RE: Financial Federated Status/Report No. 12

Dear Victims, Creditors and Other Interested Parties:

I am pleased to enclose two checks, which represent your share of $2,781,780.29 distributed by me as Criminal Restitution Receiver and $2 million representing an additional distribution through the Bankruptcy Plan.⁽¹⁾ These checks bring the total return, thus far, to approximately $16.6 million and 13.2% of the investors' losses.

My professionals and I are still working very hard to increase the recoveries and there will be at least one more distribution in late Summer or Fall of 2002.⁽²⁾ I feel compelled to repeat what the government and I told you after this fraud was discovered - you will definitely lose most of your funds. The government initially predicted a 5-10% recovery and we have exceeded that, but I am concerned that some of you are still hoping against hope that we will be able to make you whole.

I realize most of you do not have access to the internet and are unable to review the status reports I regularly post at www.finfedinfo.com, so I want to summarize developments and anticipate some future events:

A. Criminal Sentencing: Gary Pierce, Gar Hogan, Zane Balsam, Wanda Tirando, Alan Lewis and Juan Arroyo were convicted by a jury on July 10^th. Wanda Tirando was sentenced to 262 months and Juan Arroyo was sentenced to 37 months and three years supervised probation. The sentencing of the other remaining defendants, Zane Balsam, Gar Hogan, Al Lewis and Gary Pierce, will start again on March 26^th before U.S. District Court Judge Daniel T.K. Hurley.

C. Seized Property: I am holding approximately $2.8 million from the sale of real estate controlled by Gar Hogan, Zane Balsam, and Al Lewis. I am unable to distribute these funds until these men are sentenced and their appeals are exhausted. I have relatively little real estate to sell and the total remaining proceeds from other seized real estate will be less than $1 million. I am unaware of any seized vehicles or boats the United States Marshals Office has not sold, but I do expect a tax refund of approximately $540,000 from Debra Molina to be available soon for distribution to you.

D. State of Florida and Brokers: As you know, the State of Florida agreed to turn over to the bankruptcy estate the fines the State collects from brokers, instead of depositing the funds in a separate account to fund the State's future investigations. So far, the State of Florida has turned over $121,904 representing settlement agreements reached with 34 brokers. I have been speaking with a class action lawyer who was retained by several investors and is investigating possible claims against the State.

Several brokers have recently filed bankruptcy petitions and may send you a notice in an effort to discharge any claims you may have against them. For example, Ihor Humesky a/k/a Gary Humesky, has recently sought the protection of the Bankruptcy Court. If you believe you have a claim against a broker and he/she files a bankruptcy petition, feel free to file a proof of claim in that case but I may not give you legal advice or file a claim for you in an individual's case. If you have any questions relating to broker bankruptcies you must contact the clerk of the court or the Trustee assigned to those instances. The numbers to the clerks and Trustees can be found directly on the notice you receive.

E. Bankruptcy Litigation: I have recently settled some matters. For example purposes only:

1. CardCommerce: We have now collected $932,000 from CardCommerce (owned by Messrs. Fontana and Linden) and $1,678,000 is still due with interest. I am delighted with the results so far and remain cautiously optimistic.

2. Chase Manhattan Bank has agreed to pay $250,000 resulting from credit card charges paid for with your money.

3. Terrence Cunningham, an investor who had his funds repaid, has agreed to pay $185,000.

4. Palm Beach Motors and Aston Martin of North America settled for $175,000, as a result of several automobiles purchased from it with your money for Mr. Brandau and his friends.

5. HED South, an audio equipment firm, paid $50,000.

6. Interiors by Steven G has agreed to pay $30,000.

7. Cox Radio has paid $19,999.

8. Bobb's Pianos was sued to recover approximately $123,000 that it received for pianos delivered to the homes of various insiders of FinFed. We recently settled for $65,950.

We have engaged in mediation and settlement discussions whenever possible to keep fees down and all settlements are presented to the Post-Petition Creditors Committee. Most transferees protest that they did nothing wrong and have no ability to pay the money back. I am pleased with the results of the litigation since my last status letter and expect substantial amounts of activity over the next six months. We still have a large number of litigation matters to resolve.

F. Sale of Viaticals: Since my last letter, no additional viaticals have matured. However, we have had some success in marketing the viaticals for sale. We sold a total of 8 viaticals, all insuring the same viator. These viaticals had a total face value of $4,475,000, and we sold them for a total of $1,510,750, or approximately 35% of face value. We have already collected $863,000 from this sale, and the balance should be received within a month.

In an interesting development, one group of FinFed investors has expressed an interest in purchasing several viatical policies from the estate. While I am certainly not pushing this option, you should know that it is available to anyone with an interest in the policies. By now, you are all aware of the low quality of the viaticals purchased by FinFed and ABS. The demise dates were overestimated and FinFed overpaid for the policies. Nevertheless, the policies do have some value for an investor who can afford to maintain the premiums and withstand a high-risk factor. Sadly, the viaticals will eventually all "mature." If you or anyone you know is interested in purchasing viaticals from the Estate, please contact Marilyn Kohn, a lawyer in my office.

G. Ray Levy and his Family: When we learned Mr. and Mrs. Levy were trying sell their home in Delray Beach, Florida, we filed suit and Judge Ray ordered the net proceeds to be placed in escrow while we litigated whether the house (and the proceeds) are exempt under Florida Law. We prevailed in Bankruptcy Court, and I recently received $552,528.51 from the escrow agent.

I have been holding the proceeds (approximately $194,714) from the sale of a house that was owned by Levy in Cancun, Mexico. Mr. Levy appealed the Bankruptcy Court ruling in my favor to the U.S. District Court and then the U.S. Circuit Court of Appeals. These funds were tied up until the appeals were over and may now finally be disbursed.

We also sued to assert a $237,000 equitable lien in the house owned by Ronalee Levy Orlick and a $23,847 lien on a BMW. We were successful at the Bankruptcy Court level and are currently involved in an appeal. The Bankruptcy Court also awarded $58,000 in interest for the two years Ronalee lived in the house she paid for with your money. My lawyers previously had the United States Marshals Office seize artwork, computers, furniture, and certain jewelry in Orlick's house and I sold in an auction. Ms. Levy Orlick was indicted in Texas for fraud and, if convicted, will serve more time than her father, Ray Levy.

H. Tax Matters: Several investors have called Monica Bruce and me and asked when they may declare their losses on their income tax returns and how much they received from me in the past year. I want to help you, but I can not give tax advice and I urge you to keep your check stubs (deposit detail) so you will have a record of distributions. For the calendar year ending 2001 the distribution percentages were as follows:

Restitution 1st distribution: 1.09185%

Restitution 2nd distribution: 4.73055%

Bankruptcy 1st distribution: 2.28347%

Bankruptcy 2nd distribution: 1.20210%

Total distribution: 9.30797%