I have received several inquiries about the Government's Preliminary Report and Amended Preliminary Report as to Restitution, which was filed in the criminal court in Virginia on May29 and June 11, respectively.  Based on my review of the report and discussion with my counsel, I understand that the Government's restitution process is governed by a Federal statute that is different from the Bankruptcy Code.  Thus, the amount of, and allowable components of, claims for restitution purposes are not the same as in the bankruptcy case, and are not binding in the bankruptcy case (nor are claim amounts in the bankruptcy case binding in the restitution process).  In addition, in order to be recognized in the restitution program, one must fill out and return a form that the Government has circulated.  This is not the same as the proof of claim form that many have filed with the Bankruptcy Court, or with the claims agent that had been retained by the 1031 Debtors.  At this point, I am not aware of any funds currently available for distribution in the restitution program, although there may be some in the future.  If and when the Government makes a distribution, it will be based on its claims process.  Similarly, distributions made by the bankruptcy estate will be made based on the filed claims and other principles of the Bankruptcy Code.

Filing of a claim in the criminal matter does not constitute a filing of a claim in the bankruptcy case and, by the same token, filing of a claim in the bankruptcy case does not constitute a filing of a claim in the criminal case.

THESE ARE TWO SEPARATE AND DISTINCT ACTIONS.

Linked hereto is the Order of the criminal court dated June 9, 2009 , which contains information about the claims process regarding the criminal restitution proceeding.