I. Mr. Maynes was initially responsible for transferring $434,000 to Attorney Lloyd Bates toward the purchase of the E & J Lounge. He had been promised a job for doing so. This gesture of employment was important to Mr. Maynes whose education was incomplete and who might not have been otherwise employable. Attorney Bates, as a result of this transaction, was now aware that probably illicit funds were readily available, or at least concievably accessible, through Mr. Maynes. Bates subsequently contacted Maynes with respect to the purchase of the Blue Moon Bar, a property available in Radium Springs, fully aware that large sums of money might be forthcoming, through Maynes, from Mexico. At this point, Bates knew of many outstanding liens at the Blue Moon.

II. Simultaneously, Bates was representing Mr. Sammi Haddad, a local entrepreneur and venture capitalist, who, with his son, Marwan, were co-owners of the Blue Moon Bar, a property, as mentioned hereinabove, heavily burdened with liens, encumbrances, mortgages and license violations. The property in question was, at this point in time, bankrupt, seized by the State of New Mexico, distributors and the Department of Gaming and Alcohol.

III. Agreement was reached to transfer this property to Mr. Maynes who, for value received, paid the disclosed sum of $25,000 (see Promissory Note dated 12/1/90), and an undisclosed sum of $50,000, to Sammi Haddad. Mr. Haddad, however, and Attorney Bates were well aware that Mr. Jamie Stull, contractor, and others itemized hereinbelow, held liens against this property, effectively rendering it "unsalable", at this stage. Liens and obligations outstanding had to be cleared -- but were not -- at the time of the Promissory Note. The seller, therefore, was demonstrably aware that a Court Order had been issued as of September 7, 1990 awarding a Special Master's Deed, i.e. a certificate of ownership, to Jamie Stull who had spent the sum of $28,000 on remodeling, although the Deed in question seems to reflect that a "Public Auction" had been organized. (Indeed, it had, as we will see below.) Technically, therefore, Stull was owner of this property as of September 7, 1990.

IV. Maynes had already committed the sum of $75,000 to Mr. Haddad, an additional $10,000 as ordered by Attorney Bates for the "Trustee in Court", John D. Phillips, (505) 242-9677, plus $3000 in liquor license violations incurred during the period of operations under Haddad's management. The total thus invested by Maynes, exclusive of fees paid to distributors and other creditors, was, at least, $88,000, and probably approached $111,000, subject to further elucidation.

V. Under New Mexico Gaming and Alcohol Law, all outstanding liens, fines and fees must be paid prior to finalized transfer of real property for managerial operation by Mr. Maynes. Stull was owner, but Maynes, having paid these fees, was manager and ultimate purchaser of the Blue Moon under a "Commercial Lease with Option to Purchase" Agreement, dated October 2, 1990, according to the terms of which a monthly rental payment of $400.00 was to be paid.

VI. A Special Investigation Agent, as per Report dated 7/26/90, closed down the Blue Moon Bar for violation of licensing provisions, in spite of Attorney Bates' assurance to Maynes that all was in proper legal order to operate, and in spite of Maynes' having paid many thousands of dollars earlier to clear liquor violations previously incurred under Haddad.

VII. Furthermore, Attorney Bates was representing both Maynes and Haddad in probable violation of "conflict of interest" clauses governing attorney-client relations. Bates' true interest lay with Haddad.

VIII. Maynes was convinced, at this point, having paid $111,000 -- in demonstrably legitimate funds earned from investments and real estate gains -- that he had actually purchased the Blue Moon Bar. His surprise was great indeed to learn that the Public Auction, referred to earlier, had resulted in Stull being awarded ownership. Now, Maynes was compelled to pay rent on a building he, himself, purportedly owned. It is clear, therefore, that Haddad and Bates had conspired to sell real property to Maynes that did not technically belong to them. Review of appropriately dated documents will prove this contention.

IX. Mr. Maynes, therefore, wishes to claim, not only his $111,000, plus approximately 2 years' rent to Stull, but also compensatory damages for these deceptive practices, obviously aimed at taking advantage of his level of education and social status. Haddad and Bates (the latter under investigation by the Federal Government for other improprieties) should be required to make restitution to Maynes for all damages and losses incurred since inception of initial agreements in 1990. It is essential to determine the nature, extent and amounts of said damages during our discussions this morning.

X. Additionally, in spite of the legitimacy of the sources of Maynes' funds, and despite Stull's actual ownership of the Blue Moon Bar, the U.S. Marshal's Office seized the property on October 21, 1992, without a predeprivation hearing, contending erroneously that (a) it was Maynes' and (b) he had purchased it with laundered funds. It is important that, since Maynes was not guilty of drug operations either on the property or off, he should have his name cleared publicly of the Marshal's defamatory charges and allegations.

Special Investigative Agent Internal Revenue Service Las Cruces, New Mexico

RE: Recently Issued Summons Addressed

to Attorney Lloyd Bates; Our Conversation of 8/25/95.

August 25, 1995

Dear Ms. Jacobs:

I am pleased to refer to our telephone conversation of this date during which we discussed with some candor the status of the Blue Moon Bar in Radium Springs. The history of this business venture is quite complex and has, as you are aware, become even more so in light of the seizure by Federal Agents of, not only the physical facilities, but applicable tax and operational records as well, which could have shed light on the intricacies and complexities of events dating back to the time frame in question (1989-90).

Please be assured, firstly, that I will cooperate with the IRS in any way which will prove useful. You do realize, of course, that, although I fulfilled my responsibilities as Operating Manager of the Blue Moon, duly tendering taxes to State and Federal Governments when required, my ability to produce records has been negatively impacted by the complete sealing of the bar, and the disappearance of its files at the time of the Federal seizure, an action taken in the absence of a predeprivation hearing.

It has also come to my attention that, since the date of the federal seizure of the premises, at least one substantiated break-in has occurred, and is duly documented in Local Police records. Whatever records may have been left untouched by Federal Agents could well have disappeared during the ensuing burglary.

Furthermore, I am somewhat astonished to learn that the IRS appears to consider Attorney Lloyd Bates as somehow affiliated with me in matters relating to the Blue Moon. Mr. Bates was, in fact, the lawyer of a local entrepreneur, Mr. Sammi Haddad, the actual owner of the Bar during the majority of the period under discussion. At no time did I retain Mr. Bates to represent my interests. Any correspondence or contact I may appear to have had with him was initiated unilaterally by either himself or Mr. Haddad.

Parenthetically, Mr. Bates' single-handed attempts at drawing me into the fiscal confusion reigning at the time may, in point of fact, represent infringement of "conflict of interest" clauses governing attorneys under prevailing State Bar Association statutes and guidelines.

There was a proposal that I acquire ownership of the Blue Moon at one point, and, indeed, a Promissory Note in the amount of $25,000 was drawn up to this end; however, as I became aware of the liens, fines, fiscal burdens and encumbrances involved, I declined to honor this Note for obvious and justifiable reasons.

In fact, investigation will reveal that Mr. Jamie Stull, at a public auction held subsequent to seizure, acquired the Blue Moon to offset a lien he held in the amount of $28,000 for repairs and renovations. While I may have intended to lease the Bar with an Option to Purchase, none of this actually materialized due, quite clearly, to the demonstrably complex series of seizures, auctions and transfers of ownership that occurred within a relatively short time frame.

My signature may appear on certain documents associated with various stages of these proceedings; however, I was required to sign, as Operating Manager, in order that technicalities related to clearing of escrow be honored.

Your diligent inquiry will reveal that Mr. Stull resold the property, ultimately, to a third party.

In our referenced conversation, you referred to a check signed by Mr. David Morales in the amount of $18,000 which I required to honor tax obligations related to operation of the Blue Moon. This sum, I affirm, was derived from A & M Cattle Company, and represented funds of unquestioned integrity. Moreover, Mr. Morales had been steadily employed for more than a decade in the refrigeration business, working on behalf of NASA, as I recall. I had no reason to suspect that these funds were anything but perfectly legitimate.

Lastly, I would like to reiterate that Mr. Bates, realizing that my formal education was lacking, may well have intended to capitalize on what he thought was a naive intermediary, obliquely connected to individuals of means. Of course, it would appear that he was wrong on several counts; but he may well have attempted to "defraud" me (for lack of a better term) of legitimately earned funds, and may still be motivated to falsify many issues related to the present IRS inquiry.

A good number of these matters surfaced during my full cooperation with the U.S. Justice Department during the years in question. Under the circumstances, please feel free to verify the foregoing statements and series of events.

It is unlikely that I will be attending the Hearing on September 1, 1995, since I am not directly concerned with the present inquiry, and do not possess any helpful documentation to assist you meaningfully.

I request that this letter be kept in confidence at your offices. Should you require any further information, please do not hesitate to contact me during the day at ***** Restaurant.

Yours most cordially,

* * * * *

And to bring you up to date, four years later...!

MAY 1999 Letter to IRS