LAW OFFICES OF JOSEPH A. MOLINARO, LLC

648 Wyckoff Avenue

Wyckoff, New Jersey 07481

201—857—3075

j am@rnolinarolaw. corn

Bar Id. 001491994

and

ROBERT A. VORT

2 University Plaza

Hackensack, New Jersey 07601

201—342—9501

rvort@vortlaw. corn

Attorneys for Plaintiff

Bar Id. 204601968

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

MSKP OAK GROVE, LLC, a limited:

liability company of Florida, Civil Action No. 10-6465

(Hon. Jerome 3. Simandle)

Plaintiff,

NON-JURY TRIAL

—vs —

CAROL VENUTO, individually and

as executrix of the Estate of

RALPH A. VENUTO, Sr., deceased, JOINT PRE-TRIAL ORDER

RALPH A. VENUTO, JR., CAROL

REBBECCHI, RICHARD P. VENUTO,

and HOLLYWOOD TANNING SYSTEM,

INC., a New Jersey corporation

Defendants.

The following shall constitute the Final Pretrial Order

pursuant to Rule 16, Federal Rules of Civil Procedure. This

Final Pretrial Order shall govern the conduct of the trial of

this case.

Amendments to this Order will be allowed only in exceptional

circumstances to prevent manifest injustice. See Fed.R.Civ.P.

16(e). Counsel are urged to move to amend in a timely fashion

any portion of the Order that must be changed or modified between

the filing of the Order and the trial date.

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APPEARAJCES:

Robert A. Vort, Esq., Attorney for Plaintiff

Joseph A. Molinaro Esq., Attorney for Plaintiff

Dimitri L. Karapelo Esq., Attorney for Defendants

Part I.

Plaintiff MSKP Oak Grove, LLC (“MSKp” or “Plaintiff”) is a

limited liabili company of Delaware qualified to transact busi

ness in Florida The only member of MsKp is Babcock Florida

Corporati0 a Florida Corporation

Defendants Carol Venuto, Ralph A. Venuto, Jr., Carol Rebec

chi, Richard Venuto are citizens of New Jersey. The Estate of

Ralph A. Venuto, Deceased was administered in New Jersey. Defen

dant Hollywood Tanning Systems, Inc. (“Hollywood Tanning”) is a

New Jersey corporation, whose principal place of business is in

New Jersey. Hollywood Tanning is no longer operating as a corpo

rate entity.

The amount in controversy exceeds $75,000 exclusive of inte

rest and costs. This Court has subject matter jurisdici0 pur

suant to 28 U.S.C. §l332(a) (1)

HollyWood Tanning was engaged in the business of franchising tanning salons to independent franchisee operators It owned

some retail stores, most of which had been taken back from fran

chisees. it also manufactured and sold tanning beds, bulbs, lo

tions and other supplies used in the operation of tanning salons

to its franchisees

On April 18, 2007, Hollywood Tanning entered into a Contri

bution and Asset Purchase Agreeme0 (“the Agreemen!) with Tan

Holdings, LLC (“Tan Holdings”), a limited liability company of

Delaware Tan Holdings purchased almost all of the assets of

Hollywood Tanning. The parties disagree as to the amount of con

sideration paid. Defendants assert that, according to the Agree

ment, the consideration was plus a 25% interest in

Tan Holdings subject to adjustme5

Plaintiff disagrees MSKP asserts that the consideration

was either a) $4O,QQQ,Q in cash plus assumed liabilities and a

2.85% interest in Tan Holdings subject to adjustmen5 at clos

ing, b) $4,595,6l4 according to the Allocation of Sale Proceeds

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 2 of 83 PageID: 5571
prepared by Hollywood Tanning accountants (cash of $37,494,659 +

assumed liabilities of $7,199,865) or c) $42,068,283 according to

Form 8594 filed with the 2007 federal income tax return. When

one factors in the $5,000,000 released from escrow and a refund

of $1,430,000, the adjusted price ranges from $35,638,283 to

$50,675,129.

Tan Holdings assumed responsibility for certain liabilities

of Hollywood Tanning and reserved others to Hollywood Tanning.

It assumed no responsibility for liabilities incurred by Holly

wood Tanning with respect to the ownership or operation of the

business or the assets transferred.

Hollywood Tanning received approximately 24.8% of the issued

and outstanding preferred units of Tan Holdings. Hollywood Tan

ning was entitled to additional consideration depending on the

performance of Tan Holdings. The Agreement required that Holly

wood Tanning satisfy in full all its obligations save for those

assumed by Tan Holdings in the Agreement.

The closing took place on June 22, 2007. Hollywood Tanning

ceased its franchising operations. It continued to a) collect

money owed by certain franchisees before the closing whose abili

ty to pay was questionable and which assets the Buyer had not as—

sumed, and b) to monitor its interest in Tan Holdings. Its as

sets after the closing consisted of the assets not transferred to

Tan Holdings, a 24.8% interest in Tan Holdings and the right to

additional income based upon the performance of Tan Holdings.

Tan Holdings paid some creditors of Hollywood Tanning from

the closing proceeds. Tan Holdings paid $5,858,547.67, the ba

lance of the consideration for the assets to each of Hollywood

Tanning’s four principals, the individual defendants in this ac

tion, on June 22, 2007.

Hollywood Tanning leased property on September 22, 2003 in

the Oak Groves Shoppes Shopping Center in Altamonte Springs, Flo

rida. The landlord was TSO Oak Grove, LLC, a Georgia limited li

ability company. TSO assigned its interest on November 7, 2005

to Woolwright Oak Groves, LLC. On January 25, 2007 Woolwright

Oak Groves, LLC transferred its ownership interest to MSKP Oak

Groves, LLC, a Delaware limited liability company. The only mem

ber of MSKP is Babcock Florida Corporation, which maintains its

principal place of business in Florida.

3

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Hollywood Tanning defaulted on its lease from MSKP. MSKP

sent notice of default to Hollywood Tanning in July 2008. MSKP

sued Hollywood Tanning. Hollywood Tanning defaulted, and the

Florida court entered judgment in favor of MSKP and against Hol—

lywood Tanning on May 19, 2009 in the amount of $411,573.45. MSKP

then recorded its judgment with the Superior Court of New Jersey

on July 30, 2009. No portion of the judgment has been satisfied.

Following the recordation of the Florida judgment in New

Jersey, MSKP engaged in supplementary discovery. Ralph Venuto,

Jr., president of Hollywood Tanning, testified that the company

was insolvent. This lawsuit followed.

MSKP alleges a) that, when Hollywood Tanning sold its assets

to Tan Holdings, LLC, it was part of a scheme to hinder, delay

and defraud creditors of Hollywood Tanning in violation of N.J.S.

A.25:2—25(a); b) that the distribution of almost $30,000,000 to

or for the benefit of the shareholders of Hollywood Tanning left

Hollywood Tanning without reasonably equivalent consideration in

violation of N.J.S.A.25:2—25(b) (1); c) that Hollywood Tanning was

insolvent when it permitted the diversion to its shareholders of

$23,434,190.68 of the proceeds of sale of the assets of Hollywood

Tanning and additional payments made to and for the benefit of

the shareholders in violation of N.J.S.A.25:2-27(b); and U) that

the transfer of assets and the diversion of a substantial portion

of the proceeds of sale to the shareholders and the payment of

additional money to and for the benefit of the shareholders ren

dered Hollywood Tanning insolvent in violation of N.J.S.A.25:2-

27(a).

Defendants assert that the shareholder distribution was pro

per, that Hollywood Tanning was solvent at the time of the trans

fer and after the transfer, that the transfer did not render Hol

lywood Tanning insolvent and that defendants had every expecta

tion that Tan Holdings would be a profitable company after the

sale. Defendants assert that they accepted the transfers in good

faith and gave reasonably equivalent value in exchange for the

transfers. Defendants assert that they had no reason to set

aside any reserve at the time of transfer because it was not ex

pected or anticipated that the successor Tan Holdings would not

be able to timely pay operating expenses or bills to creditors

including landlord such as Plaintiff.

4

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Part II. Stipulated Facts:

1. Defendant Hollywood Tanning is currently insolvent

within the meaning of N.J.S.A.25:2—23.

2. On June 22, 2007, each of the individual defendants re

ceived $5,858,547.67 from Tan Holdings or AOl Capital, the com

pany which caused the formation of Tan Holdings and which funded

the purchase of the assets of Hollywood Tanning and whose members

owned and/or controlled Tan Holdings.

3. On June 22, 2007 an alleged “dividend distribution” of

$350,000 was paid from Hollywood Tanning’s account at The Bank to

purchase a tanning salon in Waldorf, Maryland.

4. After payment of some liabilities and obligations of

Hollywood Tanning, $4,279,399.59 was deposited into a checking

account in the name of Hollywood Tanning at a banking institution

named “The Bank.” This account was opened for the purpose of

holding all remaining cash that Hollywood Tanning had on hand af

ter the closing.

5. All leases for the 300+ franchises identified the te

nant as Hollywood Tanning Systems, Inc.

6. Hollywood Tanning wanted to be the lessee on the leases

to its franchisees because it believed that its name was stronger

than the individual franchisees and would enable the franchisees

to negotiate more favorable lease terms. Because Hollywood Tan

ning was the lessee, it retained control of the premises if a

franchisee defaulted.

7. The individual defendants, Ralph A. Venuto, Jr., Carol

Venuto, individually and as the executor of the Estate of Ralph

A. Venuto, Sr., Deceased, Carol Rebbecch± and Richard Venuto,

were the only shareholders of Hollywood Tanning as of June 22,

2007. They were also the only officers and directors of Holly

wood Tanning as of that date.

5

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Part III Each of Plaintiff’s Contested Facts:

1. Hollywood Tanning was insolvent immediately before it

transferred title to its assets to Tan Holdings.

2. Hollywood Tanning was insolvent immediately after it

transferred title to its assets to Tan Holdings.

3. The direct payment of $23,434,190.68 by Tan Holdings or

AOl directly to the Venutos and the further transfer of

$3,100,753.85 on June 22, 2007 from Hollywood Tanning to or for

the benefit of the individual defendants, jointly and/or several

ly, rendered Hollywood Tanning insolvent.

4. The direct payment to the Venutos of $23,434,190.68

from Tan Holdings to the individual defendants lacked considera

tion to Hollywood Tanning.

5. The direct payment to the Venutos from Tan Holdings of

$23,434,190.68 was not reflected on the books of Hollywood Tan

ning.

6. An additional $127,812.51 was transferred into the ac

count at The Bank from other Hollywood Tanning bank accounts.

This resulted in an initial opening deposit of $4,407,212.10 on

June 22, 2007, the date of closing.

7. The Venutos paid no consideration to Hollywood Tanning

in exchange for the receipt of $5,858,547.67 by each of them.

8. After Tan Holdings paid some of Hollywood Tanning’s

creditors and had paid $5,858,547.67 to each of the shareholders,

a new checking account entitled Hollywood Tanning Systems Invest

ment account was opened at a banking institution named “The

Bank.” The remaining sale proceeds of $4,279,399.59 were deposi

ted into that account plus $127,812.51 from other miscellaneous

accounts. Effectively the opening deposits in the investment ac

count totaled $4,407,212.10.

9. On the date of closing, June 22, 2007, every dollar of

the closing proceeds had been spent or distributed to the Venu—

tos. According to the 2007 general ledger, all that remained in

the Hollywood Tanning bank account was $117,647.38.

6

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10. On June 22, 2007, Hollywood Tanning loaned $400,000 to

an entity called Venuto’s Old World Pizza Systems, LLC f”Venuto’s

Pizza”.) The loan was not documented in writing. The loan from

Hollywood Tanning to Venuto’s Old World Pizza was not documented.

11. On June 22, 2007 Hollywood Tanning paid to Ralph Venu

to, Sr. $500,000 from the checking account. This was the amount

supposedly owed by Hollywood Tanning to Ralph Venuto, Sr.

12. On June 22, 2007 Hollywood Tanning paid $1,850,753.85

to satisfy a loan outstanding on a summer home located at 113

South 19th Avenue, Longport, New Jersey owned by the Venutos and

their spouses.

13. As the Venutos had transferred $127,812.51 into the In

vestment Account at The Bank from other bank accounts - which did

not include any of the closing proceeds - not only were the clos

ing proceeds completely distributed, but a portion of the funds

remaining from the other accounts were spent as well.

14. Hollywood Tanning paid additional distributions to the

Venutos within weeks after the closing. The 2007 General Ledger

characterized these payments as “dividend.”

15. Although Hollywood Tanning had obligations before the

closing to some franchisees for warranty and other claims, it did

not maintain sufficient cash reserves to satisfy those liabili

ties.

16. The payments from Hollywood Tanning and from Tan Hold

ings to the Venutos at the time of closing left Hollywood Tanning

without assets sufficient to satisfy its existing claimants and

creditors and the existing claims of third parties.

17. The payments from Hollywood Tanning and from Tan Hold

ings to the Venutos at the time of closing left Hollywood Tanning

without assets sufficient to satisfy contingent claimants, credi

tors and contingent claims of third parties.

18. The payments of cash to the Venutos and, more particu—

larly, the concealment of the payment from anyone who examined

only the books of Hollywood Tanning, had to have been authorized

or directed by the Venutos with the intent to hinder, delay or

defraud creditors within the meaning of N.J.S.A.25:2—25(a) be—

7

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cause a) the transfers were to insiders, c) the transfers were

concealed in that they were not recorded on the books of the com

pany, U) Hollywood Tanning had been sued in 2006 in a civil ac

tion pending when the transfer was made, e) the transfer was of

substantially all the assets of Hollywood Tanning, h) the value

of the consideration received by Hollywood Tanning was not reaso

nably equivalent to the value of the asset transferred or the

amount of the obligation incurred and I) Hollywood Tanning was

insolvent or became insolvent shortly after the transfer was

made.

19. Hollywood Tanning’s obligation to plaintiff arose be

fore the Venutos directed, or Hollywood Tanning authorized, the

payment of the money due to it to be diverted to its sharehol

ders.

20. The diversion of Hollywood Tanning’s assets to its

shareholders was without receipt of a reasonably equivalent value

and rendered Hollywood Tanning insolvent.

21. The diversion of Hollywood Tanning’s assets to its

shareholders more negatively affected the available cash reserves

of an already insolvent company.

22. At the conclusion of June 22, 2007, Hollywood Tanning

had positive cash balance of $117,647.38, an amount insufficient

to meet its obligations as they became due.

23. The shareholders knew or should have known that Holly

wood Tanning was insolvent before it transferred its assets on

June 22, 2007.

24. Three months before the conveyance in issue, Hollywood

Tanning had substantially overstated its current assets and un

derstated its remaining lease obligations and liabilities.

25. As of March 31, 2007, Hollywood Tanning had liabilities

which exceeded its assets and a deficiency in working capital.

26. In the months preceding the closing, between April

2007 and June 2007, Hollywood Tanning did not have the resources

which would have enabled it to cure the deficiency in working ca

pital.

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27. At the time of closing, Hollywood Tanning was a defen

dant in class action litigation commenced by Nafar Hadis in the

Superior Court of New Jersey and removed to this Court and as

signed Civil Action Number 06-03826. Hollywood Tanning’s notice

of removal pleaded that the damages sought exceeded $5,000,000.

28. Hollywood Tanning was also a defendant in an action

pending in the Court of Common Pleas, Bucks County, Pennsylvania.

That action was commenced by the Warminster Group and assigned

Docket No. 20004882—18—1. Judgment was entered on June 13, 2005

after a trial as to damages in favor of Warminster Group and

against Hollywood Hands d/b/a Hollywood Tanning Systems, Inc. in

the amount of $457,725.29.

29. The employer identification number for Hollywood Hands

d/b/a Hollywood Tanning Systems, Inc., as reflected in the lease

upon which Warminster Group filed suit, is the same employer

identification number reflected on the tax returns for Hollywood

Tanning Systems, Inc.

30. According to the General Ledger, after the shareholders

loaned $90,000 to Hollywood Tanning on September 4, 2007 and af

ter payment of estimated taxes, the investment account had a ne

gative balance after September 18, 2007. In October 2007, the

Venutos deposited $1,430,000 into the investment account. The

books of Hollywood Tanning classified this payment as a loan by

the shareholders to satisfy the $1,430,000 escrow shortfall ob

ligation owed Tan Holdings. The $5,000,000 escrow was estab

lished for the benefit of Tan Holdings to satisfy obligations

owed by Hollywood Tanning to Tan Holdings.

31. The payments/distributions to the Venutos left Holly

wood Tanning with almost no cash immediately after the closing

and certainly insufficient cash. Hollywood Tanning maintained

no adequate reserve for other liabilities such as its remaining

liabilities as Tenant on more than 300 franchise leases.

32. GS Partners, LLC is a judgment creditor of Hollywood

Tanning Systems. In the defense of GS Partners’ claim -both in

arbitration and in litigation - Hollywood Tanning affirmatively

hindered and delayed the adjudicative processes.

9

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Part IV. Each of Defendant’s Contested Facts:

1. Hollywood Tanning was founded by Ralph Venuto, Sr.

around 1994.

2. Ralph Venuto, Sr. was a highly successful, self-made

entrepreneur. He founded, invested in, and built up several

lucrative businesses in the South Jersey region. By the mid

2000s, he had earned a stellar business reputation by his peers,

competitors and marketplace observers and insiders.

3. Hollywood Tanning was a very successful and highly

profitable business from 1994 through 2007.

4. Hollywood Tanning grew its business the old fashioned

way: building a known brand through the sale of quality and

affordable tanning services to local patrons who became repeat

and then long term loyal customers; adding new customers through

word of mouth and strategic advertising; carefully choosing loca

tions for new stores in high traffic areas where tans were very

likely to be sought by the local population; expanding from a

small group of retail stores into the franchising business

through implementation of vertical business practices; expansion

into new states and regions as the tanning business became more

attractive to wider markets on a national scale; realizing con

sistent profits and growth by containing internal operating

costs; hiring family members for key positions thereby saving

costs on executives; training and servicing a large staff of very

dedicated in house part time and full employees; giving compre

hensive training programs to each new franchisee before store

openings; taking on little outside debt; purchasing the ground

where it would build its manufacturing plant and offices; provid

ing robust advertising and marketing support for existing stores;

and always keeping a close eye on store by store sales and pro

ductivity.

5. Hollywood Tanning grew from a small business into a

nationally known franchising operation with over 300 stores by

2006.

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6. By 2006, in a niche market with just a few serious

competitors, Hollywood Tanning was one of the top tanning

franchising businesses in the U.S.A.

7. 3y 2006 Hollywood Tanning had achieved industry dominance

in the tanning franchising business.

8. In the 1990s to the mid—2000s, the retail tanning business

and sales of tanning services, products and equipment to end user

customers grew rapidly throughout the U.S.A.

9. In the 1990s to the mid—2000s, the consumption of tans

through exposure to tanning bulbs was generally considered safe

by the public.

10. In 2004, Hollywood Tanning filed a federal income tax

return disclosing substantial sales and net operating income. It

was very profitable in 2004 from an income statement and cash

flow perspectives.

11. In 2005, Hollywood Tanning filed a federal income tax

return disclosing substantial sales and net operating income. It

was very profitable in 2005 from an income statement and cash

flow perspective.

12. In 2006, Hollywood Tanning filed a federal income tax

return disclosing substantial sales and net operating income. It

was very profitable in 2006 from an income statement and cash

flow perspective.

13. In 2004 Hollywood Tanning made cash distributions to

shareholders through the course of the year. The cash distri

butions represented actual company profits. Hollywood Tanning

made the distributions from its company bank accounts.

14. In 2005, Hollywood Tanning made cash distributions to

shareholders through the course of the year. The cash distribu

tions represented actual company profits. Hollywood Tanning made

the distributions from its company bank accounts.

15. In 2006, Hollywood Tanning made cash distributions to

shareholders through the course of the year. The cash distribu

tions represented actual company profits. Hollywood Tanning made

the distributions from its company bank accounts.

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16. Hollywood Tanning’s federal tax returns have been ac

cepted by the I.R.S. Hollywood Tanning was never the subject of

any fraud investigation by the I.R.S.

17. Hollywood Tanning used the services of the same inde

pendent auditors and C.P.A.s for many years.

18. The auditors and C.P.A.s each year audited the books and

records of Hollywood Tanning according to their internal au

diting standards and Generally Accepted Accounting Principles

(“GAAP”)

19. Deviations from GAAP, if any, were minor and not mate

rial to the financial statements taken as a whole.

20. The auditors and C.P.A.s each year issued formally

prepared audited financial statements for Hollywood Tanning with

unqualified audit opinions.

21. The audited financial statements have never been the

subject of a fraud investigation by any taxing authority or Hol

lywood Tanning lender.

22. The audited financial statements and tax returns of

Hollywood Tanning are fiscally sound documents having maintained

their integrity for accuracy since they were first created.

23. In 2005 and 2006, Hollywood Tanning started to receive

outside interest in a possible acquisition of its franchising bu

siness. At this time, Hollywood Tanning had over 300 stores,

most owned by non related franchisees, and some owned by insiders

of Hollywood Tanning.

24. As of 2006, Hollywood Tanning had no reason to see that

its decade plus of growth would slow down at any time in the near

future. If anything, because of the outside interest, Hol

lywood Tanning as bullish on its long term prospects.

25. Hollywood Tanning was cash flow positive in 2004 both from

an accounting perspective and by actually having the cash on hand

to make payments to creditors, insiders and others.

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26. Hollywood Tanning was cash flow positive in 2005 both from

an accounting perspective and by actually having the cash on hand

to make payments to creditors, insiders and others.

27. Hollywood Tanning was cash flow positive in 2006 both from

an accounting perspective and by actually having the cash on hand

to make payments to creditors, insiders and others.

28. Hollywood Tanning, before the sale, always had suffi

cient cash on hand to meet ongoing obligations.

29. Hollywood Tanning, before the sale, always had suffi

cient liquid assets to meet its working capital needs.

30. Hollywood Tanning, before the sale, always had suffi

cient assets to offset any booked liabilities.

31. In 2007, from January 1 through June 22, Hollywood Tanning

was cash flow positive both from an accounting perspective and by

actually having the cash on hand to make payments to creditors,

insiders and others.

32. From 2004 through June 22, 2007 Hollywood Tanning al- ways

had sufficient funds to operate and pay expenses and make profit

distributions.

33. Hollywood Tanning had a line of credit with an outside

lender. Hollywood Tanning routinely drew on the line and paid it

consistently and timely over the years.

34. Hollywood Tanning was never sued by any of its lenders for

loan defaults.

35. Hollywood Tanning always timely paid its bills to out

side creditors, vendors, suppliers and landlords.

36. Prior to the sale, each month the franchisees were re

sponsible to send to Hollywood Tanning a monthly sales report.

This sales report contained itemized detail including sales by

specific tanning booth; customer purchases of tans and products;

employee performance and other metrics so that Hollywood Tanning

would understand the month to month performance and be able to

make changes/suggestions to improve sales and business practices.

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37. Hollywood Tanning typically did not receive individual

store financials concerning the financial condition of any parti

cular store.

38. Hollywood Tanning was so successful and flush with cash,

that over the years it was able to acquire failing stores, and

pay the operating expenses, including rent, until Hollywood

Tanning was able to sell the stores to a new franchisee or take

other action to dispose of the asset.

39. Hollywood Tanning was so successful that over the years it

was able to keep struggling stores alive, and in doing so,

routinely and in according to solid accounting practices, booked

any monies owed by the franchisees to Hollywood Tanning as ac

counts receivable.

40. The accounting practices of Hollywood Tanning were dis

closed to its auditors and tax authorities.

41. The accounting practices used by Hollywood Tanning in its

efforts to preserve its struggling franchisees in no way ever

disrupted or significantly impacted its actual cash flow.

42. Hollywood Tanning was so flush with cash and had such

great cash flow that it was able to absorb the losses of strug

gling stores over the years.

43. from 1994 to June 22, 2007, Hollywood Tanning’s fran

chise stores fail rate as a percentage of total stores was very

low compared to industry and market standards.

44. Hollywood Tanning was sued sometimes by disgruntled

franchisees, including those lawsuits mentioned by the Plaintiff

in its lawsuit. Not one of these lawsuits ever resulted in an

adverse decision against Hollywood Tanning. The lawsuits were

either dismissed as against the plaintiffs or settled without

admission of liability.

45. Because of its success, Hollywood Tanning decided to

entertain an offer to acquire its business.

46. In 2006 and early 2007, ACI Capital, LLC, an unrelated New

York based investment fund, began its due diligence of Holly

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wood Tanning as part of its stated intention to make a very sizeable buyout offer to Hollywood Tanning.

47. ACI Capital was backed by a nationally known team of

franchise builders who intended on using its track record of suc

cess to expand Hollywood Tanning from a family owned business

into a mega franchise with over 500 stores.

48. ACT Capital’s due diligence was exhaustive: ACI engaged a

team of accountants, consultants, advisors and lawyers to exa

mine the status and condition of Hollywood Tanning from top to

bottom.

49. As part of the due diligence, ACT Capital researched,

reviewed, considered and tested each aspect of the Hollywood Tan

ning business.

50. As part of the due diligence, ACT Capital interviewed key

executives, controllers, employees of Hollywood Tanning.

51. As part of the due diligence, ACI Capital reviewed all

Hollywood Tanning insurance policies, leases, contracts, loans

and all other agreements with third parties for usual business

expenses and practices.

52. As part of the due diligence, ACI Capital reviewed any

lawsuits then pending or threatened against Hollywood Tanning.

53. As part of its due diligence, ACT Capital considered both

the upside and the downside to the transaction.

54. As part of its due diligence, ACT Capital considered the

positives and negatives of the Hollywood Tanning historical

financials. Tt carefully examined each general ledger entry,

testing the entries for purpose, soundness, fitness and reliabi

lity.

55. ACT Capital understood the financial condition Holly- wood

Tanning both from an accounting perspective and from an on the

ground assessment of actual operations.

56. ACI Capital was aware of the then current status of the

Hollywood Tanning accounts receivables as reported on their fi

nancial statements. ACI Capital probed the accounts receivable to

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determine status, collectability, and future worth to the enter

prise. ACI Capital determined that the accounts receivable was

sufficiently stated to satisfy their business intentions.

57. ACI Capital was aware of the Hollywood Tanning method of

recording income and expense on its books and tax returns.

58. ACI Capital was aware that under Hollywood Tanning

control, the individual franchise owners had distinct obliga

tions: payment of royalties to Hollywood Tanning; payment of real

property lease expenses directly to the landlords even though

Hollywood Tanning was a named lessee or lease guarantor; payment

of their other regular business expenses such as in-house employ

ees, insurance, and utilities.

59. ACI Capital was aware that over time some franchise

operators were unable to meet their regular obligations.

60. ACI Capital was aware that some of the accounts recei

vable of Hollywood Tanning represented a mix of delinquent fran

chisee obligations including unpaid royalties to Hollywood Tan

ning, rent and other expenses. Because Hollywood Tanning sought

to protect the value of its store locations it would pay any de

linquent franchisee rent directly the landlords. Hollywood Tan

ning would convert this into an asset booked as an account re

ceivable as it had the right to seek reimbursement from the fran

chisee or foreclose the location.

61. The value that ACI Capital assigned to the franchising

business did not rely heavily on old accounts receivable aged

more than 90 days. ACI Capital understood the risks involved in

taking on aged out accounts receivable.

62. ACI Capital understood that the accounts receivable

represented, in some cases, years of unpaid franchisee obliga

tions. ACI Capital understood the financial condition of these

stores.

63. ACI Capital understood that these accounts receivable, if

written off, would be a one-time bookkeeping entry.

64. ACI Capital understood that Hollywood Tanning had the

right to repossess any stores that were delinquent in expenses

and also the right to close the stores.

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65. AOl Capital understood that any write-offs of old ac

counts receivable would actually free up cash in the future as

Hollywood Tanning would no longer be absorbing the expenses on

its books or otherwise.

66. AOl Capital probed other entries in the financial

statements of Hollywood Tanning including an asset called invest

ment in stores held for resale.

67. ACI Capital understood that the item investment in stores

held for resale meant that these were stores that Hollywood

Tanning repossessed over the years from franchisees and con

verted into company owned stores.

68. ACI Capital understood the financial condition and qua

lity of the investment in stores held for resale.

69. ACI Capital, in assigning a value to Hollywood Tanning,

did not rely heavily on the investment in stores held for resale.

70. ACI Capital, in assigning a value to Hollywood Tanning,

relied, in part, on the existing profitability of the more than

300 stores on solid footing.

71. AOl Capital was aware of the downside of the struggling

stores and adequately understood how these were being characte

rized on the books and records of Hollywood Tanning.

72. As of spring, 2007, there was no legitimate business

reason for Hollywood Tanning to write down any aged accounts re

ceivable. Hollywood Tanning had options to deal with aged out

accounts receivable other than to write them off.

73. As of spring, 2007, a write down of aged out accounts

receivable would have been an unnecessary transaction considering

that the business was thriving and a sale to Tan Holdings was im

minent.

74. As of spring, 2007, there was no legitimate reason to

write down the investment in stores held for resale considering

that the business was thriving and a sale to Tan Holdings was

imminent. Hollywood Tanning had options to deal with the invest

ment in stores held for resale.

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75. ACI Capital understood the terms and conditions of all

real property leases for the stores.

76. AOl Capital understood the real property lease commit

ments and when it undertook to acquire the business, had already

been contemplating what it would do with any struggling stores.

77. As part of its due diligence, ACI Capital made competent

long term projections in accordance with accepted valuation

principles and methods.

78. As part of its due diligence, AOl Capital created and

assigned a market value for the business.

79. As part of its due diligence, ACI Capital tested this

assigned fair market value for integrity by deploying its accoun

tants and consultants in the valuation process.

80. ACT valued the business on a go-forward basis with an eye

toward prospective earnings and the future benefit that would

accrue to ACI.

81. As part of its due diligence, ACI Capital investigated the

need or lack thereof, in maintaining the Venuto family as

operating executives.

82. ACI Capital’s studies of the business made them believe

that the future of the Hollywood Tanning business as it meant to

them would be better without the family in control.

83. ACI Capital believed that the family control, while it was

useful to grow the business up from the ground to where it was in

2007, was a weight against future growth prospects.

84. ACT Capital believed with the Venutos out of control,

that sales and profits would rise and multiply over a 3 to 5 year

period going forward.

85. ACT Capital made an offer to acquire the entire fran

chising business from the Hollywood Tanning pursuant a duly exe

cuted Asset Purchase Agreement, and the transaction indeed closed

on June 22, 2007 and the business was sold to Tan Holdings, LLC,

set up by ACT for this acquisition.

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86. Save for insignificant carve—outs of select assets, ACI

Capital was buying the business lock, stock and barrel, and would

use its own lenders to partially finance the acquisition in a le

veraged acquisition.

87. ACI Capital anticipated using its lender to finance, in

part, the future growth of the business.

88. At the closing on June 22, 2007, all creditors of Hol

lywood Tanning were paid in full.

89. At the closing on June 22, 2007 a $5 Million escrow was

set aside for certain post sale contingencies not capable of be

ing fully anticipated and quantified.

90. The $5 Million Escrow was a deduction from the proceeds

otherwise due to Hollywood Tanning at the sale.

91. As part the transaction, Hollywood Tanning received a

24.85% membership interest in Tan Holdings valued at $10,000,000.

92. The $10,000,000 interest was considered equity in Tan

Holdings, LLC. In essence, rather than receive $10,000,00 in

cash, Hollywood Tanning elected to treat this as equity contribu

tion in the new business with the expectation of receiving pro

fits and distributions (including earn out targets) for this

investment.

93. The $10,000,000 interest was properly reflected on the

books and records and Hollywood Tanning and properly reported to

the taxing authorities.

94. The $10,000,000 interest is considered a tax-free ex

change of roll-over equity in the new company and no write up was

required.

95. Immediately after the closing, Tan Holdings assumed

control of the franchising operations.

96. Immediately after the closing, Tan Holdings assumed

control of all assets transferred including real estate, franchi

sing business operations, manufacturing equipment, intangibles

and goodwill, and books and records

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97. Hollywood Tanning, following the closing, owned an in

terest in Tan Holdings and other assets including promissory

notes owed by franchisees, but had no other regular business

operations.

98. Ralph Venuto, Sr. decided to sell the business because he

had learned his personal health was failing as a result of a

cancer diagnosis. Without him at the helm, it would be difficult

to keep the business thriving as a family enterprise.

99. The timing was right for a sale. The purpose of the sale

to Tan Holdings was for Hollywood Tanning to take advantage of a

very strong seller’s market, satisfy its creditors, transfer

assets to Tan Holdings, an operator with greater financial back

ing and liquidity and continue to hold an interest in the busi

ness expecting to see long term realization of the investment.

100. While following the sale to Tan Holdings Hollywood Tan

ning remained as a co-obligor of real property leases, most lea

ses were assigned with the express consent of the landlords to

Tan Holdings, LLC or its related companies who became the princi

pal obligor and payor. For those leases not assigned with ex

press consent of the landlords, Tan Holdings nevertheless assumed

responsibility for the lease obligations.

101. following the sale, Tan Holdings implemented its busi

ness plan. It removed the Venutos from management, replaced oth

er employees, hired new ertployees, began to solicit the buyout of

certain real property leases for struggling stores, changed some

of the accounting practices, and looked to expand quickly into

desirable areas.

102. following the sale, Tan Holdings scheduled investor

meetings. Ralph Venuto, Sr. and sometimes Ralph Venuto, Jr. at

tended the investor meetings. Also in attendance were other mem

bers of the board of directors including some very prominent bu

siness figures.

103. At these investor meetings, Tan Holdings was effusive

about the ongoing prospects of its business. It made various

suggestions to enhance sales including changing lotion look;

marketing strategies and others. Many of these decisions ulti

mately did not prove beneficial to the business.

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104. All the real property leases for franchise stores were

either acquired by Tan Holdings or Tan Holdings indemnified hol

lywood Tanning against any future liabilities under the lease.

105. There were no amounts overdue to landlords at the time of

the transaction.

106. Subsequent to the sale, Tan Holdings elected to negoti

ate with certain landlords to buy—out a limited number of leases.

The specific leases and the amount of the buy-outs were deter

mined by Tan Holdings and were not known or knowable prior to the

sale date.

107. Generally Accepted Accounting Principles do not require,

or even allow, the recognition of rent expense before the expense

is incurred.

108. Following the sale, Tan Holdings elected to make a sig

nificant accounting change to how rent expense at the franchise

level was recorded and booked. Previously, Hollywood Tanning

booked any payments of rent as a-n-a credit to cash and increased

the accounts receivable balance for the applicable franchisee.

Tan Holdings changed this to record both a payment of rent from

the franchisee to Tan Holdings as income or revenue and the cor

responding actual payment to the landlord as an expense and de

duction against earnings.

109. Not too long after the sale, it is a known fact that the

business and consumer lending markets and the credit and capital

markets in the U.S.A. were quickly drying up making it very hard

if not impossible for small businesses to gain access to the

capital needed to acquire and start up new franchises. In

addition, it accelerated the demise of struggling stores who had

fewer options to deal with any unforeseen financial challenges.

110. The Venuto shareholders continued to own tanning salons

following the sale to Tan Holdings. These salons were responsi—

sible to pay royalty and other obligations to Tan Holdings in the

same manner as non shareholder owned salon.

111. Tan Holdings expected that as part of the sale, it would

see increased revenues over Hollywood Tanning as the Venuto owned

salons would begin paying royalties.

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112. In 2008, the Venuto owned salons, which had being doing

great prior to the sale, started to see a decline in tanning

sales to customers due to the recession and other factors.

113. The U.S. entered an economic recession in December 2007.

The recession was the deepest downturn since the Great De

pression. The recession severely impacted the tanning business

in general and the Tan Holdings business plan.

114. Tan Holdings, at some point, in 2008 was unable to keep

the franchising business was profitable and began to shed stores

and burdensome assets and obligations.

115. Tan Holdings sued Hollywood Tanning in New York State

Court alleging, among other things, that Hollywood Tanning

breached the Asset Purchase Agreement and defrauded Tan Holdings

into purchasing the business.

116. That lawsuit settled amicably for under $500,000, much

less than the millions sought by Tan Holdings.

117. In that lawsuit, Tan Holdings never produced an expert

report or formal valuation that contradicted the ACI Capital

valuation.

118. In that lawsuit, Tan Holdings never produced any finan

cial statements for Hollywood Tanning making any of the adjust

ments that are currently devised by the experts for this Plain

tiff, MSKP Oakgrove.

119. Tan Holdings, following the sale performed a reconcili

ation of the Escrow.

120. In October 2007, following advice of its accountants,

Hollywood Tanning elected to write down certain accounts receiva

ble effective for the 2006 tax year and amended its 2006 tax re

turn. The amended 2006 tax return, despite the write downs, re

flected a positive seven figure net operating income.

121. These write downs of accounts receivable had the imme

diate effect of improving the cash flow of the buyer Tan Holdings

as they claimed the write downs against the escrow (the Asset

Purchase Agreement escrow)

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122. Tan Holdings, following the sale, because it had acqui

red over 280 healthy stores, should have had strong cash flow,

adequate enough to meet its ongoing obligations to landlords and

general creditors.

123. As part of the sale, any accounts receivable owed by

stores owned individually by shareholders, an amount totaling

$600,000, were fully paid down through the sale proceeds, effec

tively freeing up the cash flow of these stores going forward.

124. Following the demise of Tan Holdings, many of the former

landlords filed suit against Tan Holdings and Hollywood Tanning

for unpaid rent and obtained large five figure judgments.

125. Some creditors engaged counsel to collect the judgments.

126. Several lawsuits ensued similar to this one including

Orchard Mall v. Hollywood Tanning Gloucester County Superior

Court of New Jersey; AMC Richboro Delancey Partners; GS Partners,

LLC v Venuto.

127. The Warminster Group lawsuit was against Hollywood Hands

d/b/a Hollywood Tanning Systems. Inc., this entity is not the

same company as Hollywood Tanning. Hollywood Hands, Inc. was set

up by Ralph Venuto, Sr. as a separate legal entity in the State

of New Jersey.

128. The plaintiff in the Warminster Group lawsuit chose to sue

Hollywood Hands.

129. The plaintiff in the Warminster Group lawsuit chose not to

sue Hollywood Tanning Systems, Inc.

130. Just two lawsuits remain, the current action before this

Court and GS Partners, LLC, both handled by the same counsel.

131. Hollywood Tanning was not insolvent at the time of the

shareholder distribution.

132. The investment account on the books of Hollywood Tanning

did not have an actual negative balance as of September 18, 2007

or any time that month.

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133. The shareholder distribution did not render Hollywood

Tanning insolvent.

134. On June 22, 2007 the shareholders of Hollywood Tanning

used part of their distribution from the sale, an amount approxi

mating $400,000 and invested it in an entity called Venuto’s Old

World Pizza Systems, LLC (“Venuto’s Pizza”)

135. The shareholder distribution was not without considera

tion, as the Venutos were shareholders and held an ownership in

terest in the company. The shareholder distribution was payment

for the Venutos’ agreement to distribute the assets of the compa

ny they owned.

136. Plaintiff was not a creditor of Hollywood Tanning for

purposes of NJUFTA at the time of the transfer, as Hollywood Tan

ning’s lease with Plaintiff was not in default at the time of the

transfer.

137. Defendants contest the expert report and its findings and

conclusions.

138. Defendants contest that Plaintiff is owed any money, as

Defendants believe Plaintiff did not make any attempt to mitigate

damages as to the original judgment, as may be required under

Florida law.

139. Defendants reassert all factual affirmative defenses in

their Answer to the Second Amended Complaint.

Part V. Witnesses and Summary of Testimony:

A. Plaintiff’s Witnesses and Summary of Their Testimony

1. Plaintiff intends to call the following witnesses with

regard to liability and anticipates they will testify as follows:

Ralph Venuto, Jr., 480 West Railroad Avenue, Blackwood, New

Jersey 08012

Plaintiff intends to call Ralph Venuto, Jr. to testify about

a) the identity of all of the shareholders of Hollywood Tanning

b) about the financial records of Hollywood Tanning and how they

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were kept between 2003 and 2009. Plaintiff will also call Mr.

Venuto to c) testify about a judgment entered, litigation pending

at the time of the sale to Tan Holdings and subsequent litigation

following the sale which was commenced by creditors alleging

breach of lease and fraudulent conveyances, d) to testify about

loans and distributions made to shareholders or entities in which

the Venutos had an interest at or around the time of, and

following the closing. Plaintiff will also call Mr. Venuto e) to

testify about the intended or planned distribution of Hollywood

Tanning assets in advance of the closing and f) the effect of

that distribution on the creditors of Hollywood Tanning after the

closing. Plaintiff will also call Mr. Venuto to testify g) as to

disbursements of the closing proceeds from the sale of Tan

Holdings and the implementation of the Contribution and Asset

Purchase Agreement and the effect of the Agreement on creditors

of Hollywood Tanning. Mr. Venuto will also h) testify about the

number of franchises existing at the time of the sale and I) the

leasing liabilities of Hollywood Tanning before and after the

sale of its interest to Tan Holdings. Plaintiff also seeks to

call Mr. Venuto j) to elicit those facts to enable plaintiff to

establish fraudulent intent as defined by statutes which give

rise to the claims asserted in this litigation. Mr. Venuto (k)

also had knowledge of the suits against Hollywood Tanning and of

the judgments entered against it.

Richard Venuto, 470 West Railroad Avenue, Blackwood, Mew

Jersey 08012:

Plaintiff intends to call Richard Venuto with respect to the

disposition of Hollywood Tanning assets including a certain

Maserati automobile. Richard Venuto may also be called to testi

fy relating to post-closing dividends and distributions made to

him and as to loans made to or for the benefit of Hollywood Tan

ning after the closing.

Carol Rebbecchi 468 West Railroad Avenue, Blackwood, New

Jersey 08012:

Carol Rebbecchi may also be called to testify relating to

post-closing dividends and distributions made to her as well as

to testify as to loans made to or for the benefit of Hollywood

Tanning post-closing.

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Carol Venuto, 460 West Railroad Avenue, Blackwood, New

Jersey 08012

Carol Venuto may also be called to testify relating to postclosing dividends and distributions made to her as well as to

testify as to loans made to or for the benefit of Hollywood

Tanning post—closing. She may also testify about the Estate of

Ralph A. Venuto, Sr., Deceased.

Stephen Orlofsky, Blank Rome LLP, 300 Carnegie Center,

Princeton, New Jersey 08540j

Mr. Orlofsky is expected to testify a) that his law firm was

counsel to Hollywood Tanning Systems, Inc. in a suit filed by one

Nafar Hadis in the Superior Court of New Jersey and removed to

this Court and assigned Civil Action Number 06-03826, b) that

Hollywood Tanning had an insurance policy which covered only

counsel fees and costs but which did not require the carrier to

indemnify against any settlement or judgment in the action and d)

that Hollywood Tanning’s notice of removal pleaded that the dama

ges sought exceeded $5,000,000.

Mira Mulitadie, 28 Leonard Lane, Riverside, Connecticut

06878:

Plaintiff intends to call Mira Muhtadie for the purpose of

testifying as to the financial condition of the assets and liabi

lities acquired from Hollywood Tanning immediately following the

closing, and representations and warranties made as part of the

Agreement between Hollywood Tanning and Tan Holdings which were

materially breached. Ms. Muhtadie will testify a) that the fi

nancial statements supplied pre-closing to Tan Holdings reflected

significant uncollectible sums as current and valid accounts

which were not valid or otherwise uncollectible and should have

been written off, b) that the obligations to pay rent and related

lease expenses were not as represented for underperforming and

closed lease locations and c) that Tan Holdings faced significant

liability from numerous franchise terminations and liability for

the return of unearned franchise fees. Ms. Muhtadie will also

testify d) that certain franchisees were forgiven or there was an

agreement between them and Hollywood Tanning to defer collection

of outstanding accounts receivable, promises of discounts on the

cost of equipment purchases and to supply franchisees with other

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forms of financial assistance and e) that the financial records

and representations made by Hollywood Tanning were not in accord

with the actual assets received at the closing.

Ms. Muhtadie is a resident of Riverside, Connecticut. MSKP

may read her deposition testimony into the record. The deposi

tion was taken on notice to counsel for defendant who declined to

appear either in person or by telephone.

William St. Clair, 28 South Centre Street, Mercliantviile,

New Jersey 08109, was the accountant for Tan Holdings, LLC

beginning in January 2008. He will testify as to the books and

records of Hollywood Tanning in 2007 as reflected on the docu

ments given to him by predecessor accountant. He will also

discuss the formation by Tan Holdings, LLC - with the consent of

Ralph Venuto, Jr. - to create several subsidiary corporations and

their effect on the creditors of Hollywood Tanning Systems, Inc.

Carmine Gallicchio, 426 Willow Avenue, Roselle Park, New

Jersey 07204: He will testify that a) he is the only member of GS

Partners, LLC, b) that GS Partners purchased a Hollywood Tanning

franchise, c) that he believes that Ralph Venuto, Jr. and

Hollywood Tanning defrauded him in the purchase by CS Partners of

a Hollywood Tanning franchise, d) pursuant to his franchise

agreement, he filed an arbitration proceeding with the American

Arbitration Association fAAA) in June, 2008 against Hollywood

Tanning, Ralph Venuto, Sr and Ralph Venuto, Jr., e) the AAA

issued a scheduling order on January 20, 2009, f) Ralph Venuto,

Jr. and Carol Venuto, as administratrix of the Estate of Ralph

Venuto, Sr., sued him on January 26, 2009 in Chancery Division,

Camden County to enjoin the arbitration on the basis that they

were not parties to the franchise agreement, g) that the ar

bitration proceeded against all respondents, h) that the AAA ter

minated that proceeding on October 7, 2009 because Hollywood Tan

ning had not paid its share of the American Arbitration Associa

tion fee, I) that GS Partners filed suit against Hollywood Tan

ning, the Estate of Ralph Venuto, Sr and Ralph Venuto in the Law

Division, Somerset County on February 4, 2010 for damages, j) the

defendants moved to dismiss the action on March 29, 2010, k) that

the Superior Court held a proof hearing and entered judgment on

January 7, 2011 in favor of CS Partners and against Hollywood

Tanning in the amount of $959,359, no portion of which has been

paid.

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Kenneth Federman, 3103 Hulmeville Road, Bensalem,

Pennsylvania 19020, will be subpoenaed to authenticate an affi

davit he filed in the Court of Common Pleas, Bucks County unless

defendants will stipulate that he was counsel to Hollywood Hands

d/b/a Hollywood Tanning Systems, Inc. and to the admission into

evidence of that affidavit.

A representative of Travelers Insurance Company will testify

to coverage afforded by Travelers Insurance Company for lawsuits

against Hollywood Tanning Systems and payments made under those

policies.

2. Plaintiff does not intend to call any witnesses with

respect to damages. Plaintiff will rely on the Florida judgment

as recorded in New Jersey plus post-judgment interest.

B. Defendants’ Objections to Plaintiff’s Witnesses

1. Defendants object to the introduction of any statements

by Stephen Orlofsky that are protected by the attorney client

privilege that covers all communications made by and between Mr.

Orlofsky and his law firm and the defendants concerning the Nafar

Hadis lawsuit filed in the New Jersey Superior Court, or any

other lawsuit or matter that Plaintiffs attempts to raise at

trial.

2. Defendants object to all testimony of Carmine Gallichio

as not relevant to any of the claims or defenses involved in this

action. F.R.E. 401. Mr. Gallichio’s testimony would not aid

the factfinder as this Court has already observed in prior

decisions that Plaintiff MSKP Oakgrove was a creditor as defined

in the New Jersey Uniform Fraudulent Transfer Act and as such has

standing to bring this lawsuit as an alleged aggrieved creditor.

Mr. Gallichio’s testimony would not aid the factfinder in

deciding the solvency of Hollywood Tanning as the Mr. Gallichio’s

alleged troubles with Hollywood Tanning, namely the arbitration

and lawsuits referenced, all arose long after the June 22, 2007

asset sale and were largely prosecuted in 2009, which was after

the Tan Holdings franchising business had ceased operations.

3. Defendants object to any representatives of Travelers

Insurance Company for the purposes stated in Plaintiff’s portion

Pre-trial Statement. Any testimony concerning alleged insurance

payments made or not made by Travelers under insurance coverage

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offered to Hollywood Tanning has no relevance to any of the

claims asserted concerning the solvency of Hollywood Tanning.

Defendants see no connection between the ability of Hollywood

Tanning to pay creditors and the separate actions of an unrelated

insurance company which may have been paying or not paying on

claims made against Hollywood Tanning. F.R.E. 401.

C. Defendants’ witnesses and summary of their testimony:

Ralph A. Venuto, Jr., 480 West Railroad Avenue, Blackwood,

New Jersey 08012, to testify as to the financial condition of

Hollywood Tanning at the time of the Sale, before the sale, after

the sale and HTS’s evaluation of the potential of Tan Holdings to

produce profit. Ralph A. Venuto, Jr. to testify as to all

affirmative defenses in the Defendants’ Answer to Second Amended

Complaint; any lawsuits involving Hollywood Tanning before or

after the sale; the business history and operations of Hollywood

Tanning; the sale to ACI Capital; the Asset Purchase Agreement;

the operations of Tan Holdings Post-sale; the Tan Holdings

financial records; the Hollywood Tanning financial statements and

tax returns; and to any other fact or allegation of fact

involving Hollywood Tanning and defense in this lawsuit.

Richard Venuto, 470 West Railroad Avenue, Blackwood, New

Jersey 08012, to testify as to the same areas as Ralph A. Venuto,

Jr. although Richard’s scope of knowledge may be more limited

than Ralph’s.

David Rahn, 1000 Delsea Drive, Buildiong E-2, Westville,

NJ8093, to testify concerning the financial condition of

Hollywood Tanning before the sale and at the time of the sale,

the business history and operations of Hollywood Tanning; the

Asset Purchase Agreement; the lawsuits involving Hollywood Tan

ning; the Tan Holdings financial records; the Hollywood Tanning

financial statements and tax returns; and his role as an advisor

to Tan Holdings including his knowledge as to the financial con

dition, prospects and business decisions of ACI Capital after the

sale.

Jack Uris, former accountant for Hollywood Tanning. He will

testify regarding his role as accountant for Hollywood Tan-ning

and his involvement in the production of financial statements for

Hollywood Tanning and his personal knowledge as to the accuracy

and veracity of the financial statements.

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D. Plaintiff’s objections to defendant’s witnesses

Plaintiff does not object to any of the foregoing fact

witnesses although it intends to cross-examine them. MSKP

objects to Pederson’s testimony for he has performed no

independent valuation of the Venutos’ interests in Tan Holdings

or the solvency of Hollywood Tanning on or before the date of

closing. His report is only a critique of Shelley Brown’s

report, not an independent report setting forth a contrary

opinion based upon tested analysis of the financial records. His

opinion is a net opinion.

Part VI Expert Witnesses

A. Plaintiff’s expert:

Shelley Brown, MBA, CPA/ABV/CFF, CVA (Curriculum Vitae

attached)

Ms. Brown’s expected testimony will support her report re

garding the condition of Hollywood Tanning as of the date of

closing and the value of Tan Holding. More specifically, Brown

will testify that both before and after the sale of Hollywood

Tanning, it transferred assets to its shareholders, the Venutos,

without receiving any equivalent value. Hollywood Tanning also

permitted Tan Holdings to pay the bulk of the cash consideration

for the purchase of Hollywood Tanning’s assets directly to the

Venutos. Hollywood Tanning received no consideration equivalent

in value to the distribution of cash to the shareholders, and it

received no consideration at all for allowing Tan Holdings to di

vert to the Venutos the bulk of the consideration for its pur

chase of the Hollywood Tanning Assets. This diversion and dis

tribution left Hollywood Tanning with an earnings deficit which

existed before and remained after the sale to Tan Holdings.

Hollywood Tanning’s remaining assets after the sale, which

included the non-marketable, minority investment in Tan Holdings,

were not sufficient to satisfy its liabilities. Hollywood Tan

ning knew, or should have known, that it would not be able to pay

its debts as they became due.

Based on Hollywood Tanning’s 2006 and 2007 operating re

sults, Hollywood Tanning should have known that accounts receiva—

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ble could not be collected, the defaults on store leases and

equipment leases would escalate and stores held for re—sale would

not be profitably sold. The investment in Tan Holdings was not

worth $10,000,000, the projected earn outs would not be realized

and that given their lack of investment in Hollywood Tanning,

shareholder distributions were excessive.

Ms. Brown will also testify that Hollywood Tanning knew that

it had materially overstated its 2006 earnings on its financial

statements by, among other things, (I) understating bad debt ex

pense and overstating the value of accounts receivable, (ii)

overstating the value of salons held for resale rather than ad

justing their carrying values for impairment (iv) understating

lease obligations. As a result, the formula used to determine

Hollywood Tanning’s fair market value and the value of its inte

rest in Tan Holdings was flawed and materially overstated its va

lue.

Hollywood Tanning realized and recorded a material write-off

of accounts receivable and inventory in 2007. Stores held for

resale suffered a material impairment in 2006 and additional

stores suffered a material impairment in 2007. Several store

leases went into default in 2006, and additional stores defaulted

on their leases in 2007. Historically, the shareholders also

took excessive distributions and, additionally, in 2007 Hollywood

Tanning realized that accounts payable and sales tax payable were

materially understated. The Venutos agreed to a $5,000,000 es

crow of the proceeds on the asset sale. Because the escrow was

insufficient and had been exhausted, they were still required to

contribute from monies Hollywood Tanning no longer had an addi

tional $1,430,000 classified on the General Ledger for 2007 as a

‘‘loan in family members” as early as October 2007. In other

words, they realized 12% sales price adjustment on the nonmarke—

table, minority interest in the company within four months of the

sale.

During the period under review, the historical compound

growth rate (before normalization adjustments) was approximately

9.3%. Its highest historical EBITDA, (before normalization ad

justments) was 28.9%. In 2006, historical EBITDA (before norma

lization adjustments) had declined to approximately 7%. For Tan

Holdings to meet its EBITDA growth targets and pay the projected

earn outs, Tan Holdings’ first year EBITDA growth would have to

be approximately 58%, its second year growth target would have to

31

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be 13.8% and its two-year compound annual growth rate would have

to be 34%. Given historical operating results, the Venutos knew

or should have known that these target growth rates were

unattainable and that the earn outs would not be paid.

Based on the 2006 and 2007 declines in Hollywood Tanning’s

operating results, the Venutos knew, or should have known, that

its ownership interest in Tan Holdings had no value. There was

an increase in 2007 gross revenues, offset by a material decline

in operating income resulting from inability to collect their

outstanding accounts receivable, overstated inventory, understa

ted accounts payable and taxes payable, defaults on store leases

and failure to sell the stores held for resale at their carrying

values. The Venutos knew or should have known that Hollywood

Tanning would experience cash flow deficiencies. Yet they imme

diately transferred virtually all of the sale proceeds to them

selves with no regard to its current and future creditors, inclu

ding lease holders.

Hollywood Tanning distributed the proceeds of the sale to

its shareholders without regard to the fact that Hollywood Tan

ning was insolvent both before and after the transfer.

Ms. Brown will also testify as to the valuation she ascribed

to plaintiff’s minority interest in Tan Holdings, LLC. Brown va

lued Tan Holdings as a continuation of Hollywood Tanning Systems.

Brown will testify that the defendants did not produce fi

nancial records for 2003. For 2004 and 2005, production was li

mited to audited financial statements which both Crowe Horwath

and Brown found to be unreliable. For calendar years 2006 and

2007, defendants produced only partial and incomplete records.

She will testify that the buyer’s accountants appear to have

(it’s only a preliminary report) concluded that the audited fi

nancial statements were not prepared in accordance with generally

accepted accounting principles (“GAAP”) ; contingent liabilities

were not recorded, labor and raw materials were not capitalized

into inventory, the investment in stores was not tested for im

pairment. Further, due to Hollywood Tanning’s failure to perform

a monthly financial close, Crowe Horwath opined that the finan

cial data generated from the general ledger was not sufficiently

reliable to support business decisions. Based on these findings

and with no supporting or third party documentation for the 2004

32

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and 2005 audited financial statements, Brown could place no reli

ance upon them.

The 2006 and 2007 financial statements and other financial

information was also not in compliance with GAAP. However, be

cause defendants had produced the asset and liability sections of

the general ledger and the 2006 audit work papers, she could re

classify the contingent liabilities to actual liabilities and to

make normalization adjustments for bad debt, lease obligations,

New York State taxes payable, etc. Given these circumstances,

her valuation was based primarily on the 2006 and 2007 financial

data.

In 2006 and 2007, Hollywood Tanning had operating losses for

the period ending June 21, 2007 and June 22, 2007. Ms. Brown

will testify that, as of the day before the sale, Hollywood Tan

ning had an approximate equity deficit. As of June 22, 2007, the

date on which the sale closed, Hollywood Tanning had an approxi

mate $5,500,000 equity deficit. Based on both the asset and in

come approaches, she opines that Hollywood Tanning was insolvent

on the day before the sale and on the date the sale took place.

Tan Holdings owned only the assets it purchased from Hollywood

Tanning. It intended to continue the business of Hollywood Tan

ning. In addition, it had whatever debt it incurred to finance

the purchase. It also assumed debt of Hollywood Tanning. Under

these circumstances, Tan Holdings was not solvent.

Further evidence that the 25% interest in Tan Holdings, LLC

was the manner in which it was treated on the corporate books and

records. Had it truly been valued by the Venutos at $10,000,000,

there would have been an entry in the 2007 corporate general led

ger, on the 2007 income statement and the 2007 balance sheet.

The entry would be recorded as a $10,000,000 asset on the balance

sheet in an account entitled, “Investment in Tan Holdings, LLC.”

On the income statement, the $10,000,000 gain would have been re

ported in the other income section in an account entitled, “Gain

or Loss on Sale.”

It was not recorded in the 2007 General Ledger or on the

June 22, 2007 balance sheet. A June 22, 2007 income statement

was not provided. Although the sale had transpired six months

earlier, the accountant did not record this investment and the

corresponding gain was not recorded on the December 31, 2007 Pro

fit and Loss or the December 31, 2007 balance sheet. This in

33

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vestment was not recorded on the June 22, 2007 or the December

31, 2007 balance sheet prepared by the accountant. This is fur

ther evidence that the Venutos valued the 25% interest in Tan

Holdings at zero.

Ms. Brown may also testify to other matters within her

report.

B. Defendant’s objections to Plaintiff’s Expert

C. Defendant’s experti)witnesses

William J. Pederson, CPA/ABV/CFF, CIRA/CDBV, CfE (Curriculum

Vitae attached)

Mr. Pederson’s testimony will be in rebuttal to Ms. Brown’s

testimony. Mr. Pederson will testify as to all matters set forth

in his expert report, including but not limited to deficiencies

in the methods used by Ms. Brown in reaching her conclusions and

their application to the facts of this case. Particularly, Mr.

Pederson will testify regarding the 25% interest in Tan Holdings

as taxable income, as Ms. Brown has made this an issue in her re

port despite the fact that the 25% interest was not a taxable

gain. He will testify as to SSVS and NACVA standards and their

application and how Ms. Brown either failed to apply the stan

dards at all or failed to properly adhere to them. Mr. Pederson

will testify regarding the correct method of valuing a business

as a going concern and how Ms. Brown improperly used hindsight to

value Tan Holdings, as well as other improprieties in her re

ports. Plaintiff will object to any testimony by Mr. Pederson

regarding the solvency of Hollywood Tanning or of the value of

Tan Holdings.

0. Plaintiff’s objections to defendant’s expert

Plaintiff objects to Pederson’s testimony to the extent it

is based on or refers to his report in the Orchard Mall case. In

that case defendants provided incomplete evidence to Brown,

plaintiff’s expert in that case as well. Further, Pederson’s

report in the case at bar does not incorporate by reference his

report in Orchard Mall and constitutes a net opinion.

Part VII. Trial Exhibits

34

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A. Joint Exhibits

1. Contribution and Asset Purchase Agreement dated April

18, 2007 between Hollywood Tanning and Tan Holdings, LLC (“Tan

Holdings”) JNT1

2. Wilmington Trust Statement of Account as of June 30,

2007 for Ralph A. Venuto, Jr. JNT91

3. Wilmington Trust Statement of Account as of June 30,

2007 for Ralph A. Venuto, Sr. and Carol Venuto; (Exhibit 12 at

Carol Venuto deposition on June 18, 2010) JNT93

4. Wilmington Trust Statement of Account as of June 30,

2007 for Richard Venuto and Patricia Venuto JNT96

5. Wilmington Trust Statement of Account as of June 30,

2007 for Michael Rebbecchi and Carol Rebbecchi JNT98

6. Distribution Sheet of closing proceeds June 22, 2007

Exhibit 32 at deposition of Ralph Venuto, Jr. - June 19, 2015

(GSV—1) JNT100

7 US Income Tax Return for Hollywood Tanning Systems,

Inc. 2006 (Exhibit 4 at Jack Uris deposition on January 28, 2013

in Orchard Mall case) JNT1O1

8. US Income Tax Return for Hollywood Tanning Systems,

Inc. 2006 amended; (Exhibit 9 at David Rahn •deposition on March

12, 2013 in Orchard Mall case) JNT35

9. US Income Tax Return for Hollywood Tanning Systems,

Inc. 2007; (Exhibit 10 at David Rahn deposition on March 12, 2013

in Orchard Mall case) JNT171

10. Deposition Transcript, Orchard Mall, LLC v. Hollywood

Tanning Systems, Inc. Superior Court of New Jersey, Mercer County

DJ#271393-08 Ralph A. Venuto, Jr. September 22, 2009 JNT2O7

11. Deposition of David Rahn Orchard Mall v. Carol Venuto

et al. Superior Court of New Jersey, Gloucester County GLO-L

2044—10 March 12, 2013 JNT245

12. Deposition of Ralph Venuto, Jr. Orchard Mall v. Carol

35

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Venuto et al. Superior Court of New Jersey, Gloucester County

GLO-L-2044—l0 February 12, 2013 JNT626

13. Hollywood Tanning General Ledger 2006 JNT1344

14. Hollywood Tanning General Ledger 2007 JNT1944

15. Deposition Transcript of Mira Muhtadie, June 22, 2015

JNT2554

16. Hollywood Tanning Systems tax return 2005 JNT2622

17. 2010 transactions — State of New Jersey notification

schedule of Liabilities for 2007 of $114,158 JNT2660

18. Warrant issued by State of New York for taxes owed from

2007 in the amount of $107,409.10 NJT2662

19. HTS, Inc. balance sheet as of June 21, 2007 (Exhibit

10 to Brown report) JNY2666

20. Hollywood Tanning Systems, Inc.: Report on Audits of

Financial Statements and Additional Information Years Ended

December 31, 2006 and 2005, Altenburger, Uris, Caglioti &

Heymann, LLC (March 13, 2007) JNT2670

B Plaintiff’s exhibits

1. Final Judgment entered May 19, 2009 in case of MSKP Oak

Grove, LLC v. Hollywood Tanning Systems, LLC in the Circuit

Court, Eighteenth District, Seminole County, case No. 08-CA6420—15—G $411,573.45 MSKP1

2. Docketed Judgment, July 30, 2009 MSKP Oak Grove, LLC v.

Hollywood Tanning Systems, LLC., Superior Court of New Jersey,

Mercer County, DJ—171176—09 MSKP4

3. Transcript of the deposition of Ralph A. Venuto, Jr.

June 18, 2010 MSKP Oak Grove, LLC v. Hollywood Tanning Systems,

LLC, Superior Court of New Jersey, Mercer County. DJ#171176-09

MSKP8

4. Consent to Sublease, March 19, 2004 between Tenant

Hollywood Tanning Systems, Inc. (“Hollywood Tanning”) and

36

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Altamonte Chic Shades, Inc. (Marked Exhibit 2 at Ralph Venuto,

Jr. Deposition on June 18, 2010) MSKP114

5. Side Letter Agreement dated June 22, 2007 between

Hollywood Tanning and Tan Holdings MSKP120

6. Final Adjusted Working Capital: Final Net

Debt/Shortfall of $6,339,643.85 October 19, 2007 MSKP139

7. Confidential Settlement Agreement and Release dated

February 10, 2010 between Hollywood Tanning, et. al and Tan

Holdings et al. (GSV285—GSV331) MSKP146

8. Purchaser Earn Out Statement July 8, 2009 for calendar

years December 31, 2007 and December 31, 2008 (Bates 91—93)

MSKP173

9. Demand for payment of final salon adjustment dated July

16, 2009; (Bates 94—95) MSKP176

10. Assignment and Assumption Agreements June 22, 2007

(HTS19—26) [10 (a) — 10(g)]

10(a) Assignment and Assumption Agreement between Hollywood

Tanning Systems, Inc as Assignor and HT Systems, LLC as Assignee

MSKP182

10(b) Assignment and Assumption Agreement between Hollywood

Tanning Systems, Inc as Assignor and Tan Holdings, LLC as

Assignee MSKP189

lO© Assignment and Assumption Agreement between Hollywood

Tanning Systems, Inc as Assignor and Hollywood Tanning Systems,

LLC as Assignee MSKP195

10 (d) Assignment and Assumption Agreement between

Hollywood Tanning Systems, Inc as Assignor and HT Franchising,

LLC as Assignee MSKP200

10(e) Assignment and Assumption Agreement between Hollywood

Tanning Systems, Inc as Assignor and Hollywood Tans, LLC as

Assignee MSKP2O5

10(f) Assignment and Assumption Agreements between

37

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Hollywood Tanning Systems, Inc as Assignor and HT Overseas, LLC

as Assignee MSKP211

10(g) Assignment and Assumption Agreement between Hollywood

Tanning Systems, Inc as Assignor and HT Manufacturing, LLC as

Assignee MSKP216

11. Notice of assignment to CMA Business Credit Services of

assets by HT Liquidating, LLC May 9, 2009 f/d/b/a Hollywood Tans,

LLC et al MSKP221

12. Deposition Transcript Rowen Petroleum v. Hollywood

Tanning Systems, Inc. United States District Court, District of

New Jersey 08-4764 Deposition of Ralph Venuto, Jr. February 14,

2011 MSKP225

13. E-mail trail between Ralph Venuto, Jr. and David Rahn

dated May 14, 2007 MSKP268

14. Involuntary Bankruptcy Petition HT Systems, LLC filed

July 20, 2009 United States Bankruptcy Court, District of New

Jersey Case 09-2874l—GMB MSKP272

15. Summary of Schedules prepared by HT Systems, LLC filed

July 20, 2009 United States Bankruptcy Court, District of New

Jersey Case 09-28741-GMB M5KP276

16. Class Action Complaint, Nafar et al. v. Hollywood

Tanning Systems, Inc. Superior Court of New Jersey, Law Division,

Middlesex County MID—L—4879—06 filed June 21, 2006 MSKP31O

17. Notice of Removal Nafar et al. v. Hollywood Tanning

Systems, Inc. United States District Court, District of New

Jersey, 06—3826 filed August 14, 2006 M5KP332

18. Docket Report Nafar et al. v. Hollywood Tanning

Systems, Inc. United States District Court, District of New

Jersey 06—3826 filed August 14, 2006 MSKP36O

19. Initial Disclosures filed by Stephen N. Orlofsky, Esq.,

Blank Rome on behalf of Hollywood Tanning System in Nafar et al.

v. Hollywood Tanning Systems, Inc. United States District Court,

District of New Jersey 06-3826 dated November 8, 2006 M5KP375

38

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20. Audited Financial Statements of Hollywood Tanning

Systems, Inc. for the years ended December 31, 2006 and 2005,

Altenburger, Uris, Caglioti & Heymann, LLC dated March 17, 2007.

(Exhibit 47 at deposition of Ralph A. Venuto, Jr. dated June 19,

2015) MSKP419

21. Letter from Ralph Venuto, Sr. and David Rahn to

Altenburger, Uris, Caglioti & Heymann, LLC dated October 11, 2007

stating that $3,260,882.95 of accounts receivable included in

Hollywood Tanning Systems financial statements were uncollectible

and should been written—off as bad debts as of December 31, 2006;

Includes Bad Debt Write-Off Analysis; (Exhibit 8 at Ralph Venuto,

Jr. deposition on February 12, 2013 in Orchard Mall case) MSKP439

22. Notice of Default Wilmington Trust to Hollywood Tanning

Systems, Inc. 3/27/2007 MSKP449

23. Hollywood Tanning Systems, Inc. Account Aging as of

December 31, 2006 with accounting work papers MSKP454

24. Independent Auditors’ Report on Additional Information

March 13, 2007 MSKP464

25. Profit and Loss Comparison Hollywood Tanning Systems,

Inc. 2005/2006 MSKP468

26. Claim for Indemnification December 8, 2008 Tan Holdings

to Hollywood Tanning MSKP492

27. Hollywood Tanning Systems, Inc. Accounts Receivable

aging summary as of December 31, 2006 MSKP496

28. Letter dated March 15, 2007 from Hollywood Tans to

Altenburger, Uris, Caglioti & Heyman signed by Ralph Venuto, Sr.,

David Rahn and Michelle Ernst stating representations of

Hollywood Tanning (Exhibit 1 at David Rahn deposition on March

12, 2013 in Orchard Mall case) MSKP495

29. Mutual Separation of Employment Agreement Hollywood

Tanning and David Rahn February 27, 2007 MSKP512

30. E-mail dated September 8-9, 2011 from Ralph Venuto, Jr.

to Chuck Dugan, Parente Beard, LLC regarding Hollywood Tanning

sales tax assessment paid for 2007 MSKP522

39

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31. Seller’s Disclosure Schedules pursuant to the

Contribution and Asset Purchase Agreement provided at closing

June 22, 2007 MSKP524

32. Schedule K—i 2007 Tan Holdings — $975,420 partner share

of loss MSKP631

33. 2008 U.S. Income Tax Return Hollywood Tanning Systems,

Inc. MSKP635

34. The Bank Statements for Hollywood Tanning Investment

Account June 20, 2007 — January 31, 2009 (Exhibit 33 at

deposition of Ralph A. Venuto, Jr. June 19, 2015) MSKP718

35. Cancelled checks drawn on investment account at The

Bank MSKP743

36. Letter dated April 26, 2007 from Hollywood Tanning to

Rowen Petroleum Products, LLC regarding sale of substantially all

of the assets of Hollywood Tanning and request to execute an

assignment and assumption agreement MSKP751

37. Letter Travelers to Ralph Venuto, Jr. dated July 26,

2006 acknowledging receipt of the Hadis Nafar lawsuit. Bates T34

M5KP762

38. Letter Travelers to Ralph Venuto Jr. dated August 16,

2006 declining coverage under defendant’s WRAP policy Bates T35-

37 MSKP763

39. Letter Travelers to Ralph Venuto Jr. dated April 11,

2007. reconsidering coverage with reservation of rights Bates

T38—42 MSKP766

40. Complaint filed by GS Partners, LLC v. Hollywood

Tanning Systems, Inc., NT Franchising, LLC, Ralph Venuto, Jr. and

Ralph Venuto, Sr. in June 2008 with American Arbitration

Association (AAA) MSKP771

41. Letter dated January 20, 1999 from AAA with order

entered at January 14, 2009 preliminary hearing MSKP789

42. Notice dated January 20, 2009 of AAA hearing for May 4,

2009 MSKP794

40

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43. Answer of Venuto respondents in AAA proceeding dated

January 26, 2009) MSKP795

44. Motion of Venuto respondents filed with AAA to enjoin

arbitration MSKP800

45. Memorandum of law filed by Venutos with AAA seeking to

enjoin arbitration dated January 26, 2009) MSKP8O2

46. Verified complaint in Superior Court of New Jersey,

Chancery Division, Camden County (“the Camden County action”)

filed by Ralph Venuto Jr. and Carol F. Venuto, as Administratrix

of the Estate of Ralph Venuto, Sr. v. GS Partners, C-16-09 (Filed

January 26, 2009) MSKP812

47. Letter dated January 26, 2009 from counsel for Venutos

to Hon. Mary Eva Colalillo, P.J.S.C. MSKP899

48. Letter from AAA dated January 28, 2009 acknowledging

receipt of respondents’ motion to dismiss MSKP9O1

49. Order to show cause entered January 29, 2009 in Camden

County action MSKP9O2

50. Brief filed on behalf of plaintiffs in Camden County

action dated February 9, 2009 MSKP9O4

51. Reply brief filed on behalf of Respondents with AAA

(Dated February 19, 2009) MSKP927

51A. Order of Chancery Division, Camden County entered March

9, 2009 MSKP934

52. Order of American Arbitration Association entered March

20, 2009 in GS Partners, LLC v. Hollywood Tanning Systems, Inc.

M5KP936

53. Invoices and Statements issued June 15, 2009 by AAA for

arbitration of dispute between CS Partners, Hollywood Tanning

Systems, Inc., MT Franchising, LLC, Ralph Venuto, Jr. and Ralph

Venuto, Sr. MSKP938

54. Order terminating arbitration dated October 7, 2009

MSKP94O

41

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55. Amended complaint filed January 29, 2008 in United

States District Court in action entitled HT of Highlands Ranch,

Inc. v. Hollywood Tanning Systems, Inc. Civil Action 07-5718 f”HT

of Highlands action”) MSKP941

56. Brief of defendants filed April 17, 2008 seeking to

dismiss HT of Highlands action and compel arbitration MSKP991

57. Reply brief of defendants filed June 2, 2008 seeking to

dismiss HT of Highlands action and compel arbitration MSKP1000

58. Opinion of Court dated December 1, 2008 in HT of

Highlands action denying defendants’ motion to compel arbitration

MSKP1O2

59. Complaint filed February 4, 2010 by GS Partners against

Hollywood Tanning, Ralph Venuto, Jr. and Estate of Ralph Venuto,

Sr. in Law Division, Somerset County MSKP1O48

60. Judgment entered January 7, 2011 in Superior Court of

New Jersey, Law Division, Somerset County in favor of CS Part

ners, LLC and against Hollywood Tanning Systems, Inc. in the

amount of $959,359.00 MSKP1O76

61. Motion of defendants to dismiss Somerset County Action

(Dated March 29, 2010) MSKP1O78

62. Information Subpoena answered by Ralph Venuto, Jr. for

Hollywood Tanning MSKP1O98

63. Asset search of Hollywood Tanning MSKP11O1

64. MSKP Oak Grove, LLP vs. Hollywood Tanning Second

Amended Complaint MSKP1362

65. Defendants’ Answer to the Second Amended complaint

MSKP1377

66. Plaintiff’s First Request for the Production of

Documents and defendants’ response MSKP1388

67. Plaintiff’s Second Request for the Production of

Documents and defendants’ response MSKP1400

42

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68. Plaintiff’s Third Request for the Production of

Documents and defendants’ response to it MSKP14O2 and MSKP14O9

69. Plaintiff’s Fourth Request for the Production of

Documents and defendants’ response to it MSKP1416

70. Defendants’ responses to Requests for Admissions in the

matter of Orchard Mall v. Carol Venuto et. al. Superior Court of

New Jersey, Gloucester County GLO-L-2044-10 (Exhibit 16 at

deposition of Ralph Venuto, Jr. February 12, 2013) MSKP1424

71. Trial Transcripts Rowen Petroleum Properties, LLC v.

Hollywood Tanning Systems, Inc., et al, United States District

Court, District of New Jersey Civil Action No. 08-4764 December

3, 2012 MSKP1444

72. Trial Transcripts Rowen Petroleum Properties, LLC v.

Hollywood Tanning Systems, Inc., et al, United States District

Court, District of New Jersey Civil Action No. 08-4764 December

4, 2012 MSKP1619

73. Trial Transcripts Rowen Petroleum Properties, LLC v.

Hollywood Tanning Systems, Inc., et al, United States District

Court, District of New Jersey Civil Action No. 08—4764 December

5, 2012 MSKP171O

74. Deposition transcript of David Rahn, Rowen Petroleum v.

Hollywood Tanning Systems, LLC et. al. United States District

Court, District of New Jersey 08—4764 November 11, 2010 MSKP1852

Exhibit 17: Asset and Contribution Agreement (Listed above

as J—1 M5KP1892

Exhibit 18: Certification of Rahn dated August 18, 2009

MSKP198O

75. Schedule of accounts receivable of Hollywood Tanning

Systems, Inc. as of December 31, 2005 (Exhibit 5 at David Rahn

deposition on March 12, 2013 in Orchard Mall case) MSKP2006

76. Letter dated March 23, 2007 from Wilmington Trust Co.

to Hollywood Tanning Systems, Inc. declaring event of default

(Exhibit 6 at David Rahn deposition on March 12, 2013 in Orchard

Mall case) MSKP2007

43

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77. e-mail chain dated September 15, 2008 between John

Breza and David Ralin (Exhibit 12 at David Rahn deposition on

March 12, 2013 in Orchard Mall case) MSKP2O1O

79. Deposition of Ralph Venuto, Jr. MSKP Oak Grove v. Venuto,

June 19, 2015 MSKP2O13

80. Final Net Debt computation and escrow shortfall dated

October 19, 2007 $6,305,143.85 (Exhibit 39 at the Deposition of

Ralph Venuto, Jr. June 19, 2015) MSKP2124

81. Check for $80,000 from Ralph A. Venuto, Jr. to Hollywood

Tanning Systems, Inc. dated July 23, 2007 (Exhibit 40 at

deposition June 19, 2015) MSKP2131

82. Check from Ralph A. Venuto, Jr. dated May 21, 2008 to

Hollywood Tanning Systems, Inc. in amount of $9,500 (Exhibit 41

at deposition June 19, 2015) MSKP2132

83. Check from Ralph A. Venuto, Jr. dated June 23, 2008 to

Hollywood Tanning Systems, Inc. in amount of $6,250 (Exhibit 42

at deposition June 19, 2015) MSKP2133

84. Deposition of Richard Venuto, MSKP Oak Grove v. Venuto,

June 18, 2015 MSKP2192

85. Check from Richard Venuto dated June 17, 2007 to

Hollywood Tanning Systems, Inc. in amount of $80,000 (Exhibit 26

at deposition June 18, 2015) MSKP2216

86. Check from Richard Venuto dated May 20, 2008 to

Hollywood Tanning Systems, Inc. in amount of $9,500 (Exhibit 27

at deposition June 18, 2015) MSKP2217

87. Check from Richard Venuto dated June 23, 2008 to

Hollywood Tanning Systems, Inc. in amount of $6,250 (Exhibit 28

at deposition June 19, 2015) MSKP2218

88. Deposition of Carol Venuto, MSKP Oak Grove v. Venuto,

June 18, 2015 MSKP2233

89. Check from R. C. Real Estate Invest, Inc. dated July

23,2007 to Hollywood Tanning Systems, Inc. in amount of $80,000

Exhibit 13 at deposition of Carol Venuto dated June 18,2015)

44

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MSKP2261

90. Check from R. C. Real Estate Invest, Inc. dated May 21,

2008 to Hollywood Tanning Systems, Inc. in amount of $9,500

(Exhibit 14 at deposition of Carol Venuto June 18, 2015) M5KP2262

91. Check from R. C. Real Estate Invest, Inc. dated June

23,2008 to Hollywood Tanning Systems, Inc. in amount of $6,250

(Exhibit 15 at deposition of Carol Venuto June 19, 2015) MSKP2263

92. Deposition of Carol Rebbecchi, MSKP Oak Grove v.

Venuto, June 18, 2015 M5KP2278

93. Check from Carol Rebbecchi dated July 18, 2007 to

Hollywood Tanning Systems, Inc. in amount of $80,000 (Exhibit 21

at deposition June 18, 2015) MSKP23O5

94. Check from Carol Rebbecchi dated May 20, 2008 to

Hollywood Tanning Systems, Inc. in amount of $9,500 (Exhibit 23

at deposition June 18, 2015) M5KP2306

95. Check from Carol Rebbecchi dated June 23, 2008 to

Hollywood Tanning Systems, Inc. in amount of $6,250 (Exhibit 22

at deposition June 19, 2015) M5KP2307

96. Deposition of William St. Clair dated June 12, 2015

MSKP2 315

Exhibit 2 - Hollywood Tans LLC accrued expenses 12-31-

2008 MSKP2343

Exhibit 3 - Hollywood Tans LLC accrued expenses 12-31-2

2007 M5KP2344

Exhibit 4 — Form 1065 U. S. Return of Partnership 2008

Tan Holdings, LLC MSK92348

Exhibit 5 - Consolidated Balance Sheet 12-31-2007

MSKP2439

Exhibit 6 - Independent Auditors’ Report 6-30-09

M5KP2442

Exhibit 7 — Form 1065 U. S. Return of Partnership 2008

45

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Hollywood Tanning Company MSKP2460

Exhibit 8 — Form 1065 U. S. Return of Partnership 2008

Tan Holdings, LLC 2007 MSKP25O8

Exhibit 9 - Hollywood Tans, LLC Transactions by account

as of 5—6—09 MSKP2564

Exhibit 10 - Tan Holdings LLC and subsidiaries

Consolidated Financial Statements 12—31-2007 MSKP2565

Exhibit 11 - Summary of Interpretation No. 45 MSKP2583

97. Letter dated April 29, 2015 from William St. Clair to

Robert A. Vort MSKP263O

98. List of partners in ACI (Exhibit 1 at Muhtadie

deposition, June 22, 2015) MSKP2634

99. Distribution Sheet fJ—11, Exhibit 2 at Muhtadie

deposition, June 22, 2015) MSKP2635

100. Letter dated April 2007 from Ableco Finance to Tan

Holdings, LLC (Exhibit 3 at Muhtadie deposition, June 22, 2015)

MSKP2636

101. List of salons with Venuto family ownership interests

(Exhibit 4 at Muhtadie deposition, June 22, 2015) MSKP2649

102. Email chain ending July 15, 2009 (Exhibit 5 at Muhtadie

deposition, June 22, 2015) MSKP2653

103. Organization chart for Tan Holdings, LLC (Exhibit 6 at

Nuhtadie deposition, June 22, 2015) MSKP2666

104. Tan Holdings complaint (Dated February 10, 2009)

MSKP2667

105. Answer and Counterclaim of Hollywood Tanning Systems,

Inc. (Dated April 8, 2009) MSKP2685

106. Amended Answer and Additional Counterclaims of

Hollywood Tanning Systems, Inc. (Filed June 23, 2009) and

counter—claims MSKP2719

46

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107. Tan Holdings 2007 and 2008 draft consolidated financial

statements MSKP2761

108. Hollywood Tanning System tax return 2009 MSKP2797

109. Hollywood Tanning System 2005 financial statement

MSKP2892

110. HTS — Tan Holdings settlement agreement MSKP2914

111. Loan agreement M5KP2941

112. Note and Mortgage Modification agreement MSKP 2990

113. Revolving Credit Note M5KP2993

114. Warminster Group, LP v. Hollywood Hands, Court of

Common Pleas, Bucks County, Docket No. 2000-4882-18—1. Hollywood

Hands Petition to Strike Off or Open Confessed Judgment (Dated

August 24, 2000) with confession of judgment for money dated

August 2, 2000 and complaint in confession of judgment for money

with lease attachment M5KP2997

115. Verified Petition of Hollywood Hands to stay execution

dated October 2, 2000 and October 5, 2000 with memorandum of law

in support of petition MSKP2999

116. List of witnesses June 2002 (multiple dates) MSK?3055

117. Brief of Hollywood Hands objecting to plaintiff’s

motion in limine dated June 3, 2002 MSKP3O56

118. Jury Verdict, Warminster Group, LP v. Hollywood Tanning

Systems, Inc. et. al. Case #2000—04882 MSKP3O64

119. Undated petition of Kathy McGuire to strike off or open

confessed judgment MSKP3O69

120. Hollywood Hands supplemental memorandum of law in

support of motion for post—trial relief (July 19, 2002) MSKP3111

121. Judgment, Warminster Group, LP v. Hollywood Tanning

Systems, Inc. et. al. Case #2000—04882 entered December 19, 2002.

47

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MSKP314O

122. Exhibit list trial of Warminster Group, LP v. Hollywood

Tanning Systems, Inc. dated June 4, 2002 MSKP3148

123. Docket Sheet through November 25, 2009 (Printed August

25, 2016) MSKP3153

124. Transcript of hearing June 13, 2005 M5KP3172

125. Notice of Appeal dated January 10, 2006 MSKP3199

126. Opinion of Court of Common Pleas of Bucks County dated

March 28, 2006 MSKP3200

127. Opinion, Superior Court of Pennsylvania January 5,

2007 M5KP3212

128. Order, Superior Court of Pennsylvania July 30, 2007

M5KP3220

129. Response of Hollywood Hands to Interrogatories in Aid

of Execution (Dated February 28, 2006) MSKP3227

130. Response of Hollywood Hands to Document Requests in

Aid of Execution (Dated February 28, 2006) MSKP3246

131. Brief of Hollywood Hands in support of motion for

reconsideration of order entered August 14, 2009 MSKP326O

132. Order of Court of Common Pleas of Bucks County entered

August 14, 2009 MSKP3267

133. Brief of Hollywood Hands dated October 8, 2009 in reply

to papers of Warminster Group in opposition to Hollywood Hands

motion for reconsideration and vacatur MSKP3268

134. Order of Court of Common Pleas of Bucks County entered

October 20, 2009 M5KP3318

135. Declaration of Kenneth Federman with Lease between

Warminster Plaza Shopping Center and Hollywood Hands, Inc. d/b/a

Hollywood Tanning Systems, Inc. (Dated October 8, 2009) MSKP3278

AND 3322

48

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136. List of cases in which Venutos or their companies were

parties MSKP3364

137. Request for Document Production (Exhibit 1 to Brown

report) MSKP3376

138. Subpoena to Parente Beard, LLC (Exhibit 2 to Brown

report) MSKP3400

139. Subpoena to ACI Capital (Exhibit 3 to Brown report

MSKP341O

140. Documents requested from Hollywood Tanning which were

not received) (Exhibit 4 to Brown report) MSKP3426

141. ACI Capital Terms Outline per HTS, Inc. (Exhibit 6 to

Brown report; (Exhibit 5 to Brown report was deliberately blank)

MSKP3432

142. HTS, Inc. due diligence report (December 2006)

(Exhibit 7 to Brown report MSKP3434

143. ACI Investment Memorandum (Exhibit 8 to Brown report)

M5KP3494

144. HTS, Inc. balance sheet as of December 31, 2007

(Exhibit 9 to Brown report) MSKP3557

145. HTS, Inc. 2006 lease expenses (Exhibit 11 to Brown

report) M5KP3570

146. HTS shareholder loan receivable account per general

ledger (Exhibit 12 to Brown report;) MSKP3573

147. HTS, Inc. investment account per general ledger

(Exhibit 13 to Brown report) MSKP3579

148. HTS, Inc. form 8594 asset acquisition statement

(Exhibit 14 to Brown report) M5KP3580

149. HTS, Inc. Debt Distribution Sheet (Exhibit 15 to Brown

report) M5KP3581

150. HTS, Inc. Audited Financial Statements 2005-2006

49

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(Exhibit 17 to Brown report ) MSKP3582

151. HTS, Inc. Final Adjusted Working Capital (Exhibit 18 to

Brown report) MSKP3597

152. HTS, Inc. Long—Term Capital Gain (Schedule K) per Tax

Return (Exhibit 19 to Brown report) M5KP3599

153. FITS, Inc. Amended 2006 Corporate Tax Return (Exhibit 20

to Brown report) M5KP3603

154. Tan Holdings, LLC Balance Sheet as of May 31, 2007

(Exhibit 21 to Brown report) MSKP36O4

155. HTS, Inc. Investment in Corporate Stores 2006—2007

(Exhibit 22 to Brown report) MSKP36O5

156. Tan Holdings, LLC Undisclosed Liabilities (Exhibit 23

to Brown report) MSKP36O7

157. HTS, Inc. Proposed Revised A/R & Royalty Revenues

(Exhibit 24 to Brown report) MSKP36O8

158. Tan Holdings, LLC Franchised Lease Terminations

(Exhibit 25 to Brown report) MSKP 3610

159. HTS, Inc. Projected Balance Sheet as of March 31, 2007

(Exhibit 26 to Brown report) MSKP3622

160. HTS, Inc. Allocation of Sale Proceeds (Exhibit 27 to

Brown report) MSKP3623

161. HTS, Inc. Sale Price and Proceeds per APA (Exhibit 28

to Brown report) MSKP3625

162. E—mail from Rebecca McDowell to Robert Vort,

Quickbooks Password (Exhibit 29 to Brown report) MSKP3626

163. CNN Article, “A Popular Tanning Biz Feels the Heat”

(Exhibit 30 to Brown report) M5KP3627

164. 1ST Magazine article, “Brighter Days Ahead for the

Tanning Industry” (Exhibit 31 to Brown report) MSKP3628

50

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165. US News article, “It’s Indoor Tanning Season. But

Watch Out” (Exhibit 32 to Brown report) MSKP3629

166. Tan Holdings’ 2007 Return of Partnership Return Form

1065 (Exhibit 33A to Brown report) MSKP363O

167. Hollywood Tanning 2007 Income Tax Return for an S

Corporation, Form 1120S (Exhibit 33B to Brown report) MSKP3631

168. Hollywood Tanning General Ledger, Salon Payoffs

$955,779 (Exhibit 34 to Brown report) M5KP3632

169. Hollywood Tanning 2006 Income Tax Return for an S

Corporation, Form 1120S (Exhibit 35 to Brown report) MSKP3633

170. Hollywood Tanning Profit and Loss, Trailing Twelve

Month, July 2006 through June 2007 (Exhibit 36 to Brown report)

MSKP3814

171. Hollywood Tanning Profit and Loss 2006 (Exhibit 37 to

Brown report) MSK?3816

172. Hollywood Tanning Balance Sheet as of June 21, 2007

(Exhibit 38 to Brown report) MSKP3819

173. Hollywood Tanning Balance Sheet as of June 22, 2007

(Exhibit 39 to Brown report) MSKP3821

174. Slip reflecting $14,379.38 deposit into investment

account (Exhibit 36 at deposition June 19, 2015) MSKP3823

175. Slip reflecting $31,298.42 deposit into investment

account (Exhibit 35 at deposition June 19, 201;) MSKP3824

176. Slip reflecting $52,100.90 deposit into investment

account (Exhibit 37 at deposition June 19, 2015) M5KP3825

177. Verified Amended Complaint in action for judgment of

insolvency In the Matter of the Estate of Ralph A. Venuto, Sr.,

Deceased M5KP3826

178. Order granting petition to declare insolvent the

Estate of Ralph A. Venuto, Sr., Deceased 3836

51

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C. Defendants’ Objections to Plaintiff’s Exhibits

1. Exhibit No. 16-19. Defendants’ object based on grounds

of relevance and hearsay. F.R.E. 401 and 801. The documents

are not relevant as they offer no additional facts not already in

the record elsewhere. The Nafar v. Hollywood Tanning lawsuit was

a known alleged liability to both Hollywood Tanning and Tan

Holdings as of the asset sale, June 22, 2007. Further, the

lawsuit, a class action complaint, was dismissed as the Court did

not certify the class. Offering the lawsuit records, to prove

any truth of the allegations of the lawsuit, would be tantamount

to hearsay.

2. Exhibits No. 37, 38 and 39. Defendants object based on

relevance. F.R.E. 401. Any testimony concerning all insurance

payments made or not made by Travelers under insurance coverage

offered to Hollywood Tanning has no relevance to any of the

claims asserted concerning the solvency of Hollywood Tanning.

Defendants see no connection between the ability of Hollywood

Tanning to pay creditors and the separate actions of an unrelated

insurance company which may have been paying or not paying on

claims made against Hollywood Tanning. F.R.E. 401.

3. Exhibit Nos. 40 - 54. Defendants object to these

documents as not relevant to any of the claims or defenses

involved in this action. F.R.E. 401. These documents would not

aid the factfinder as this Court has already observed in prior

decisions that Plaintiff was a creditor as defined in the New

Jersey Uniform Fraudulent Transfer Act and as such has standing

to bring this lawsuit as an alleged aggrieved creditor. The

documents would not aid the factfinder in deciding the solvency

of Hollywood Tanning as Mr. Gallichio’s alleged troubles with

Hollywood Tanning, namely the arbitration and lawsuits

referenced, all arose long after the June 22, 2007 asset sale and

were largely prosecuted in 2009, which was after the Tan Holdings

franchising business had ceased operations.

4. 55-58. Defendants assert the same legal objection for

Exhibits Nos. 55-58. The HT of Highlands lawsuit was settled and

offering the lawsuit records, to prove any truth of the

allegations of the lawsuit, would be hearsay.

5. Exhibit No. 63. Defendants object as this document is

52

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not adequately described to ascertain its origin and purpose in

this lawsuit.

6. Exhibit No. 71. Defendants object as this document is

not adequately described to ascertain its origin and purpose in

this lawsuit.

7. Exhibits No. 114 — 135. Defendants object to these

documents based on hearsay and relevance. F.R.E. 401 and 801.

The Warminster lawsuit was a liability disclosed to Hollywood

Tanning System in 2006 and which appears in its financial

statements as a potential liability. Introducing underlying

state court records does not add anything further for the

factfinder to consider that would be relevant in helping the

factfinder understand the nature and impact of this alleged

liability to Hollywood Tanning. These documents are hearsay as

Hollywood Tanning was not a named defendant in the lawsuit, and

therefore, because it did not defend or participate in the

action, has no knowledge about the events which occurred in the

lawsuit. Defendants’ further object to the introduction of any

documents on hearsay as the parties who provided in the

information in the documents may not be available at trial for

cross-examination. Defendants further object as to the relevance

of this Court re-examining allegations made in a lawsuit not

involving any of the claims asserted in this action, namely, the

solvency of Hollywood Tanning.

8. Exhibit no. 136. This Court has already ruled in its

Order disposing of cross-motions for summary judgment that there

is no relevance in considering any prior lawsuits of the Venutos

not involving Hollywood Tanning.

9. Exhibit 140. Defendants object on grounds of relevance

as it makes no sense for Plaintiff to reference an item

describing documents not produced. Further Defendants object

based on relevance as the Court has denied Plaintiff’s motion for

discovery sanctions.

10. Exhibit 162 is not relevant. F.R.E. 401. This Court has

denied Plaintiff’s motion for discovery sanctions, and this email

appears to be related that motion which was decided against

Plaintiff.

11. Exhibit Nos 177-178. Defendants objects on grounds of

53

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relevance and hearsay. The personal records of the Estate of

Ralph Venuto and its financial condition bear no relevance or

connection to the issues which Plaintiff needs to prove at trial

regarding the solvency of Hollywood Tanning.

D. Defendants’ exhibits

1. William Pederson Expert Report, July 31, 2013, Orchard

Mall, LLC v. Venuto et al., Dkt. No. L—2044-10 (N.J. Super. Ct.);

D1—41

2. Defendants’ Brief in Support of Motion for Judgment on

the Pleadings with Respect to Count Four of the Second Amended

Complaint Pursuant to F.R.C.P. 12© fDoc. No. 148, Sept. 18,

2015) ; D42—60

3. Defendants’ Motion for Summary Judgment with Exhibits

(Doc. No. 178, Nov. 5, 2015); D61—1766

4. Defendants’ Motion in Limine to Exclude Shelley Brown

as an Expert Witness with Exhibits (Doc. No. 150, Sept. 24,

2015) ; D1767—1780

5. Kevin Penn Affidavit (Orchard Mall LLC v. Venuto et

al., Dkt. No. L-2044-10 (N.J. Super. Ct Sept. 6. 2013); D1781-

1782

6. Settlement check signed by Defendants (Orchard Mall LLC

v. Venuto et al., Dkt. No. L—2044—10 (N.J. Super. Ct.); D1783

7. ACI Information Request List from Crowe Chizek; D1784-

1792

8. Plaintiffs’ Expert, Shelley A. Brown, CPA/ABV,CVA, CFF

Curriculum Vitae; D1793—1796

9. Plaintiffs’ Expert Report: Shelley A. Brown, “Valuation

of Tan Holdings, LLC as of June 22, 2007”, August 21, 2015 (MSKP

Oak Grove, LLP v. Venutos et al., Dkt. No. 10-6465 (D.N.J.);

D1797—1837

10. Plaintiffs’ Expert Report: Shelley A. Brown, “Fraudulent

Conveyance Report”, August 17, 2015 (MSKP Oak Grove, LIP v.

Venutos et al., Dkt. No. 10—6465 (D.N.J.); D1838—1898

54

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11. Defendants’ Expert: William Pederson, CPA/CFF/ABV/CFE,

CIRA/CDBV Curriculum Vitae; D1899-1922

12. Defendants’ Expert Report: William Pederson Expert

Report, September 23, 2015 (MSKP Oak Grove, LLP v. Venutos at

al., Dkt. No. 10—6465 (D.N.Jj; D1923—1946

13. Crowe Chizek Hollywood Tanning Systems Due Diligence

Document Request List; D1947—2181

14. Hollywood Tans Group LLC, Accounts Receivable Summary

Analysis as of December 31, 2011;

15. Shelley Brown Expert Report (Orchard Mall, LLC v.

Venuto at al., Dkt. No. L—2044—l0 (N.J. Super. Ct.) D2182-2222

16. National Association of Certified Valuators and

Analysts f”NACVA”) Professional Standards; D2223—2247

17. Statements of Standards for Valuation Services (SVSS);

D2248—2323

18. Contribution and Asset Purchase Agreement between Tan

Holdings, LLC and Hollywood Tanning Systems, Inc. and those

holders of all of the issued and outstanding stock of Seller set

forth on Exhibit attached hereto dated April 18, 2007; D2324-2492

19. Gilchinsky v. National Westminster Bank N.J, 732 A.2d

484 (N.J. 1999);

20. Nassif v. Jelmac, L.L.C., No. A—4100—10T2, 2012 WL

2812299 (N.J. Super Ct. App. Div. July 11, 2012); D2493—2503

21. Jecker v. Hidden Valley, Inc., 27 A.3d 964 (N.J. Super.

Ct. App. Div., 2011); D2504—2511

22. Scheck v. Bowne, 166 A. 189 (N.J. Misc. 1933); D2512—

2515

23. Moody v. Sec. Pacific Business Credit, 971 F.2d 1056

(3d. Cir. 1992);

24. Peltz v. Hatten, 279 3.R. 710 (Bankr. D. Del. 2002); —-

55

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 55 of 83 PageID: 5624
25. In re Joy Recovery Tech. Corp., 286 B.R. 54 fN.D. ill.

2002) ; 025—16—2540

26. MFS/Sun Life Trust— High Yield Series v. Van Dusen

Airport Srvs. Co., 910 F. Supp. 913(S.D.N.Y. 1995); 02541-2573

27. In re McGarry, 230 B.R. 272 (Bankr. W.D. Pa.1999);

02574—2583

28. In re Labrum & Doak, L.L.P., 227 B.R. 323 (Bankr. E.D.

Pa. 1998) ;

29. “Final WC Agreement.xls” (Orchard Mall, LLC v. Venuto et

al., Dkt. No. L—2044—10 (N.J. Sup. Ct.) (Parente Beard to

Plaintiff) (December 20, 2012); 02584—2664

30. Discovery Orchard Mall, LLC v. Venuto et al., Dkt. No.

L-2044-10 (N.J. Super. Ct.): Subpoena demanding Parente Beard LLC

to produce “documents and things” specified in Schedule A in

possession, custody, or control of Parente Beard LLC or any of

its predecessor, affiliates, partners, officers, members,

directors, managers, or employers, including but not limited to

Jack L. Uris and/or Altenburger, Uris, Caglioti & Heyman, LLC.

Each of these requests for documents shall be deemed to call for

production of any and all documents which were in, or came into,

existence at any time between January 1, 2006 and the course of

the litigation. (Orchard Mall, LLC v. Venuto et al., Dkt. No. L

2044—10 (N.J. Sup. Ct.); 02665—2676

31. Discovery Orchard Mall, LLC v. Venuto et al., Dkt. No.

L-2044-10 (N.J. Super. Ct.): Documents requested: Documents

concerning the June 22, 2007 Contribution and Asset Purchase

Agreement and resulting purchase and/or sale between HTS and/or

Tan Holdings, LLC and/or HT Systems, LLC, including, but not

limited to, any closing documents for the sale and any accounting

of the disbursement of the proceeds of the purchase and/or sale;

any/all documents concerning the filing or reporting of state

and/or federal taxes by or on behalf of HTS for the years 2006-

2011; any/all documents reflecting the filing or reporting of

state/federal taxes for all income and/or expenses filed by the

Venutos, or the Rebecchis in any way concerning income received

from HTS from 2006—11; any/all docs concerning business dealings

acquisitions, asset divestitures, financial statements,

expenditures, capital contributions, cash disbursements, loans,

56

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gifts transfers bank statements credit card payme5 and any

other financiai transactions of HTS from 2006_li. any/all

documents concerning annual revenues net worth value assets

and any other accounting documents concerning valuation of HTS

from 2006_il; any/aJ documents concerning due dilige

Performed at any time in connection with the sale and purchase of

assets of HTS in 2007 and/or 200$; any/all documents concerning

payment for any purpose by HT5 to the Venutos or Rebecchis. and

any/all documents concerning payme by Tan Holdings and/or NT

Systems to the Venuto5 or Rebecchis (Orchard Mall, LLC .

Venuto

at al., Dkt. No. L-2044_10 (N.J. Sup. Ct.); D2677_2697

32. Discovery Orchard Mall, LLC v. Venuto et al., Dkt. No.

L-2044_10 (N.J Super Ct.): Als0 subpoenaed.K S. Penn, Aol

Capital, Jack L. Uris, CPA, Parente Beard LLC, David kahn,

Custodian of Records AOl Capital, Custodian of Records Tan

Holdings LLC. • (Orchard Mall, LLC v. Venuto at al., Dkt. No. L

204_l0 (N.L Sup. Ct.); D266$$_2704

33. Transcript of Proceedings before Judge Coleman (Gs

Partners V. Hollywood Tanning 8Ystems, Inc., at. al, N.J Super.

Ct., Apr. 30, 2010); D2705_2713

2007); D2714_1717

34. Hollywo0 Tanning Syste5 Inc. Balance Sheet (June 21,

35. Defendant HollyW0 Hands’ Notion for Reconsideration

and Vacatur (Warminster Group, L.p V McGuire and Hollyw00

Hands, Dkt. No. 2OQ0488218C of Common Pleas Bucks County

(Aug. 13, 2009)) D2718_2866

36. Order of November 24, 2009 granting Defendant,s Notion

for Clarification (Warmjnster Group V. McGu and

Hollywood Hands Dkt. No. 200°48821go of Common Pleas Bucks

County (Nov 24, 2009)); D2867_2862

37. Defendant Hollywo0 Hands’ Notion for Clarification of

the Court’s October 20, 2009 Order (Warminster Group, v.

McGujre and HoJlywo0 Hands, Dkt. No. 20004882_i$_Co t of Common

Pleas Bucks County (Feb. 28, 2006) D2859_3017

38. Hollywo0 Tans, Final Salon Adjust0 Calculation

3555

prepared by Tan Holdings (July 16, 2009) (Bates No. V95); D3018_

57

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39. Stipulation of Voluntary Dismissal with Prejudice, HT

of Highlands Ranch, Inc. v. Hollywood Tanning Systems, Inc. et

al., Dkt. No. 07—cv—5718, Doc. No. 261 (D.N.J. Apr. 2, 2010);

D3556—3557

40. NT of Highlands Ranch, Inc. v. Hollywood Tanning

Systems, Inc. et al., Dkt. No. 07—cv—5718 (D.N.J.) Docket; D3558—

3594

41. IRS Revenue Ruling 59—60, § 2031, Reg. § 20.2031—2;

D3595—3600

42. Stipulation of Dismissal Pursuant to Federal Rule of

Civil Procedure 41(a) (1) (A) (2) with Prejudice (Nafar v. Hollywood

Tanning Systems, Inc., Dkt. No. 127, Civil Action No. 06-CV-03 826

(D.N.J. June 10, 2013); D3601—3650

43. Hollywood Tans “Transaction Detail by Account” January —

December, 2006 (printed March 7, 2007); D3651

44. Hollywood Tans “Transactions by Account” as of December

31, 2006 (printed February 25, 2007) (dates include May 23, 2006 —

August 1, 2006); D3652

45. Hollywood Tans “Transactions by Account” as of December

31, 2006 (printed February 25, 2007) (dates include October 31,

2006 only) ; D3653

46. Hollywood Tans “Transactions by Account” as of December

31, 2006 (printed February 25, 2007) (dates include December 31,

2006 only) ; D3654

47. Hollywood Tans “Transactions by Account” as of December

31, 2006 (printed February 25, 2007) (dates include September 30,

2006 and December 31, 2006 only); D3655

48. Status Report for Hollywood Hands, Inc. by New Jersey

Business Gateway, Business Entity Information and Records Service,

Business ID 0100583556 (September 9, 2016) ; D3656—3658

49. Court Order granting in part and quashing in part the

Subpoena directed to Parente Beard, LLC, Orchard Mall, LLC v.

Hollywood Tanning Systems, Inc., Dkt. No. L-2044-10, (N.J. Super.

Ct., Dec. 7, 2012); D3659—3660

58

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50. Letter from Jack L. Uris, CPA, Parente Beard, to Ellen

Nunno Corbo, Esq., Taylor, Coliccchio & Silverman, LLP (December

20, 2012) ; D3661

51. Letter from John J. Barber, Assistant General Counsel,

Crowe Horwarth to Joseph A. Molinaro, Law Offices of Joseph A.

Molinaro, LLC and Robert A. Vort, Re: MSKP Oak Grove LLC v.

Venuto, U.S. District Court for the District of New Jersey, Case

No. 10—cv—6465 (July 24, 2015); D3662—3663

52. Diagnostic Report for Tax Year 2008 of Taxpayer ACI HT

Investors, LLC, Return No: 65464S; D3664—4184

53. Email from Jack L. Uris, CPA, Parente Beard to Ellen

Nunno Corbo. Esq., Taylor, Coliccchio & Silverman, LLP, copying

Philip Santarelli, Dimitri Karapelou, and Philip N. Colicchi,

(January 17, 2013); D4185—4189

54. Steve Rhyne, Kennedy Covington, Attorneys at Law,

“Private Equity Considerations in M&A Deals” (Presentation for

Business Law Section and Corporate Counsel Section- Joint Annual

Meeting, North Carolina Bar Association, February 22, 2008);

D4190—4204

55. Letter from Thomas G. Bailey, Jr. and Richard F.

Markert, Bleakley Platt & Schmidt, LLP to Hollywood Tanning

Systems Inc. (July 8, 2009) (Bates No. V91—V92); D4205—4473

56. Ableco Finance, LLC (the Lender) ACI Capital Co.,

LLC/Hollywood Tanning Systems, Inc., Outline of Terms of

Conditions for Financing Facility (April 2007) (Bates Nos. V190—

V197); D4474—4742

57. In re: Semcrude L.P., v. Whyte, No. 14—4356 (3d Cir.

Jan. 25, 2016); D4743—4751

58. Status Report for Hollywood Hands, Inc. by New Jersey

Business Gateway, Business Entity Information and Records

Services, Business ID: 0100583556 (September 9, 2016); D4752—4900

59. Order and Memorandum granting in part Defendants’ Motion

to Dismiss, MSKP Oak Grove, LLC v. Venuto et al., Dkt No. 10-6465,

Doc. No. 34 (D.N.J. June 20, 2012); D4901—4931

59

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 59 of 83 PageID: 5628
60. Order and Memorandum denying Plaintiffs’ Motion for

Discovery Sanctions (June 2016); D4932—4937

61. Transcript of Motion Hearing Ref: Plaintiffs’ Motion for

Sanctions before the Honorable Joel Schneider, United States

Magistrate Judge (March 18, 2016); D4938—4969

62. Complaint, Orchard Mall, LLC v. Venuto et al., Dkt. No.

L—2044—l0 (N.J. Super. Ct. Nov. 22, 2010); D4970—4988

63. Ralph A. Venuto, Jr. Deposition, June, 18, 2010 (MSKP

Oak Grove, LLP v. Hollywood Tanning Systems, LLC, Dkt. No. 171176-

09, N.J. Super. Ct.); D5029—5068

64. Letter Agreement between Hollywood Tanning Systems, Inc.

and Tan Holdings, LLC, Exhibit A, (Apr. 21, 2007) (Bates Nos.

V105—V129) ; D5069—5337

65. wilmington Trust Statement of Account as of June 30,

2007 for Ralph A. Venuto, Jr.; D5338—5345

66. Wilmington Trust Statement of Account as of June 30,

2007 Ralph A. Venuto, Sr. and Carol Venuto; D5346-5353

67. Wilmington Trust Statement of Account as of June 30,

2007 Richard Venuto and Patricia Venuto; D5354-5361

68. Wilmington Trust Statement of Account as of June 30,

2007 Michael Rebbecci and Carol Rebbecci; D5362—5369

69. Distribution Sheet of Closing Proceeds, June 22, 2007;

D5370

70. Letter Agreement from Kevin S. Penn, Manager, Tan

Holdings, LLC to Ralph A. Venuto, Jr., President, Hollywood

Tanning Systems, Inc., (Oct. 19, 2007) (reflecting Final Adjusted

Working Capital of $2,354,213 and a Working Capital Shortfall of

$6,339,643.85 (Bates Nos. V198—202); D5371—5639

71. Confidential Settlement Agreement and Release between

Hollywood Tanning Systems, Inc. and Tan Holdings, LLC, Feb. 10,

2010, Bates No. V29—V55; D5640—5707

72. Purchaser Earn Out Statement for Calendar Years Ended

60

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 60 of 83 PageID: 5629
December 31, 2007 and December 31, 2008 (Bates No. V93); D5708-

5976

73. Docket Report, Nafar et al. v. Hollywood Tanning

Systems, Inc., Dkt. No. 06—3826 (D.N.J. Filed Aug. 14, 2006);

D5977—5990

74. Hollywood Tanning Systems, Inc.; Report on Audits of

Financial Statements and Additional Information years ended

December 31, 2006 and 2005, Altenburger, Uris, Caglioti & Heymann,

LLC (March 13, 2007) ; D991—6058

75. Letter from Ralph A. Venuto, Sr., President and David

Rahn, CPA, CFO, Hollywood Tans to Altenburger, Uris, Cagliotti &

Heymann, L.L.C . (Oct. 11, 2007); D6059

76. Hollywood Tanning Systems, Inc. 2005 Federal Income Tax

Return; D6060—6096

77. Hollywood Tanning Systems, Inc. 2006 Federal Income Tax

Return; D6140—6185

78. Hollywood Tanning Systems, Inc. Amended 2006 Federal

Income Tax Return; D6097-6139

79. Hollywood Tanning Systems, Inc. 2007 Federal Income Tax

Return; D6186-6230

80. Hollywood Tanning Systems, Inc. Account Aging as of

December 31, 2006 with Accounting Work Papers; D6231-6241

81. Independent Auditors Report on Additional Information,

March 17, 2007; D6242—6261

82. Hollywood Tanning Systems, Inc. Profit and Loss

Comparison 2005/2006; D6262—6263

83. Indemnification Letter from Lewis Shender, President,

Tan Holdings, LLC to Carol F. Venuto, Carol B. Rebbecchi, Estate

of Ralph A. Venuto, Sr., Ralph A. Venuto, Jr., Richard P. Venuto,

Hollywood Tanning Systems, Inc., (December 8, 2008) (Bates Nos.

V88—V90) ; D6264—6532

84. Audit Balance Sheet Representations by Hollywood

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Tanning, March 15, 2007; D6533—6536

85. Hollywood Tanning Systems, Inc., Profit and Loss Excel

Spreadsheet, 2007, produced by Parente Beard, Orchard Mall, LLC v.

Venuto et al., Dkt. No. L—2044—i0 (N.J. Super. Ct.); D6537—6597

86. Ralph A. Venuto, Jr. Deposition Transcript, September

22, 2009 (Orchard Mall, LLC v. Hollywood Tanning Systems, Inc.,

Docket No. 271393—08 NJ Super Ct); D6598—6613

87. E—mail from Ralph Venuto, Jr. to Chuck Dugan, Parente

Beard, LLC (Sept. 9, 2011);

88. Warrant regarding Unpaid Taxes, New York State

Department of Tax and Finance, December 20, 2010;

89. Audit by State of New Jersey Department of the Treasury

of Hollywood Tanning, August 17, 2010;

90. Seller’s Disclosure Schedules pursuant to the

Contribution and Asset Purchase Agreement, April 18, 2007; D6614-

6720

91. Tan Holdings’ Schedule K—i, 2007; D6721—6766

92. Hollywood Tanning Systems, Inc.’ 2008 federal Income Tax

Return; D6767—7287

93. Hollywood Tanning Systems, Inc. Bank Statements,

Investment Account, June 20, 2007—January 31, 2009; D7288—7292

94. Defendants’ Motion to Dismiss Somerset County Action

(March 29, 2010)

95. Second Amended Complaint, MSKP Oak Grove, LLP v.

Hollywood TannIng Systems, LLC, Dkt. No. 171176-09, N.J. Super.

Ct.); D7293—7338

96. Answer to Second Amended Complaint, MSKP Oak Grove, LLP

v. Hollywood Tanning Systems, LLC, Dkt. No. 171176-09, N.J. Super.

Ct.); D7339—7349

97. Defendants’ Response to Plaintiff’s First Request for

the Production of Documents, MSKP Oak Grove, LLP v. Hollywood

62

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Tanning Systems, LLC, Dkt. No. 171176-09, N.J. Super. Ct.); D7350-

7357

98. Defendants’ Response to Plaintiff’s Second Request for

the Production of Documents, MSKP Oak Grove, LLP v. Hollywood

Tanning Systems, LLC, Dkt. No. 171176-09, N.J. Super. Ct.); D7358-

7362

99. Defendants’ Response to Plaintiff’s Third Request for

the Production of Documents, MSKP Oak Grove, LLP v. Hollywood

Tanning Systems, LLC, Dkt. No. 171176-09, N.J. Super. Ct.); D7363-

7367

100. Defendants’ Response to Plaintiff’s Fourth Request for

the Production of Documents, MSKP Oak Grove, LLP v. Hollywood

Tanning Systems, LLC, Dkt. No. 171176—09, N.J. Super. Ct.); D7368-

7373

101. Defendants’ Responses to Requests for Admissions,

Orchard Mall, LLC v. Venuto et al., Dkt. No. L-2044-10 (N.J.

Super. Ct.); D7374—7379

102. Representation letter from Hollywood Tanning to

Altenburger Uris, Caglioti & Heyman, LLC; D7380-7383

103. Hollywood Tanning financial statements provided in

accordance with audit for 2005 and 2006 as of December 31, 2006,

Bates No. V—68—73; D7384—7403

104. Hollywood Tanning Balance Sheet as of December 31, 2006;

D7404—7423

105. David Rahn Deposition, March 12, 2013, Orchard Mall,

LLC v. Venuto, et al, Docket No. L—2044-10 (NJ Super Ct.); D7424-

7692

106. Ralph Venuto, Jr. Deposition, February 12, 2013,

Orchard Mall, LLC v. Venuto, et al, Docket No. L-2044-lO (NJ Super

Ct.); D7693—7860

107. Hollywood Tanning General Ledger 2006; D7861-7865

108. Hollywood Tanning General Ledger 2007; D7866-8089

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109. Mira Muhtadie Deposition, June 22, 2014, MSKP Oak

Grove, LLC v. Venuto, et al, No 10—6465 (D.N.Jj; 08090—8124

110. Ad Capital Co, LLC, Listing of Managers and Counsel

(3ates No. BTVK000027; 08125—8293

111. Letter from Ableco Finance, LLC, Lender to Tan

Holdings, LLC c/o ACI Capital Co., LLC (April 2007) (Bates Nos.

V185—V189; 08294—8562

112. Salons with Venuto Family Ownership Interests (Bates

No. Louis Shendler—0140—0143); 08563—8831

113. Email from Mira Muhtadie, ACI Capital, to Thomas G.

Bailey and Richard F. Markert (July 15, 2009, 5:05 p.m., Bates No.

Louis Shendler—0144); 08832—8987

114. Email from Mira Muhtadie, ACI Capital, to Thomas G.

Bailey and Richard F. Markert (July 15, 2009, 1:11 p.m., Bates No.

Louis Shendler—0144) ; 08988—9143

115. Hollywood Tanning Systems, Inc. Audited Financial

Statements for 2004 and 2005; 09144—9164

116. Tan Holdings 2007 Tax Return; 09165

117. Bill of Sale, Hollywood Tanning to Tan Holdings, June

22, 2007 Escrow Agreement from Hollywood Tanning Systems, mc, to

Hollywood Tanning Company, LLC, signed by Ezra S. Field, Manager,

Hollywood Tanning Company, LLC and Ralph A. Venuto, Jr, President,

Hollywood Tanning Systems, Inc., 09166-9178

118. Bill of Sale, Hollywood Tanning to Tan Holdings, June

22, 2007 Escrow Agreement from Hollywood Tanning Systems, mc, to

Hollywood Tans, signed by Ezra S. Field, Manager, Hollywood Tans

and Ralph A. Venuto, Jr, President, Hollywood Tanning Systems,

Inc.;

119. Bill of Sale, Hollywood Tanning to Tan Holdings, June

22, 2007 Escrow Agreement from Hollywood Tanning Systems, mc, to

HT Manufacturing, signed by Ezra S. Field, Manager, HT

Manufacturing and Ralph A. Venuto, Jr, President, Hollywood

Tanning Systems, Inc.;

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120. Excel Schedule — Hollywood Tanning support for Form

8594 and allocation of sale proceeds; D9179—9224

121. Asset Acquisition Statement Form 8594; D9225-9270

122. ACI Capital, Hollywood Tanning Systems, Inc.,

Investment Memorandum, Preliminary Draft, (June, 2007) ; D9271-9333

123. AOl Capital Acquisition of Hollywood Tanning, Terms of

Sale, January 25, 2007; D9334—9338

124. Tan Holdings Projected Opening 3alance Sheet, May 31,

2007; D9339—9430

125. Tan Holdings, LLC Consolidated Financial Statements,

Unaudited Draft, December 31, 2007; 09431—9470

126. Tan Holdings, LLC Consolidated Balance Sheet, Unaudited

Draft, December 31, 2007; D9471—9510

127. Independent Auditors Report by St. Clair, CPA’s PC, Tan

Holdings, LLC, December 31, 2008, Bates No. TH 0258; D9511—9531

128. 2010 Transactions— State of New Jersey notification

schedule of liabilities for 2007 of $114,158 and State of New York

$107,409.10;

129. Tan Holdings’ Complaint and Counterclaims; 9532-9548

130. Dismissal Order, AMC Delancey Richboro Partners, L.P.

v. Hollywood Tanning Systems, Inc., Dkt. No. L-5169 (N.J. Super.

Ct. June 10, 2011); D9549—9551

131. Transcript Court’s Dismissal, AMC Delancey Richboro

Partners, L.P. v. Hollywood Tanning Systems, Inc., Dkt. No. L-5169

(N.J. Super. Ct. June 10, 2011); D9552—9567

132. Complaint, AMC Delancey Richboro Partners, L.P. v.

Hollywood Tanning Systems, Inc., Dkt. No. L-5169 (N.J. Super.

Ct.); D9568—9577

133. Martinwolf, Understanding “Rollover Equity”, Valuation

& Deal Insights, May 16, 2013; D9588—9589

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134. Holland & Knight, What to Expect if a Private Equity

Firm Acquired Your Company, September 2009; D9590-9592

135. PRATT, REILLEY, AND SCHWEIHS, VALUING A BUSINESS (4th ed.

McGraw—Hill)

136. Shelly Brown Deposition, October 27, 2015, MSKP Oak

Grove, LLC v. Venuto et al., Dkt. No. 10-06465 (D.N.J.); D9593-

9779

136a. Shelly Brown Deposition, December 9, 2015 D9780—9794

137. Hollywood Tans Proposed Revised A/R & Unreported

Royalty Revenues Summary as of 6/22/2007 produced by Parente Beard

Orchard Mall, LLC v. Venuto et al., Dkt. No. 1—2044-10 (N.J.

Super. Ct.); D9795—9840

138. Hollywood Tanning Systems, Inc. Extension Tax Docket

for 2006 filed by Altenburger, Uris, Caglioti, & Heyman, LIC,

produced by Parente Beard Orchard Mall, LLC v. Venuto et al., Dkt.

No. 1-2044—10 (N.J. Super. Ct.); D9841—9934

139. Defendant’s Motion for Partial Summary Judgment, Rowen

Petroleum Properties, LLC v. Hollywood Tanning Systems, Inc., et

al., Dkt. No. 10-6465 (D.N.J. Mar. 23, 2015); D9935-9974

140. Hollywood Tanning Systems, Inc. Formational Documents;

D9975—1024

141. Deposition of Jack L. Uris, Jan. 22, 2013, Orchard

Mall, LLC v. Venuto et al., Dkt. No. 1-2044-10 (N.J. Super. Ct.);

D10025—10148

142. letter Agreement from Michael A. Pacali, Vice

President, Wilmington Trust, FSB, to Ralph A. Venuto, Sr.,

President, and Ralph Venuto, Jr., Chairman, Hollywood Tanning

Systems, Inc. (Mar. 23, 2007) (Bates Nos. BTVK00004O—41); 10149—

10150

143. HTS Aging Analysis of accounts receivable prepared for

trial November 2016

144. Revolving Credit Note between HTS and Wilmington Trust

D10341—10344

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145. Loan Agreement between HTS and Wilmington Trust dated

October 24, 2006 010345—10398

146. Hollywood Tans Financial Structure. D10399

147. Note and Mortgage Modification Agreement between the

Bank and HTS dated August 28, 2006 010400-10406

148. Asset summary of HTS dated December 31, 2006 010407—

10414

E. Plaintiff’s objections to defendants’ documents

1. Plaintiff objects to document 1 on grounds of relevancy

and because Brown’s reports in this action are based on

information provided which is more than the documents provided in

the Orchard Mall case. Pederson should be held to his expert

report in this action which does not incorporate by reference any

portion of the Orchard Mall report.

2—4. Plaintiff objects to documents 2, 3 and 4 on the

ground that arguments of counsel are not evidential, Simmons v.

South Carolina, 512 U.S. 154, 172 (1994) (Souter, J., concurring),

United States v. Retos, 25 F.3d 1220, 1224 (3d Cir. 1994)

3. Plaintiff objects to the admission of document 5 as

hearsay, Fed.R.Evid. 801©.

4. Plaintiff objects to the admission of document 6

on the basis of relevancy. MSKP is not in privity with Orchard

Mall.

5. Plaintiff objects to the admission of document 7 on the

grounds of relevancy and hearsay, Fed.R.Evid. 801©.

19—28. Plaintiff objects to the admission of documents 19,

20, 21, 22, 23, 24, 25, 26, 27 and 28 on the ground that case law

is not evidence.

29-32. Plaintiff objects to the admission of documents 29,

30, 31 and 32 on the grounds of relevancy and hearsay, Fed.R.

Evid. 801©. Plaintiff also objects to documents 30 and 31 for

lack of specificity.

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33. Plaintiff objects to the admission of document 33 on the

ground of relevancy.

39-40. Plaintiff objects to the admission of documents 39

and 40 unless defendants state the purpose for which they intend

to offer these documents.

42. Plaintiff objects to the admission of document 42 unless

defendants state the purpose for which they intend to offer this

document.

49—50. Plaintiff objects to the admission of documents 49 and

50 on the basis of relevancy. MSKP is not in privity with Orchard

Mall.

53—55. Plaintiff objects to the admission of documents 53, 54

and 55 on the grounds of relevancy and hearsay, Fed.R.Evid. 801©.

57. Plaintiff objects to the admission of document 57 on the

ground that case law is not evidence.

62. Plaintiff objects to the admission of documents 62 on

the basis of relevancy. MSKP is not in privity with Orchard Mall.

94. Plaintiff objects to the admission of document 94

because there were two actions in Somerset County, neither of

which involved MSKP.

126. Plaintiff objects to the admission of document 126 on the

grounds of relevancy and hearsay, Fed.R.Evid. 801©.

129—132. Plaintiff objects to the admission of documents 129,

130, 131 and 132 on the grounds of relevancy and hearsay,

Fed.R.Evid. 801©.

132—134. Plaintiff objects to the admission of document 57 on

the ground that articles are not evidence and constitute hearsay,

Fed.R. Evid. 801©.

143. Plaintiff objects to the admission of Exhibit 143.

This document was prepared in November 2016 and is an attempt to

expand Petersen’s expert testimony beyond the confines of his

report. Defendants did not produce this before discovery ended.

Part VIII Law

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1. Plaintiff’s statement of the legal issues

a. Whether defendants hindered, delayed or defrauded

MSKP in violation of N.J.S.A.25:2-25(a);

b. Whether evidence of defendants’ behavior toward

other claimants and creditors is a) relevant to their

intent to hinder, delay or de fraud MSKP under

Fed.R.Evid. 401 or b) to establish a routine within

Fed.R.Evid. 406;

c. Whether Hollywood Tanning received fair

consideration for the diversion to the Venutos or for

the monies paid to them or for their benefit of the

monies paid by Tan Holding;

d. Whether Hollywood Tanning became insolvent and, if

yes, whether it was insolvent before the transfer of

its assets or as a result of the transfer of its

assets;

e. Whether, following the transfer of its assets,

Hollywood Tanning had a duty to its creditors to retain

sufficient cash to pay claims of creditors, including

creditors whose claims have not yet matured.

f. What is the scope of the lawyer-client privilege

codified at N.J.S.A.2A:84A-20 and Fed.R.Evid. 501 and

502 regarding communications regarding the quantum of

insurance coverage between defendants on the one hand

and Orlofsky and Travelers on the other hand?

g. Are disputes between Hollywood Tanning and other

claimants and creditors relevant under fed.R.Evid. 401

and 406 to the issue if defendants’ intent to hinder,

delay and defraud?

h. Are statements by a litigant’s counsel in the

course of litigation I) hearsay within Fed.R.Evid.

801(d) (2) (C)-(E)?

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2. Defendant’s statement of the legal issues

I. Introduction

The essence of this lawsuit is that Plaintiff MSKP Oak Grove, LLC

(“Plaintiff”) alleges that a Shareholder Distribution by

Defendant Hollywood Tanning Systems, Inc. (“FITS”), while solvent,

as part of a forty million dollar sale of HTS’s business and

assets to Tan Holdings, LLC (an unrelated party) to shareholders

and Defendants Carol Venuto, individually and as executrix for

the estate of her husband Ralph A. Venuto, Sr., Ralph Venuto,

Jr., Carol Rebbecchi, and Richard P. Venuto (collectively

“Defendants”) constituted a fraudulent transfer. Plaintiff is

not the first to collect money from HTS or its shareholders by

suing FITS and the family who ran the family business for the same

sale transaction on June 22, 2007. In a prior Opinion, this

Court explained that a key issue is whether FITS had sufficient

liquidity post—asset sale to cover contingent creditor claims.

That Court allowed two years of discovery while waiting for the

outcome of a companion case, Rowen Petroleum v. Hollywood Tanning

Systems, Inc. (“Rowen case”)

In all other lawsuits, the courts have found no evidence of a

fraudulent transaction. Plaintiffs cannot show any evidence of

a fraudulent transaction in the instant case either. Plaintiff

cannot show that the Shareholder Distribution was made with the

intent to hinder, delay, or defraud creditors. Plaintiff cannot

show that FITS did not receive reasonably equivalent value or was

left with unreasonably small assets, as FITS received a

significant sum of money in addition to a twenty five percent

interest in Tan Holdings. Plaintiff cannot show that the Venutos

knew or should have known that Tan Holdings would fail and that

the twenty five percent interest would ultimately be worthless.

Plaintiff cannot show that the Venutos had any reason to believe

that HTS should have set aside a reserve for Plaintiff’s alleged

obligation, an unknown future claim, or a liability for which no

money was due at the time of sale to Tan Holdings. Plaintiff

cannot show that FITS was insolvent at the time of the transfer or

that the Venutos knew it was insolvent. Plaintiff cannot show

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that Plaintiff’s claim arose before the Shareholder Distribution

II. Plaintiffs do not and cannot establish that Defendants

violated NJUFTA.

The New Jersey Uniform Fraudulent Transfer Act (“NJUFTA”) 25:2-20

to 34:1 establishes a heightened burden of proof standard that

goes well beyond the preponderance of the evidence. See Barsotti

v. Merced, 788 A. 2d 802, 811 (N.J. Super. Ct. 2002) (“It is well

established that fraud must be proven by ‘clear and convincing’

evidence.”)

Evidence is “clear and convincing” “when it produce[s]

in the mind of the trier of fact a firm belief or

conviction as to the truth of the allegations sought to

be established, evidence so clear, direct and weighty

and convincing as to enable [the factfinder] to come to

a clear conviction, without hesitancy, of the truth of

the precise facts in issue.”

In re Jobs, 108 N.J. 394, 407 (N.J. 1987) (quoting State v.

Hodge, 95 N.J. 369, 376 (N.J. 1984).).

(I) Plaintiffs cannot establish HTS intended to hinder, delay or

defraud any creditor.

Courts look to “badges of fraud” to determine whether the

circumstances of a particular transaction give rise to the

conclusion that the transferor possessed actual intent to thwart

or evade creditors. See Gilchinsky v. Nat’l Westminster Bank,

N.J., 732 A. 2d 482, 489 (N.J. 1999). N.J.S.A. 25:2-26 lists the

“badges of fraud.” Plaintiffs cannot establish that the HTS

Asset sale was not a legitimate arm’s length transaction for fair

value. Plaintiffs ask the Court to believe the ludicrous — that

HTS would sell its business, pay its creditors in full, and

retain value in Tan Holdings for the purpose of avoiding a

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conting liabil±t to Plaintiff

Second, PlaintIff cannot demonstrat any indic of intentional

fraud N.J Stat Ann § 2S:225(a) Proposes questj01 whether

the person making the conveyance put the asset beyond the reach

of creditors or Whether he or she transferred Property wits

Intent to defraud, delay or hinder the creditor Both elements

must be alleged and proven to prevail on Such a cla See

Nassif v. Jelmac L.LC No. A-41Qoj0 2012 WL 281229 at 4

(N.J Super Ct App Dig. July ii, 2011) (quotati0 Omitted)

(plaintiff asserting the U.F.TA claim “bears the burden of

evidence )

Proving the transfer Was fraudulent by clear and convincing

(ii) Plaintiff also cannot demonstrat that HT$ received a

transfer that was fraudulent due to constructiv fraud.

Under this section, Plaintiff must prove both (1) that RTS did

not receive equival value in exchange for the transfer and (2)

that HT Was engag or about to be engaged in a business for

Which the remaining assets were unreasonably small in relation to

that business. First, Plaintiff argues that HTS did not receive

reasonably equiva value for the distribution to the Venuto5

HT5 asserts that the sale of all of RTS’ assets constituted a

reasonably equival value As shareholder the Venutos held

an ownership interest in HT5 Receiving excess money from HT5’s

asset sale constituted a payme for distributing the assets of

the company in which they held an ownership interest. See Scheck

v. Bowne, 166 A. 189 (N.J 1933) (“One Who conveys his Property

to a corporation in payment of capital stock of aPProximatel

equa’ value does not thereby render himself insolvent, nor is the

convey void upon the ground that it is a voluntary assign

Without consideration and in fraud of creditors!) Moreover at

the time of the transfer, Defendants expected their twenty five

percent interest in Tan Holdings to create a Steady and

reserve.

signifi revenue stream, leaving HT5 With ample capital

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The Third Circuit Court of Appeals defines the term “unreasonably

small capital” as “a financial condition short of equitable

insolvency.” Moody v. Sec. Pacific Business Credit, 971 F.2d

1056, 1070 (3d Cir. 1992) . The test for “unreasonably small

capital” is “reasonable foreseeability.” Id. Plaintiff cannot

demonstrate that HTS did not possess sufficient capital or assets

to carry on its business. HTS retained substantial and valuable

consideration following the execution of the APA and Shareholder

Distribution including twenty-five percent of the issued and

outstanding preferred units of Tan Holdings and contingent

earn-outs from Tan Holdings, and constituted a value so great it

exceeded any then-existing potential liability to Plaintiff. On

the date of the Shareholder Distribution, HTS could not

reasonably foresee that it would not have sufficient assets with

which to carry on its business.

I. Plaintiff’s lawsuit fails because they cannot show that HTS

was insolvent at the time of transfer or that HTS became

insolvent as a result of the transfer, and that the Venutos

knew the business would be unsuccessful.

N.J.S.A. 25:2-27(a) provides:

A transfer made or obligation incurred by a debtor is

fraudulent as to a creditor whose claim arose before

the transfer was made or the obligation was incurred if

the debtor made the transfer or incurred the obligation

without receiving a reasonably equivalent value for the

transfer or obligation in exchange for the transfer or

obligation and the debtor was insolvent at that time or

the debtor became insolvent as a result of the transfer

or obligation.

Id. In the instant case, on the Closing date, HTS sold its

business at the top or near the top of the market in June, 2007.

The buyer, Tan Holdings, was a non—related party and Plaintiff

has not alleged any facts to suggest the sale was not arms’

length. HTS received proper consideration for the sale. In

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2008, the United States fell Into a great recession affecting

market prices and businesses through0 the Country HT5 could

not have predicted the recession and believed t sold Its

business for fair value

A debtor is insolvent if the sum of the debtorrs debts is

great than all of its assets at a fair valuation N.J.SA

25:2—23(a) . Based upon the evidence and case law, HTS Was

5°lvent at the time of the alleged transfer and immediately

foll1 the transfer

II. PlaintiffiS Claims are Barred by Co]]ateraj Estoppj

In a nearly identicai case before the Honorable Faustino .

Fernandez_yin in the Superior Court of New Jersey for Camden

County, ANC Delancey Richboro Partner, LP (AMC”) a commercial

landlord with interests similar to that of Plaintiff MSKp filed

an identical lawsuit again5 Defendants making the same claim

that Defendants fraudulently transferred corporate funds to its

shareholder Defendants also filed a motion to dismiss this

Other complaint On June io, 201i, Judge Fernandez vi ruled

that under the facts, the same facts that form the basis of

?ISIntjffr lawsuit now before the Court, ANC had failed to Plead

a claim under NJUFTA, and he dismissed the complaint More

sPecifically, he made it clear that there were no facts in the

complaint or that could be produced in discovery to support the

Plaintiff!5 complaint He ruled that under the facts, HTS and

its shareholders could not have had any knowledge, imputed or

otherwise that they sold their company to a company that would

not be able to assume their financial Obliga05 and therefore

had no knowledge they would have any liability to Plaintiff under

the lease after their assets were sold

This Court should follow Judge Fernandez V ruling and

dismiss this case pursuant to the doctrine of collateral

estoppel The doctrine of collateral estoppel or 15sue

preclusion prohibt5 re_litiga of issues that have already

been adjudic in a prior lawsuit. State v. Gonzalez, 380 A.2d

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1128, 1131 (N.J. 1977) . There is a strong public policy argument

for collateral estoppel in order to avoid the multiplicity of

litigation over the same issue and to conserve judicial

resources. See Zirger v. General Accident Ins. Co., 676 A.2d

1065, 1072 (N.J. 1996) . To invoke the doctrine of collateral

estoppel, a party must show that:

(1) the issue to be precluded is identical to the issue

decided in the prior proceeding;

(2) the issue was actually litigated in the prior

proceeding;

(3) the court in the prior proceeding issued a final

judgment on the merits

(4) the determination of the issue was essential to the

prior judgment;

(5) the party against whom the doctrine is asserted was a

party to or in privity with a party to the earlier

proceeding.

Twp. of Middleton v. Simon, 937 A.2d 949, 954 (N.J. 2008) . Since

HTS can show all of these elements, the Court should preclude

Plaintiff’s fraudulent transfer claim.

I. The instant lawsuit is barred by the District of New

Jersey’s Holding in Rowen Petroleum Properties, LLC v.

Hollywood Tanning Systems, Inc., No. 08-4764 (D.N.J. Sept.

28, 2012) whereby the Court found no evidence of fraud.

In Rowen Petroleum Properties, LLC v. Hollywood Tanning

Systems, Inc., No. 08—4764 (D.N.J. Sept. 28, 2012), the District

Court of New Jersey again faced identical facts and the identical

Defendant. The Court held:

Plaintiff has presented no facts that the individual

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defendants used HTS as their alter ego or otherwise

disregarded the corporate form to commit fraud. For example,

plaintiff has not presented any evidence that HTS was

grossly undercapitalized, failed to observe corporate

formalities, failed to pay dividends, was insolvent,

maintained non-functioning officers or directors, or failed

to maintain corporate records. Although the facts show that

HTS’s assets were assigned to Tan Holdings, while the leases

were assigned to HTS plaintiff has not come forward with

evidence that any of the individual defendants knew that HT

Systems was undercapitalized. The evidence indicates that

ACI Capital, a private equity firm in New York City, formed

the deal with Tan Holdings and HTS. Rahn testified that the

terms of the deal formed by ACI were not disclosed to him or

the Venutos, and that he personally found out about the deal

after it closed on or around June 22, 2007. Plaintiff has

not presented evidence that could show that defendants’

intention in selling HTS’s assets was to commit fraud.

Rather, based on Rahn’s undisputed testimony, the Venutos

decided to sell HTS after Ralph, Sr. was diagnosed with

terminal cancer and wanted to provide for his children after

his death.

In sum, plaintiff has not presented evidence that HTS was a

mere facade for the operations of defendants or that any of

the individual defendants failed to observe corporate

formalities or otherwise dominated the corporation.

Plaintiff has not presented evidence that any of the

defendants were directly involved in the formation of Tan

Holdings or HTS or knew that those companies were

undercapitalized. HTS and Tan Holdings are not subsidiaries

of HTS. While HTS may no longer have adequate assets, this

fact alone does not provide grounds for piercing the

corporate veil. See Lutyk, 332 F.3d at 197 (“Companies

commonly become insolvent, then bankrupt; piercing the

corporate veil is an exception reserved for extreme

situations, rather than the rule.”); Port Drivers Fed’n 18,

Inc. v. All Saints Exp., Inc., 757 F.Supp.2d 443, 458

(D.N.J. 2010) (“While plaintiffs have shown that All Saints

is grossly undercapitalized, does not pay dividends, and

does not have a functioning board of directors, they have

not established the other factors necessary to find that All

76

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 76 of 83 PageID: 5645
Saints is a mere instrumentality of St. George.”)

As such, defendants’ motion for summary judgment on Count Five

will be granted.

Id. at 12—14. Similarly, in the instant case, Plaintiff has not

and cannot show any evidence that HTS was insolvent at the time

of sale or that Defendants had any intention to commit fraud.

Accordingly, Plaintiff’s fraud claims must be dismissed for

collateral estoppel reasons.

II. Plaintiffs’ Expert, Shelly Brown, relies on faulty legal

standards for fraudulent transfer and valuation reports.

Plaintiff’s expert, Shelly Brown (“Brown”), is an unreliable

witness. She does not rely on the correct legal standard for

fraudulent transfer. She deemed HTS insolvent as of the date of

the asset sale in the Orchard Mall valuation report, but stated

at her deposition that she did not have enough information to

make such a determination. Brown has only performed a handful of

valuation reports as an expert witness and none appear to be for

proof of solvency. She is a forensic accountant who has tried to

learn how to perform valuations, but has instead blurred the

lines between the two. For these reasons, the Court cannot rely

on Brown’s reports or testimony.

Part IX Miscellaneous

Defendants have agreed not to dispute the authenticity of

certain discovery and depositions produced in other litigations

involving the same or similar issues as this case. However,

Defendants did not agree that non-party depositions from other

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cases can be used as trial testimony. (Deposition Ralph A.

Venuto, Jr. 6/19/15 6-3 to 6-23.) Defendants reserve the right

to require plaintiff to call any non-party witnesses such as

David Rahn to testify at trial as the deposition5 of non-party

witnesses in other cases were taken for discovery purpose and not

for trial testimony Plaintiff responds that any use of the tes

timony of a non-party witness such as David Rahn and/or Nira

Muhtadie will be consistent with Fed.R Civ p 32 (a) (3) and (8)

Defendants also object to the entry into evidence of any in

formation regarding the Warminster matter, as it is not relevant

to the instant suit. The Warminster judgment was not entered

against any of the Defendants.

Pursuant to Fed.R.Evid 807, if unable to secure the

testimony of Kenneth Federman pursuant to subpoena, plaintiff

will offer into evidence an affidavit he filed in the Court of

Common Pleas (Document 143)

X. Non-Jury trials

No later than seven days prior to the scheduled trial date,

counsel for each party shall submit to the District Judge, with a

copy to OPposing counsel, proposed findings of fact and

conclusions of law. There is reserved to counsel the right to

submit additional requests during the course of the trial on

those matters that cannot reasonably be anticipated.

EACH OF THESE ITEMS IS TO BE FILED JUST PRIOR TO THE

FIRST TRIAl., DATE EVEN IF THE CASE IS CONTINUED

COUNSEL ARE ON NOTICE THAT FAILURE TO PROVIDE TIMELy

COMPLIANCE WITH THE REQUESTS OF PART X AND XI MAY

RESULT IN THE POSTPoNENT OF TRIAL AND THE ASSE5$NT

OF JUROR AND OTHER COSTS AND/OR THE IMPOSITION OF

SANCTIONS.

78

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CONCLUDING CERTIFICATION

We hereby certify by the affixing of our

signat5 to this Final Pretrial Order that it

reflects the efforts of all counsel and that we have

carefully and completely reviewed all parts of this

Order prior to its submission to the Court. Further,

it is acknowledged that amendments to this Joint Final

Pretrial Order will not be permitted except where the

Court determines that manifest injusti0 would result

if the amendment is not allowed.

Attorneys for Plaintiff: Attorneys for Defendants:

Robert A. Vort, Esq Dimitri Karapeo Esg.

Entry of the foregoing Joint Final retrial Order is

hereby APPROVED this kay 2017

OE SCHNEIDER, U.S.MJ

/ United States District

rt, District of New

Jersey

79

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Shelley A. Brown, MBA, CPA/ABV, CVA, CFF

PFK O’Connor Davies

106 Prospect Street

Ridgewood, NJ 07450

Shelley.brown@pkfod.com

(201)-639-5760

Experience

As a Principal in the Forensic, Litigation and Valuation Services Department for O’Connor

Davies, Shelley Brown provides business valuation and forensic accounting services to the

legal and business communities. For more than two decades, she has served as an expert

witness on matters involving business and marital dissolution, shareholder disputes, insurance

claims related to business interruption, estate challenges, bankruptcy litigation, buy/sell

agreements and more.

Ms. Brown has served as the Plaintiff’s expert in an insurance fraud investigation perpetrated by

a security company; the Plaintiffs expert for a bank in a fraudulent conveyance complaint; the

Defendant’s expert in a commercial damage claim; the Plaintiff’s expert for a condominium

association in a lawsuit filed against its Board of Directors; and the government’s expert in a

white collar crime investigation resulting in the recovery of millions of dollars on behalf of the

state.

Ms. Brown is accredited in Business Valuation (ABV) and Financial Forensics (CFF) by the

American Institute of Certified Public Accountants (AICPA), and is certified to perform business

valuations by the National Association of Certified Valuation Analysts (NACVA).

Ms. Brown has been certified as an expert witness in Bergen, Essex, Hudson, Morris, Passaic,

and Union counties. She has been court appointed in Bergen, Hudson, Passaic, Morris and

Sussex counties by the Honorable Judge Robert Brennan, the Honorable Judge Miguel De La

Carrera, the Honorable Judge Bonnie Mizdol, the Honorable Judge Maryann Neergard, the

Honorable Judge Maritza Berdote Byrne, the Honorable Judge Louis Sceusi, the Honorable

Judge John Seltzer, the Honorable Judge Ronnie Siegal and the Honorable Judge James

Troia no.

Ms. Brown is a speaker on forensic and business valuation matters and has addressed The

New Jersey Family Bar, New York State Society of Certified Public Accountants, The Hispanic

Bar Association, The National Association of Certified Valuation Analysts, The New Jersey

Council on Economic Education, The New Jersey Center for Consumer Education Services,

The New Jersey Association for Justice, The Essex County Chapter of the New Jersey State

Society of Certified Public Accountants, The New Jersey Association of Women Business

Owners, and the Displaced Homemakers Association of America.

Publications and Course Work

Ms. Brown published “Calculating Capitalization/Discount Rates in the Build-Up Method for

Business Valuations” in the National Litigation Consultants Review; and “the Role of the

Forensic Accountant” for In Brief, a publication of the New Jersey Association for Justice. She

has written and taught the course, “Valuation of Medical Practices for Divorce,” on behalf of the

National Association of Certified Valuation Analysts

Expert Witness and Litigation Support

Ms. Brown’s industry experience includes the auto lift, auto repair, collision repair, construction,

dental practices, distribution, home health care, insurance, janitorial, lobbying, manufacturing,

medical, packaging, medical practices, pharmacy, plumbing, printing, professional service, real

estate franchise, restaurant, and title industries.

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 80 of 83 PageID: 5649
Shelley A. Brown, MBA, CPAIABV, CVA, CFF

Curriculum Vitae, continued

Education

Bachelor of Science in Business Education

Rider University, 1973

Lawrenceville, New Jersey

MBA in Finance

Rutgers University, 1981

Newark, New Jersey

Professional Affiliations

American Institute of Certified Public Accountants

New Jersey State Society of Certified Public Accountants

National Association of Certified Valuation Analysts

Professional Credentials

Certified Public Accountant States of New Jersey and New York

Certified Valuation Analyst (CVA)

Accredited in Business Valuation (ABV)

Accredited in Financial Forensics fCFF)

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 81 of 83 PageID: 5650
Exhibit 1

iSNERAMPS ACCOUNTANTS & ADVISORS

William J. Pederson CPA/CFF/ABV, CIRA/CDBV, CFE

Bankruptcy and Restructuring Group

Director

(215) 881-8859 (Office)

(610) 772-6097 (Mobile)

Employment History:

5/09 — Present EisnerAmper Philadelphia, Pennsylvania

Bankruptcy and Restructuring National, 1,200 Professionals

9/00 — 5/09 Protiviti Baltimore, Maryland

Litigation Services and Bankruptcy International,

3,000 Professionals

5/97-5/00 Richard Martinez, PLC New Orleans, Louisiana

Bankruptcy Attorney

8/95 - 8/96 Entergy New Orleans, Louisiana

Regional Utility

2/90-7/95 USF&G Baltimore, Maryland

National P&C Insurer

1/86-2/90 Ernst & Young Baltimore, Maryland

International Accounting Firm

Representative Engagements:

• Accountant and Financial Advisor — FTC investigation and suit against the owner of a debt counseling

service and his companies — damages exceeded $100 million.

• Financial Advisor — Computer fraud case involving fictitious sales and leases — damages exceeded

$300 million.

• Accountants and Financial Advisor — Computer fraud conducted by the former owner of a small

insurance finance company. Through a number of forensic techniques, we were able to locate and

quantify the damages attributable to the actions of the insider.

Case 1:10-cv-06465-JBS-JS Document 226 Filed 01/12/17 Page 82 of 83 PageID: 5651
Exhibit 1

William Pederson, CPA/CFF/ABV, CFE, CIRA/CDBV

Page2of2

• Financial Advisor — Fraudulent conveyance case involving an LBO of a large metal press machine

manufacturer. The Trust for which we were working prevailed in the lower courts on its multimillion dollar claim. Case is being appealed.

Expert Testimony

U.S. District Court for the Eastern District of Pennsylvania — Hipple v SCIX, eta!

o Provided expert testimony in valuation.

U.S. Bankruptcy Court of the Eastern District of Pennsylvania — M,Krasny v. P.Bagga

o Provided deposition testimony.

o Counsel Reference — Eugene Malady, Eugene Malady, LLC

American Arbitration Association — RBC Mortgage Company

o Provided expert testimony in support of rejection of damages.

o Provided deposition testimony.

o Counsel Reference— Daniel Tobin, Ballard Spahr Andrews & Ingersoll.

Education:

• Roanolce College, BBA

• University of Baltimore, MBA

• University of Baltimore, MS — Finance

• Loyola University College of Law, JD

Professional Designations:

• Certified Public Accountant (CPA), Maryland & Pennsylvania

• Accredited in Business Valuation (ABV)

• Certified in Financial Forensics (CFF)

• Certified Insolvency and Restructuring Advisor (CIRA)

• Certified in Distressed Business Valuation (CDBV)

• Certified Fraud Examiner fCFE)

Affiliations:

• Turnaround Ma nagement Association, Pennsylvania

• American Institute of Certified Public Accountants

• Association of Insolvency and Reorganization Advisors

• Association of Certified Fraud Examiners

• American Bankruptcy Institute

• American Bar Association

• Maryland Bar Association

• Louisiana Bar Association

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