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To: scion who wrote (2149)	7/18/2008 4:41:12 PM
From: scion	Read Replies (3) \| Respond to of 2347

Doc 341 Extract Part 3 ------ While pleading poverty to the Court, Altomare directed his attorney, defendant Chris Gunderson, to incorporate Encore Holdings, Inc., entered into a lease of a virtual office, conducted negotiations to acquire a company operating in Florida, and offered an investment in the enterprise to at least one of the former investors in Universal Express. See attached deposition Exhibit 44. Altomare failed to disclose any of these activities in either the January 18, or February 4, 2008 hearings. While it is not illegal for Altomare to form a corporation, Response at 42-43, he is prohibited from offering securities when no registration statement is in effect or filed for the transaction, or serving as an officer or director of a public company. Altomare has filed supplemental information that he has been served with a suit to foreclose on the Toscano condominium for failure to pay the mortgage. While this development indicates that he may lose this asset unless he cures his default, it does not meet his burden of proving impossibility to pay the judgment. As discussed above, he continues to have assets for which he has not disclosed the location or disposition. He continues to own, with his wife, the Bocaire home which was taken off the market and only re-listed for sale on July 12, 2008. II. Altomare Has Not Met His Burden And Should Remain Incarcerated. Altomare has failed to demonstrate categorically and in detail that it is financially impossible for him to pay further amounts toward the disgorgement judgment. The SEC has identified numerous assets that Altomare retains, which could be turned over to the SEC toward satisfaction of the judgment, including, but not limited to, his ownership in the Bocaire house, his fine art and jewelry, the furnishings in the Toscana condominium, his ownership interest if any in the Jackson memorabilia and Universal Express judgments. Nor has Altomare provided records to show the source of the down payment on the Toscano condo or the additional $43,000 in payments to the Weinstein Design Group from which it can be inferred that he has other bank accounts. Furthermore, he has not provided records showing the disposition of various cash advances from his more than fifteen credit card accounts. Regardless of whether Altomare is in default on the Toscano loan, he has not demonstrated his inability to pay some amount toward the judgment. Since the entry of the order to show cause in August, 2007, Altomare has spent over $400,000 through his Wachovia account 5480. Altomare argues that the SEC’s search for his assets has been a shifting line in the sand moving back in time rather than focusing on his current ability to pay. Response at 21. The SEC’s inquiries into Altomare’s finances prior to entry of the March 8, 2007 judgment are designed to locate assets and accounts which Altomare has not disclosed. He has known about the SEC’s lawsuit since March 2004. He has had substantial time to structure his finances in a manner to hide his sources of income and assets. Altomare argues that he should not remain incarcerated while the SEC analyzes his financial records. Response at 31-32. The SEC has attempted to work with Altomare’s counsel to jointly retain a financial analyst. When those efforts to work jointly failed because of Altomare’s purported inability to share in the cost, the SEC has retained an expert to review the records provided by Altomare, but he has not completed his analysis. Altomare has not provided any form of analysis, independent or otherwise, of the records that he has produced to the SEC or the Court. Response at 24. The summaries of various bank transactions submitted by the SEC do not meet Altomare’s burden of demonstrating the sources and disposition of his income and assets. They are limited to the information that has been available to the SEC, which does not have knowledge or possession of all of Altomare’s bank and credit card accounts. The 2006 bank account statements were necessary as they included information on wire transfers and other deposits that were not included in the checks and other records previously produced. Altomare has failed to provide any documentation on the property inspections for which he paid in July and September 2006. Response at 38-39. While Altomare’s credit report does not show ownership of additional properties in his name, he may have acquired properties in the name of an entity which he has not disclosed. ----------------- 07/18/2008 341 STATUS REPORT. Reply to Second Submission on Altomare Contempt Document filed by U.S. Securities and Exchange Commission.

To: scion who wrote (2149)	7/18/2008 6:40:56 PM
From: scion	Respond to of 2347

Altomare has also failed to produce any documents related to his personal transfer of 8,500,000 shares to Segoes Trust located in the Grand Cayman Islands or his receipt of compensation related to that transaction.[3] See Exhibit 69 attached. From this transaction, it appears Altomare has an interest in an offshore entity. He has not tendered any of these assets to the SEC toward satisfaction of the judgment. [3] Altomare’s passport indicates that he traveled to the Cayman Islands. ---------------------- Segoes defying court order Alan Markoff Thursday 19th May, 2005 Posted: 16:53 CIT (21:53 GMT) caycompass.com The Cayman Islands Monetary Authority issued a statement Tuesday stating John Kaweske and James Fontanetta, directors of Segoes Services Ltd, have not complied with two court orders for information concerning the company’s business practices. Segoes Services Ltd. was put into joint provisional liquidation on 29 April. This morning in Grand Court, a petition is being made to wind up the company by putting it into formal liquation. “The winding up process would allow us to start dealing with creditors and distributing assets,” said Kenneth Krys one of the joint provisional liquidators of RSM Cayman Islands. CIMA’s public notice stated: “The primary duties of the JPLs are to locate, protect, secure and take into their possession and control all assets, books, papers and records to which the Company is or appears to be entitled.” Mr. Krys said he and the other joint provisional liquidator, Christopher Stride, have been doing just that, both here and overseas. “We’ve taken a number of steps,” he said, noting that he had just returned from the United States where he had obtained a temporary restraining order through a Miami court to freeze Segoes assets in Florida and New York. Mr. Kyrs said injunctions against third parties have been issued to hold assets of Segoes and its related entities in other countries as well. The companies include Segoes Services Ltd., Segoes Trust and Segoes Holdings Ltd. here in Cayman; Segoes Bond Fund and Segoes Administration in the British Virgin Islands; Segoes Holding Ltd., Segoes Services and Segoes Securities in Belize; and Laxberg SA in Ecuador. CIMA issued a public notice 26 October, 2004, stating that Segoes was not authorised to conduct securities investment business in or from the Cayman Islands and that it was not otherwise regulated by the Authority. Segoes then withdrew its licensing application and started doing business here as Segoes Services Ltd. instead of Segoes Securities Ltd. At that point CIMA sought additional information from Segoes. “Pursuant to Section 34(8) of the Monetary Authority Law (2004 Revision) the Authority required John Kaweske, James Fontanetta and the company to provide the information,” CIMA said in Tuesday’s statement. “Adequate answers were not provided…and as a result…the Authority applied to the Grand Court for an order requiring John Kaweske, James Fontanetta, and the Company to comply with the Authority’s request for information in order to determine whether the Company was conducting securities investment business in contravention of Securities Investments Business Law. CIMA noted that court orders dated 22 December 2004 and 24 March 2004 had not been complied with. Mr. Krys confirmed that Mr. Kaweske and Mr. Fontanetta were directors of Segoes Services and many of its related entities. Contrary to a recent statement made by another Segoes employee, Rebeca Gonzalez, Mr. Krys said his investigation did in fact find Ms Gonzalez was a director of one Segoes entity, Segoes Administration Ltd. in the British Virgin Islands. Ms Gonzalez reiterated in a telephone interview on Wednesday that she was not a director of any Segoes company to her knowledge. “I’ve never even heard of a company called Segoes Administration,” she said. “I didn’t even know we had companies in the British Virgin Islands.” Mr. Krys said he had discovered only limited Segoes assets here in the Cayman Islands. “We’re still in the initial step of gaining information,” he said, adding that he expects to learn some things from the interested parties who will speak at the Grand Court proceedings today. In another development in the matter, the two petitioners for the liquidation will have new counsel today, with Attorney Peter Broadhurst of Broadhurst Barristers now representing them. The petitioners were represented in court by Alistair Walters of Campbells when the joint provisional liquidators were appointed. Mr. Krys said the switch of attorneys had to do with avoiding a potential conflict of interest. Campbells was acting for the petitioners, who are potential creditors of the company. The firm also instructs the joint provisional liquidators, who represent the interests of Segoes as a company. In an affidavit sworn by Mr. Kaweske and published in the 12 May issue of KYC Alert, Mr. Kaweske states that Campbells also represents Myron Gushlak. Mr. Gushlak’s name has been mentioned in connection with Segoes, but Mr. Krys said he did not believe the change in attorneys had anything to do with Mr. Gushlak. caycompass.com