June 7, 2001

RE: Financial Federated Status/Report No. 10

Dear Victims, Creditors and Other Interested Parties:

Hundreds of you have been calling, writing and sending my office e-mails in the past month. I know you are concerned whether you have provided us with all necessary information and completed your ballots correctly. I know you want to know when you will get your first check. We are trying to call everyone back quickly, but please be patient.

I want to bring you up-to-date on some of the developments:

1. Plan Process:

Thank you for returning so many ballots before the June 4^th deadline. The results have been overwhelmingly supportive of the Amended Plan. They will be posted soon on my website and filed with the Bankruptcy Court before the June 20^th confirmation hearing. You do not need to attend the confirmation hearing unless you filed an objection to the Plan. However, all hearings are open to the public and local victims might find it interesting. I am only aware of one objection to confirmation.

Assuming the Amended Plan is confirmed, I will promptly start working on initial distribution checks from me, as Trustee. It may take a few weeks to print and distribute the checks, but we know you are very anxious to get some money back. Please remember this will be the first bankruptcy distribution and the timing and amounts of future distributions will depend upon how successful I am in pending and future litigation and how quickly the criminal forfeiture process may be concluded.

The estate's records must include the social security number(s) of all parties to whom payments are made, including IRA investors. I am enclosing a W-9 form and self-addressed envelope to my accountants for this purpose. If more than one person holds the claim, such as a husband and wife, please include all social security numbers. All you need to do is fill in your name(s), address, and social security number(s) and then sign the form. If you are a non-resident alien, and not a U.S. Citizen, please call (305) 377-0648, ext. 411.

2. Claims Objections:

As I have reported in previous status letters, and is set forth in the Amended Disclosure Statement, I have consistently taken the position that all victims are entitled to a general unsecured claim for the amount of their investment, less any distributions received. Several of you were confused by the Proof of Claim form and checked boxes saying you had a secured claim or a priority claim. Some of you filed duplicate claims against FinFed and ABS. Others did not attach basic, essential information substantiating your investment. We objected to more than 2000 claims on these grounds and most of you agreed with my position after it was explained again. I am sorry if I worried you.

Another batch of claims objections is being prepared now for those of you who included interest or expected profits in your proof of claim form. Bankruptcy Judge Ray has already preliminarily ruled that Ponzi scheme victims are not entitled to interest and all I am trying to do is treat everyone equally. If I did not object to all claims which included interest, it would not be fair to those of you who filled out claims as I recommended. If you receive an objection based upon our belief that you received "interest" or some other sort of payment, you do not need to call us if you agree with my proposed treatment: deduct all payments from your claim. If you disagree with my position, you will need to file a written response. Please read the letter carefully which will accompany any future objections before calling. The phone number for all claims objections is (305) 377-0648, ext. 318 or ext. 411. Please do not call me directly.

3. Bankruptcy Notice from Oklahoma Regarding Bradley Bertrand

Mr. Bertrand was a broker for ABS who personally filed a personal bankruptcy in Oklahoma. I had sued him and obtained a judgment against him for $851,527.00, which was entered on December 20, 2000, so I will file a claim in his bankruptcy. The Bertrand bankruptcy is completely separate from the FinFed/ABS bankruptcy case. You do NOT need to file a claim in the Bertrand bankruptcy case in order to receive your distribution in the FinFed/ABS case. Mr. Bertrand apparently listed all of the creditors of FinFed and ABS in his bankruptcy schedules, and a Notice to File Claims was recently sent in his bankruptcy case to most, if not all, the FinFed/ABS creditors. I can not advise you whether or not you have a claim against Mr. Bertrand or how to pursue it. If you would like more information about Mr. Bertrand's bankruptcy, please contact his trustee, Janice Loyd, at (405) 235-9371 or Mr. Bertrand's lawyer, David Cheek, at (405) 239-6444.

I received hundreds of calls regarding this broker's bankruptcy. Please do not keep calling because there is nothing else my staff or I can do.

4. US Capital/First Capital

Some of you have received notices from us even though you lost your money in another Ray Levy scheme - US Capital and First Capital Services. We sent you notice because the U.S. Government initially believed you might be a victim of the FinFed ABS fraud and included your name on a list it provided to me. However, if you lost your money only through US Capital and First Capital, you do not have a claim in this bankruptcy case. You should contact Michael Seese, the bankruptcy attorney for First Capital Services, if you have questions about US Capital and First Capital. His phone number is (305) 379-9000. Do not call Mr. Seese about FinFed matters.

6. The Criminal Case Brought by the U.S. Attorney's Office and Restitution

The second phase of the criminal case against Gary Pierce, Zane Balsam, Gar Hogan, Al Lewis, Wanda Tirado and Juan Arroyo started on April 2, 2001 and may not conclude until July. The government expects to conclude its direct case this week and the defendants will then have an opportunity to introduce evidence.

Ray Levy will be sentenced on June 29, 2001 at 2:30 p.m. by U.S. District Court Judge T.K. Hurley at the Federal Courthouse, 701 Clematis Street, Room 5, West Palm Beach, Florida 33401 unless the sentencing is continued. I suggest you call (305) 377-0648, ext. 411 a few days before the sentencing hearing to avoid inconvenience. You are welcome to appear and the Judge might permit you to make comments. Mr. Levy pled guilty to two counts to avoid going to trial and hopes his sentence will be much less harsh than the one imposed upon his former friend and business "partner" Fred Brandau . He has not cooperated with me yet and I will definitely attend the sentencing hearing. I still hope Mr. Levy will cooperate and help us find more money for the victims.

The Criminal Forfeiture Section of the U.S. Attorney's Office had been previously told that I wanted to make a restitution payment to eligible victims⁽¹⁾ at the end of June. Recently, I was told the government will not be able to meet this goal due to the length of the criminal trial and the requirements of the criminal forfeiture statutes. I hope the delays are not lengthy and I am doing everything I can to get more than $10 million in seized assets distributed to the victims soon. My lawyer, Laurel Isicoff, and Mr. James Clarke, Chairman of the Creditors Committee, will be meeting this Friday with the government to discuss the restitution process. The distributions I make as Restitution Receiver will be separate and in addition to your bankruptcy distribution. Ellen Cohen and Steve Carlton, the lead prosecutors in the criminal action, are working very hard to obtain convictions against all the defendants who did not plead guilty. The criminal trial is also open to the public and you should feel free to stop by if you are in the W. Palm Beach area. Introduce yourselves during the breaks to these dedicated prosecutors. They would appreciate the support.

7. Florida's Department of Banking and Finance's efforts to collect fines against brokers:

In March, 2001, at least 18 months after Florida-based brokers stopped selling viaticals, the Department of Banking and Finance held a press conference and announced it was filing administrative actions against 114 individual brokers and several companies to "cease and desist" and would seek to impose fines of $5,000 against the brokers for each transaction which took place in Florida. The maximum fines being sought exceeded $17 million, but no one expects that much will be collected from the brokers.

Since I have sued several brokers to recover commissions and the Amended Plan provides for the subordination of brokers, I was concerned and upset when I recognized the State intended to keep the fines instead of seeking restitution for investors or, at least, the victims of a particular broker's actions. I had asked to meet with the Comptroller's office and, after being initially blown off, I encouraged the Creditors Committee and Florida - based residents to start sending letters and e-mails to their State Representatives and Governor Jeb Bush and Comptroller, Robert Milligan. I am truly appreciative of your prompt action.

Your numerous letters definitely got the State's attention. I had a very good conversation with Mr. Gil Robinson, Director of the Orlando Region of the Department of Banking and Finance last Thursday, and I am now hopeful he and I will be able to work together to maximize the return of funds from brokers to victims while recognizing his office's important role. Mr. Robinson has made an effort to stop fraudulent viatical sales and I appreciate it. I just hope the State can do much more. Your letters helped and I will not hesitate to ask you to send more, if necessary.

8. ABS Trust Litigation:

As many of you know, I am involved in a lawsuit with ABS Trust, who is asserting that it owns, on behalf of hundreds of ABS Trust certificate holders, many of whom are creditors. It has consistently been my position that these policies belong to all the creditors. Several investors that invested when the ABS Trust was formed, filed a motion to intervene in my lawsuit against the ABS Trust and that motion was denied. These investors are currently seeking the right to file an appeal. We filed a motion for summary judgment in the action against ABS Trust asking the Court to rule the policies belong to all the creditors. The Court has not yet ruled, but I am confident. We will be filing a motion with the Court asking that there be no distribution yet to creditors who filed a claim relating to a policy in which ABS Trust asserts an interest. This is necessary because if the ABS Trust wins, the investor/victim will need to look to ABS Trust for payment and will not have a claim in this case.