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

(F) SEWAGE SYSTEM SCHEMES

168. As a further part of the land development scheme, commencing on or about September 30, 1986, and continuing through the present, the Defendants, FRANK M. CEDRONE, C.B.G. LIMITED, and its subsidiaries VALLEY UTILITIES CO., INC. did knowingly and willfully devise numerous schemes and artifices to defraud owners of property and prospective lot purchases, through numerous false and fraudulent pretenses, representations and promises, and through extortion made possible by CBG using its control of the security check points to enforce the fees charged by VALLEY UTILITIES CO., INC.

169. As one part of the "sewage system schemes", Frank Cedrone and Valley Utilities Co., Inc., on or about June, 29, 1989 filed for a four hundred percent (400%) sewer rate increase based on the fraudulent claim that this rate increase was necessary to complete the construction of the sewer system promised by CBG in its "Property Reports." In order to stop the defendants from completing this fraud, it was necessary for the property owners, organized through the Valley of Lakes Civic Association (VOLCA) in a coordinated effort with the Consumer Advocates Office to file approximately 85 formal complaints with PENNSYLVANIA PUBLIC UTILITY COMMISSION (PUC) . On or about March 22, 1990, The PUC concluded after intense investigation to disallow the requested increase and ordered VALLEY UTILITIES to charge rates more consistent with the expenses incurred from the operation of the Valley Utilities.

170. A copy of a forty-six page document, titled "C.B.G. LIMITED VALLEY OF LAKES/EAGLE ROCK RESORT," distributed by CBG Ltd. in its course of business is annexed hereto and made a part of this complaint, and marked Exhibit 94-1 to 94-46.

171. A copy of an Opinion and Order (G-880113)of the Pennsylvania Public Utility Commission, dated September 29, 1988 is annexed hereto and made a part of this complaint, and marked Exhibit 95.

172. A copy of a newspaper article titled "Valley of Lakes residents oppose 400 pct. rate hike," by Jim Dino, Staff Writer, published on or about October 23, 1989, in the Hazleton Standard Speaker of Hazleton, Pennsylvania is annexed hereto and made a part of this complaint, and marked Exhibit 96.

173. A copy of a letter, dated November 21, 1989, from Pamela Bishop Sarvey, Assistant Consumer Advocate, Pennsylvania Office of Consumer Advocate, 1425 Strawberry Square, Harrisburg, Pennsylvania 17120, addressed to "Consumer Colleague" is annexed hereto and made a part of this complaint, and marked Exhibit 97-1 to 97-2.

174. A copy of a letter, mailed as a group mailing, circa Fall 1989, from Frank M. Cedrone, President, Valley Utilities Company, Inc., Post Office Box F, Oneida, Pennsylvania 182424, addressed to "Utility customers," is annexed hereto and made a part of this complaint, and marked Exhibit 98-1 to 98-2.

175. A copy of a Sworn Formal Complaint filed with the Pennsylvania Public Utility Commission, against Valley Utilities Company, Inc., filed September 7, 1989, by Patricia M. Haffey, of 4151 Gilham Street, Philadelphia, Pennsylvania 19135, is annexed hereto and made a part of this complaint, and marked Exhibit 99-1 to 99-6.

176. A copy of an Opinion and Order (R-891358) of the Pennsylvania Public Utility Commission, adopted March 22, 1990 is annexed hereto and made a part of this complaint, and marked Exhibit 100-1 to 100-36.

177. As one part of the "sewage system schemes", commencing on or about September 30, 1986, and continuing through the present, Defendant Frank Cedrone and Valley Utilities Co., Inc., MLA, FIRST EASTERN BANK, and other defendants, did knowingly and willfully devise a scheme and artifice to defraud owners of property and prospective lot purchases, within the area known as "Valley of Lakes, through numerous false and fraudulent pretenses, representations and promises, e.g., Property Reports, that the sewer system would be properly maintained when in truth and fact defendants have not maintained the sewer system. As a further part of this scheme, the defendants undertook an extortion scheme, i.e., property owners who were late or failed to pay their sewer bills to VALLEY UTILITIES would be declared an owner not in good standing by C.B.G. LTD. and MLA and be harassed at the security gate, be denied access to all community areas, and have their names publicly posted. This extortion scheme has been made possible through the fraudulent covenants and restrictions of CBG. Paragraph 4 of Covenants and Restrictions recorded on or about January 30, 1987 in the Office of Recorder of Deeds for Schuylkill County in Miscellaneous Book 249, Pages 885 to 902, (Exhibit 10-4), states:

"4. The Purchaser understands that the annual payments, as set forth in the 'Agreement of Sale' for services, development, maintenance and security of Valley of Lakes and those related to water and sewer, are payable to the Seller or its assignees, regardless of whether or not the Purchaser uses or enjoys the roads and common facilities; and that the said fee or assessment shall remain a charge and lien upon the property of the respective Purchaser until paid."

178. As one part of the "sewage system schemes", the defendants devised a scheme to secure loans from PENVEST in the name of the Valley Utilities Co., Inc., a regulated public utility, in the false pretense of completing the building of the sewer collection system by Valley Utilities Co., Inc. when in truth and fact C.B.G. Ltd. had represented that it would bear the cost of completing the system; and when in truth and fact the funds were not used to complete the sewer system.

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