facsimile
o AIRTEL
PRECEDENCE:
o Immediate
IX] Priority
o Routine
CLASSIFICATION:
o TOP SECRET
o SECRET
o CONFIDENTIAL
o UNCLAS EFT 0
00 UNCLAS
Date 4/14/92
FM FBI SAN FRANCISCO (196A-SF-93255) (P) (SQ 5)
TO FBI DALLAS/PRIORITY/
FBI SAN ANTONIO/PRIORITY/
BT
UNCLAS
CITE: //3790//
PASS: ssAl.... ...J1 AND SA l _ SQ 10 - DALLAS;
SQ. 7 - SAN ANTONIO.
SUBJECT: CONNIE C. ARMSTRONG, JR., AKA CHIP ARMSTRONG, DBA
,Ie HAMILTON TAFT, 1 MARKET PLAZA, SUITE 3200, SAN FRANCISCO,
CALIFORNIA 94105, FRAUD BY WIRE (A) MAIL FRAUD, TAX
BANKRUPTCY FRAUDi (A); 00: SAN FRANCISCO•
.--\
RE: SAN FRANCISCO TELEPHONE CALLS TO
AND I I<SAN ANTONIO) ON 4/13/92.
CAPTIONED CASE INVOLVES A CONVERSION OF HAMILTON TAFT
ISN:
_-------"IIIt....------=- _ kDLPt _
MRI/JULIAN DATE:
FUNDS BY SUBJECT ARMSTRONG TO HIS PERSONAL USE IN AN AMOUNT
I I If, .- I · r pj#
r f- ,l .."'}.: ..! .(/2 ---
L ....... y._./ ,r
APproJed: Sb Original mename:6(X !)01 . 0'';
Time Received: Tel prep J_
t
,-_
024
FOX DATE & TIME OF ACCEPTANCE.
APAGE 2 196A-SF-93255 UNCLAS
APPROACHING, $55 TO THE EFFORTS OF THE TRUSTEE
.-,,--'
__ ... ,.-.,
APPOINTED BY THE U.S. BANKRUPTCY COURT IN SAN FRANCISCO,
MILLIONS OF DOLLARS IN ASSETS HAVE BEEN RECOVERED.
ADDITIONALLY, THE ACCOUNTANT FOR THE TRUSTEE HAS TRACED OVER
$16 MILLION IN HAMILTON TAFT FUNDS GOING DIRECTLY TO CONNIE C.
ARMSTRONG, JR AND/OR TO ONE OF HIS NUMEROUS DALLAS BASED
CORPORATE ALTER EGOS. INVESTIGATION HAS ESTABLISHED THAT FROM
1/1/89 THROUGH 6/15/91, $4,787,950.84 HAS BEEN TRACED TO
ARMSTRONG'S PERSONAL ACCOUNTS.
IN MARCH OF 1992, JUDGE LLOYD KING, U.S. BANKRUPTCY COURT
SAN FRANCISCO GRANTED A MOTION OF THE TRUSTEE FOR HAMILTON
TAFT FOR A FORMAL ORDER TO ASK THE UNITED STATES ATTORNEY'S
OFFICE IN SAN FRANCISCO TO INITIATE THE CONTEMPT OF COURT
INVESTIGATION AGAINST SUBJECT ARMSTRONG GIVEN HIS SEVERAL
VIOLATIONS OF THE BANKRUPTCY COURT'S ORDERS TO NOT DISSIPATE
THE ASSETS OF THE HAMILTON TAFT ESTATE.
SAN FRANCISCO CASE AGENTS ,-----__---JI AND WILLARD
b/e)
/
/
L. HATCHER, WITH THE CONCURRENCE OF DALLAS AND SAN ANTONIO
CONDUCT INTERVIEWS OF SEVERAL FORMER EMPLOYEESi )
{OR ASSOCIATES)OF ARMSTRONG. SAN FRANCISCO CONTEMPLATES THE J
".,. .
f
...
"
,
,
.
I

• '-:. FD-302 (REV 3
M
10-82)
..
"e
- 1 -
FEDERAL BUREAU OF lNVESTIGATION
Dlltc· of transcnpllon
met the agents at the
a : 0 a.m. the morning. The interviewing
themselves and the subiect of which they wished to
I Iabout. I he wanted to cooperate andl
accompanied the intervlewing agents to the San Antonio
Bureau of Investigation (FBI) office.
The interviewing agents arrived at the FBI office at
approximately 8:39 a.m. at which time the interviewing agents
again advised I Iwhat the interview was concerning. _
was advised oJ by the Chen
the Advice of Rights form (FD-395) to read. L ILead the
Advice of Rights form and then signed it at approxlrnately 8:49
a.m.. A photocopy of the FD-395 will be incorporated into and
become part of this FD-302 as an attachment and the original will
be maintained in the lA section of the investigative file.
I 'gave the following information:
r lstated he has read the Waiver/Advice of Rights
form FD-395 and slated he is not represented by counsel at this
time. IJ66f eis lunderstood that this interview is concerning his
relationShlp wlth HAMILTON TAFT & qpMPANV INC., VISION
INC. and CONNIE C. ARMSTRONG, JR.. L Jsaid that he
understood he is not at this time the pr1rnary focus of this
investigation but that the interviewing agents are not making any
promises or representations that he may not become a subject of
this investigation later as further facts are revealed.
b7C
stated he attended
He a
go en a rea esca e ro ers lcense some lme 1n e mid nineteen
sixties. He is J I In the
nineteen seventles he formed texas real estate partnerships first
I<PHO) and then with] IWhich developed
various real estate. In the early nlneteen elghties he was able
to purchase control of AMERICAN CENTURY CORPORATION which
InvcSIIElltlOn on lIt San Antonio, Texas File # 196A-SF-9 3 2
I1h) WILLARD L. HATCHER, JR. /WLHMj..
Lb7C Dntcdlcllltcd
4/23/92
ThIs document conl1uns nClther recommendatlonB nor conclUSions of the FBI ILlS the property of the FBlnnd Iii loaned to your IIgency.
It and Its contents arc nOl to bc dlstnbuted OUISlde: your IIgency
~
,
, .. 'i

'');-302a (Rev )]-1 S-83)
196A-SF-93255SubC
2 I .On 4 / 22 / 9 2 I Page
-J --- ~ - - - - - - - ----'------ ----
Continuation ofFD·302 of
controlled several real estate companies. He used AMERICAN
CENTURY to purchase COMMERCE SAVINGS & LOAN in San Antonio,
Texas. He managed the real estate while his partner managed the
banking operations. old his stock in AMERICAN CENTURY
in February of 1984. used compensating balances to
generate investment capital. explained that compensating
balances is when a company with temporary access to large amounts
of cash can deposit money into a bank and maintain a certain
balance in return for the bank issuing him loans at below market
rates which he would use to invest and generate even more
capital.
l Isaid that in late 1983 the state of Texas
approaocabout purchasing the troubled SUMMIT SAVINGS AND
LOAN. said he made a mistake and purchased SUMMIT S&L
before camp e ~ n g the net worth audit. Soon after taking over
the state reguerted that more capital be deposited into SUMMIT
S&L andL Jsaid he was not able to raise the capital needed b)C
so he handed the state ~ h e keys to SUMMIT S&L in 1985. In or
around December of 1987l Isaid he formed VISION INC. which
was to be an investment company.
I Ihad told I Ithat HAMILTON TAFT was a
service company which managed money on a temporary basis for
fortune 500 companies for a period from four to sixty days. He
asked her who regulated the industry and she said no one.
I Istated she said, you can even buy raw land in Dallas with
the money. She went on to sa it was okay to invest funds any
way HAMILTON TAFT wishes. '1//JliIP'!-l' saw HAMILTON TAFT as a
possible source of funds for 0 use as compensating balance
for loans from banks.
I I said he knew that his trouble at SUMMIT S&L
would get a lot of press. He needed a vehicle by which to
insulate himself from his purchase of HAMILTON TAFT from CIGNA
who then owned HAMILTON TAFT so he wanted to use MAXPHARMA INC. a
pUblicly traded company on the American stock Exchange (AMEX) for

196A-SF-93255SubC
Conloo"loon ofFD-102 of -1 ....Jf--------. On 4/22/92
,Page __3 __
thislDurpose, I He took a couple of trips to San Francisco to meet
with. and CIGNA to negotiate the purchase of HAMILTON
TAFT by VISION then later it was agreed that MAXPHARMA would
purchase the stock.
I [said he was asked to take a look at INTERPHARM
INC. by an old frlend of his,1 Iwho was on the
board of INTERPHARM. I c'C/).r.;:.! Ihad introduced him to u.l/j/
I Ihad traded a large share of MAXPHA __
INTERPHARM stock and some capital. I ladvised that
get out 9
f
the 0jal. MAXPHARMA traded INTERfHABM i:J
and thenL _arranged to bUy the note ofL_ The note
was at the NATIONAL BANK OF WASHINGTON and securedy the stock
of MAXPHARMA. 1,C7A;:7 p I.! Ipeeded MAXPHARMA as a vehicle to purchase
HAMILTON TAFT so he gotVJri,x/! Ito personally guarantee the note in
order for the bank to release their rights to MAXPHARMA stock to
VISION and MAXPHARMA returned INTERPHARM it's stock for MAXPHARMA b7C
stock that INTERPHARM held
1
then was the majority I
shareholder of MAXPHARMA. Jstated that he never met
I Iwho was involved with the NATIONAL BANK OF
MAXPHARMA deal.
I Iexplained thatl I to
vast capital through the SAAR
comprised of rich Saudi Arabian businessman. I Iwas
impressed byl lability to raise capital when he closed the
Aspen, Colorado deal on a handshake and got to I
million dollars the next day. This underminedL _ bid
for the property. I lexplained he was an agent on t e deal
and got a commission for closing the deal for COMMERCE S&L. If
COMMERCE S&L got paid in full ($10 Million dollars) he would get
one million dollars.
Sometime in late 1987 1988 the price for
HAMILTON TAFT was negotiated andl Jchanged the entity that
was purch . om ISION to MAXPHARMA. During
this . e /h was hired to run MAXPHARMA.
ha a an was hired byl
torney, who was by
........olIaIIaIo.t"""'-and appointed as MAXPHARMA's Secretary
;;
'tt
196A-SF-93255SubC
b7C
.On __ __,Pllgc 4 / ,.i-
I
') -, i}
/.i iii"
. .:/j,
)
IOIJ-') iJ
"!-
In January of 1988 MAXPHARMA consummated the
of HAMILTON in from CIGNA. I Icontinued by 1)'
explaining thatl Jwas MAXPHARMA's eyes and ears in the
CIGNA deal. ADP COMPANY ang CONTROL'DATA INC. were also trying
to purchase HAMILTON TAFT. Ikept '[,[ laware of what
was needed to keep the from purchas1ng HAMILTON TAFT.
r I said thatL afraid of losing her position if
one of the 0lher payrolax companies purchased HAMILTON TAFT.
At this time . MAXPHARMA by putting
I land charge.
I land I stated they could carne up with 1,,/!j!l)
the $4.5 miqlion dollars needed by using HAMILTON TAFT funds. \.1i·
I Jsaid it was Jega1 to use HAMILTON TAFT funds to
purchase HAMILTON TAFT. l Itoldl Ithat he had run
it by some California attorneys who agreed with him it was legal
and an acceptable method of purchasing HAMILTON TAFT.
I''f,j''ACi d( Is' interested in the
trucking bUS1ness. 1988 with a deal
to purchase a trucking company. and they decided
that MAXPHARMA would become a company for several
different type of c . even though technically MAXPHARMA did
not have any cash. "\Iii I) stated they decided to use HAMILTON
TAFT funds to purchase the other companies.
I Isaid he questioned I landl
about the legaI1ty of using client deposited tax
HAMILTON TAFT and they said there were no restrictions on how
this money was to be used as long as the investments were
"prudent
lt
• said gotten legal opinion to
that affect. r;aid that _was Director of
HAMILTON TAFT at this time and that always listened to
what I Irecommended.
I Istated that I land himself had several
and were no longer working together in mid 1988.
said he toldl Ithatl Iwasl I
said he demanded a sharIhOlde:s of MAXPHARMA and
would never hold one. Jandl Iclairned
they were not prepared to holdn ann AI share olders meeting of
MAXPHARMA. MAXPHARMA was "0 listed
fl
by the AMEX for not filing
financials and not having an annual shareholders meeting.
I Istated that he wasl labout this
COn!IfiUl1Il0n of FD-302 of
;:

.....t?30211 (Rev I H S-83)
196A-SF-93255SubC
5
ContlnUlltlon of FD·302 of
J
·On __4-=-1_
2
_
2
-=-1_
9
_
2
__•Page
___________ ----
time and thatl landl Ifelt they could ignore him
and deflect all blame on h1m for what was going on at MAXPHARMA.
___ stated that when he hired r Ihe told him
he probably would, Jso he wanted
Ito invest HAMILTON TAFT dollars wisely and not use that
I I stated he instructed I Ion how to
use the compensating balances to get financing for acquisition of
new companies.
r Istated he filed a law suit in 1988 to regain
control MAXPHARMA throU;h a dallas attorneyI :::L-
telephone - I:Dd Francisco attorney,c:::J
I I(PHD) L Jsaid, he was successful
a permanent 10n S 0pp1nQ the transper of
TAFT funds to MAXPHARMA. After this I landL _" L
asked him what he wanted in order to aro the law suit. J b7C
said to them he wanted them out. stated e barr wed
approximately $600,000.00 dollars from S../Adl-!
finance the law suit and CODtfol of MAXPHARMA. ' said
he heard during this timei: went to CAPROCK SAVINGS AND
LOAN to get a line of cred1t 1n order to borrow five million
dollars to cover HAMILTON TAFT capital shortage. I
thatl Iwas not successful in securing a line of credit at
CAPROCK.
I Istated that it was about this time that
ARMSTRONG came on to the scene and filed multi Ie law suits
attempting to gain control of MAXPHARMA. stated he
transferred all N stock and a 600,0\0.00 dollar
note payable to c,\W-' ':' ompany CR _
INC.. I Ihired ' telephone number I
I a former Wells argo an 0 lcer, to take
HAMILTON TAFT and try to find out what had happened over there.
They hired ARTHUR ANDERSON C.P.A. firm and TOPINKA to audit the
books and records of HAMILTON TAFT to determine where HAMILTON
TAFT stood legally and financially. I Isaid this all took
place sometime late 198B.

he perceived that the $4 million dollar
debt that he purchase of HAMILTON TAFT would have to be
paid back. said he hoped he could acquire GULFTEX INC.
which he thought may have had enough equity in real estate

(Rev 11-15-83)
196A-SF-93255SubC
••
6
ConllnUllllon of FD·302 of
J
·On 4/22/92 •Page
____--- ------- ---
holdings to repay the $4 million dollar debt. But, I Isaid,
ARMSTRONG got a temporary restraining order issued by the Dallas
courts while he was in the middle of the deal. The deal then
fell apart. Around the same timel Isaid he had gotten the
legal opinion from PETIT & MARTIN law firm expressing that he
could not use HAMILTON TAFT client deposited funds for any thing
other that short term liquid investments.
While under deposition by ARMSTRONG's
stated he was telephoned by TOPINKA who told him that they had
determined that HAMILTON TAFT had a negative capital position of
$20 million dollars and probably would not be able to meet their
quarterly) tax payments. I Isaid he then stated to
ARMSTRONG on the ;ecord he was going to put HAMILTON TAFT
into bankruptcy. L that ARMSTRONG jumped up and got
real mad and insisted that he still wanted control of MAXPHARMA
and HAMILTON TAFT. sol I said he went on the record and
asked ARMSTRONG if he still wanted even though it
was $20 million dollars in the hole. L told ARMSTRONG
that a tax was coming due that they HAMILTON TAFT may not
be able to that HAMILTON TAFT's biggest customer is
considering pUlling out and ARMSTRONG said he still wanted
TA;r ARMSTRONG then said he bac a nJa
n
to :ake it all
work. _ _ Isaid that ARMSTRONG andl Jwere both
depose by 15 attorney.
the first time he heard of ARMSTRONG was
in 1988 Wh'e'i1'] :=Jbrought him in to meet him_ ABMSTRQNG
offered to purchase VISION's shareef MAXPHARMA. r jsaid,
he refused the offer rnd ARMSTRONG got mad. While ARMSTRONG was
at his office I , said he showed him his proposal to GULFTEX
INC. which later ARMSTRONG stole and completed the deal himself
but the difference was that ARMSTRONG used HAMILTON TAFT funds

getting a bank loan using compensating balances.
said he remembers regdjnq in some HAMILTON TAFT report
a au ARMSTRONG meetingL Jand some money t:
ENTERPRISES INC. before he met ARMSTRONG in 1988. i:: jsaid
had askedl J who was DRESDNER and I lsal 1. was
someone he knew. L Isaid later he found out it was a
ARMSTRONG company.
I Isaid that he capitulated in March of 1989 and
agreed to over all of CR ACQUISITION stock to ARMSTRONG as
long as he agreed to pay the I Inote for $600,000.00
• (RtV 11-15-83)
196A-SF-93255SubC
r.e
••
7
Contmuatlon of FD-302 or
J
'00 __4-=-1_
2
_
2
-=-1_
9
_
2
__•
----------_...... -------- ----
dollars. r Isaid he asked ARMSTRONG for proof that he had
the capital outside of HAMILTON TAFT funds to repayl land
ARMSTRONG insured him he did. I Icannot remember where the
outside capital supposedly was to come from. ARMSTRONG tut:=J
around and hiredl Ito collect the notes payable from
! fhere was a $3 million dollar note from HAMIL
TAFT to that he had arranged in 1988.
this note tv stiltjrg iT2
to
in Aspen, ,
Colorado. sald he told 1 was 0 a ly up to hlID
if he wanted to loan a 0 Ispecifically
remembers! [asking i he was sure hT could legallY
loan HAMILTON TAFT fun 5 n said yes. said on
after granted the $3 ml1110n dollar
loan to that he was a te o;set! Ito pledge assets as
collatera or the loans but Iwere not
interested. Later ARMSTRONG aSke= h1ID to handle the matter.
said that while MAXPHARMA owned HAMILTON TAFT
r------......----------------.....,ran HAMILTON TAFT. He said he 1)7C
reques e ey a reslgn a er e regained control of MAXPHARMA
in late 1989 but thatl Iwas allowed to stay on in a
reduced role because of her re1ationshlp wlth the local banks.
r Isaid he met with ARMSTRONG only two times after
the transfer of stock in March of 1989. The first time was to
introduce ARMSTRONG to the GULFTEX people and the second was
about securingl Inote. I Iremembers seeing HAMILTON
TAFT financials wh11e at a meeting with GULFTEX in 1989. I__
said tb: fin;nCialS indicate: thuge net worth at HAMILTON TAFT.
I .brokers at GULFTEX, never got any
comm1SS1ons rom ARMSTRONG t a were do them. I Isuggested
they may still have a copy of the financials.
I asked by the interviewing agents why he
thought that ARMSTRONG wanted control of HAMILTON TAFT when
basically it was insolvent? said, the HAMILTON TAFT had
approximately $4 billion dol 'ng through the company and
it was totally unregulated. had said that these funds
were unrestricted in the use.
I Isaid it was clear to him after regaining
control of HAMILTON TAFT in 19B9 that the same major banks
involved with 1AFT still thought CIGNA still owned
HAMILTON TAFT. l- Jsaid he saw correspondence in 1989 from
GD-302n (Rev 11·15-83)
196A-SF-93255SubC
:..
Contlnuallon of FD·302 of
....1-- ' On __ __•Page __8__
banks addressed to HAMILTON TAFT referencing CIGNA.
speculated that if somehow that HAMILTON TAFT was able to conceal
the fact that CIGNA had not sold HAMILTON TAFT the banks would be
more willing to allow temporary negative cash balances because
they figured they had CIGNA assets backing HAMILTON TAFT.
I Istated he thought that the "intangible assets"
listed in the MAXPHARMA June 30,1988 10Q filing were referencing
payroll contracts of HAMILTON TAFT. When asked who was the
"affiliate of VISION INC.
1t
that received $625,000.00 dollpr Joan
and a $875,000.00 dollar loan referenced in the same
said that VISION INC. did borrow some money from MAXPHARMA.
VISION had an employment contract with MAXPHARMA where MAXPHARMA
paid VISION a management fee for access to investment
opportunities. MAXPHARMA had thT first fight of refusal of any
deal that VISION may had going. L . said the above
referenced be the MAXPHARMA board authorized loans
to his family. said it is possible thatl I
considered himse an a filiate OflVISION since at one he
was an officer of VISION. I reviewed a photocopy of the
lOQ report and said it contained several false statements.
For exarnple,l lsaid, the board of MAXPHARMA never
met to authorize apxthlng In 1988. Also, the $1 million dollar
bonus thatr Jpaid himself was supposed to be only if
and when the C & H NATIONWIDE INC. deal was consummated. L I
said this bonus deal was in writiQg somewhere at MAXPHARMA at one
time. I Isaid that I Japparently paid himself this
Q
thout meeting the conditions of getting the bonus.
said it was ludicrous to believe someone would pay anyone
or ge ing MAXPHARMA into a bad deal like that one.
Referencing the lOQ again, 'd that the May
1988 $400,000.00 dollar payment was to to help her
purchase a house. He said that off in order to
get her cooperation. She was the person needed in San
tq WirelIDOney from San Francisco to him in Dallas.
Alsg _ would charge MAXPHARMA huge legal fees that
I felt were not justified. I Isaid that could explain
same of the payments referenced in the 10Q.
b7C

rp.302a (Re.... 11-15-83)
196A-SF-93255SubC
ConlmUlllJon of FD-301 of
J
On 4 / '2 2 /9'2 . Pllge _9_
---------------------, _----:._--=-----
I that he assumed the THIRD NATIONAL BANK
referenced in the 10Q is referencing his deal withl I He
said that most of that money, approximately 1.6 mi110n
was paid back to MAXPHARMA.
I Isaid that the last two paragraphs of page 13 of
the MAXPHARMA lOQ in question are absolute absurd. I
there was never any urging by any major shareholder.
I Istated thatl llisted as
prinyipaJ finrncial officer on the MAXPHARMA 16Q was some yes man
thatL . brought into MAXPHARMA. I Ifelt that this lOQ
was a result of MAXPHARMA officers trying to take the emphasis
off of themselves and put it was soon to be
indicted. I he told this lOQ was totally
inaccurate when it was filed and agreed but said that
I Iwas the
l
and suggeste it be filed this way_
At about this time, Jsaid,1 Iwould keep his office
doors locked all day in Dallas so as not to be served legal
documents by process servers. Isaid that MAXPHARMA quit
filing security Exchange Commission (SEC) reports because there
were no more assets in MAXPHARMA.
A photocopy of the above referenced MAXPHARMA 109 will
be incorporated into this FD-302 as an attachment behindl
advice of rights form. ---------
FD-36 (Rev 8-29-85)
FBI
TRANSMIT VIA:
00 Teletype
o Facsimile
o AIRTEL
PRECEDENCE:
D Immediate
IX! Priority
D Routine
CLASSIFICATION:
D TOP SECRET
o SECRET
o CONFIDENTIAL
o UNCLAS EFT 0
!Xl UNCLAS
Date 4/29/92
FM FBI SAN FRANCISCO (196A-SF-93255) (P)
TO FBI DALLAS/PRIORITY/
BT
UNCLAS
CITE: //3790//
SUBJECT: CONNIE C ARMSTRONG, ET ALi DBA HAMILTON TAFT AND
COMPANY, ET ALi SAN FRANCISCO, CAi FBW (B); MAIL FRAUD,
BANKRUPTCY FRAUD, (A)i 00: SAN FRANCISCO.
ARMED AND DANGEROUS
RE TELETYPE FROM SAN FRANCISCO DATED 4/14/92.
SUBJECT CONSIDERED ARMED AND DANGEROUS BECAUSE KNOWN TO
HAVE VIOLENT TEMPER, OWNS FIREARMS, AND ALLEGEDLY THERE HAS
BEEN DEATH THREATS TO WITNESSES IN THIS CASE.
/L
b7C
FOX DATE & TIME OF ACCEPTANCE.
I SA ( }<..---- --
----------------------------- ----

---rr-"""-
"'l." , ( /

(....:;=>'J
-------

Approved: D..
II
Original filename: L-t. t!. 00

Time Received: I Telprep filename: a:
MRIJ JULIAN n-A-T-E-: ISN"";:: __
----+-1 _ ..........
;7D
FD-36 (Rev 11-17-88)
FBI
TRANSMIT VIA:
D Teletype
o Facsimile
(K] AIRTEL
PRECEDENCE:
o Immediate
[J Priority
o Routine
CLASSIFICATION:
D TOP SECRET
o SECRET
o CONFIDENTIAL
o UNCLAS EFT 0
o UNCLAS
-93255) (SQD 15) (P) SAC,
SAC, SAN FRANCISCO
CONNIE C. ARMST
DBA HAMILTON T T AND COMPANY, ET ALi
SAN FRANCISC , CALIFORNIA;
FBW (B); MA FRAUD; BANKRUPTCY FRAUD (A);
00: SAN F CISCO
ARMED AND DANGEROUS
FROM
SUBJECT
TO
RE: Teletype from San Francisco to Dallas dated
April 3, 1992.
b'7C
b7D
Enclosed for San Francisco are two copies of insert
regarding witness I I original and one copy of
FD-302 regarding meeting betweenl
with original interview notes.
For __ __ agents observed
__ between and debriefed
I Jimmediately a
cp:
San Francisco (encl
Dallas
)
, , "
I
(Number)
Transmitted
Approved: _
b7D
LEADS:
DALLAS AT DALLAS: Will obtain co ies of
2
and forward them to San
FD-36 (Rev 11-11-88)
FBI
TRANSMIT VIA:
o Teletype
o Facsimile
IX] AIRTEL:
PRECEDENCE:
o Immediate
D Priority
o Routine
CLASSIFICATION:
D TOP SECRET
o SECRET
o CONFIDENTIAL
o UNCLAS EFT 0
o UNCLAS
Date 5 5/92
TO
FROM
SAC, SAN FRANCISCO (196A-SF-93255)
SAC, DALLAS (196A-SF-93255) (SDQ 15) (RUe)
SUBJECT CONNIE C. ARMSTRONG, ET ALi
DBA HAMILTON TAFT AND COMPANY, ET ALi
SAN FRANCISCO, CALIFORNIA;
FBW (B) i MAIL FRAUDj BANKRUPTCY FRAUD (A);
00: SAN FRANCISCO
ARMED AND DANGEROUS
RE: Teletype from San Francisco to Dallas dated April
3, 1992 and Airtel from Dallas to San Francisco dated 5/1/92.
Enclosed for San Francisco are nine documents
enclosed in a envelope.
For information, San Francisco,
sent copies of -------- __
r These documents are as
b7C
b7D
r
'"IS pertal.n to 1..... 1
.....------------.....
Inasmuch as all investigation has been conducted by
the Dallas Division in this matter, this case is being consid-
ered Rue.
(2)- San Francisco (encl
Y - Dallas
JM/jm
Approved: _
Transmitted
(Number) (Time)
,EARCH,fD .... .....--1
ERIAUZED,......... ( __
5
A._ ", "_
APAGE 2 196A-SF-93255 UNCLAS
WILLARD L. HATCHER, JR. AND SAI IN
DALLAS LAST WEEK (4/22/92-4/24/92) INTERVIEWING WITNESSES IN
THE DALLAS AREA. I IWAS ONE OF THE WITNESSES
INTERVIEWED. I I
"'-------- 1
BY THE SAN FRANCISCO OFFICE) BE AWARE THAT
?
SAl IDALLAS
DIVISION.
LEAD:
DALLAS DIVISION
AT DALLAS] TEXAS
DEBRIEFI SOON AS POSSIBLEI I
I I

IF FEASIBLE AND PRACTICAL, CONTACT .
PRIOR TOI... .....,j1
b7e
b7D
APAGE 3 196A-SF-93255 UNCLAS
BY THE MEETING P L A C E ~ ITO b7D
WITNESS THE MEETING AND/OR OVER HEAR THE CONVERSATION.
BT
Tim document conttUn3 neither rccommcndal1on:l nor conclusions of the FBI 11 IS the property of the FBI ond 15 loaned to your agency,
11 Bnd lts contents are not 10 be dIStributed outSide your 81leney

afternoon of April 28, 1992, Special Agent
Feceived a envelope from a company known as
Company, accounts, 10830
North Central Expressway, Suite 400, Dallas, Texas, Thi S
I
envelope contained a memo dated May 17, 1990, from. .
to CHIP ARMSTRONG regarding lithe Remlngton dllemma -.
envelope also contained a letter dated January 3, 1991, to Mr.
CONNIE C. ARMSTRONG, Jr., Chairman of thr BqarC. KDiartsbridge
Company, Inc., Dallas, Texas, announcingL . reslgnation
from this company.
Finally, this envelope contained a letter to Mr. CONNIE
C. ARMSTRONG, Jr., on the letterhead of an entity known as
Lenders Flnancial Corporation, dated necemt=J,
1990, which lS three pages in length and 15 signed by
I I Caples of these documents are attached to an
conslaered a part of thlS lnterview form.
b7C
by _/_9_
1
Date dictated
- - ....
5/13/92
Date of transcnptlon ."....-5_/_2-.-9_/_9_2 _
-------

at San FranC1SCO, Californ.lCfllc (f 196A-SF-93255 SUB
- 1. -
FEDERAL BUREAU OF INVESTIGATION

InvestJgellon on 4/28/92
FD-JO.2 (REV 3-10-82)
. -§ ...,
b7C
FD-30Jll {Rev li-15-83}
196A-SF-93255

SUB C

ConllnuallOn ofFD-302 of ..... ...... , On 08/26/92 . PDBe __2__
company as a Retirement Plan Admlnlstrator.
I lstated that she became involved 1n cllent
at Taft jn November 1990.
Accordlng tol Jfriend was the actual front
runner for the posltlon of Head of the Client Relatlons
Department at H t. There was a conflict and eventually
I lasked to head up the Client Relations
Department because knowledge of Hamilton Taft.
I Istated also involved
in client correspondence at thiS time.
with respect to the Client Relations

thatL ::::J (ph) / I _ I(ph) /
(ph), arun f(ph) were emp oyed In the
of Hamilton Taft.
I Irecited that the function of the Client b7C
Relations Department was basically to keep Hamilton Taft's
clients happy. She stated that the Client correspondence unit
was under the Operations Unit of Hamilton Taft and it handled IRS
inqulres, state and local lnquires, and would handle customer
inqulres. She advised the Client Relations Department handled
specific customer complaints and inqulres. She sald that the
mechanlcs of handling a complaint sometlmes involve the receipt
of a complalnt via telephone and/or facsim1le from a client
directly to a person or persons known as Tax Accountants. She
stated that there were approxlmately SlX to eight Tax Accountants
working for Harnllton Taft. The Cllent Correspondence Team
actually was headed up byl Isupervised by the Vlce
Presldent of Operatlons.
I Ireiterated that she became lnvolved wlth the
Cllent Relations Department at the end of 1990
j
under the
oil I stated that, I
requested her to create a client breakdown list, which she did in
fact generate. This request was made :lto the Client
Relations Unit. At this point in tirne,[ rwas shown a
copy of the client breakdown list and she proceeded to explain to
the interviewing agents the eodings. Some clients according to
I I were more conscious than others in demanding proof of
payments; is they demanded proof that payments had In fact
been made on their behalf by Hamilton Taft to taxing
FD-302n (Rev 11-15-83)
196A-SF-93255

SUB C

Con tmuntlon or FD-302 oI ----Jl.- .....---- On
08/26/92 . Page 3
----
authorities. This usually was in the form of a Federal Tax
Deposit receipt. A list was created which contained both the
state Income Tax (SIT) and the Clty Income Tax (CIT) cl1ents.
That is to say a report Was created which showed those cllents
who had to pay SIT as well as CIT. There also 15 a 11st of all
payments made to each state for each payment perlod. These
reports were generated by Ham11ton Taft employees.
with respect to the cllent breakdown Ilst,l
provlded the followlng explanation. She stated
cllents who had an "A" after thelr name, indlcated that this
partlcular cllent had recelved dellnquency notices and had
fact called once or twice wlth respect to late notlces that lt
had recelved from varlOUS taxlng authorltles. Those cllents who
had a "SenS.ltlve" deslgnatlon included those accounts who had
their own collectlons court, collections, correspondence I and
other overall problems. WIth respect to those cllents who had
the deslgnatlon "Collectlonsll after thelr name, thlS indlcated
that the client's account had been hit twice; that it hld beep
debited twice, and/or debited too late, or not enough. .
reiterated that the Client Relatlons Unit came up with this list.
I lrepeatedly processed those complaints which
had sometimes gone through the proper channels. The first line
of employees receiving inquires were Tax Accountants who
received a telephone call. For example, Federal Express
regarding a delinquency notice lt had received from the IRS,
regardIng a non-payment of taxes. A Tax Accountant UP9D receipt
of klnd of cornplalnt, would send the complalnt tol I
tvho would analyze the problem and send a letter to the clIent
with an explanatlon.
toe: [cllents were told that there
were systems problems.-' lsays that AL MAY (deceased)
told her to tell the cllents that there were computer problems.
I Istated that thlS could have very well have been the
case, since Hamilton Taft was undergolng a prgcerSV!
from one partlcular computer system to another. l .
advlsed that she f1rst became of the seyerlty of Client
Correspondence Unit problems whenL all the
cl1ents 1n March 1991, and told them that Hamllton Taft was not
making their tax payments. Furthermore,1 lreceived a
personal visit at Hamilton Taft headquarters in San Francisco
b7C
. - ,. ..
FD-302n (Rev 11-15-83)
196A-SF-93255

SUB C

Contmu.lIonoIFD-301ol -1..... ......1----' On 08/26/92 ,Pnge __
4
__
shortly afterl lallegations became pUblicized. This
visit was from representatives of Commercial Credit, which was a
very large client of Hamilton Taft. This company wanted to know
and wanted written assurance that it's tax obligations had in
fact been paid by Hamilton Taft.
I Istated that when these representatives of
Commerclal Credit appeared at her office she irnrnedlately went to
I LJ Controller of Hamilton Taft. He
toldl rthat payment had not been made for Commercial
Credlt for the current pay perlod. I ItOldl Ithat
payments for several clients had not been made. He told her this
in response to her questlon as to how many more Hamllton Taft
cllents' :ayments had not been made. She was shown a list by
I Jon that very day, of other cllents whose payments had
not been made by Taft. I Itoldl Ithat
Hamllton Taft needed to make the payments for these
I Isald that they couldn/t make the payments. ]
stated that she could not get a straight answer from .....
to why the clients' payments had not been made.
---------- - ----------------
l)nited States Attorney
Northen! District of Califanlia

u.s. Departm or Justice
I
"""'"=T:-r-u-s""":"t-e-e-f="o-r----:H==--a-m"'Ti""='l-:-t-o-n-, Taft & Co.
235 Montgomery street, suite 2500
San Francisco, CA 94104
Federal Building Box 36055
450 Golden Gate AVaJUt; 11th Floor
San Francisco} California 94102
September 4, 1992
(415)556-1328
FAX (415)556-7619
b'le
RE: Hamilton, Taft & Co.
_
This is to request that you provide this office with

and all communications in your possession
________1 and Connie C. Armstrong, Jr.
Please contact either Special Agent I I
Federal Bureau of Investigation or myself regarding this request.
Very truly yours,
JOHN A. MENDEZ
united states Attorney
ccll--- _
MICHAEL J. YAMAGUCHI
Assistant u.s. Attorney
,
/ ?{,!f --C;-F- /J - 3
"

196A-SF-93255 SUB C - 11
9/8/92
'ilI/Wlh
WILLARD L. HATCHER, JR. was
telephoned by the
Hamilton Taft Company Chapter 11 bankruptcy case. L..Jgave the
following information:
She stated that Aurther Anderson CPA firm conducted an audit
of HAMILTON TAFT in or around 1987. This was the last audited
financial statement she was aware of before CONNIE CHIP ARMSTRONG
took over HAMILTON TAFT.
On or around March 26, 1989 CHIP ARMSTRONG took control of
HAMILTON TAFT. He hired Pete Marwick, CPA firm in or around
April of 1989 to audit HAMILTON TAFT so he could show the dire
financial condition of HAMILTON TAFT when he took control. Pete
Marwick issued two financial statements.
The first statement was an audited opinioned financial
statement that showed HAMILTON TAFT with a negative net working
capital of around $14 million dollars as of March of 1989. The biC
financial statements indicated that HAMILTON TAFT had $18 million
in very questionable note recievables which HAMILTON TAFT held
$14 million in debt reserve (allowance for doubtful accounts)
this netted to leaving HAMILTON TAFT with a $4 million notes
recievable under long term assets.
The second financial statement issued by Pete Marwick was
only a "statement of review" of HAMILTON TAFT supposedly
indicating the financial position of HAMILTON TAFT as of June
1989. In this financial statement HAMILTON TAFT assigned the 18
million dollars in doubtful notes recievable to DRESDNER
ENTERPRISES, INC. in Dallas, Texas and DRESDNER in return issued
HAMILTON TAFT a 18 million dollars note which is payable in 1994. ,//fW
Pete Marwick states that the note is good because DRESDNER has
the "PIP" project which Pete Marwick says is worth $1.6
dollars. The DRESDNER note was issued in April of 1991 and not
payable untill 1994,c:::Jsays she has a copy of the note. Pete
Marwick further stretches the truth by listing the DRESDNER note
as a current asset. Pete Marwick states that the note is due in !i))l
1990, therefore, giving HAMILTON TAFT a positive net working S'>
capital.
c:::Jis not sure who was actually shown these Pete Marwick
financ1al statements. c:::Jhas seen internal HAMILTON TAFT notes
which direct individuals to send the financials to the HAMILTON
TAFT sales department. Butr---lcannot find any indications that
the financials were actually-sEOwn to clients.
...". - , ......


b7C
196A-SF-93255 SUB C
c:::Jsaid by the end of 1989 the PIF project is known by
everyone including Pete Marwick to be worthless. So at the end
of 1989 no financial statement is issued because Pete Marwick
would be forced to reverse the previous entry of the DRESDNER
notes actually being worth something. In 1990 no financial
statements are again issued and no financial statements of
HAMILTON TAFT was issued again.
I thail= she found infernal notes at HAMILTON TAFT
that indicated thatlktL\"\-l VOIJ at Pete Marwick had daily
communication with HAMILTON TAFT. 11." Id h h Iended up being
terminated by Pete MarW}dSing CHIP ARMSTRONG office space
in Dallas. At one time was doing work for CHANELL
CORPORATION (PHD) in Da as. He was even signing the checks
there.
c:::Jsaid she located a new CHIP ARMSTRONG business through a
change of address in Dallas. CHIP ARMSTRONG's new business was
CC ENTERTAINMENT AND PROMOTIONS, 5949 Cherry Lane, suite 1460,
Dallas, telephone number (214) 265-0585.
2*
FD·302n 11-15-83)
196A-SF-93255SubC
• •
Contmullllon of FD-302 of J ..... ....------------. On __9--,-/_9_/_9_2__ Page __2__
..... that he saw the second quarter lOQ
Securities and Exchange commission (SEC) MAXPHARMA report which
stated that MAXPHARMA's total assets were only HAMILTON TAFT and
100 acres of land. He remembers that soon after MAXPHARMA
purchased HAMILTON TAFT that several wire transfers were executed
from HAMILTON TAFT to MAXPHARMA. He remembers several more such
wire transfers during the period MAXPHARMA owned HAMILTON TAFT.
r---1said that he knew of the wire transfers because
was responsIE!e for the bookkeeping for the two HAMILTON TAFT
fund balance sheets: the Client Impound Fund and the HAMILTON
TAFT operating Fund. He had to reconcile these fund's balance
sheets at least once a month.
he
r...-. ..... ! must have gotten the word
from to wire transfer the funds to
MAXp..........,.....-"="""'-.....-...............----, probably instructedI I to make the
wire transfers. sa1 that someone would notify him about
the amounts transfers to MAXPHARMA.
_____Istated that before the sell to MAXPHARMA that
HAMILTON TAFT had a multi-million dollar line of credit with a
financial institution to cover any temporary shortfalls in the
HAMILTON TAFT Operating Fund. He said that after the MAXPHARMA
purchasel him that MAXPHARMA negotiating
a in a line of credit. I Itold him
twas 1.0 the bag . CC,'('-
I I said that on or around August of 1988 he notified
Ithat HAMILTON TAFT could not continue to operate under
the current level of revenues. He said that I Itold him
that it had been authorized to transfer funds from the
Impound Fund to finance the operations q!
said that about two months later he andl JaskedL ____
about thj line of credit that was supposedly coming from Texas.
I _told them that it was corning any day. I Isaid he
continued to ask about t line of credit so often in
the following months that instructed him make his
enquiries through had told him to book the wire
transfers to MAXPHARMA as short term notes payable from
MAXPHARMA.
I Istated that every pay period (twice a month) that
HAMILTON TAFT was short of funds to meet payroll and that he
b"lC
I - " ,
, iI- ,.
" .
FD·]021l (Rev 11-15·83)
196A-SF-93255SubC

COnltnUllllon of FD-302 of -J ,-------------.On __9....;,/_9....;/_9_2 , Page __3__
would informI each time. It appeared that I Iwas
getting worrled because his CPA may been in
jeopardy. I lrecalls that I ItoldL Jthat his
license was 1n Jeopardy and he was not putting his license on the
line for this " ... illegal act
ll

I
recalled that sometime on or around June of 1988 a
Waterhouse CPA firm was sent out to audit
HAMILTON TAFT a I Iconf ided inl labout HAMILTON TAFT's . .,)'
flow sometime in Soon this 1/1);/1,((//
lncl.dent Pr1ce Waterhouse wt:4 and the aud.1.t rr.1")
completed. Soon after this and MAY resigned.
I I(PHO) was hired as chle financial officer by
sornetl.rne in late 1988 or early 1989.
IIsaid soon after these reSigntti :ns I 1eld
an all meeting at HAMILTON TAFT. . _ r(PHO)
questioned I labout the rumors about monl.es diverted
from client accounts into MAXPHARMA. I Iresponded with b7C
something to the affect that what we do with our money is our
business.
I Istated that by the time CONNIE (CHIP) ARMSTRONG,
JR. as DRESDNER COMPANY took control of HAMILTON TAFT in 1989
HAMILTON TAFT was $14 million in debt to the flient
due to wire transfers to MAXPHARMA. r .informed that
Author Anderson CPA firm was coming in to complete the Pr1ce
Waterhouse audit. MAY had returned to HAMILTON TAFT as Executive
Vice President. I Istated that a meeting took place between
Author Anderson aUditors, I land MAY at which they discussed
what went on at HAMILTON TAFT it was owned by MAXPHARMA.
I lunderstood that Arthur Anderson later issued a Review of
Flnancial statements report for HAMILTON TAFT.
I Isaid that when ORESDNER took control in March of
1989 two individuals from Dallas, Texas came in and took over the
day ,?perations 01 for the
These 1ndlvlduals were: . (PHO) and _
(PHO)! L ::JJ.eft HAMII,TON TAFT 0 never return.
promotedl ItOI J Then on or around 0 1989
ARMSTRONG appeared personally at HAMILTON TAFT and said that he
owned TAFT. ARMSTRONG said Presid
7
nt of
DRESDNER 1n Dallas and that he was try1ng to ta _
returning to HAMILTON TAFT as President. But,
FD-30211 (Rev 11·15·83)
196A-SF-93255SubC
• •
ContmULltlOn of FD-302 of
J"'- -------------.On __9....;./_9.....;/_9_2 •Page _4_
I I(PHO) was appointed as HAMILTON TAFT I
ARMSTRONG. He said it was about this time when he was instructed
merge the Fun: balanCJ sheet with the Operating Fund
balance sheet bYl _ _said these transfers to DRESDNER
were also shown as no es paya Ie like the MAXPHARMA transfers.
I lexplained that hGreSi;Jed from HAMILTON TAFT
because he was asked to quit by in May of 1990 due to his
being "written uptl three times. said the first time was
written up was soon after he told Peat Marwick auditor, I I
I I about the Internal Revenue Service (IRS) tracers that
HAMILTON TAFT received in December of 1989 in a meeting a with
I Isaid he told his then girlfriend,1 I
about HAMILTON TAFT not meeting the client/s quarterly tax
payments in August of 1989 and that HAMILTON TAFT was receiving
for the August tax payments in December of
l----Jsaid his girlfriends mother whq good
ARMSTRONG's executive secretary, Ihadtold b"lC
her what he toldl land apparently told ARMSTRONG.
ARMSTRONG confronted h1m at work about what he ha told his
girlfriend. I ItOld him that he should fire him for the
incident and denied that HAMILTON TAFT was withholding
any client tax payment checks.
I Isaid that the second incident
around January of 1990 whenl Ihad gotten fired.
confided in him that he was gain to firel
could not take the pressure. came ta h1m the next day
that he was being asked to teach his' ob. I Isaid he told
I Iwhat I Ihad told him went and toldl
r---1 said that third and final incident that lead to
__ __ that he resign was due to some accounting
mistake concerning . nts percentage of HAMILTON TAFT interest
it was to receive. said he was blamed for thelIDjstakf and
then asked by to resign. I Irecalled that . said
after he was asked to resi9n to not mess with them and they will
not mess with him. I Jtold him in front ofl I (from
HAMILTON TAFT Human Resources Q his mouth shut
and do not go to the IRS. I that was referencing
the client tax payments that were being W1 e .
I lexplained that there was several CPA firms
auditing HAMILTON TAFT while he was employed there. Author
FD·J0211 (Rev 11-15-83)
196A-SF-93255SubC


ConllOulltlon of FD·302 of
L- ' On __9....:/_9....;1;...9_2 • Page _5_
Anderson firm started on or around the end of 1988 and was gone
by the end of April of 1989 after ARMSTRONG took over. Peat
Marwi,k In jn April of 1989. __
(PHO) ,I, Jwere the Peat Marwick people he
remembered at HAMILTON TAFT. I Iwas denied access to
the HAMILTON TAFT premises in December of 1989. This was soon
after he confided in her about the HAMILTON TAFT withholding of
tax payments.
Isaidl Iprobably was the one that handled the
auditors for HAMILTON TAFT. He was sent to pick up copies of the
HAMILTON TAFT financial statements from Peat sometime in
of He gave these statements tel J Later that
daY,L Jtold him that the statements were going back to Peat
Marwick because ARMSTRONG was not happy with the figures.
told' • that HAMILTON TAFT was trying to
build up a relationship with their clients. He said thatl I
said that HAMILTON TAFT was going to show the Peat Marwick
HAMILTON TAFT financial to clients. , Irecalled that after
Iwas banned from HAMILTON TAFT everything dealing with Peat
Marwick was directed from Peat Marwick office and that any
questions would be directed toL I Peat Marwick, in
Dallas, Texas.
I thatc:::Jasked him why the wire transfers
were being. made out of HAMILTON TAFT and into the DRESDNER
accounts in Dallas. He answered that he did not know why.
I Irecalled that soon afterl Ibecame President
I Irequested that $7 million be transferred to Dallas to
purchase a shopping center. I told him that the funds would
be returned to HAMILTON TAFT within the month with interest
guaranteed. I Isaid that funds never were sent back to
HAMILTON TAFT as for as he knew.
btated that sometime in late 1988 or early
Jwas hired as Director of 0 erations for HAMILTON
TAFT. It was a known fact that had a fEie:dtl i:
the IRS Fresno, California. Itgeared to that I
was volunteering his services. said t a e unders oodhat
if HAMILTON TAFT had any problems h the IRS such as penalties
that needed to be abated I I could arrange it. He
thatl have penalties abated for HAMILTON TAFT. l----J
.... ·f ... .,
FD-301n (Rev 11-15·B3)
196A-SF-93255SubC


Conlmunhon of FD·302 of J -------------.On __9...;./_9....:;/_9_2 •Pllge _6_
said that it seemed that any time there was trouble with the IRS
people at HAMILTON TAFT they WOUld--=J :::Jto telephone his
friend at the IRS. I Isaid thatC::: the Client
Correspondence unit at HAMILTON TAFT but that he felt the
individual PTAs (Payroll Tax Accountants) would actually send
letters to clients about problems with the IRS.
c===J stated that it was rumored at HAMILTON TAFT that
Iwith ARMSTRONG and/orl I He
said she was promoted from plain Secretary to Corporate Secretary
making over $60
/
000.00 while ARMSTRONG ran HAMILTON TAFT.
Supposedly in 1990 her mother in New York died and she inherited
$500
/
000.00. He had heard she had been offered a position with
Parker Automotive by ARMSTRONG. I Isaid he understood that
I Iwas still in contact with ARMSTRONG. c::::Jsaid that
she would just about do anything for that
about six months ago,1 [his former girlfriend's (who
is now his wife) sister had told thatl her that
ARMSTRONG toldl Ithat he may have to serve a jail
sentence for what he had done.
b'/C
FD-302 (REV 3-10-82)


- 1 -
FEDERAL BUREAU OF INVESTIGATION
Dote of tranSCriptIon
09/15/92
. b7C
evening of August 26, 1992, I I
was interviewed at the San Francisco office of the
a californi1 J
which 1.n lcate that her residence is : I
California 94564. ThlS llcense also 115 e hera e a blrtn as
I Ithereafter provided the followlng
1.nfOrmatlon. She stated that she was born in the city of
I lin thel land that she is a U.s.
clt1.Zen. She stated that she was formally employrd with Hamilton
Taft, in San Francisco, in their Tax Department. I
stated that she has a Bachelor of Science degree hotel
Philippine University. She stated that her
husband, is an Ai . dvised that her
current emp oyment is with in stell art
a Fra emp oye as aj I
J w1th
with respect to her employment at Hamllton Taft, she
stated that in approximately SlPtember 1985 she was a Tax
Accountant and was employed by . Ias a Natlonal Tax
Accountant, prlor to beCOj1.ng employed w1th Harnllton Taft. She
stated that I _was 1nvalved 1n the purchase of
by Maxpharma Corporatlon. Dur1.ng thls tlme
I promoted to DireCjor for all of Hamilton
Taft. thatL _and herself had
differences regarding management style, not further described.
She then advlsed that she became the head of Consulting Service
Unit at Hamilton Taft which did consulting work regardlng payroll
taxes, analysis of potential cl1ent payroll problems and other
work related to the processing of payroll tafes for Gl\ents.
When CONNIE ARMSTRONG carne to Hamilton Taft,L Jstated
that she was the Consulting Services Unit manager. At thls pOlnt
in time, she stated that! 'was still the Presldent of
Hamllton Taft, when ARMSTRONG took over. She volunteered that
I Q{er as President from Some tlme
thereafter,L . went to Dallas, T ry
offices of ARMSTRONG's companies aqd became
President. In May 1991J Jle aml on a a er the
bankruptcy of that company and went to work for AC Transit
on 08[26/92 at San Francisco, CaliforniCfll, # 196A-SF-93255 SUB c1/
by IwILLARD L. HATCHER! JR. PKMLlbW21t: D.te dlet.led 09LOI/92
ThJS document contlllns neither recommendations nor conclusIons 01 the FBI II IS Ihe property of the FBI and 15 loaned to your agency
II and Its contents are not to be dJSlnbuted outstde your agenq'
FD-302a (Rev 11-15-83)
196A-SF-93255


Contl.nuatIon ofFD-302 01 --JL- --------. On 10/16/92 . Page _2_
~ ~ _ ~ ~ ~ __Iwas asked as to whether or not he noted
any unusual incidents taking place at tpe company. He stated
that in June of 1990, another employee, l ~ Irequested
access to the application tools of a certa1n computer program.
The access required special authorization because once inside
this particUlar applications tools portion of this computer
program it gave the person who accessed the program the ability
to change ledgersl:nd dater as well as figures with Q
client payments. ~ . stated t . ked with on
this occasion statlng that he asked whether e was going
to change the deposit dates for the ustomer accounts. He
also stated that when he joked with ut this possible
changing of deposit dates that he told if he were going
to change the deposit dates that it would necessary to change
other reports as well. He stated that I Ireplied that he
was just doing what he was told to do.
I 1stated that this applications tools program
previously referrea to contained deposit dates as well as dates
upon which checks were issued and dates upon which the various
checks were printed as well as copies of the checks themselves.
These checks of course were checks that were being sent to
various taxing authorities by Hamilton Taft on behalf of its
clients.
b7C
'.
..
FD-J02 (REV 3-10-8.1)

- 1 -

FEDERAL BUREAU OF INVESTIGATION
Date of transcrlptJOD
11/16/92
b7C
On the evening of November 9, 1992,1 I
voluntarily appeared at the San Francisco of Ehe Federal
Bureau of Investigation and provided the following information:
I I
lw . leXhibited California d.,....· .......... a.;;;,,;;;....
.... .... - ... ... ......
address as
I Istate.... that her
current employment is with Aetna Health Plans. She is employed
with this company asl her work phone is
(415) 244-8382. r==: ladv1sed that she had been employed
with Aetna Health Plans from October 11, 1991 through the
present. She stated that she is a united States citizen having
become a citizen in October of 1991. She
immigrated froml---Jin June of 1977.
r Istated that in June of 1990 she was hired as
an manager at Taft corporation in San
Francisco. She reported taL controller of the
company. She continued to be employed by Hamilton Taft through
October of 1991. She stated she acquired the job by a
newspaper ad. 1 Iduties included the assisting in the
preparation of monthly financial stateme1ts forlHamilton Taft and
checking outstanding client check lists. , stated that this
latter.duty involved the perusal of a computer generated check
list which showed which client checks were still outstanding.
I that the first time that she became aware
of the possibility that Hamilton Taft,
holding back client checks was in October of 1990. tated J
by way of background information that this y, that is
the possibility Hamilton Taft was holding back client checks had
been rumored for some time at Hamilton Taft and that it was a
fairly common rumor. She a:Vised that i: of 1990, a
manager by the name Jcould not
gave her a 0- checks were missing and asked
Jif these checks were being held.
,/
InveshgBll0n on --=1=-=1=-</--:9::..J/'-9::...::.2 at San Francisco r CalifornicFlle tI
Dille dlctnted
I
I
196A-SF-93255 .. 5V8-c;

11/13/92 I
ThIS document contains neither recommendallons nOf conclusions of the FBI It IS the pfoperty o{ the FBI and 1S loaned to your agency.
It and Its contents are not to be dutnbuted outside your agency

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