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Alphonse Mourad's Presentation to the Three Judges of the Appeals Court Regarding the Payment of Raxes in Excess of $190,000

July 15th, 1999

1. Introduction:

* Good morning your honors -
* My name is Alphonse Mourad - I am the President & Sole Shareholder ofV&M Management.
* V&M's corporate bankruptcy has led to my personal bankruptcy - as a result I have been unable to retain an attorney for these proceedings and will be representing myself pro-se.

2. I am here today to appeal 2 decisions made by the US Bankruptcy Court:

* First motion was: "Memorandum of Decision on Motion of Alphonse Mourad to Compel The Trustee to Pay The Federal Taxes of V&M Management."
* The second issue was: Judge Kenner's September 26,1999 ruling that declared Trustee Stephen Gray owner of the Mandela Development for the purpose of tax credit approval.

3. ISSUE OF TAXES:

* The Trustee has issued me -the sole shareholder of V&M Management with a Kl for 1996 and 1997 that showed a profit of approximately 1.3 million dollars.
* The IRS notified me in a June 24,1999 letter that under the Sub Chapter S Corporation - as the sole shareholder, I am responsible for the taxes on the 1.3 millions dollars and yet, none of the profits came to me.
* In Judge Kenner's ruling on November 16,1998 on 'Motion of Alphonse Mourad to Allow Administrative claim Late, Judge Kenner states,
"The S corporation's items of income, loss, deduction, and credit are passed through its shareholders on a pro rata basis and taken into account in determining the tax on their income."
This leads me to ask this court to consider 2 issues:
The first issue is: if income, loss, and credits are passed to the shareholders in an S corporation, and I am the sole shareholder, why is it that only the liability has been passed to me and not the credits? Gray^ brief- page 4 - also notes that the shareholder of a sub-chapter S corporation are subject to income, loss, deductions, or credit and that the filing of bankruptcy does not change this. I am arguing that if I am entitled to the losses then I am also entitled to the 'credit.9 One of the following must be true"
Either: I am liable for the taxes on the 1.3 million dollars and am entitled to all of the 'credits' as the sole shareholder - including the tax credit issued under V&M Management to Stephen Gray and later transferred to Beacon Management on September 26,1997.
OR
I am not liable for the taxes and not entitled to the credits.
Even though Judge Kenner claimed that for the purpose of the tax credit application Stephen Gray had ownership, and she states at the

confirmation hearing that, " Mr. Gray has site control as an owner. He is the owner in his capacity as trustee of the debtor." But Mr. Gray was never a shareholder and therefore did not qualify for the credits and is not recognized by the IRS as owner.
Therefore, I ask that this case be remanded to the Bankruptcy court for administrative proceedings.
I think the Court should also note that the Bankruptcy Court Approved Stephen Gray's fees
Kenner Approved in her order on September 19,1997 for Paul Moore 392,000 in fees plus future estimated fees of $80,000.
Grey on the same day was approve for $246,000.00 These both add up to $472,000.00
Why weren't these fees which were incurred during my ownership, deducted from my 1997 Kl tax returns? In fact - they were not deducted until 1998 when the property was under the financial control of Beacon management.

4. Issue of Standing:

* I owned and managed this property for over 15 years. I sought the protection of the bankruptcy court - and then one day woke up to discover that I had not only lost my company but my only source of income. This directly left me personally bankrupt - as an aggrieved party I believe I have the standing to argue this case before you.
* The IRS has identified me as personally responsible for the 1.3 million dollars accrued in profit by Stephen Gray in 1996 and 1997 - in essence they consider me to have been the owner of the property during that time. On September 26,1997 Judge Kenner confirmed that Beacon was approved - tax credit and all - on September 26,1997. If under the Sub Chapter S Corporation Status -1 was given a Kl for 1996 & 1997 - and was entitled to all credits -Beacon could not have qualified for the tax credit while I was the owner and sole stack holder.

* Judge Kenner had no legal right to make Trustee Gray the 'owner^ - his role was to manage and operate the corporation on behalf of the shareholder.
I HAVE STANDING BECAUSE I HAVE EQUITY IN THE PROPERTY :
* CAPITAL RESOURCE JANUARY 30,1996 APPROXIMATE COMMITMENT FOR THAT YEAR IS 9MILLION DOLLARS BASED ON CASH FLOW.
* Multi-loan Network: Commitment to Al Mourad for $5.5million on January 27,1997.
* APRIL 7,1997 Appraisal - Blake & Associates $7.3 million.
* Frank PIETROSKI & Company: $12million from February 15,1996.

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