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

(I) SCHEME TO CONTINUE RACKETEERING USING CHAPTER 11 BANKRUPTCY PROTECTION

200. As a further part of the land development scheme, commencing on or about [March 30, 1992,], the date on which CBG filed for protection under Chapter 11 of the Bankruptcy Code, the Defendants FIRST EASTERN BANK, CBG, FRANK CEDRONE, ONEIDA WATER COMPANY, [X] , VALLEY UTILITIES COMPANY, INC and other defendants, did knowingly and wilfully devise a scheme and artifice to defraud property lot owners and prospective lot owners, and to lull them into inaction, through numerous false and fraudulent pretenses, and promises, which represented that the purpose of CBG's filing for Chapter 11 protection was to complete the promised land development improvements, and that new financing for CBG was imminent, when in truth and fact CBG was incapable of securing any financing and did not even formulate a plan to emerge from bankruptcy. As a further part of this scheme, the defendants continued to tout the promotional plan of the subdivision, in numerous newspapers articles, and mass mailings sent throughout the U.S. And as a further part of this scheme, the defendants continued to take away the property interest of the lot owners to use the common areas and to freely associate as members of VOLCA, and to associate themselves to protect their interests in the Bankruptcy proceeding. And as a further part of this scheme, the defendants made false representations to the PUC using the Chapter 11 protection and the promises of imminent financing as a fraudulent device to continue to provide inadequate water service by ONEIDA WATER COMPANY in order to not pay for the necessary maintenance of the system. And as a further part of this scheme, defendants continued to charge lot owners for maintenance fees while denying the lot owners the promised recreational facilities, and adequate maintenance.

201. As a part of this scheme, FRANK CEDRONE issued press releases and made other statements to the press causing numerous articles to be published, making numerous false promises, pretenses, representations, assuring lot owners that the purpose of Chapter 11 was to permit him to immediately complete the development, among others:

    a. A copy of a newspaper article titled "Valley of Lakes and Eagle Rock Resorts files for bankruptcy," by Jeff Cox, Staff Writer of the Standard- Speaker, published on or about March 31, 1992, in the Hazleton Standard Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 121. Defendant FRANK CEDRONE was quoting as follows:

      "Getting the interim financing will allow Valley of Lakes to continue its development. Cedrone said continuing the townhouse project will be a priority, but added that work on the golf course probably will resume as soon as weather permits. Meanwhile, getting the Chapter 11 protection will allow the company relief from its creditors while it can reorganize, which will include a refinancing.

      ....

      Meanwhile, Cedrone said work is progressing well on the golf course, which will be championship caliber. He said the first nine holes of the course are cleared, and cul-de- sacs, sandtraps and water hazards are cut. 'What remains there is irrigation, the covering and final seeding," he said. 'That will resume, I would imagine, the minute the weather gets warm.'"

    b. A copy of a newspaper article titled "Resort will regroup and rehire," by Sandie Geib, Herald writer of the Evening Herald, published on or about April 3, 1992, in the Evening Herald of Shenandoah, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 122. In said article, FRANK CEDRONE was quoted as follows:

      "Cedrone expects approval on the CBG proposal sometime in April; then laid-off workers will be called back he told the Evening Herald. Once the financing is in place, CBG Ltd. has numerous projects in mind. The golf course and office building, now about two-thirds finished, will be completed. In addition, Cedrone said, there are plans for a hotel and convention center, as well as a motel.

      The convention center will be a 'four seasons community' because of golf, tennis and skiing. Cedrone said the plans include an arts and entertainment facility, paved and over one full acre, which will be similar to the Robin Hood Dell in Philadelphia, an ice skating arena, a dance floor with collapsible seating, a shopping center that would be available to the general public. TOWN-HOUSES, TIME shares and condominiums are also slated, he continued. He spoke of the entire community becoming computerized and eventually including fiber-optics so residents can send and receive images through existing cable wires. 'Assuming everything is finished by the end of April, we'll get started again, file our registrations and start selling,' said Cedrone."

    c. A copy of a newspaper article titled "CBG Limited files Chapter 11," by Claire Schechter, Business Editor, published on or about March 31, 1992, in the Times Leader of Wilkes-Barre, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 123.

    d. A copy of a newspaper article titled "Valley of Lakes battles to recover from Chapter 11," by Ray Saul, published on or about June 6, 1992, in the Hazleton Standard Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 124.

202. Because of the bankruptcy of CBG and its affiliates, VOLCA filed a proof of claim and letters with the Bankruptcy court in order to protect the interests of the property owners, to wit:

    a. A copy of a letter dated June 23, 1992, from Randy A. Galgon, Chairman, Bankruptcy Committee, and Leon Raymond Dongelewicz, President, both of Valley of Lakes Civic Association, addressed to Honorable John J. Thomas, United States Bankruptcy Court/Middle Pa., Federal Building of U.S. Courthouse, 197 South Main Street, Wilkes Barre, PA 18711, is annexed hereto and made a part of this complaint, and marked Exhibit 125-1 to 125-3.

    b. A copy of a Proof of Claim filed with the U.S. Bankruptcy Court/Middle District of Pennsylvania, by Randy A. Galgon, Chairman, Bankruptcy Committee, Valley of Lakes Civic Association against CBG Ltd., on September 4, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 126-1 to 126-11.

203. The developer filed false statements with the New Jersey Real Estate Commission, stating that all advertising into New Jersey had ceased when in truth and fact the defendants continued mail numerous mass mailings into New Jersey:

    a. A copy of a letter dated July 14, 1992, from Robert M. Chasnow, Esq., Ingersoll and Block, 1401 Sixteenth Street, N.W., Washington, D.C. 20036, addressed to Mr. Robert K. Carter, Acting Chief, Bureau of Subdivided Land Sales Control, New Jersey Real Estate Commission, Department of Insurance, CN-328, Trenton, New Jersey, 08625-0328, is annexed hereto and made a part of this complaint, and marked Exhibit 127.

    b. A copy of an Affidavit by Frank M. Cedrone, on behalf of CBG Ltd., for termination of registration of the "Valley of Lakes and Eagle Rock Resort," filed with Bureau of Subdivided Land Sales Control, New Jersey Real Estate Commission, on or about July 14, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 128-1 to 128-2.

204. In particular, regarding the part of the scheme to use the Chapter 11 protection to continue to provide inadequate water service, the following exhibits are made a part of this complaint:

    a. A copy of a Formal Complaint filed with the Pennsylvania Public Utility Commission, against Oneide Water Company, filed May 20, 1992, by A. Joseph Liberty and Jocquin Liberty, of H 65 Valley of Lakes, Nuremberg, Pennsylvania, is annexed hereto and made a part of this complaint, and marked Exhibit 129-1 to 129-2.

    b. A copy of a Sworn Formal Complaint filed with the Pennsylvania Public Utility Commission, against Oneida Water Company, filed May 11, 1992, by Steven and Christine Stamatopoulos, of Valley of Lakes, I49, P.O. Box 140, Oneida, Pennsylvania, is annexed hereto and made a part of this complaint, and marked Exhibit 130-1 to 130-3.

    c. A copy of a Formal Complaint filed with the Pennsylvania Public Utility Commission, against Oneide Water Company, filed June 6, 1992, by Brenda and John Cherba, of B-28 Lake Valley Drive, P.O. Box 718, Nuremberg, Pennsylvania, is annexed hereto and made a part of this complaint, and marked Exhibit 131-1 to 131-2.

    d. A copy of a Formal Complaint filed with the Pennsylvania Public Utility Commission, against Oneide Water Company, filed circa January 27, 1992, by George Morris et al., of C26 Lake Valley Drive, Valley of Lakes, P.O. Box 242, Nuremberg, PA 18241, is annexed hereto and made a part of this complaint, and marked Exhibit 132-1 to 132-7.

    e. A copy of The Office of Consumer Advocate's Supplementary Memorandum of Law, before the Pennsylvania Public Utility Commission, Docket No. C-00923820, dated September 30, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 133-1 to 133-9.

    f. A copy of a letter, dated December 9, 1992, from John J. Sellinger, Mattioni, Mattioni & Mattioni, Ltd., addressed to The Honorable Richard Lovenwirth, Administrative Law Judge, Pennsylvania Public Utilities Commission, Room 108, Scranton State office Building, 100 Lackawanna Avenue, Scranton, PA 18503, is annexed hereto and made a part of this complaint, and marked Exhibit 134-1 to 134-2.

    g. A copy of a letter, dated December 2, 1992, from Francis J. Hoegen, Law Offices of Hoegen & Marsh, 25 North River Street, Wilkes-Barre, Pennsylvania 18701, addressed to John Sellinger, Esquire, Mattioni, Mattioni & Mattioni, 399 Market Street, 2nd Floor, Philadelphia, PA 19106, is annexed hereto and made a part of this complaint, and marked Exhibit 135.

    h. A copy of an Interim Order (C-00923820, C-00924012, C-00924186) before the Public Utility Commission, dated December 15, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 136-1 to 136-3.

    i. A copy of an Interim Order (C-923820) before the Public Utility Commission, dated May 21, 1993, is annexed hereto and made a part of this complaint, and marked Exhibit 137-1 to 137-8. j. A copy of an Interim Order (C-00924012) before the Public Utility Commission, dated May 21, 1993, is annexed hereto and made a part of this complaint, and marked Exhibit 138-1 to 138-5.

205. As a part of this scheme, the defendants intensified their campaign to extort the property interest of the lot owners to use the common areas and to freely associate as members of VOLCA to protect their interests in the Bankruptcy proceeding. The following two paragraphs identify exhibits relating to this scheme for purposes of specificity and particularity, and other exhibits are introduced infra.

206. A copy of a letter, dated June 17, 1992, from Frank M. Cedrone, General Partner, on "Valley of Lakes and Eagle Rock Resort" letterhead, addressed to Tom Marcheski, Treasurer, VOLCA, (CW-72) Lake Valley Drive, P.O. Box 275, Oneida, PA 28242, is annexed hereto and made a part of this complaint, and marked Exhibit 139- 1 to 139-2.

207. A copy of a memorandum, sent to Ray Dongelewicz, Joe Natale, Randy Galgon, George Denke, Chris Stamatopoulos, Larry McCutcheon, Tom Marcheski, and Tom Pierson, from "Valley of Lakes and Eagle Rock Resort" on or about June 17, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 140-1 to 140-7.

208. A copy of a Notice, mailed to "All Valley of Lakes Property Owners," circa July, 1992, from Frank M. Cedrone, Managing General Partner, C.B.G. Limited, on "Valley of Lakes and Eagle Rock Resort" letterhead, is annexed hereto and made a part of this complaint, and marked Exhibit 141-1 to 141-2.

209. In order to continue to carry out the various extortion schemes, the defendants illegally closed one of the entrances to the subdivision, on or about July 11, 1992, thereby obstructing interstate commerce, and causing severe hardship for property owners. The defendants obstructed this entrance in order to force all traffic to clear their remaining security check. A copy of a newspaper article titled "Eagle Rock shuts down," by Jim Dino, Staff Writer, published on or about July 11, 1992, in the Hazleton Standard Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 142. This obstruction of interstate commerce was required by First Eastern Bank. See Exhibit 141.

210. A copy of a group mailing, mailed to "All Property Owners-Valley of Lakes/Eagle Rock," from Frank M. Cedrone, Managing General Partner, titled "Current Status Report," dated September 9, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 143.

211. In order to protect the interests of the property owners in the Bankruptcy proceeding, VOLCA filed with following petition with the Bankruptcy Court, in protest:

    a. A copy of a letter and Petition to the U.S. Trustee, Middle District of Pennsylvania, Harrisburg, PA, from Valley of Lake Civic Association with one hundred plus signatures, dated October 20, 1992, is annexed hereto and made a part of this complaint, and marked Exhibit 144-1 to 144-8.

------------------

BACK TO MAIN COMPLAINT

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

Home | Court Decisions | News Articles | Exhibits