Contempt Motion

8/6/2019 Contempt Motion

1/66

ll en , P .A YS A T L AW

1 = i1 r ' ~ :. ., ILcUCAROLINAlmJ Ju t t8 ~I'4t'laIN

File #lO-CvS-107~THE GENERAL COURT OF JUSTICEORTH

LENOIR COUNTY L E N Q } , q C O U N TY . C'sJ;.STEPHEN L A R O Q r n ! ! 1 - , . ~ )Plaintiff, )

)))))

SDPERIOR COURT DIVISION

MOTION TO SHOW CAUSEFOR CONTEMPTvs.R. VAN BRAXTON, ET AL,Defendants.

The Defendants, .R. Van Braxton, and Van Braxton forN.C. House (hereinafter rtBraxton"),pursuant to the provisionsof N.C.G.S. 5-21, et seq., and N.C.G.S. lA-1, Rule 45(e)hereby moves the Court for an order holding East CarolinaDevelopment Company r Inc. (JlECDC"),in contempt of this Courtfor violating an Order of this Court filed herein on May 25,2011, and in support of this Motion, Braxton shows to theCourt the following:

1. That on May 2 . 5 1 2011, this Court entered anAmended Order overruling Objections and directing ECDC toproduce re.cords pursuant to RIlle 45 Subpoenas served onoctober 25, 2010 and February 18/ 2011. A copy of the AmendedOrder is attached hereto as Exhibit A.

2. That on June S, 2011, ECDC served a Response tothe Subpoenas and produced certain documents which Ecnccertified were responsive to the two Subpoenas. A copy of theResponse is attached hereto as Exhibit B.

3. That the Court! s Amended Order of May 25, 2011specifically states, in part, TfThat to the extent that senefails to produce dOcuments described abbve, Eene shallaffirmatively state in its response that the documents do notexist or that all documents have previously been pxcducedv .


2/66

PAS A T LAW

T O N, N .C .

That ECDC's Response (Exhibit B) does not comply with theCourt's AmendedOrder in that the certification to Exhibit Bstates, in part, that "all the Documents responsive to thesubpoenas have been produced or a statement has been made thatwe have been unable to locate the document in our records. IIECDCS cert.LfLcati i.on and response are intentionally ambiguousby suggesting that certain records responsive to the Subpoenasmay be in existence, but not produced. The certification is aclear violation of the Court1s May 25., 2011 Order. Theviolation is intentional as counsel for ECDChad submitted aproposed Order to. the court which contained the ambiguousstatement similar to the language of the certification. Thatproposed language was rejected by the Court. In addition,counsel for ECDCagain complained about the language of theAmendedOrder by letter dated June 3, 2011, a copy of which isattached as Exhibit C. finally, ECDC'sattorney. in a letterto Braxton's attorney, represented that certain documentsrequested in the October 25, 2010 Subpoena did not exi.st.(Letter attached as Exhibit D).

4. ECDChas also failed to complywith the Court'sAmendedOrder as follows:

(a) Failing to produce any documentsconcerning the loan represented by Exhibit J to the February18, 2011 Subpoena;

(b) Failing to produce all documents whichwere part of the 501 (c) (3) Application of ECDea-fter Braxtonhad informedECDC of the deficiencies (Exhibit E)i

(c) Fail ing to produce all Board of Director.Minutes. ECDCpreviously produced someminutes. On April 25 I2011 ECDCturned over Minutes from approximately 26 meeting.

signed.ost Minutes were Most Minutes containedot

2


3/66

len, P.A.]N EY S l iT L AWT ON , N .C .

redactions. There is no language in the Order allowingredactions of any document to be produced by ECDC.

produced) Failing to all documentsconcerning the loans referred to in the Subpoenaes andespecially those loans represented by Exhibits P, G, H, I andJ, to the Febr~ary 18, 2011 Subpoena. The Court's Orderspecifically directed ECDC that !TIn complying with this Order,BCDC shall specifically produce all Documents as defined inthe Subpoenas "... [1 The Subpoenas define IIDocuments to incIudebooks, bookkeeping records, bank records, correspondence,emails, working papers, appraisals and materials stored on acomputer. In addition, the February 18, 2011 Subpoena includedDocuments EeDC represented to the USDA it would maintain aspart of "Loari Servicing" including correspondence I notes of

i . phone conversations, appraisals, tickler system, and contactswith delinquent borrowers. ECDe has not produced Documentsthat meet these definitions and which exist. For example, ECDChas produt:::edthe following documents relating to certainloans:

-(i) Checks written to borrowers attachedas Exhibit Fi(ii) Monthly

attached as Exhibit G;statement to borrower

printoutiii) computed reflectingpayments on IRP Loans 180 and 270 attached as Exhibit H;

(iv) correspondence, emails, notes ofphone conversations, with borrower attached as Exhibit Ii

(v) Loan records I cash receipts, generalledgers referred to in Financial statement Findings 00-1 toAudit Reports for years 1998 through 2008 attached as Exhibit

3


4/66

A lle n, P .A . ,EY SA T L AWO N. N .C .

(e) Failing to provide any documents tosupport the reasonableness of fees paid to the Plaintiff byBCDC or to state that no such documents exist;

(f) Failing to produce any documents betweenECDC and USDA and any documents between ECDC and USDAconcerning an OIG Audit Report of ~une, 2010. ECDC1s Responseto 11see previously produce documents" is misleading as EeDChas not produced any documents responsive to those requestsand, has failed to state the documents do not exist asrequired by the Amended Orderj

5. ECDC has failed to _produceat least onedocument which Braxton obtained from a third party and whichhas been provided to Plaintiff's attorney. Attached as ExhibitK is a letter obtained by Subpoena which related to five (5)loans covered by the Subpoenas which was not produced by EeDC.

6. ECDeIs Response to the February 18, 2011Subpoena is misleading. Prior to the Court Is Amended Order IECDC had done nothing more than file a broadside objection toevery request contained in the Feb:t;Uary18i 2011 Subpoena.ECDC's Response (Exhibit B) was the first time E c n c hasresponded in any fashion to the February 18, 2011 SuPpoena.

7, ECDC IS 'certification is misleading inrepresenting to the Court that a Hgood faith" effort has beenmade to search for records. It has been over seven (7) monthssince ECDC was served with the November 2010 Subpoena and overfour (4) months since service of the"February 2011 Subpoena.ECDC has suggested in correspondence that the Plaintiff is the"principal II of ECDCIwith his access to that his legislative duties interferedrecords and that he would need to bepresent at any hearing on any production issues. Plaintiff hasnow certified to the Court that he is only one of the personsresponsible for maintaining and controlling ECDC records. ECDC

4


5/66

l en , P .A .N EY S A T L AWT O N, N .C .

should show cause why' the certification to ECDe Is Response(Exhibit B) isn6t contempt of Court by representing to theCourt both a' good faith effort to sea'reh for documents and. nowadmitting that other persons had control of the recordsgoverned by the subpoena.

WHEREFORE, Braxton respectfully prays that the Courttreat this verified Motion as an Affidavit in support of thisMotion and that the Court find and hold East CarolinaDevelopment Company in contempt of Court for violating theCourt's Order of January 10, 2011, and the Amended Order datedMay 25 r 20llo

This

WHITE & ALLEN, P .A.,Attorne s for .R. Van Braxton and Van

Marshalltate Bar #16732l"'>6I~.l1ew. SullivanN.C. State Bar #22343WHITE & ALLEN, P.A.Attorneys at LawP. O. Box 3169Kinston, N.C. 28502-3169Tel.; (252) 527-8000

JCA/rnb #21l105897-00001

5


6/66

A lle n, P .A .N F. :Y S A T L AWNSTON , N .C ,

NO RTH CARO LINALE NOIR COUNTY

John C. Archie, being first duly sworn, deposes andaays , in the above entitled action, that he has read theforegoing document and knows the contents thereof f that the.same is true of:his own knowledge except asto those. mattersand things therein alleged upon information and belief, and asto those, he believes them to be true.

JCA! rnb # 211105897-00001

6


7/66

P.AT 1 'O R t 'G Y S A T : 1 "A WKI ij STON , N .C .

F l L E B File #lD-0~S-1071lliB " A i ' 2 5 PI 2~ 1 \ &NORTH CAROLINA IN THE GENERAL CODRT OF JUSTICEL E N C iIR C O U N T Y . C S . .G .

SUPERIOR COURT DDTISIONENOIR COUNTYSTEPHEN LAROQUE, B Y ---.-::::t-J

Plain tiff, ))

VS. ))

R. VAN BRAXTON, VAN BRAXTO N )FOR N. C. HOaSE, NORTH CAROLINA)DEMOCRATIC PARTY I and SENATpR )BROCE PATTERSON, )

Defendants. )

AMENDEDORDER OVERRULINGOBJE CTIONS ~ COMPELLINGPRODUCTION PUP~UANT TO

Rffi.,E 45

THIS CAUSEcoming on to be heard and being heardAp;r:;-il 271 2011 in Lenoir. County Superior Court before theHonorable Paul L. Jones, Senior Resident Superior Court Judgepre$iding on Motion of R. Van Braxton an d Van Braxton for N.C.House (hereinafter "Braxtontt) pur.suant to N.C. Gen. Sta,t. lA-I, Rule 45(c } (4) an d (6) an d ~ule 45(e} fqr Or der s O ver rul in gObjections, Compelling Production and directing East Carolina ~Development Company, Inc. {"BCDcrr) ~ to show cause why itshould not be held in contempt; ~d

IT APPEARING TO THE COURT, after having reviewedBraxtons 1 Motions filed March 14t 2011 and having heaz-d thearguments of counsel, that Braxtonsl Motions should beallowed.

NOW, THEREFORE, it is hereby ordered, adjudged anddecreed as follows:

l. That Braxtons' Motions Overruling Objectionsand Compelling Production are hereby allowed.

2. The objections filed by ~CDCwith this court onJanuary 28, 2011 are overruled.

E XHIBIT A


8/66

te&Allen, PAAT r ll RNE l $ A ' tUWlONSTON. N.C.

3. scoc is ordered to produce at the offices ofWhite & Allen, P. A. I 106 S. McLewean Street, Kinston, NorthCarolin a, within teu (10) days of the date of this Order, all,Documents described in or On ~ibit A to the October ~5, 2010Subpoena served on ECDC.

4:. That ECDe r S Objection to the Subpoena and itsMotion to QuaSh Subpoen a filed on February 281 2011 are herebyoverruled an d den ied.

5. ECDC;is hereby ordered to produce, within ten(10) days of th~ date of this Order at the offic es o~ White &Allen, P.A'T all Documents described in or on the Subpoenaserved on EGDC by Braxton on February 18, 2011.

6. That to the extent that ECDe fails to producedocuments described above, EeDe shall affirmatively state inits response that the documents Bought do not exist or thatall documents have previously been prod~ced.

In complying with this Order, EeDC shall.specifically produce all Documents as defin ed in the Subpoenasserved on Oc tober 25, 2010 an d February 18, 2011.

8. That Braxton Is Motion for Contempt J;ernainspending and is, if appropriate, subjec t to further dispositi.onby this Court.

9. Thi$ Order shall amend an d sQpersede the OrderOverruling Objections and Compelling Pzoduct.Lon Pursuant toRule 45 entered by this. Court on May 12, 2011..

This 2fh day of May, 2011 ..~'r - = : ; >

L ~

The Hon orable FaSuperior Court J

JPM/jax #202~05897~OOOOl2


9/66

ST AT E O F N O RT H C AR OL IN ALENO rR COm ..rT Y IN T HE GE l\T ER AL C O UR t O F JU ST IC ESUPERIOR COuKT DIVISIONF ile No . : 1O-CVS-I071

Plaintiff,)))) RESPONSE TO SUBPOENAS) SERVED ON EAST CAROLINA) DEVELOPMENT COMPANY, INC. ON) OCTOBER 25~2010 AND ON RESPONSE) SUBPOENA DATED OCTOBER 25, !OlO)))))

S T EPH EN LAR OQU E ,

v .R.VAN BRAXTON. VANBRAXTON FOR NC HOUS~NORTII CAROLINA DEMOCRATICPARTY , and SE NAT OR B RU CEPATTERSON ,

Defendants.

NOW COMES East Carolina Development Company, Inc. ("ECnC"), by and through counsel,and makes the following response to the subpoenas served upon EeDC on October 10,2010 and onFebruary 18.2011 by counsel for Van Braxton and Van Braxton for North Carolina House:

RESPONSE TO SUBPOENA DATED OCTOBER 25,2010Inresponse to the specific numbered document requests of the subpoena, ECDC responds:1. See previously produced documents,2. See previously produced documents.3. See previously produced documents.4. See previously produced documents.5. See previously produced documents and attached "Exhibit A"6. See previously produced documents.7. See previously produced documents.8. See previously produced documents,

E XHIBIT R


10/66

9. See previously produced documents.10. See previously produced documents.11. See previously produced documents.12. See previously produced documents.13. See previously produced documents and attached "Exhibit A." If a requested document was

not produced, EODe states it is unable to locate the document in its records. Note that forsome of the earlier contracts. EeDC did not have an executed version of the contract, and aWord version of the contract was included on the CD. -

14. See previously produced documents. If a requested document was not produced, ECDC statesit is unable to locate the document inits records.15. See previously produced documents. Ifa requested document was not produced, EeDe statesit is unable t o locate the document in its records.

16. See previously produced documents.

RESPONSE TO SUBPOENA DATED FEBRUARY 18,2011Inresponse to the specific numbered document requests of the subpoena., EeDe responds:1. See previously produced documents.2. See previously produced documents and attached "Exhibit A." Ifa requested document was

not produced, ECDC states it is unable to locate the document in its records.3. See previously produced documents and attached "Exhibit A:~4. See Previously produced documents and attached "Exhibit A." If a requested document was

not produced, ECDe states it is unable to locate the document in its records.

20f4


11/66

5. See attached "Exhibit A."

This the ~YOfJune, 2011 .

30f4

. D IEN ER LAW@ o r E C D CRichard A. DienerN C B ar # 31487Jo hn Ma ch uc aN C B a r # 41401209 Eas t Arlington Blvd.G ree nvi lle, N C 2 78 58Ph : 252 -747-7400Fx: 866-948-8268


12/66

CERTIFICATE OF SERVICETIllS IS TO CERTIFY that the undersigned has this date served a copy of theforegoing RESPONSE TO SUBPOENAS SERVED ON EAST CAROLINADEVELO PMEN T COMPANY , IN C . O N O CTOB ER 25.2010 AND ON FEBRUARY

18,2011 inthe above-enti tled action upon counsel for Van B raxton and Van B raxton forNorth Carolina House and upon counsel for the North Carolina Democratic Party bydepositing a copy thereof in a wrapper 'With su ff ic ie nt po st ag e prepaid in the UnitedS ta tes M ail properly a dd ressed to counsel, a s ind ica ted below ;R . Van Braxton &V an B ra xton for N orth Carolina Housec/o M atthew S . S ulliva n" E sq.warrs &ALLEN, P.A.1 06 S . M cl.ew ea n S treetK inston, N C 2 8502

N orth C arolina D em ocra tic Pa rtyc/o Jim W . P hi lli ps, J r., E sq .BROOKS, PIERCE, McLENDON, HUMPHREY, L.L.P.P.O , B ox 1800R aleigh, N C 2 7602This the ~y of June, 2011 .

D IEN ER LAW~ECDCRichard A. DienerNC B ar # 31487Jo hn 'M a ch uc aNC Bar # 41401209 Eas t A rli ng to n B lv d.G reen ville, N C 2 7858Ph: 252-747-7400Fx: 866-948-8268

40f4


13/66

8T A TE O F N OR TH CAROLINALEN OlR C OU NTY

1'N T HE GE NERAL COU RT O F' JU ST IC ESUPER .!O R COURT D IVIS 10NFife No.: 1OCVSm1071STEPHEN LAROQ1,J8, )

)Plaintiff: ))

~ ))R . VAN BRAXTON , VAN ). B RAXTON FOR NC HOUSE , )N OR m C AR OL IN A DEMOCRATIC )PAR1\' , and SENATOR BRUCE )P A 1 i E R S O N t ))Defend ants. )

CER fnl?lC A ~ O F AU1'REN T [C ITY

IllE REBY CERT l'fY tha t the repro ductio n o f business reco rd s a t t a c h e d t o t hi scer ti fi ca te a re, t o the best of 1 ' 1 . y k nowledge. t ru e a nd a ccu ra te copies o f t he re co rd ssubpoena ed , t he originals of whi ch a re maintained by Ea st C a ro li na Develo pmen t Company.Inc. S aid record s a re made and kept in th~ re gu la r n nd o rd in ary cou rse o f bu sine ss. 1~ "'U RTHE'RCERT fFY tha t r am one o fth e p eople re spo nsi ble fo r m a in ta ln ln g a ndcontrol ling these records, a nd /o r th e appointed designee responsible fo r t he re le as e o f t he serecords. Finally, I ClCRTItY tha t , pur suant t o the subpoenas s erv ed upon East CarolinaD ev elo pmen t C ompa ny, ln c., a g oo d faith effort ha s been m ad e to sea rch a ll the record s oft he company, a nd that o i l the documents responsive tothe subpoenas nave been p roduced o ra S ta tem ent ha s been m ad e tha t w e ha ve been una ble to lo ca te thed ocum ent in Q ur record s.This the 7 d.YOfJ"ne'2011.~ .

Stephe LaRoquePresidentBast Ca ro li na Development Company, I nc .


14/66

. .... , ,.,~ > , ~ ", _, .... r'" - . . _ .. . . " , . n . . . c . . " . . ,~ "". ...

, . ' ..", .

' ..,, _ ' , ' ...~~. . . . . -.~.." .. .. . . . . . . , .-

.. ' ...... . F . ." , . . . . ~"." r'~ ,0 c " .' . . . . . . . . - - . . . . . . "~ ....

~.'.~. .. ,,.:.- ;'-rn ';' 3" 2 011' ..:. " .. '.:' .. " ......~. . ~v , . "'.. .' , .. . ,. .< , ..--.' '' .,,. . . ' . . . . . - ' . . L .~ . ' r

'" : . '" >, p",. , . ,:"... -- .. ..-. . ,. ..-',,, ._.,., , ".' " .. -"

r c ~ , ,""

., ..' ~.,d .,, . '. . _ . ' . ' V I AF A C S " n n t l t i0 2 5 i5 j~ 5 4 2 J . : , . " . _.. . . : " . ' . , ' . . " " . . . . .

'.' '.',.' JudgePaul Jones _ ..... ' . ' /,' / ... ' . ._ - c / o A m y C a r t e r S c b t t ~ ' . . " ' . . - . . _ ... .' .Trial Court C oord ina tor '.' .. " ,.' .'~ :'~ ,r/ "Po~ t Office B ox 68 . ,,,.,,' '~ .. " _ . . ....

, , . . K m ston,N C 28502 , ~ ,''_ .. ..."" .." .~ . "." , ..-- .... ,. , ,. ~'" .'. _ .~: ..' : . . , ' ,r ,

' . ' ; ' - : ,.. ' : ~ : ta R o q u ~ v . ~ r ~ o n ~ t c t l. , L e ~ O ~ ~ o u n tY ~ n ~ 'N ~ , .1 ' ~ : C V S ~ 1 0 7 { . , ~ . ~ : .: . : ' : // , < " ' . : - ; ,

. '.--. " 0, : ' ."

_ , , _ , . ' .:o . .. ' c.

'. > ,"""

., . . . . ,,

..: ':.,_-_~~'ri~ar J U d g e J6neS! .-:: . ,,: . ..,... ,.' , .',' . . r.. .' .. , . ..,' '.'rL _ , r ."

: '.,' -: . . ' .,...Asy6U kno~ ' co~{ in t h e " ~ b o ~ e - r e t ~ t e i i c e daS~ '~e bef~te y o ~ ~ A p r i l ~ t 7 , i Hr .. , .. ' . ' .. for ahea ring on the M otion of R, V an B ra xton a nd V an B ra xton for N ..C rH ouse ("B raxton") .., .pursuant to R ule 45 (c) (4) a nd (6 ) and Rule 4S( e) fo r o rd ers Ov erru li ng Objections, Compelling .' ..' . ..'. . P rod uction a nd directing E a st C a ro li na D ev elo pmen t Company, Inc . \ 'ECDC' j to show cause . '. . . . " . ~.wh y i t should not be held in com -erupt. After the hea ring. counsel for B raxton subm itted a . ..: '. r:: .. _... " "proposed O rd er to th e C O U l " 4 a nd I su bm i tte d a n e xp la na to ry l e t t e r a nd a n a lterna tive proposed ."" ::': ..-'. .' . 'O rd er incorpora ting a statement that ECDC had produced substantial documents, that ECDC had ": __,,:: .' ., ' :. . m ade a good faith effort, to date , to p ro duce the d ocum ents req uested , and that ECDC had :: .... .. ' .. '" produced all th e re sp on si ve d o cum en ts i n its c a re . c us to dy. o r-c on tro l ( a s o ppos ed t o s ta t ing- tl: :i a t - - ' ..: '. . ':'..,' ifECD~ did n ot p ro du ce th e d ocumen ts. th ey "d id n ot ex ist. '1 " ' . ..... . . _ .' . , . . . ~,.~~ ;

: , ' , .' - : ~ . . , :'. .. .~ .' . fMy' o f f i c e e -m a i le d Amy Cru:te~: S C 6 t f 6 n F t I d a y ~ M# 6 ; 2 m i ' ~~~e'ify6~'ad e z i ' r e d ' ' ; : ~ . ; : ' : . : : ... ...~" ail Ord r .. a nd Amy responde d on Mond ay. May 9 , 2011 . that you ha d not yet d one so. but tha t .-.: :' " '.sh e wou ld le t u s k nowa s soon a s you d i d . Apparently, - o n May 1 2,2 0 1 1, you signed the .:..; .':. '_ .': ..' ,,' .- '. -: p ropo se d O r de r se nt to you by Jo hn Marsha ll, a nd the O rd er w as filed with i li e C lerk on t h e ' s a m e ) . : : : ' ' . . . '

: .-. ,,' . ,:' ." date. I did not receive a copy of that Order by e-mail .U.S.Ma:i1~ or facsimile transmission, a n d . I : ." ' ..: : " ... ~ .~ . ,_ _ : ....W a s n ot n oti fi ed i n a nyw ay tha t i t ha d been entered. Itappears that on May 17,2011 , John ; : __-. ..',J .: . Marshall w rote to yo u stat ing that he had in adve rt en tly submitted a n . e a rli er v ers io n o f the Order" i .': ':,_" '. :....:and provided his final v ersio n o f th e O rd er e'the Amen de d O rd er"), w hi ch you si gn ed o n May _ I . , ' . _ ...: .r> ,'2 4, 2 01 1; a nd w hi ch w as 'fi led with th e C lerk o n M a y 2 5,2 01 1. John Marsha ll 's l et te r to yo u of " i........:." ," ' .." ".' M ay 17.2011 . states fuat[ was carbon copied on th e letter bye-m ail a nd U .S . M ail. I d id not . [ :.: .._" :.,

. :., ." .. ' c.: '... receive'a ro py o f thi s letter by a ny m ea ns until June 2 . 2011. I also d id not rec ei ve a copy of :,,:' ~,: . ~ . ... -.' " ; , .' your Amended O rd er by e-m a il. U . S. M a il. 01' f ac sim ile tr an sm i ss io n, a n d I was not notified in : :':. :. ,.- ... '. ": .. ' ' '. "any way that it h ad b een entered . In fact, th e first 'in dica tio n I h ad th at y ou had entered a n O rder '. :,' '_". .'- ' .' '" .- ~ (or an Amended O rder) ia .this ma tter was on the afternoon ofJune 2 ,2 01 1 . whe nJ finally . .,',.: :.' . ,..:-'.' received John M arsha ll's letter of May 17. 2011 . I would a lso note that t he Amended O rd er ... ' ... . _. '.. conta ins the requirem ent that I cer ti fy t ha t CDC h ad e ith er produced th e requested documents' . ..' ., .' or tha t they d o not exist. A s I pointed out in m y ea rlier expla na tory letter to the C ourt, it wou ld ,".'. ;be perjury for m e to certify that d ocumen ts. su ch a s the 0 1G R ep ort, "d o n ot exist," simply .,.'

. " ~ .'

.; .. ,.... ~~....... '.' '~4 ,:'I"".r ,~. ~~_-,.: A{)ZS~E,"li,irSlteel: : ..... :.: ~... ' . ' .... :: .. '.' , ..... ,,' ... : ,/ ". '.' ,.' .:': ..... ",, " P.O . B ox 555 . '.. . ',,: . .' "209 E. ~'l i i ingt[}nBoolev8td '. " , ,' . ..' , ..- 20K S ,Mam :S trd ' , .' : .,.302 NCFHghway 55 'W est .'. ' , . " S ! ; ! .! ;> " , Ifill NC. 28tl8'O' '.,.'. : .. : Greerrville, NC 27&58 .; . .- ".: Kenansville, NC .28349 '.,' .: '. . ."" MQunt Olive NC:27514 . ,'. Phone: 252.747.741){) " ., . Phone: 2S1 .747 ,7400 . ,phone: 910,447.4129 .. : .: Phone: 919.299.3028. ' - : ' . F a x : 866243920} .' .' .. ' .:':':: Fax: 856.243.9263 E X i I i B t 1 ' C . . Fa,, ; 866.243.,9263 .. : ,,' .. ' Fax: R 66.2 43.92 63 ."-'-,T . .~ ~ ~ _ '


15/66

. . . ,-. ,'" .

"

.. _ . . . . . . ."~ ' . . . . . . ' . . - + . . . . . . .,,' . . . "

/~ '.. . . . . . .. . . . ~.. . .: .> ~ ~ e ' ~ c iX . ;h ~ ~ ~ t ' ~ ~ b d : a~f;'~ifu~::~:l i l l n m ~ ; ~ o ~ : ~ f ' b u s i ~ ~ ' ~ ; - ~~ . . : ' "

.: . -a ppea rs to be exa ctly wha t the C ourt's Amended O rd er requires me to do. '" '. ,~' " -r?. .'.~...

:.~ ." .,: ~ ~u.rrti~ gten '(fO ) d a y s ~bfufu~'fi1ed dfite o f the Amended Oi d e rP to v1d~~ '~ 'd u ed a te 'o r .... . . .,: " .:Sa iU rd8.y, June 4,2011, which, .pursuimt to Ru le 6 (a ), becomes Mon da y, J un e 6.2011 . ..' .~ "Accord ing ly ; I w i ll make every effort to'comply 'with th e Cou rt' s Amende d Order filed oli' M ay ' . , , " : " .. 25,2011, but itmay take me one or two extra days to com plete tbe docum ent production. E CDC ': ..c > , , :.," - . w ill pro duce a ll responsive m ateria ls ithas kept in the ord ina ry course of business, but a s - . . ,'- ... ' :",' -,co ntra sted w ith a request toproduce to a party pursuant to Rule 341EeDC does not have a rt ' . . , . : ' , , : - . ~.: " .i:a ffirm ative d uty to seek out d ocum ents a nd responsive m ateria ls beyon d w ha t it ha s kept in the '. ~ ,"..,., .:ord ina ry course of business. I just wa nted to bring these issues of tim ing to your a ttention a nd to' '.;. .t he a tte nt io n o f oppo si ng counse l. Thank yo u very much fo r your time and con si de ra ti on .

. . . . . .

. . . . . . - . - . . ' .. . .W i t h ' ' ; ~ r n 1 'e s tr e g a rd s ; , , _ ' . . . . . . . . ." .. ..:': . . . . .~'" ~" .~. ,..... ,.e

." ..:' ' ......... . ..- p.. . . . . . ,. _ .....

.. . ' .~' .' ...' . .> . .,,' . . . ... ,..~. . . . ." .. , .. . : ."/~"" ...:. , : ' : . : . , . , , , _ , ',:.,, .. .. , , , , ' . . . . . .. ~ :' . _,," .~,'..-' .:'.. - ~ ~.. .. -. '. ' :R ichard A. D iener: :.~ ' ,:' ,:.:

_. . - ' . : ~ .,A tt orney at Law /_., .

.j r - .. -.r' : . '_+ .J.

c" .' .< . .~r'' . - ~ y . . '. - .. . . . . . :.. . .- ~.

...~" . . . . . . . . . ' .+" .~ :i.~. ",~. .' . . . . . . . ,:E n c l ~ ~ u r e . .>:R AD fpsb '.,_ _ .c ." , T /< c . . . ' . . . .

. -'.. ._ '" , . C C : , John J V k . i h a n , ESq.{v i~~~le t615;-52 '7~8128j.r': ':~ . . .E ric David, Esq. (vi a facs im i le to 336-232-9103) ... .-. ,: . ~.'.. ...

. . . .r:

.: ",.," , .

r ..... "

, nO .~

_:. . . . . . . . . . . ., . .. ..... +,. .~'.~.~~. .~." .: , + "" . ~.. . .. . . . . . . , .".. ~, , - " . , . . ~',..- . > " . ,~c" c . . . . . ' ,

, 'to ;" d ', .' .". .. ', .. '" :,:: ... ~. .' ../ '. .." . . . . . . . . "_ ........ ' ...:~ '.... .,~. ''',' . .. +. ~ . . . ..... , p

.: .. . . . . .' . . . . . . . . . . ' , .. .~.' ..._..-., . . . . . " ..:,~. ' . . . . . . . .. . . ..' ,." , . . . . . . ". . .+ .~~ ,'0." ,.c. .... : . .. ' .,' . .,. "

,~ ' ... -,' . '.. .; : . " ~- .... . . ., '" .. ..". ~ c ~ r. _ .. . : . - .' - ,.~. _ ,

> .....".... ~ ... I . c . / ~

.~.' ". '" ' . . ~..~ ," , , ' " ..~ . , ." :: : .r , . ..... "". _. ~ ~.: . ,, .,0-.. , . . ..,: ,. ......:" . . . . . :.' .' , _ .. . ..~'- . _.~./'. . .- . . . . . . . ;.' ~. :._.~ . .,' '. ~, " "

,'" ...' ~. , . , " _ .. '. -~ ,. / ,.~". . - -' '. ," .:.~.r: ~ .. ' _, ~ r

. ,.. ' ..~ .' .. _ : .. .~,. .~..~ .. " .~.~.- ,,~ . ". ~,."~,.: " ..~ . . .~.~. . . . . . . . ~.'. .

. . .. . , . . ' ...~ . ' . . . . , . - . ' ~- ' .." .. ' ,: . - .."~.. . .:. ~. .. - :~, ;.t . , . . . ' .- .. " . . . . . ,_ . . . .~~'. . ,_' . . ' ~. . . .: d. ...~ r., .' : ': .... . ..: . . . . . .~ . ,T . , : ~r ,~ 'r"" ..+ . ~" _


16/66

I-J\.~ ~!""'I 8 _PAGE } OF 3

diener , l ~ T 1 X E Y sFebruary 16~2011

VIA. FACSIMILETO ( 25 J) 5 2 7- 81 2 8John P. Ma rsh all, E sq .WH.1TE & ALLEN) P.A.P.O . B ox 3169K i nsto n, N C 2 8 5 0 2 ;

R E: Further response to y ou r h it te r o f February 14. 2011Lakoque v. B raxto n et al., L enoir C ounty File N o. 1O -C VS -l 071

D ea r Jo hn:. I have ha d th e o ppo rtu ni ty to c ommun ic ate briefly with S te phe n L a R oq ue si nc e my le tterto y o - u yesterday, He wa s able to p ro vi de som e a dd iti on al i nfo rm a ti on d uri ng the conver sa t ionb a sed on h is g ene ra l r ecol le ct io n s, bu t he a dvised tha t frmrt Mond a y a fte rn oo n u nt il the end ofth e day o n Th urs da ys , h e is in legislative session illR a le igh , 'W h erehe d oe s n ot h av e access tothe reco rd s o f E ast C a ro lin a D evelo pm en t C om pa ny ~Inc. ("E eD C '') a nd L ak oque M an agem en tGroup, Inc, C 'LMOj . Accordingly. it 'Win be Friday o f'thi s w eek be fo re h e is able to se arc h h isrecord s to d eterm ine ifhe has


17/66

2116/11 U~: .L'r-l'I ;;'';;>.1.E X H I B I T I:-----PAGE G\ OF~~

h ad c ha ng ed " with respect to the documen ts that were customarily attached, most o r a n of whichhad to do with E CDC and not with t he s pe ci fi c loan. Since nothing ha d changed on . theseo cc asi on s, b e re ca lls t ha t h e w a s n ot re qu ire d 10 submit many o r a ll o f t he a tt ac hm en ts. whichwere sti ll on file with the U S DA . F or exa mple, S tephen reca lls tha t t he w ork pla n for E C DC ha sbeen the sa me from the incep tion ofEeDe u nti l v ery re ce ntly, "Wh ena : r eques ted amendmen tw as submi tted to me U SDA su bm itted fo r a ppro va l, A cco rd in gly , th e "initial workpla n" whi chyo u a ck nowle dge h av in g re ce iv ed is the w ork pla n for E CD C that wa s in place during an yrelevant t ime p eri od . M oreo ver, S teph en L a koq ue in di ca ted that he believes he has produced th elo an re ques ts w i th r es pe ct to the loa ns show n on th e O IG report

Inreference to the sp eci fi c n um bered i tem s o f the letter, p lea se see b elow :1. As we stated above. S tephen w ill not be a ble to sea rch hi s records to o bt ai n a ny o th erpossibly r espons ive r ecords until this Friday. Accor di ng ly . 'WeVl111ot be able toa dd ress y our req uest fo r a d diti ona l m inu tes from E eDC B oa rd o f D irecto rs m eetin gsuntil tha t tim e. L ik ew ise, w e w ill not be a ble to provid e d ocum enta tion concerning

a ny comp en sa ti on p ai d to Stephen L a ko qu e u nti l t ha t t ime .2. As w e sta ted in o ur p re vi ou s le tte r, fu e S ub po en a to EeDC d id 1 1 0 t actually request

the documents concerning the loans t o Recipient F~L Specifically, the Subpoenar eques ts the product ion of all d ocum ents listed o n Exluoit A, which in turn inNumber7 requests, Documents conce rn ing l oan s i d en ti fi ed as F-2, F-4 and F~5 OD. page 24 ofth e 6110/2010 O IG A ud it R eport no. 34601-6-AT (f ront pa ge a nd pa ge 2 4 a tta ched a sExhibit E)." T he S ubpoena to EeDC m ak es n o o ther reference to Exhibi t E and noreference atall to the loans to R ecipient F-l. W e d isa gree with your contention thatthe documents are requested simply because oro "obviously r ev ie we d" t hem toproduce its report. .

3. T h i s n umbe re d i tem requires no response .4. Seeresponse to No. I' above.5. Stephen L aR oque ind ica ted verba lly tha t no such documents exist.6. StephenLaRoqueindicated verbally that no such documen ts exist.7. Thisnumbereditem requires no response,8. This numbered item requires no response.I ha ve respond ed a s fully a s possible to the points ra ised in your r ecen t cor re spondence .given the lim ited a ccess to S tepben L aR oque w hile the legisla ture is in session M ond aya ft ern oons t hro ugh la t e on T hursdays. 1will ask Stephen to search hi s reco rd s on F ri da y sothat w e ca n a ttem pt to a dd ress your other concerns .. I believe tha t Stephen Lakoque willneed to a ttend a ny bearing that may be set on this matter in t he f ut ure , a n d I re spec tfu ll yrequest that h is leg isla ti ve sc he du le b e t ak en into a cc ou nt . O n ce Stephen has the opportunity

2


18/66

18/11 05;14PM E ST '8ob4~vw~__

to sea rch his record s on F rid ay, I w ill a scerta in w ha t a dd itiona l d ocum ents a re a va ila ble a ndr el evant t o you r r eque st s.r"!ILV1 rrthwarmest regards;

lERLAW "\{ . \ - - - - ~< ~ \~ ., )Richard A. " B er t" D i e e:JAttorney a t L aw

. ~ .. t# .

RAD/psb

3

-~'---------.----------.--------


19/66

EXH!8fT - : - -_C_.___PAGE. I OF 2 ?

10 M C ; A R C H I ER I C H A R D J. . A R C H I EJ O H N C. B IR CH E R I I IJ O S E I'J ! S . B O W E RO l 'l A I II A O . E O I ' DD A V I D J. F 1 u 'I l' P E IJ . J R .M T l ! E R I N ' E A, F O R R E S Te R JA N J . G A .T C H E tS Hf J1 W D O D C . H E N D E R SO NJ. MARK HERRINGC .G A A Y J O HN S EYIe I ' I I ' L S J O f lN S O I 'I , J R .MOSES D . l ASm t: RW l W AM E . M A l iN IN G , J R .J OA N P . M A R S H A LLW .lo P ER CIS E II IMA ff il EW S . SUW I' AN! IR I A N Z . T A Y l O RT I f O M A S J. W H I T E , I II

W h i t e & A U e n j P . A .. A 'IT O RN E Y S A T L AWr , o . fun: 3 1 B I I

K i n s t o n , N G 2 8 5 ( ) Z \1 05 S . ! .i C lBW eM S tr e

ie lephtJO;l252527.l1000i ei em p lb r 2 52 5 2i .8 12 B'II'!"II'.lI!llteanU~llen.curtt

THOIMS J.WHrtE.JR.(1903' lW1)

l A M E S A. . H O O O C S . J R .(19S1.1982}

WM , A. AlLEf i . JR .(1920-2:001)

Richard A. DienerDiener LawP.O. Box 555.Snow Hill, NC 28580

VIA EMAIL TRANSMISSIONAN D FIR ST C LAS S MAILEMAIL: [email protected]

Re: Section SOl(c)(3) ApplicationDear Bert:We are still in the process of reviewing the documents that have been produced. Itappears that all of the- documents that comprise the 501(c)(3) application to the IRSwere not included in the documents which you emailed the other day..SpeCifically, page 9, Part 4 of the application makes reference to an attachment 4. Theattachment was not included. Additionally, the IRS requested additional information.from East Carolina Development by letter dated May 1, 1998. To make it easy, 1 amenclosing pages 3 and 5 of that letter. We did not receive any documents responsive toparagraphs 1, 3, 5, 13 and 14. Please send that information to us along with theattachment #4 described above as soon as possible.WIth best wishes, we remain

VIT"~t:\.kr.L..c,.N) P.A

f~

K IN S TO N ! lE W B E R t I S I IO W H I l lE XHIBIT E
mailto:[email protected]:[email protected]


20/66

6.

R e v 09/97

E X H I B I T _ 8 _ ! _ . . . - ' _ _P A G E ;:< O F .3

3E a s t Carolina Development C o m p a n y , I n c .

A l l i n f o r m a t i o n submitted i n support o f y o u r application fot e x e m p t i o n m u s t b efurnished under the signature of a p r i nc ip a l o f f ic e r or other a p p o i n t e d personacting w i t h proper authorization or be attached to a properly s i g n e d coverletter. Please be sure your response is signed by a principal officer (ortrustee) or a 1 l t h o r i z e d representative. 7Q.71 1,06593 :.055.93 1.304.7B G O D 141,734.03 141.734.037 0310312000 2.370.7, 980.20 990.20 1.360.51 0.00 140.353.52 140,353.528 D4/0512000 2.370.71 1.078.61 1.076.51 1.2B2.10 0.00 139.00142 139.061A29 0510112000 2.370.71 841.99 &41 .99 1.528.12 0.00 137.532.70 137.532.7010 0610512000 2.370.71 1,120.99 tY20.9B 1,249.72' 0.00 136,282.98 \36.282.9811 0710512000 2,370.71 952.11 952.11 1.418.60 0.00 134.864.38 134.864.3812 C8r04r.lOOO 2.370.71 942.20 942.20 1.428.51 0.00 133.435.87 133.435.87i3 0910112000 2 .37D .71 870.07 870.07 1",500_$4 0.00 131.935.23 131.935.23~4 10/0312000 2.370.71 983. \9 983.19 1.387.52 0.00 130,547.71 130.:547.7115' '1110112000 2.370.71 881.64 B8\.64 1.489.07 D . O D 129,058.64 129.058.6416 12101/2000 2,370.71 901.64 901.64 1,469.07 0.00 127,589.57 127.589.5717 12f29f20oo 2.37D.71 831.95 83\.95 1.53$.76 0.00 12..050.81 12S.050.Bl2000 Totals 0.00 30.819.23 12.502.73 12.502.73 1B.316.5018 OVO112001 2.370.71 9911.05 998.05 1,372.56 0,00 124,678.15 124.678.1519 0310112001 2,370,71 81:2.97 612.97 1.557.74 o . o o 123,120.41 123,120.412 0 0 31 29 /2 00 1 2,370.7\ 802.B1 B02.81 1.567.90 [i.D O 121,552.51 121.552.5\21 05/0112001 2.370.71 934 .12 934.12 '.~36.59 0.00 120,1\5.92 120,115.9222 0610512001 2,370.71 979.0.3 979,03 1.391.68 0.00 116,724.24 11S}24,2423 07/0'31200\ 2.370.71 774.15 774.15 1.596.56. 0.00 117,127.6


43/66

-~----.-.--. - ...........-"+ ~----. _,.__ . . .. --.' ..~ -. _ _ .... .~. . . . . . .,. - _ . _ .. P 3f 21 1 20 0 . ~1C hap s Resta urant - lRP 260Com pound Period ...... : ExaC t D ayS' - .- - ....... . _ - - - .. _ o ", .,.....--~_~~_~TNomina! Annua l Rate .. : 9.000 %Effective An nu al R ate .. : U nd efin edPeriodic Rate.......~...... : 0.0247 %Dai ly R at e . .. .M............. : 0.02466%CASH FLOW D ATA

Event - . Slart Oate _ Am~nl- Num~ Period -End~D~ie1 L oan 0 3 1 2 0 1 2 0 0 1 15.000.00 12 Pa vm en ! 0511612001 163.97 13 P aV men t 0610512001 102.33 14 Pa ym ent 07103/20(11 110 .96 . 15 P ay mlln t 0810212001 114 .65 16 P av men t { )9 f06 f2001 114 .66 17 Psvment 10J0212001 110.96 1a Loan 10 /1212001 105.000.00 19 Pavrnen! 11 /0712001 1 .575.00 11 0 P ayme nt 1210312001 1.575.00 111 Payment 01(08/2002 1 ,575.00 112 Pavment 02J05I2002 1.575.00 11 3 P ay me nt 0310512002 1 .575.00 11 4 P ay me nt 04/0212002 1.575.00 115 P .wmen t 0510612002 1,575.00 116 Pavmen1 0610512002 1 .575.00 117 Pavment 0710912002 1 .575.00 118 PaYmen t 0610512002 1.575.00 11 9 Pa ym ent 0910612002 . 1 . 57 5. 00 12 0 . P a v rn .e n t 10109/2002 1 .575.00 12 '1 P aYmen t 11/ [}712002 '1.575.00 1

22 PaYlllent 1210912002 1 ,575.00 123 Payment. 01/2712003 623.92 12 4 P av rn en t 02 /1012003 840.93 12 5 P aV rn en t OSf '!012003 759.55 12 6 Pa vm ent 0410712003 840.93 127 Pawneot 0510512003 813.80 12 8 P ay me nt 0611612003 1.700.00 12 9 Paym ent 0711112003 1.575.00 130 Payment 0811512003 1,700.00 13 1 P ay men t 0911212003 1 ,700.00 13 2 P aw ne nt 1012112003 UOo.oO 133 Pamtent 11126(2003 1.700.00 13 4 P ay men l 0112112004 104. (}7 13 5 P avm en l 0112112004 91Q.62 13 6 Pa \' l' ll 9n t 03111/2004 702.49 13 7 p ay men t 0412112004 1,561.07 13 B P avme nl 06f1412004 780.53 139 Payment 0 9 1 3 0 1 2 0 D 4 500.00 140 PaYment 0311512 005 24.756.1~ 14 1 P ay men t 04101(2005 1 ,575.00 72 Monthly 031011201142 Payment 04/0112011 1.575.00 1AM ORTIZ ATION SC HED ULE US Rule

Interest Interest PrinciPa l ~- -_ ._ Ba lance DueDale Loan Pa~!'lJ. __ ~-'s!__ .. Paid .. __ ... ?~~rest . Pfincipa! Tota lLoan 0312012001 15,000.00 0.00 0.00 0.00 0.00 15.000.00 15.000.001 OS!15f2 { )01 163.97 210.82 t63.97 0.00 46.85 15.000.00 15.046.852 0 6lO 5 J2 (} 01 102.33 73.97 102 .33 O . C O 1B.49 15.000.00 15.018.493 0 71 03 12 0 01 110 .96 103.56 110 .96 0.00 11.09 15.000.00 15 .011.094 0 81 0 2/2 00 1 114 .85 110.95 114.65 0.00 7AO 15.000.00 15.007.405 0 9/ 06 1 2 00 1 114.66 129.45 114.66 0.00 22 .19 15.000.00 15 .022 .196 1010212001 110.96 96.16 110.96 0.00 7.39 15.000 .00 15,()O 7 .39L oa n 1 01 12 12 0 01 105,000.00 36.99 0.00 0.00 44.38 120,000.00 120,044.367 1 1 10 71 2 00 ,1 1.575.00 769.32 613.70 761.30 0.00 119,238.70 119,238.70"8 1 21 03 12 00 1 1.575.00 764.43 764.43 .610.57 0,00 116.428.13 118 ,428 .132001 Tolals 120,000.00 3.867.53 2.295.66 2.295.66 1.571.87s 0110812002 1,575.00 1,051.25 1,051.25 523.75 0.00 117.904.38 117.904.38ro 02 /0512002 1 ,575.00 814.02 814.02 760.98 0.00 117,143.40 117.143.4011 0310512002 1.575.00 808.77 808.77 766.23 O . O D 116,3n.17 116.377.171 2 0 41 02 1 20 02 l,575.00 803.48 803.48 771,52 0.00 11 5,605.65 115.605.651 3 0 51 06 12 00 2 1.575.00 969.19 969.19 605.81 0.00 114.999.64 114.999.841 4 0 610 51 2 0 02 1,575.00 850.68 850.58 724.32 0.00 114.275.52 114.275.521 5 0 71 09 {2 00 2 1,575.00 958.04 958.04 816.00 0.00 113.658.50 113.658.561 6 0 61 0 51 2 00 2 1.575.00 756.69 756,69 818 .31 0.00 112.840.25 112 .8402517 0 9fO O 12002 : 1 .575.00 890.35 890.36 684J>4 0.00 112.155 -.61 112 .155 .611 8 1 01091 :2002 1.575.00 912 .61 912 .61 662.39 0.00 111 ,493.22 111.493 .22f 9 1110712002 1 ,575_00 797.2 5 797.25 m.7S 0.00 110,715.47 110.715.472 0 1 2 10 9/2 00 2 1.575.00 873.59 873.59 701.41 0.00 110.014.06 110.014.062 tlO Z T o ta ls 0.00 18,900.00 10,465.93 10,485.93 8.414.072 1 0 11 2 71 20 03 623.92 1,329.21 623.92 0.00 705.2 9 110,01 'L 06 110,719.35


44/66

031211Zg0? PaQ,,:2C ha ps R esta ura nt - !RP 2 60c ,L _ .. .. _ ."."""'_" 'T

interest . . Interest Princip.a! Balance DueDare Loan Pax!J1~nt Accrued Paid Paid Interest Ptincip~1 To(;ll

22 02/10/2003 MO.eS 379.77 840.$3 0.00 244.13 110.014.06 110'.258.1823 0311012OC3 759.55 759.55 759.55 0.00 244.13 110.014.06 110,258,1324 04/0712003 840.93 759.55 &40.93 0.00 162.75 110,014.06 110,176.8125 05105/2003 813.80 759.55 813.80 0.00 106.50 110.014.06 110,122.5626 OSI1S!2003 1.700.00 1.139.32 1,241.82 452.18 0.00 109.561.8a 109,561.8627 07111/2003 1,575.00 67S.38 675.38 899.62 0.00 ;08,662,26 108.562.2628 015/1512003 UO .D .OO 937.77 B37.77 762,23 0..00 107.~DD.( )3 107.900,0329 09112/2003 1.70000 744.95 744 .95 955.05 0.00 106.944.SU '106,944.9830 10{2112003 1,700.00 1.02343 1,028.43 67157 0.00 106.273.41 105.27"3.41'31 1112512003 1.700,00 943.36 9


45/66

--- -.--.----~.--- ______ . . ,, .0312112005 PaggjC hap s R esta ura nt - IR P 2 70.-----,.--_- --._----_. . ._--------C om po und Perio d " . ... : E xa ct D ay sNomine! Annual R at e . . 9.000 %Effective Annual Rate, UndefinedPeriodic Rale v- 0.0247 %Deny Rate 0.02466%C ASH F LO W DATA

Event S ta rt D a te - --'Amount NLImber-period- "'End-Oa"te-_---_.-. --- ._-.----~-.-1 L o a n 03120/2001 10,000.00 12 P avm ent 05/16/2001 103.56 13 PaVment 06/0512001 76.44 14 Payment 0710312001 73.97 15 Payment 0810212001 76.44 16 Payment 0910612001 76.44 17 Payment 1010212001 73.97 18 payment 11/0712001 131.67 19 PaYment 1210312001 131.67 110 PaYment 01108(2002 '131,67 111Pavment 0210512002 131.67 112 Payment 0310512002 131.67 113 Payment 04102.12002 131.67 114 P ay ment 0510512002 131.67 115 Payment 06/0512002 131.67 1- 16 Payment 0710912002 - 131.67 11 7 P av me nt 0610512002 131.67 116 Pavment 0910612002 131.67 119 Payment 1010912002 131.67 120 Payment 1110712002 131.67 121 Payment 1210912002 131$7 122 PaYment (}112712003 52,10 123 PaYment 0211012003 70.23 124 Payment 03/10/2003 63.43 125 Payment 0410712003 70.23 126 Payment 0510512003 67.96 127 Payment 06116 /2003 141.67 128 Payment 07 /1112003 131.67 129 Payment 08/15/2003 141.67 130 Payment 09/1212003 141.67 131 Payment 1012112003 141.67 132 Pavment 1112612003 141.61 133 Payment 01121/2004 B.69 1:M Payment 0112 1 l2004 76.06 135 Payment 0311112004 58.66 13 6 P avme nt 0412112004 130.39 137 Payment 05(1412004 65.20 138 Payment 0913012004 50.10 13_9 Payment 03/15/2005 2,052.76 140 Payment 0410112005 131.67 72 Monthly 03101120114 1 P ay ment 0410112011 131.67 1AMORT IZ ATION SCHEDULE US R uleDate

Loan 03/20120011 0 51 16 12 00 12 06105120013 0 71 03 12 0 014 08102/20015 09/06120015 1 0/0 21 20 017 1 1 10 71 2 00 16 1210312001200 1 To ta ls -9 011081200210 02105120021 1 031 05/ 20 021 2 0 4 10 2 12 00 213 05/06J20D214 06J05I20D215 07/091200216 081051200217 09/06120021 8 1 01 09 12 0( }219 11/071200220 1210912002, 2002 Totals2 1 D 1f2 7I2 oD 322 021101200323 0311012003

Loan lolerest In terest Princip al ,._- - - Balance Due ---,P a y m e n t Accrued Paid .. Paid ___ I~~.. Principal -To ta l0.00 0.00 0.00 0.00 10.000.00 10.000.00103.56 140.55 103.56 0.00 36.99 10,000.00 10,(}3.9976.44 49 . 32 76 .44 0.00 9.87 10.000,00 10.009.8773.97 59.04 73.97 0.00 4.94 10,000.00 10.004.9476.44 73.97 76.44 0.00 2.47 10,000.00 10,002..4776.44 86.30 76.44 0.00 12.33 10.000.00 10,012.3373.97 64.11 73.97 0.00 2 . 4 7 10.000.00 10,002.47131.67 88.77 91 .24 40 .43 0.00 9..959.57 9.959.57131.67 63.85 63.85 67.82 0.00 9,891.75 9,691.75744.16 635.91 635.91 10625

131.67 67.81 8'7.81 43.86 e . o e 9,847.89 9.B47.89131.67 67.99 67.99 63.68 0.00 9.184.21 9,784.21131,67 67.55 67.55 64 .12 0.00 9.720.09 9.720.09131.67 67.11 67.11 64.56 0.00 9.655.53 9.655.53131.67 80.95 aO.95 50.72 0.00 9,604.81 9.604.81131.67 71.05 71.05 60.62 0.00 9.544.19 9,~4.19131.67 80.01 80.01 51.66 O , O Q 9.492..53 9.492.53131.67 63.20 63.20 68.47 0.00 9.42-4.06 9.424.05131.67 74.36 74.36 57.31 0.00 9.366.75 9,36.75131.67 76.22 76.22 55.45 0.00 9,311.30 9,311.30131.67 66.58 66.58 55.09 0.00 9.246.21 9.246.21131.67 72.96 72.96 58.71 0.00 9,1S7.50 9,187.501,580.04 875.79 875.79 704.2552.10 111.01 5 2 . 1 0 Q . O O 58.91 9,167.50 9.246.4170.23 31.72 70.23 0.00 20.40 9.187.50 9.207.9063 . 43 63 . 43 63.43 0.00 20.40 9,187.50 9,207.90

10,000.00

10,000.00

0.00


46/66

0312112005 Page 2 :C hap s Res tau rant - IRP 270

In leresi In leresl Principai Balance Due/ Dale loan Paymen t Accrued Paid Paid Interes\ PrinCipal 10tfli;2 4 0 4. 10 71 2 00 3 70.23 63.43 70.23 0.00 1l.60 S.187.50 9,201.102 5 0 51 05 12 00 3 6796 6 : : > . 4 3 6796 0.00 9.07 9,187.50 9.196.572 6 0 61 16 12 00 3 141.67 95.15 104.22 3 7 0 4 5 0.00 9.150.05 9.150.0527 0711 1J2003 131.67 56.40 . 5 8.4 D 75.27 0.00 9.074.78 9.074.76?B 0&,512003 141.67 78.32 78.32 63.35 0.00 S.011A3 9,011.4329 09/1212003 141 .S7 62.22 62.22 79.45 (l.OO 8.931.f i8 6.931.9830 1012112003 1


47/66

--_._. --"-__ 03121/2005 Pa ge 1-..-----~-'~._.ChtWS Restau ra~~_ RSE(3 _!~.O_.. .--.,.---.~-. __ . . . . . . . . ._.,,--_ . . . . . . ,.C om pound Perio d ..... : Ex act D ay sNominal A . - - l OU i ' l 1 R ala ,,: 7.500 %E ff ec !iv e A nn ua l R at e .. : U nd efin edPer io di c; R ata . ... .. .. .. .. .. . : 0.0205 %D a ily R at e . .. .. .. .. .. .. .. .. .. . : 0.02055%C ASH F LOW D ATA

Event Start Da te. ,,-_ .- Amounr N u m t i e r P erio d .. ~ D a t e "_._----_._-_ . . . . . . . . . . . . . . . ._-_._-_. "":--- .~-1 Loa n 03/2 (}12001 0.00 12 Loan 1211012001 99.900.00 13 P ay ment 011OSI2OO2 1.241.75 14 Payment 0210512002 1.241.75 15 Pavmsnt 031(}512002 1.241.75 16 P ay ment 0410212002 t .241.75 17 P ay ment 0510612002 1 .241 .75 1a Payment 0010512002 1.241.75 19 P awne nt 07109/2002 1.241.75 110 PaVlTien! 0810512002 1.241.75 "I11 Payment 0910512002 1 .241.75 11 2 P aY me nl 1010912002 1.241.75 11 3 P ay me nt 11107/2002 1 .241.75 11 4 P ay menl 1210912002 1.241.75 115 Payment 01f27120D3 435.74 116 Payment 0211012003 587.30 117 Payment 0311012003 530.47 11 8 P ay m en t 0410712003 587.30 119 P ay men t 0510512003 568.36 1

2 0 P ay ment 0611612003 1.316.75 12 1 P ay m en t" 07/1112003 1.241.75 12 2 P av ment 0 6 1 ' 1 5 1 2 0 0 3 1.316.75 12 3 P ay me nt 1l9J1212003 1 .316.75 124 Payment 1012112003 1.316.75 12 5 P ay me nt 11/26/2003 1,316.75 12 6 P ay ment 0112112004 72.55 12 7 P avm ent 0112112004 634 .8D 126 Payment 0311112004 489.69 12 9 P ay men t 0412112004 1,088.22 1SO Paymen t 0611412004 604,39 13 1 P ay men t 0913012004 . 500.00 132 Payment 0311512005 20,699.75 13 3 P ay ment 04/0112005 1,241.75 7 2 M o nth ly 031011201134 Payment 0410112011 1,241.75 1AM ORTIZ ATION SCHED ULE - US Rule

Interest Interest Principa l .----... ..-_._ B ala nce D u e ~ .Dale _ _ .~ . .. . . _ L 2 Y -menl . ,,-_~~~ ... _ _ _ E ! _ h : I _ Pa id Interest PrinCipal Totar.~-----. . . . ~--.Loan 03l20J2001 0.00 0.00 0.00 0.00 0.00 0.00 0.00L o an 1 2 11 01 2 00 1 99.900.00 0.00 0.00 0.00 . O . D O 99,900.00 99,900.002 0 01 T ota ls 99,900.00 0.00 0.00 0.00 D . O O

1 0 11 08 12 00 2 1.241.75 595.29 595.2.9 646.46 0.00 99.253.54 99.253.542 0210512002 1 .241 .75 . 571.05 571.05 670.70 0.00 98.582.84 98.562.643 0310512002 1.241.75 567.19 567.19 674.56- 0.00 97.908.28 97.900.284 04102 /2002 1 .241 .75 563.31 563.31 678.44 0.00 97.229.84 97.229.645 05/06 . '2002 , 2 4 1 ,75 679.28 679.28 562.47 0.00 96.667.37 96,657.376 051 05 12 00 2 1.241.75 595.89 595.89 545.86 0.00 96.021.51 96.02"1.517 0710912002 1.241.75 670.84 670.84 570.91 0.00 95.450.60 95,450.60B 08105l2002 1.241.75 529.55 529.55 71220 0.00 94.738.40 94,738.409 0 9/ 06 1 20 02 1.241.75 622.94 622.94 618.61 0.00 94.119,59 94,119.591 0 10 J0 91 2 00 2 1.241.75 638.21 638.21 603.54 0.00 93.516.05 93.516.0511 1110712002 1 .241.75 557.25 557.25 684.50' 0.00 92.631.55 92.831.551 2 1 2 1 09 !. 20 02 1.241.75 810M 610,40 631.35 0.00 92,200.20 92,200.202 00 2 T ota ls 0.00 14.001.00 7,20120 7,201.20 7.699.801301m120D3 435.74 928.32 435.74 0.00 492.58 92.200.20 92.692.781 4 0 2 11 0 12 0 03 567,30 265.23 587.30 0.00 170.51 92.200.20 92.370.711 5 0 31 1 01 :2 0 03 530.47 530.47 530.47 0.00 170.51 92,2.0020 92.370.711 6 0 410 71 2 00 3- 5S7.30 530.47 587.30 0.00 113.68 92,200.20 92.313.88'1 7 0 51 05 12 00 3 568.36 530.47 568.36 0.00 75.79 $2,200.20 92.275.991 S 0Sf1612003 1.316.75 795.('0 871.49 445.26 0.00 91,754.94 91.754.9"419 07 /1112003 1.241~75 471.34 471.34 770.41 0.00 90.984.53 90,984.532 0 0 8 /1 51 20 03 1.316.75 654.34 654.34 662.41 0.00 90.322.12 90.322.122: 1 0911212003 1.316.75 519.66 519.66 797.09 0,00 89,525.03 89.525,0322 10/2112003 1.316.75 717.43 717.43 599.32 0,00 88,925.71 86,925.7123 111261.2003 . 1 .3 1 6. 75 657.81 657.81 658.94 0.00 88,266.77 88,266.772003 Tolafs 0.00 10,534.67 6,601.24 6,601.24 3,933.43- 24 D112112004 72.55 1 .015.67 72 .55 0.00 943.12 88.266.n 89.209.692 5 0 11 2 11 2 00 4 634.80 0.00 634.60 0.00 308.32 a8.266.77 88.575.092 6 0 31 1 11 2 00 4 489.69 9OB .B5 489,69 0.00 725.48 88.266.77 8B.992.25zr 0412112004 1,088.22 743.62 1.088.22 0.00 380.88 88,266.77 88,647.65


48/66

..~... .~. _ _ ._ ... _ _ . _ ~". .. 03121120Q? . . _ I ' ' _ ~ g e . ?Chaps Res ta ura nt - RBEG 140"L~L~"""""_C"""__ ........... _~~ _ . D _ _ . _ .....--~~~ .. -- ..( tnteresl Interest P rin cip al - _ .. B a la n ce D u eDale loan P ~ ) P . 1 ' 7 : , : l l Aocrued Paid Paid Interest Pr incipal Tolal..... ,-~-~-.,. _ ... - '.".~-''' --,.~.,~.--..

2 8 aG J1 4 12 0 () 4 604.39 979.40 604.39 0.00 755.89 88,266.77 89,OL2.629 0913012004 500.00 usa 80 500.00 (l.OO 2.21~.69 88.265.17 9Il,481.462004 Tolals 0.00 3,3B~.65 5,604.34 3.3~9 (35 0.0030 03115/2005 20,699.75 3,010.74 5.225.43 15 ,474 .32 0.00 72,792.45 72,792.4520"05 Totals 0.00 20,69975 3,010.74 5,225.43 15.474.32

G ra nd T ot al s 99.900.00 ~~,S25.07 22.417.52 22,417.52 27,107.55


49/66

Page I or I

jAr~ lR;o;tS;.;n] I..D ele t~J M ore Actions YNew Horizon View ,n Gmai!Je rr y Hanna h < : je rr y g h annah@gma i l. com> t o S t ephen LaRoque Ju l 1

Stephen; H er e a re s om e bullets we'l l need t o cons ide r 85we m o ve f or wa rd .. .. (t hin gs w e K n ow n ow )

Still ne ed to p u ll CB I & f in nis h a " gl ob a l c a s h f lo w" to see ac tu a l c o ve rage O f any } N ew H orizon ca nno t su pp ort it's o blig a tio n f ro m a " se lf~suppo r ti ng" ana l ys is New Hor izon (w li ts principats) is p ro ba bly u nlik ely to s ho w s uf fic en ! c as h f lo ~v to s up p ort d eb t a s w ell. (y et to b e seen)B u ilt R ite h a s (based on 2009 ) $ 3 2 k avai lable to service deb t (we shou ld be .ab le t o s t ru c t u re th e ma tu re d n ote fo r t han$500.00 per mon th )I w ou ld s ug ge st w e d on 't adjus t o r m o dif y s n y n ote fo r B uilt Rite u ntil w e h ave a n a gre ed u po n p ath fo r N ew H orizo n (h old ithos tage if yo u w i ll )I 'm s a ti sf ie d Pope s F /S is p ro ba bly tr ue a nd c or re ct f or th e m o st p a rt. I'm n ot s alif ie d Freeman 's is a nd h e re a re a fe w reason's why: 2'2,..-' N ef w orth h as d ec ea se d by $ 2 .9 m i!!o n in th e la S! 8 4 m on th s ..::? . C as h en h an d d ec re as ed by $ 172 k in 2 4 mon ths 2 010 F /S sh ow s h e rece ivednorth o f $ 1 8 5 1 < f ro m "n ote d ue h im " (no! in 09 return Ima y be w ill be on 2010 if no t bad debt)

as did historical ly) :> $2221< A ll in ve nto ry a n d f ar m e qu ip m en t h a s b ee n mo ve d o ff b ala nc e s he et (n o longer repor t ing A pp ea rs h e to ok a dv a: nta ge o f a $ 2 0k "c as hva lu e" o f life in su m ac e ( no t repo r ti ng o n F IS N o longer rep orting h e owns AN Y au tomobi les a nd iC ir v alu e s, (2 0 08 v alu e s $32k) N o lo ng er r ep o rtin g he o wn s A NY p er so na l p ro pe rty a nd /o r v alu es ( 2008 $100k ) 2 re ale sta te p ro pe rtie s h av e b ee n m o ve d (n ot s ur e w h en ) into h is daugh te rs name(Off ice and a. DfV\ /& land ta x value $ 26 3 k ) . It w o uld a ls o a pp ea r th at th is IS N OT M rs . F re em a ns s ig na tu re o n hi s f inancialsta tem ent he h as p resen ted to th is o ff ice . .

any longer)

I offer th es e a s "points to p ond er" a s w e move f o rwa rd .

S te p h en la R oq u e < s la ro q u e@ya h oo .c om> to J er ry H a nn a h Ju l 1

G r e at p o in ts Jerry. Lers ta lk la te r today o r t omo rrow .

F ro m: J erry H an na h T o; S te p he n laR oq u e < sm rq g ue (j: )'; ya h QQ .cQm >Sent: Thu, Ju ly 1,2010 12 :2 3:0 3 P MSubject: New Hor izon~~::;,~~~.ll~IJ~!ti~~

~ Back 10 Inbo~ Compose MOl1 [~ch iVe: l I ReP9,rt.$P\lm_] ~l M ore Actions v

bttps.z/mail.google.corn/mai l!iglmailmax?hl=en&gl;=us&mid""5&1 irent=http.z/www.google.; 7/6/2010E XHIBIT I


50/66

New Horizon Properties, uc BaL$160,OOOSecured by 2 nd Deed of Trust / 2 duplexes2900~2904 Lee Court GreenvilleNo E q uity position -1 s t M tg . F irs t Carolina State Bank B a 1.$ 3 7 5kOwners & G u ara nto rs . ...(w ives d o not guarantee}

.. Vernon Doug la s F r eeman- 5 00 t 6 Farmer & S co tts L aw n Care

.. . D avid Mark P op e- 50% -L en oir C ou nty E co no m ic Development DirectorTA lK ING PO INT S

.. The loan matured 10-1-2008 Severely past due (interest and fate charges} No Equity in Property.. The project alone cannot cash flew its obligations.. The project with it s pr incipals cannot cash f lo w it 's obligations.. P rincip als a re being evasive.. Fa lsified and f or ged f in anc ia l information presented to this company

Bu i lt -R it e Cons tr u c ti on IRP460 Bal. $231,710 Cell-couple of lotsBui l t-Ri te Development lRP 50 0 Bal.$103,965 CoIL-llot#17

E astern N C la wn S ervice IRP 750 Baf.$103,946 Coll~A/R blanket lien equip.

Possi b le Ac t ion plan Based o n la test a na ly sis, we ask them to m ove the credits.. Maintain position on notes currently performing G ive 30 days to have no tes p a id In f u ll Should that not come to pass. Sue for money owed and proceed with taking collateral Get judgments in place.. Ifthrea ten w ith Bankruptcy and no offer of settlement we proceed with criminal action


51/66

Jerry G H anna h - ,From:Sent:To:Cc:Subject:

[email protected] riday , January 07,20111:33 PMMa rk P op e; D ou g FreemanStephen La roque; [email protected] ew S tru ctu re for N ew Hor izon

Dea r S i rs ,W e wou ld lik e th e partners o f N ew H oriz on to consider th e fol lowing structure as It p erta ins to your n ote w ithEas t Ca ro lin a D e ve lo pmen t C omp an y, IRP# 870 . T he lo an originated on May s" , 2006 for $ 160k and wasstructured a s a sing le p ay note fo r 6 months; payable in fu ll by December 1st, o f 2006 ; In the p revious 5 yearsth ep rinc ip al am ou nt o fth is loan h as h ad no cu rta ilm ent, zero m oneys h ave been ap plied to th e orig ina lp r oceeds. A lt h ough some interest payments have been m ad e over th is tim e fra me, interes t a ccru al rem ainsc ons idera bly p ast d ue a t a n a mo unt o f $ 25,50 5.2 2.E ast C aro lina D evelo pm ent C om p any w ou ld lik e to o ffer th e fo llow ing stru ctu re a s a m ore fa vo ra ble so lu tio nso the no te can begin retirem ent. W e wou ld hop e and trust the p artners o f New Horizon wou ld want thesame th ing in t h is r ega rd . Tha t sa id , p lease consider th e fo llow lng, and a t you r concu rrence, we w ill begin th eprocess.N ew _H oriz on a nd Its p artn ers to :

.. Ap prove and o ffer as add itiona l co lla tera l: secu rity interest in a ll o th er N ew H oriz on p ro pe rtie s.

.. Ap prove and o ffer sp ou ses as add itiona l gu aranto rs ... New Horizon to be resp onsib le fo r any fees assoc ia ted with o bta in ing th e sec urity in teres t in th e

collateral.East Carol ina Development Company and itsboard to:

.. Ap p rove and set p aym ent a t $ 1,000 .00 p er m onth fo r th e nex t 12 m onth s . Ap p rove and a llow the no te to rema in on i ts cu rrent ra te stru ctu re, F SB p rim e +1.0%; currently 4 .25%.. A llow the no tes accrued interest to be p a id by " th is" s tru ctu re o ffered ; no t req uiring th e s ta nd ard

interest c olle ctio n to d ate . Ap p rove and wa ive completely, th e s ta nd ard modification fee,

we h op e th e partners o f New Horizon find this of fer fair a nd eq ulta ble. E as t C aro lina D evelo pm ent C om p anyp rid es its elf in b ein g flexible, with its c lients in tim es o f econom ic down tu rns; th is done in a m easu re to helpc om p anies rem ain via ble. W e feel over th e last 5 yea rs th is has been evident to New Horizons and its p artnersand hop e they ap prec ia te ou r effo rts o f p ast .:O ur objective aga in, is to o ffer a fa ir S tru ctu re to th e company and its p artners so the cu rrent no te can begin ap ath to norm al and acceptable rep ay ment a nd retirem ent. P lea se notify ou r o ff ice no la ter th an the dose o fb us in es s o n J an ua ry 14th,20ll o f y ou r accep tance or denia l o f this offer.If you have any q uestions p lease feel free to contact m e a t any tim e.Sincerely,

1
mailto:[email protected]:[email protected]:[email protected]:[email protected]


52/66

Print Page 1 of 1

F rom: S tephen L aRoque (s [email protected])To: Doug Freeman; Mark Pope -Da te : Thu,F eb ru a ry 18,20103:09:21 PMSubject: New HorizonsMark & Doug ,Th e New Horizons loan m atu red October 1,2009 . 'need to m eet w ith bo th o ryou to d iscuss th is loan. I h ave no t received a p ayment for th is m onth and theloan is severely p ast due and h as been in nega tive amo rtiza tio n fo r m onth s.P lease let m e know wh en is a good tim e fo r us to m eet.Stephen

http://us.mg4.mail. yahoo.com/dc/launch?gx 1&.rand=ap66n91 mlqv81 2/18/2010
http://us.mg4.mail./http://us.mg4.mail./


53/66

Print PagelotlF rom : S teph en L aRoqu e (sla ro [email protected] )To! mpope@!enoiredc.com;D ate: S un, A pril 25, 2010 9:04:00 AMCc: . -Subject: New HorizonsMar k .H ave y ou sent a pay rnen tye t? !need your ta x retu rns for 2008 and your 2009 when com pleted as well as anup dated financ ia l s ta tem ent When can you get them to m e? The loan ma tured on October 1, 2009 . We need toge t together to mod ify th e lo an a nd d isc us s a paymen t p la n th a t will ca tc h u p th e b ack in te re st and start p ay ing .d ow n t he p rin cip a l.Stephen

http://us.mg4.mail.ya.lJ.oo .COm! dc/launchvsysreq=ignore 516/2010
http://us.mg4.mail.ya.lj.oo/http://us.mg4.mail.ya.lj.oo/


54/66

ECDCEas t Carol ina Development Company, Inc. PO Dol 1634 Kinston , N ,C . 2 8 5( 13P i lone 251 -S21~3399 Fa x 252-527-3799 ,-May7,2010New HOrizons PropertiesM r. D ou g F reem anM r. Mar k Pope _P O Box 5 010K insto n NC 2 850 3Re: N ew Horiz on Prope rt ie s / IR P# 8 70Dea r S ir s,Please allow m e to introduce mysel f . My Name is Jerry Hannah and I have reCently become anassociate w ith La Roq ue M anagem ent G roup , Inc. work ing with M r. S tep h en LaRoque in Eas tCarol ina De ve lo pm en t C om p an y, Inc. (eeDC) and P iedm on t D eve lo pm en t C omp an y (POe). Myresponsibi f r t ies will be th e ,servicing and grow th o f "Bus iness Loans" m ade by th e res pec tivecompan ies and funded by th e U SD A.One of ou r p rim ary resp onsib ilit ies to the USD A is to ensu re a ll loans a re in c om p lia nc e with th eterm s a nd cond itions a greed u po n at o rig in a tio n. Wh ile reviewing th e a bo ve mentioned file th ere a rea few docu ments we need to obta in to bring the f ile in com pliance and a id in th e renew ing o f th em atured note (O ct. 1,2 009 ). Th e docum ents needed for th is p articu lar file are as fo llows:

.. _20 08& 2 009 Business Tax Retu rn - New Horizon Prop erties.. Current Business financial statement - New Horizon with f'Rent Roll"

.. 2008 & 2009 Personal Tax Returns ...Doug F~eman.. , Current Personal financial statement - Doug Freeman.. 2 006& 2009 Persona l Tax Retu rns - M ark Pop e Current P ers ona l fina nc ia l s ta tem ent.., M a rk 'P op eTh is is just p art of our ongoing p rocess to com ply with lo an te rms , a gr eemen ts and loan commitmentsp rev ious ly es tab lished with you at Origina tion. Please rem it the above m entioned docum ents p rio r toM ay 24 th fo r review and th e renewing o f note IRP-870 . . . 'I look forward to working with you and aid ing in any way- f can to help your business and future'growth . If I can be of any assistance in the mean tim e p lease do no t hes it a te to call.Regards,

~~.,HannahM anagem ent G roup , Inc.

East C aro lin a D eve lo pm en t C omp a ny , In c. is a n e qu al o p po rtu nity -,le nd er.


55/66


56/66

~:Page 1 of2

. !L . l;@ck to InllQ): ComDose M ali L.rch rve. J l R ep or tS pa m I I Delilte 1 More Ac ti on s TRent Roll V iew in G m aiiJerry Hannah < je rr yg ha nn ah@gm a iL com > to slseastemnc@eartht lnk.net . Stephen LaRoque Ju n 16

Hello D o u g ,H ere's a bla nk "R en t R oll" form th at m ay be help fu l . I k now yo u s aid y ou p ic ke d on e up somewhere, b ut fe el fre e to c om p are th etw o a nd u se w hic h ev er is . sim p le st . If it's p rovid in g th e s am e in fo a s in th e a ttch ed fo rm it s ho uld su ffice .At t hi s point we' re w ai ti ng f or :

your 08 & D9 personal t ax r et ru n along with th e joint persona! f in anc ia l s ta tement. M ark 's Pe rs o na l f in anc ia l s ta tement ( le ft h im a vo ic e m ail y es te rd ay a s w ell) Rent Roll f or N ew H or iz on P ro p er tie sIf you h a ve a ny quest ions p lease don 't he s it a te t o c a li . .Than!- :;sJerry

' I' * * * * * * * * * * " * * * * * * * * * > I : * " " '* , * * * * * * * * * * * * ~ ' " " * , ,, * * * * * * * * * * , " * * * * * * * * * * * * * * * " '* * * \ t . " * * " '~ : * * * * * * " ' * * * * * * * * * * * * * * * * * " ' * * * *- - Forwarded M essage - - -From: ' 's l seaste rnn .c(1 :Uear th !i I' 'l k ,ne t~T o: S te p he n laR oq u e < slo lr oq u e@y ah oo .c om >Sen t: T ue , June is, 2 010 3:3 8:57 PMSubject: JenySTEPHEN. JERRY LEFT M E A M ESSAG E ABOUT RENT ROLLS. M ARK KEEPS THAT INF ORM ATlON.1 BELIEVE A TOTAL ISABO UT $ 5750 .0 D P ER M ONTH.I D O NO T HAVE ANYTH ING OFF IC IA L, BUT M AYBE THAT W lLL HELP.I AM G ETTING ACOPY OF M Y RETURNS FOR YOU, I S TOPPED BY TO G IVE YOU A CHECK TODAY. I WENT OVER TWICE .. I CAN M AIL rrOR TRY AGAIN TOMORROW .slsessternnc(@eart!llink net; E arth Lin k R evo lv es A ro un d Y ou .

Rent RolI.xls24 k b V iew DOv \' !1 lcad

R eo ly A !I" sls ea st er nn c@e ar th lin k.n et" < sls ea ste m nc@ea rth lin k. ne t> to J er ry H a nn ah < je rr yg ha nn ah@gm aH.c om > Jun 16JERRY. STEVE HAS2 00 8 RETURNS.! G O THRO UG H THIS EVE RY YE .A.R. F IND THE M.THAI>JKS

jer r [email protected] to " s lseas temnc@ear t h lf nk .ne t " , Stephen laRoque


57/66

Page 2 of2

" s lseas te rnnc@ea r tl lt in k . ne t " t o " je n ygn an n ah@gmai l. com :' < je rr y glla n n ah@gma il. com>

JERRY, I D O NOT M IND G ETTING YO U ANOTHER COpy OF 2 00 8. P LE AS E F IL E IT S O YOUR RECORDS Will BECOMPLETE.THANKS,

- - O rigina l M essage -_ .From:To: s!se.a.J.lq!1.Q!;@QrrhJ!DJi.netc c : ;O te p h en J dl .R c .( ]uQ .$:'-:r:~,':~".~;;~c!T~!.

S te ph en L aR oq ue < sJ aro qu e@ y ah O o.c om > to jerryghanna l l@gmal l .com, " s ls aas te rnnc@ea r th l in k .net "


58/66

Friday, July 23, 2010

.FINAL NOTICE

N ew H oriz on Properties, L LCM r. D oug F reem an & Mr. M ark PopePO Box 5010K inston N C 28503

Dea r Cu st ome r,T o d ate, w e ha ve received no correspond ence orthe d ocum ents perta in ing to our request for your-fina ncia l sta tem ents a nd ta x returns n eed ed to comply with previ ously a greed up on term s setout a tthe origina l comm itm ent. T his, fo llow in g num erous a ttem pts to co llect the in fo rm atio n will b e y ou rfi na l n oti fi ca ti on p ri or t o our considering other options to m ainta in com plia nce set out by the U S DA ,w hich m ay includ e full d em and of note.- W e intend to close th is m atter w ithin no m ore than five business d ays of 7123/2010 ; Expatriat ionbeing midnight of June 2 5.2 01 0. Y our full a tten tion to this m atter w ould be grea tly a pprecia ted .If you fa il to respond to this notice, you lea ve us w ith no a lterna tives. At the expira tion of this n oticew e w ill begin reviewing our opt io ns in-an effo rt to pro tect o ur i nte rest.

Regards ,

Jerry G. HannahVice P re si d en tN C B usiness L oans


59/66

Gma il - F ina ncia ls Page I 01 '3

Jerry Hannah

Financials5 messagesJerry Hannah To: [email protected], [email protected]: Stephen LaRoque Ma r k ,Th ank s fo r send ing th e fax y es terda y o f the f /s. I a ls o put the original in the mail to you, jf you' ll tum that backaround to m e today it w ou ld be m uch appreciated.

Wed,Jun 23, 2010 at 9:Q6 AM

Mark & Doug,This has gone on !ong enough, we have got to bring this to a close of some sort. Attached is a letter I s ent tothe New Horizon mailing address on May the 7th asking for the financials we needed. See attached {neededitems highlighted). We are no w in the seventh Week since this initial request and to date the information is st illnot here and/or incomplete. The remaining is as follows: '

.. New Horizon B us in es s f in an cia l s ta tem en t (detail ing assets and all pertinent information regarding it'sliabITities).. New Horizon Business Tax Return for ~008" Rent Roll (detailing ALL of New Horizons rentals) I've attached once again, a rent roll for yourconvenience.Theone received yesterday did not detail ail the information needed ... Mark Pope Personal ta x return for 2008.. Doug Freeman current personal f jnancial statementAS I mentioned. we have got to move this bali forward. We need these final items to be in our office no laterthan the close of business on June 28,201 O. I f you fail to have this in our office we will have no other choicethan to pursue other measures to protect our interest

If you have any question please do not hesitate to cal! and I look forward to hearing from you.

Jerry G. HannahVice PresidentEast Caronna Development Corp.(252)527 -3399-direct(252)527 [email protected]

2 attachmentsO Financial Statement Request - 2010-05-07 .docx17K

00 ' 1 Rent_Roll.xlsc.J 24K

._----.----.~---------,-----Mark Pope Reply-To: mpope@!enoiredc.comTo : Jerry Hannah


60/66

Gmail - Financia ls . rage Lor .)

Jerry ,

This is the first! have seen of this request and you di d not mention this the other day. I have yourinfo and willbs glad to get to you. We are planninq to make sure steve is taken care of butunderstand the housing market has not been Kind to anyone.

Mark

From: Jerry Hannah [mailto:ierryghan.nah@gmaiLcom]Sent Wednesday, June 23,20"10 9:06 AMTo: [email protected]]J; [email protected]: Financialsf{boI8(f ie~i h'GrJenj

Jerry Hannah To: [email protected]. [email protected]: Stephen' LaRoque Mark,Thanks for the response, I sent the request for info to PO Box 5010 Kinston, if It should be going to a differentaddress just let me know; thats what we have on record for New Horizon. Communication to the partnershipfor the needed info and a solution to the condition of the loan has been made in various ways and torsometim e now. .

Thu, Jun 24,2010 at 7:53AM

We feel we've displayed flexibility and patients regarding the note,payments and documents required.However, fo r us, time is of the essence and we're working diligently to get the various issues fin~lized.OUf desire is to have th e note in proper order and a repayment structure in place that will work for both NewHorizon and EeOC.W e ro ok forward to hearing from y ouThanksJerryfQ uoted leX: hidd en l

[email protected] Reply-To: sIseastern [email protected]: Jerry Hannah Cc: Stephen LaRoque

Thu, Jun 24,2010 at 7:59 AM

JERRY, r DO NOT CHECK THE MAIL FOR NEW HORJZONS. roro TALK TO STEPHEN LAST WEEK ANDTOLD HIM I WAS GETTING F/S TOGETHER, HIS TONE SEEMED TO BE BEITER THAN YOURS. I HAVETRIED TO ASSIST IN GETTING THIS PAPERWORK IN so THAT YOU CAN GETALL YOUR LOANS INCOMPLIANCE.I UNDERSTAND YOUR NEW JOB AND THE CHALLENGES AHEADJF I CAN HELP YOUANYMORE PLEASE LET ME KNOW. '

https:llmaiLgoogle.com/maiIl?ui=2&ik= 1Ode7e2age&view=pt&search; ; ; ; ; inbox&th= 12964e... 6/24/2010
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


61/66

Oma i l ~ F in a nc ia ls rage j 01j

- - - - O rig ina l M essage -- -From: JerfY HannahTo : [email protected]:slseasternncearthlin\cnetSent: 6/23 /20109 :06 :14 AMSubject Financials .Mark ,Th anks fo r send ing th e fax yesterday of th e f/s. I a lso p ut th e orig ina l in th e m all to y ou , if you'll turnthat back around to me today it would be much appreciated, .Mark & Doug,Tnls h as gone on long enough , we have got to bring th is to a c lose of som e sort. A ttached is a letter 1sent to the New Horizon m ailing address on M ay the 7th a sk ing fo r th e fina nc ia ls w e need ed . Seeattached (needed item s h igh ligh ted). W e are now in th e seventh w eek since th is initta l req uest and todate the in formation is still not here andJo r in com p le te . T he r em a in in g is as f o ll ows :

'" N ew H oriz on B us in es s fln an cla i s ta te me nt (d eta lH ng a ss ets a nd a ll p ertin ent in fo rm atio nrega rdi !} g i t's l iab il it ie s ).. New Horizon Bus iness Tax Retu rn tor 2008

e R ent R oll {d eta iling ALL o f N ew H orizo ns renta ls ) I've a tta ch ed onc e a 9a il1, a rent ro ll fo r y ou r-c orrvenlence.Th e o ne rec eived y es terd ay d id no t d eta il a U th e in fo rma tio n needed .Co Mark Pop e Persona l tax retu rn fo r 2 00 8iii D o ug F re em an c urre nt p ers on a! fin an cia l s ta te me nt

As! m entioned, we have got to m ove th is ba ll fo rward . W e need these fina ! item s to be in ou r o fficeno la ter th an th e c lose of business on June 2 6,2 010 . r f y ou fa H to have th is in ou r office we will haveno oth er ch oice th an to p ursu e o th er m ea su res to p ro tec t o ur interes t.If you have any question p lease do not hes ita te to ca ll and r lo ok fo rw ard to h earing fro m y ou .

Jerry G. HannahVice PresidentE ast C aro lina D evelo pm ent C orp .(252)527~33.9g-direct(2 52 )52 7 - 3 799 - f axier !yghannah@gmail [email protected] To : "slsea ste [email protected]' Identify ing one p erson as th e p oint m an for th e p artnersh ip and verify ing w e're using th e righ t m ailing addresswou ld be a b ig h elp . O fh er th an th at, it 's a lJ go od .

Thu, Jun 24, 2{)10 at 8:14 AM

We look forward to receiving the information l isted In the initial request.T h a n k s , J e r r y[allOled lex1 hli:ldelll

.-."~~---.---.-_..:_---~

.https;/!maiI.google.comimail/?ui=2&ik=1 Ode7e2age&vieW "'pt&search=inbox&th= 12964e... 6/24 /20 I0


62/66

EAST CAROLINA DEVELOP:MENT COMPANY, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor the Fiscal Year Ended September 30, 2007

Id en ti fi ca ti on o f m a j o r fed era l p ro gram s:C FDAN umber N am e of Federa l Program10.767 U .S . D epa rtm en t o f A gri cu lture

Intermediary RelendingProgram ( lRP)Do lla r th re sh old u se d to d i sti ng ui shB etween T ype A .and T ype B Program s $300,000

Aud itee q ua li fi ed a s lo w-risk a ud iteei _yesSection n- Financial Statement FindingsF in din g 0 0-1 :

Condit ion: As reported in th e p ri or audits. one em ployee ha nd les a ll loa n recordm aintena nce. T his sa me ind ivid ua l ha s responsibi li ties for ca sh receipts and general ledgertra nsa cti on s. W i th ou t th e involvement of a nother em ployee to review a nd check thecalculations involved with loan record maintenance. errors could occur and not be detected inati m ely m a nn er,R ecommend a tion: W e recognize tha t d ue to th e l im i t ed number o f C omp an y p erso nn el.c omp le te se greg ati on o f emp lo ye e duties m ay be d ifficult to achieve cost e ffect ive ly.However, we r ec ommend that ind epend ent personnel supervise a nd review the ha nd ling ofth ese lo an re co rd s.M anagem ent's response: _ L oan record s a re period ica lly reconciled to th e d eta iled g en era lledger by the Executive Director. Management realizes calculat ion errors in lo a n re co rdm a in ten an ce a re a p ossi bi li ty . Through t h is ve ri f ica t ion process, such errors should be held toth e m i nim um .

22

EXHIBIT J


63/66

J O HN C . M C H IER IC H A R D ] . A R CH IEJ O H N C . B I H C H f I fIIJ O S E P H . S. B O W E RDElAlNll D . B O YDD A V ID l . F lL U P P E ll , J R .K A Th ER IN E A . F O R RE S TB R I A N J. G A T C H E lSHERWOOD c. HENDERSOK. M A R K R E fI RIN GC. GMYJOHNSEYE . W Y L ES J O H N S O N , J R .OSES 0 . l AS IT rrR

E. MANNING, JR .P.MARSHAU

lE E P f IC IS E I I Il iEW S. SUll IVANLT A n D R

H OM A S J. W H IT E , I I I .

W h i t e & A l l e n } P .A .A T I 'O R N E Y S A T L A W

P .O . B o x 3 1 6 9K lns te n, NO 28502

1 05 S . M c Le wi la n s be etTe l ephone252 027 .8000Telecoplr252527.8128W W I N . w h i t e a n d a i le n . c o l l1

T H O M A S J. W H IT E , J R.rIgQ3,19HJ

J A M ES A . H OD G ES , J R .(!937-1992)

W M . A . A L l E N , J R.(19202001)

March 31, ~Ol1Richard A. DienerDiener Law ,P.O. BOKS55Snow HiJ1,NC 28S80

VIA EMAIL TRANSMISSIONAND FIRST CLASS MAILEMAIL:[email protected]

Re: Section 501(C)(3) ApplicationDear Bert:Pursuant to Rule 4S(d)(1), I hereby notify you that the enclosed materials were produced incompliance with a Subpoena served upon L.Allen Hahn.Attorney at Law.With regard to Subpoenas issued to Vernon D. Freeman, Melinda K Freeman) Built-RiteDevelopment, LLC and New Horizon Properties, LLC, those materials are not yet available forinspection because there is an issue with regard to compliance' with those Subpoenas.I intend to schedule for hearing on Aprilri, 2011 the Motions to Compel previously scheduledon March 21, 2011 C as to those" subpoenas 'previously served upon the above referencedindividuals and entities and East Carolina Development Company, Inc.With best wishes, we remainSincerely,

JPMjrnb #165/105897-00001

Enclosures

K IN STO N N E W B E R If SN OW H IL LEXlllRIT K


64/66

ECDCE a st C a ro li na Devcl.opmertt C omp an y, w e. 2 31 2 H (l dg l\'$ .R o ad j Kins ton , N.C, 28504

Pho:~~e252-523- 71()O Fax 2S2"'S23-8SS0

Februa ry 2 7 , 2006L . A llen H ahn504 A R ed B ank s R oadG ree nvi lle, NC 2 78 35 -0 665Dear M Jr, Hahn,East Ca roli na Development Company, Inc. agrees t o r ele a se the following d eed s of trustupon closing a nd d isbursem ent of Iund s for t h e property' listed below : .Property description:Be ing all of Lot 2 containing 0.21 J 9, m ore or less, and L ot 3 containing O J 7 79 a cre s,more 01 ' less, of C ascad e A partm ents, Phase 1 a s show n in Map B ook 61 , Page 187 of theP itt C o un ty Registry.Deed oi'Trust dated 08/27/04 record ed in B ook 1 780 Pa ge 13& fo r $1&7,500.D~ of T rust d a ted 08/27/04 record ed in B ook 1780 Page 141 for $ 62,500.D eed of T rust d ated 08/27/04 record ed in B ook 1780 Page '1 S 6 for $150,000,D eed of T rust dated 08/21104 record ed in B ook }780 Page 1 65 f or $ 10 0,0 00 .D eed of T rust d ated 08/27/04 recorded In B ook 1780 Pa ge 114 fo r $ . l S 0 , O O O .

Sincerely.

S t ep he n L a k oq ueExecutive Director

N H t : l H : W D t I . : l


65/66

- OMS NO . 2 50 :1 .0 26 5 , r; .. ' B . T YP E O F LO AN :us. D er AA TM Et iT O F' H OU SIN G !I. URSAN OEVELCPM);NT 1.DFHA 2.0FmHA a [R\CONV. UNINS. 40V/\ S . D C ON V, IN S.6 . I 't LE N UME ER : 1 7 . l .OANNUMS"R:SETILEMENT STATEMENT HARRELL . D AV ID J. SR 9511S52570g0001S , M OR TG AG e IN S C AS E N UM BE R:C . NOT E: ihi$ form j, f l . J t n J 3 / w d to g i ' I I I J yo~$s ta te me nt o f ~WJ"I rel~~",.. nt bo$ro: . Amoun /3 p J 3 1 d I e s n d b y tM s~lllBm.llt "gent are shown.I l i>msmBfket i "[POC!,wm~ p~ldou/sida the cJ~sing; t : tW y H. CounI yTw .e . 01101 /! l1 l. t o l l.m 8 lO 6 I 111.23212 . A . ,. ." . "men t s 10 ~""ssmenl!l to !213 . 5t3.214 . 514 . .... _ _ .21t i . 515..216 . Sia.217. 5 17 . S ALE PROCEEDS to eAST CAROLtNA OEVELOPMt'J 176 306.18:\1S. i' 518.i19. L 519.2 :2 0. T OT A L PAID B YI FO R t JO R ROWER 162,~OO.2a 5 2 0. TOTI lL R IEDUCT /ONAMOUN r OU I ; S EL lE R 17MOO,OO3 ~( ). C AS H A T S ET TL EME NT F ROM IT o . BO RR DWER; 000. CAS~rOIl'"FmM SEI.l.ER:31)1. G IO ~ Am ou nt D ue F ro m B orro we r (Un a 1 :2 Q) 179.7


66/66

,'., L S ET TL EM EN T C HA RG ES

700. TOT .u . COMMISS ION B S S Q d on Price s @ % PII lDFROM ?AIl>FROM~7 DM$if ln ~f C l : Jmml IOJ 'J~m& 700/ as fo l lOW$: S01100W"oR'S GaLER'S701.$ t o . . F l . I N C S A T !'UNOSAT70~ $ to Sfml!1iIioo SET1l.E_IIl~T7 0S . C o rt lm is s o n P alO a t S at lle me n! -7M. toBC~.ITE~ INCONNECr!Ol!lWITHUlANaC1. Loa~ Fae % t~e02. Loan % toaU3. ApPra"'.IJ'tIll 10lIQ4, Cradil R~p.:m to806. Lender'. in'p"ctJonF~~ to1100. Mrlg~g~ In ~Jl. Fee til -807. Assumption f~e toaOB. COIiiIMIi'M~m FeE to 6R AN 15H S AN K1 NG;;' T RU ST c o . eOS.50: e 0 9 .810.81 90~ . IT EM S R EQ uiR ED B Y L EN DE R T O E lE PA ID IN ADVANCE9 01 . I~tmstF rom to @ s Iday ( day" %) ii , 90: 1.. M or tq e e MUrartce Prel11OJmf", - . m o nl hs i o . - ... - - .s oa H (t t; I E ' s ~ a r c h 10o n It>Sinder 10 L. A U.e N H AH N, P .A. 70.001 1 0 5 . D O Q U / l 1 1 jr !l i> r e p a 1 ll li o n i l : > L . A LL SN K AHN P.A. DEED 85.001100. NoImV~ I1 1 0 7. A tt o m eY s F e< 1 ! 3 10 i..A U- EN H AH ri, PA 450.00m C l U Q o ! l s abovB i l B f f i r 1um iw r s ;~.

\0 INVESTORS' ITLS INSURANCE OM!>,. ,N ' :J14.8~n!Jf1'Ibers:1 $ 161,100.001 $ 178,000.00 S74.BDe \0 . A LL EN .H AH N. P J > , . 50.001112.1113.COMPU~~E.F~e to L.AI.~~A!1N'P.A 35.001~lIo. GOVERNMENT RECORDING AND TRANSF5R CHARGESiiI lC O J' dl ng F e e. , t ie e~ .S 17.00: Mortg3g" $ 29.00; R01="" $ 45.00. Peed ' 'M < 1 _ _ l t ga ge .

Stt ll il Tax iS \l !! l1 j) s: R !IVe lI tl !l . S tamps 356.00; M o rt aa Q ll . 355.00121M,1205. . t - " ., j1 3( 10 . A Oo rn ONAL S li iT h .EM :ENT CHARGES " " . . ' .... .'i.~.1~01. $urwY to " i1302. PestInMl~rr 10 -I1303. ;>T1304. I1305.1 4 00 . TOTALSET' l' l. .E MENT CHARGES ! En te r QnL in . .. . 1 0 3, s . . c tl or t J a t Id 50Z , S~ t: tlO rl !Q _ I 1,761.30 491.00

C er tif ie d 1 0 be a t r u E > cOpy.