In re Raejean S. Bonham dba World Plus
Bankruptcy No. F95-00897
Unofficial Web Site

Attorneys for Trustee

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ALASKA

In Re:

RAEJEAN BONHAM, aka JEAN BONHAM, aka
JEANNIE BONHAM dba WORLD PLUS, Case No. F95-00897 HAR

Debtor.

AFFIDAVIT OF LARRY D. COMPTON

STATE OF ALASKA

THIRD JUDICIAL DISTRICT

Larry D. Compton, trustee, being first duly sworn, deposes and says:

1. I am the duly appointed and qualified Chapter 7 trustee in the above entitled bankruptcy case. Earlier in this bankruptcy, I was the Interim Trustee in the involuntary Chapter 7 proceeding, and the Chapter 11 trustee. Accordingly, I make the following statements from personal knowledge.

2. On December 19, 1995, Ken Lougee filed an involuntary Chapter 7 petition (the "Involuntary Petition") against Raejean Bonham, aka Jeannie Bonham, aka Jean Bonham on behalf of several creditors. A true and accurate copy of the Involuntary Petition is attached as Exhibit 1. Originally, Lougee had specifically included World Plus, Inc. as debtor, but scratched it out and hand wrote the words "dba World Plus" onto the caption. In indicating the nature of the debtors, Lougee marked both "personal" and "other," and hand wrote the words "dissolved corporation." The Involuntary Petition indicates that the debts are primarily business debts. Lougee filed the petition on behalf of Victor and Patricia Rentschler, Sylvia McCormick, and Dale Yoder, each of whom were creditors by virtue of an investment contract with World Plus. See Investment Contracts of Victor and Patricia Rentschler, Sylvia McCormick, and Dale Yoder, true and accurate copies of which are attached as Exhibit 2.

3. The Involuntary Petition stayed at least three state court collection actions instituted by investors against Bonham and World Plus to recover on delinquent investment contracts. On December 6, 1995, Joe Sheehan filed O'Rear v. World Plus, Inc., 4FA-95- 2916 Ci. Two days later John R. Hiltenbrand, Jr. filed suit against World Plus and Raejean Bonham. Case No. 4FA-95-2979 Ci. Jerry, Jay, and Nancy Sadler also sued World Plus and Bonham in Case No. 4FA-95-2935.

4. On December 20, 1995, I attended the hearing on the Motion to Appoint Interim Trustee in the involuntary Chapter 7 proceeding. The judge and myself were in Anchorage; the debtor's and creditors' attorneys participated telephonically from Fairbanks.

5. Raejean Bonham was represented by Warren Taylor during the hearing. During the hearing, Judge Ross asked what were the assets of the estate. Taylor identified the Bonham's house and a boat as the only personal assets. The Court then asked about "the corporation," referring to World Plus, Inc., and whether it was still operating as a corporation. Taylor replied that it had been dissolved, though he thought someone might be trying to reinstate it. The court then proceeded to inquire about the "business." Taylor described the "debtor's business" as purchasing large blocks of frequent flier miles to resell to the public and vigorously denied that the business was a Ponzi scheme since it had been in business for 15 years.

6. The court noted at the December 20, 1995 hearing that there were a lot of "red flags" that supported the appointment of a trustee for at least a short duration to seize control of the business and make an investigation. At the end of that hearing, I was appointed Interim Trustee, and given express authority to take over and continue the business of the debtor.

7. At that time, I understood that the debtor's business had two components, one being the resale of frequent flier miles and the other being the issuance of investment contracts.

8. That evening I called Joy Bentley, a former member of the U. S. Trustee's office and now self-employed, and asked her to travel to Fairbanks the next day to assist me in evaluating and administering the debtor's business.

9. On December 21, 1995, Ms. Bentley and I travelled to the business offices of World Plus located at 748 Gaffney Road, Fairbanks, Alaska. I took possession of the business and all business records located on the premises. I arrived at approximately 8:00 a.m. and advised the secretary at the office who I was. I asked her to call Raejean Bonham at home and ask Raejean to come to the office. I waited about an hour and Ms. Bonham did not appear. So I then began my review of the office without her.

10. The office was extremely busy all morning. The answering service, which serviced approximately four incoming telephone lines, could not keep up with the telephone calls. The fax machine was operating nearly nonstop. The phone calls and faxes were demands for payments or expressions of concern about the callers' and senders' investments. Cars filled the parking lot outside. People knocked on the door asking about their investments. The atmosphere was that of a run on a bank. In the rear office of the building (Bonham's private office), I found piles of unopened mail together with hundreds of faxes from investors also concerning their investments.

11. In order to minimize the interruptions I finally locked the front door and placed a notice on the door that I had been appointed. I cut the side off a FedEx envelope mailer and put into it about 50 copies of a blank proof of claim form. I also called Jim DeWitt and asked him to come to the office to help me analyze the situation.

12. An issue has arisen in this case at to whether the debtor's business encompasses the business or operations being conducted under the names World Plus, Inc. and Atlantic Pacific Funding, Inc. As of December 20, 1995, I had not heard of Atlantic Pacific Funding Corporation. Since then, it has become obvious that "the business" which was conducted by Atlantic Pacific Funding Corporation was functionally indistinguishable from "Raejean Bonham's" business or "World Plus, Inc.'s" business. There was nothing in the debtor's file organization methods which distinguished Raejean Bonham personally from World Plus, Inc. from Atlantic Pacific Funding, Inc. There was no personal versus corporate distinction manner that the files were organized. The individual ledger cards that Bonham maintained for each investor did not distinguish contracts issued by World Plus, Inc. from those issued by Atlantic Pacific Funding, Inc. Correspondence to and from the corporations, and Bonham personally, was intermingled. I have never seen a "due to, due from" accounting record of any kind which kept track of funds transferred between the debtor's various bank accounts or corporations.

13. I have also reviewed a number of documents returned from the Internal Revenue Service that had been seized by the IRS prior to the Involuntary Petition. I have also obtained a number of documents pertaining to the debtor's finances obtained through subpoena. Specifically, I, through counsel, have subpoenaed the bank records of the various bank accounts used by Bonham and Steve Bonham, World Plus, and Atlantic Pacific. These accounts are discussed in greater detail below. Through counsel, I have also obtained a copy of documents relating to the State of Alaska's investigation of World Plus and its registration to offer exempt securities under Alaska law.

14. On January 2, 1996, Bonham filed a pro se Response to Involuntary Petition, a true and accurate copy of which is attached as Exhibit 3.

15. On January 5, 1996, Raejean Bonham filed a voluntary Chapter 11 petition (the "Voluntary Petition") listing as debtors herself, Atlantic Pacific Funding Corporation, and World Plus, Inc. The petition states in Bonham's handwriting: "This is an individual filing - these are names of corporations in which debtor was a former shareholder. RSB" See Voluntary Petition dated January 5, 1996, Case No. F-96-00013 HAR, a copy of which is attached as Exhibit 4. Debtors' business was described as: "Airline coupon broker. Purchase airline miles, repackage & sell as tickets."

16. Bonham filed a Request for Clarification of Order for Appointment of Interim Trustee on January 5, 1996. A true and accurate copy of the Request for Clarification is attached as Exhibit 7. The thrust of the motion is Bonham's dissatisfaction with the trustee's operation of the "business." Bonham acknowledges that Compton was appointed on December 20, 1996 to operate the business. She stated:

World Plus and Raejean Bonham can not pay back creditors without the continuation of current and existing contracts which exist between World Plus and ticket agents, thus doing a incredible economic damage to World Plus. World Plus, as a business in order to satisfy creditors, or World Plus and Raejean Bonham will continue to be damaged both financially and in name.

17. The court scheduled trial on the involuntary petition for January 8, 1996. A number of matters were set that day concerning the involuntary action and the voluntary petition. The court prefaced its remarks at the hearing by stating that he saw the bankruptcy as an opportunity to stop the rush of creditors from "picking over the bones of World Plus." The court informed the debtor that the filing of the voluntary Chapter 11 essentially admitted the involuntary action, but the trustee wanted to keep the earlier date. The court asked Bonham if she wanted to consent to the Involuntary Petition. The debtor agreed to the involuntary and moved to convert the case into a voluntary Chapter 11 proceeding with a trustee to be appointed.

18. On January 8, 1996, the court dismissed Case No. F96-00013 HAR. A true and accurate copy of the Order Dismissing Voluntary Petition is attached as Exhibit 5. The court also entered its Order for Relief and Voluntary Conversion to a Chapter 11 Case on January 8, 1996, based upon the debtor's consent to the Involuntary Petition. A true and accurate copy of the Order for Relief and Voluntary Conversion to a Chapter 11 Case is attached as Exhibit 6.

19. On January 29, 1996, the Court held a hearing on the trustee's Motion to Convert Case. At the conclusion of the hearing, the Court granted the trustee's motion to convert the Chapter 11 proceeding to a Chapter 7 based upon its conclusion that there was no prospect of reorganization in large part because the operation appeared to be a Ponzi scheme in which Bonham used new investors to pay off existing investors. Alternatively, the Court recognized that the debtor could no longer conduct business in light of the injunction preventing the resale of Delta Airlines frequent flyer tickets and the revocation of World Plus' authorization to offer exempt securities.

20. After the conversion of the case to Chapter 7, a dispute arose regarding the trustee's ability to disconnect Bonham's personal telephone lines and take certain personal property. On February 9, 1996, Bonham filed her Motion for Clarification of Case, a true and accurate copy of which is attached as Exhibit 74. The court denied the Motion as seeking an advisory ruling on March 14, 1996 (Docket No. 210), a copy of which is attached as Exhibit 77. However, Bonham filed a Request for Reconsideration of Order Denying Motion for Clarification of Case in Regards to Specifically Which Entities are in Bankruptcy, a true and accurate copy of which is attached as Exhibit 78.

21. On March 20, 1996, James DeWitt, counsel for the trustee, took the Rule 2004 examination of Raejean Bonham. During the examination Bonham candidly confessed that she considered World Plus and Atlantic Pacific "all as one." The pertinent pages of the transcript for the Rule 2004 examination are attached as Exhibit 75. Based upon the testimony at the Rule 2004 examination and at the Section 341 hearing, the trustee responded to the Motion for Reconsideration by noting that the Motion was further evidence of Bonham's casual and consistent disregard for the corporate formalities, which was typified by her testimony at the Section 341 hearing and her Rule 2004 Examination in which she repeatedly stated "I am World Plus." A true and accurate copy of the Response to Request for Reconsideration of Order Motion for Clarification of Case in Regards to Specifically Which Entities are in Bankruptcy is attached as Exhibit 79. The court denied the Motion for Reconsideration on April 8, 1996. A true and accurate copy of the Second Order Denying Various Motions by Debtor is attached as Exhibit 80.

World Plus

22. I have reviewed the corporate book for World Plus, Inc. Though doing business as "World Plus, Inc.," Bonham did not incorporate the business until April 22, 1991. See Articles of Incorporation and Certificate of Incorporation for World Plus, Inc. issued on April 22, 1991, copies of which are attached as Exhibit 8.

23. Bonham filed her Articles of Incorporation on April 22, 1991 identifying her as World Plus' incorporator, registered agent, and sole director. Id. See Initial Biennial Report, a true and accurate copy of which is attached as Exhibit 9. The only other officer was her husband Steve Bonham who was listed as vice-president. Id.

24. World Plus was involuntarily dissolved on September 18, 1995. See Exhibit 10.

25. From my review of the debtors' records, and specifically the corporate book for World Plus, Inc., it appears that Bonham did apply for an Employer Identification Number for World Plus, and made its election to be treated as a Subchapter S corporation for tax purposes. See Exhibit 11.

26. However, those are all the corporate actions ever taken. There were never any stock certificates issued or logged onto a stock ledger. Nor is there any indication as to how the corporation was capitalized or any transfers of property to the corporation.

27. World Plus did not hold shareholder meetings and there are no minutes of shareholder or directors meetings.

28. Although World Plus did provide some or all of its investors with Form 1099 Miscellaneous Income Statements for the years 1991-1994, it appears that it never filed any income tax returns with the IRS or the State of Alaska. The only tax returns that I have found that were filed are Form 1040's for 1989 and 1990 for Steven A. Bonham and Rae Jean Bonham. World Plus's income and expenses for those years are shown on Schedule C. I have been supplied with a copy of a purported 1992 tax return for World Plus, which I do not believe was ever filed with the Internal Revenue Service.

29. I have not found any financial statements for World Plus.

Atlantic Pacific Funding Corporation

30. During my investigation I located the corporate book for Atlantic Pacific in the debtor's records. On September 21, 1992, Irma D. Butler, a customer service coordinator for Laughlin Associates, Inc., incorporated Atlantic Pacific Funding Corporation in Nevada. It appears that the State of Nevada defaulted Atlantic Pacific on October 1, 1995. Exhibit 71.

31. On February 24, 1993 Bonham opened Account No. 2510 194 0 in the name of Raejean Bonham dba Atlantic Pacific Funding Corporation with First National Bank of Anchorage (the FNBA Account). See Statement of March 1993, a copy of which is attached as Exhibit 12. The initial deposit was a check in the amount of $5,000 drawn on World Plus, Inc.'s Key Bank Account No. 125200879. Id.

32. On February 19, 1993 Bonham signed a Nevada Headquarters Program or Contract Office Service Package with Laughlin Associates to provide corporate services, a copy of which is attached as Exhibit 13. As part of the Corporate Profile for Atlantic Pacific, Bonham completed a Mail Forwarding Service Agreement and Application for Delivery of Mail Through Agent in which Bonham described Atlantic Pacific's business as "travel." A true and accurate copy of the Corporate Profile, Mail Forwarding Service Agreement and Application for Delivery of Mail Through Agent is attached as Exhibit 14.

33. It appears that on March 19, 1993, Bonham signed an Application for Business License for Carson City on behalf of Atlantic Pacific. A true and accurate copy of the Application for Business License for Carson City is attached as Exhibit 15. Three days later, George Johnson signed a bill of sale on Atlantic Pacific letterhead acknowledging receipt of $1,000 from Atlantic Pacific Funding Corp. for payment "in full for the purchase of this corporation from Raejean Bonham." A copy of the Bill of Sale is attached as Exhibit 16.

34. On May 6, 1993, Carson City issued a business license for "Raejean S. Bonham Atlantic Pacific Funding, Inc." effective through December 31, 1993. A copy of the Business License is attached as Exhibit 17.

35. A List of Officers and Directors (List) was sent to Laughlin Associates on or about September 15, 1993. A copy of the List is attached as Exhibit 18. The List states that Charles Ferrara was the sole officer of Atlantic Pacific and did not list any directors. On October 1, 1993, Bonham signed a Consent to Action without Meeting of the Shareholders of Atlantic Pacific Funding Corporation to remove Ferrara as a director. In February 1994, Bonham completed a List identifying herself as the president, secretary, treasurer, and sole director of Atlantic Pacific. A true and accurate copy of the August 1994 List of Officers and Directors for Atlantic Pacific Funding Corporation is attached as Exhibit 19. However, Bonham again sent a List for Atlantic Pacific in August 1994, identifying her as president, secretary and treasurer, but did not disclose the directors of the corporation. The address of the corporation is Laughlin Associates' address: 2533 N. Carson #1185, Carson City, NV 89706, the same address used for World Plus. A true and accurate copy of the August 1994 List of Officers and Directors for Atlantic Pacific Funding Corporation is attached as Exhibit 20.

36. From my review of the debtors' records, and specifically the corporate book for Atlantic Pacific Funding Corporation, it appears that Bonham did apply for an Employer Identification Number. It also appears that Bonham used preprinted forms probably supplied by Laughlin Associates for a Consent to Action Without A Meeting of the Shareholders of Atlantic Pacific Funding, Inc. by which Charles Ferrara was removed as director and she was named director of Atlantic Pacific. The accompanying Acceptance of Office is signed by Bonham and dated February 14, 1994. True and accurate copies of the Consent to Action, Resolution of the Board of Directors, and Acceptance Office are attached as Exhibit 21. The files also contain Minutes of Annual Meeting of Board of Directors of Atlantic Pacific Funding Corporation, and Minutes of Annual Meeting of Stockholders of Atlantic Pacific Funding Corporation, both reflecting that they were held on September 24, 1994. True and accurate copies of the Minutes of the Annual Meetings are attached as Exhibit 22.

37. However, there were never any stock certificates issued or logged onto a stock ledger reflecting Bonham's ownership of the stock of Atlantic Pacific. There is no documentation as to how the corporation was capitalized, or what assets were transferred to it.

38. Although Atlantic Pacific did provide some or all of its investors with Form 1099 Miscellaneous Income Statements for the years 1993-1994, it appears that it never filed an income tax return with the IRS or the State of Alaska.

39. I have not found any financial statements for Atlantic Pacific.

40. Atlantic Pacific never registered to do business in Alaska, and Bonham sent a letter to her investors dated February 9, 1994, specifically stating her intention not to register to provide securities in any state other than Alaska or Nevada. A true and accurate copy of the February 9, 1994 letter is attached as Exhibit 23. Moreover, she instructed her investors not to tell anyone about the investments or the lack of registration.

41. Atlantic Pacific had no employees. Atlantic Pacific had no offices in Nevada, and had no offices separate from World Plus in Alaska. Its mailing address was a post office box in Carson City, Nevada, the mail from which was forwarded to Bonham on a daily basis. See Exhibit 14.

42. As to phone calls, Bonham instructed Laughlin Associates to take messages and inform the caller that she was "currently out of the office." Id. She also instructed that all phone calls "should be taken care of by me." Id. The mail was forwarded to P.O. Box 10245, Fairbanks, AK 99710, Suite 1185, also used as World Plus' mailing address.

43. Atlantic Pacific had no business other than the issuance of investment contracts, collecting the investment income and paying investors of Atlantic Pacific and World Plus. From my review of Atlantic Pacific's check register and ledger, it appears that the only payments Atlantic Pacific made that were not to investors were monthly payments to Nevada Bell and occasional payments to MUS. There is also one payment to Robinson & Sinz and a few relating to corporate filings.

44. Indeed, the distinctions between World Plus and Atlantic Pacific were never made to the investors of World Plus. I have not discovered any written explanation to investors who were rolled into Atlantic Pacific investment contracts from the World Plus investment contracts, and back again. Bonham sent notices to her investors informing them that an investment was maturing on letterhead for "World Plus Inc. Atlantic Pacific Funding Corporation." See Notice to Phyllis Lassin (Bullion), Chris Parkan, Jack or Morna Mellor, copies of which are attached as Exhibit 24.

45. From my review, the only reason Bonham created and used Atlantic Pacific was to draw the investment income away from World Plus and thus avoid scrutiny by the Alaska state agencies if they wanted to investigate the finances of her business and investment scheme.

46. Bonham apparently closed investments with Atlantic Pacific at the end of 1994. After that date, my review to date shows that all investment contracts were issued by World Plus, though new investment proceeds were still deposited into Atlantic Pacific's account, and Atlantic Pacific continued to pay World Plus investment contracts.

47. The State of Nevada defaulted Atlantic Pacific on October 1, 1995. See Exhibit 71.

The Business

48. I had several discussions with Raejean Bonham while acting as Interim Trustee, and later as the Chapter 11 trustee. In those discussions, Bonham always referred to a singular "business" which was supposed to include the purchase of bulk mileage from large corporations financed by private loans and the resale of frequent flier tickets.

49. Additionally, Raejean Bonham was deposed by Jeff Willis, counsel for Delta Air Lines, on September 22, 1994 as part of Delta Air Lines v. Robert Y. Seward et al., Civil Action No. 1:93-CV-1036-HTW (N.D. Ga.). Pertinent excerpts from the Bonham and Walrath depositions are attached at Exhibit 25. Bonham's employees Melanie Cook and Carol Walruth, were also deposed. Id. During the deposition, Bonham and her employees were asked to describe the operation of the frequent flier business. She, and her employees, explained that a person wanting a ticket would contact the office giving the dates and destination desired. Id. at Bonham Deposition, pp. 68-69. Bonham's employees would place a reservation with the airlines. Id., Walruth Deposition, pp. 46-48. Since 1991, the vast majority of World Plus' tickets were with Delta, and Bonham estimated that in 1994, over 90% of the reservations were placed with Delta Air Lines. Id. at Bonham Deposition at p. 72; Walruth Deposition, p. 52. After making the reservation, the employee would receive payment from the customer, and order a frequent flier ticket from a broker, such as ELKO/Westdale Holdings who in turn would contact the individual frequent flier to generate the ticket to the destination. Id. at ¶ Bonham Deposition, p. 111. The broker would take 50% of the ticket price at the time of the order and receive the rest on delivery. Id.

50. Consistent with the deposition testimony, I did not find any inventory of frequent flier mileage from which frequent flier tickets were to be drawn when I took control of the business. Because the frequent flier miles were supposed to be the inventory of the business, I was particularly interested in understanding how the business operated and the inventory available to sustain the continued operation of the business. I also did not find any contracts for the purchase of bulk frequent flier miles from any corporation or payments to corporations for large blocks of frequent flier miles.

51. I have found one contract for the purchase of frequent flier airline miles between Atlantic Pacific and Patriot Management Corporation dated December 3, 1993, for the purchase of three million miles. A true and accurate copy of the contract with Patriot Management Corporation is attached as Exhibit 26. I have found no evidence that Patriot Management Corporation ever conveyed frequent flier miles to Atlantic Pacific, or to ELKO, Inc., as Atlantic Pacific's agent. I have found investment contracts between Atlantic Pacific and Patriot Management, and payments to Patriot Management totalling $1,170,000 since 1993. See Complaint, Compton v. Patriot Management Corp., et al. Adv. Case No. F95- 00897-436, a true and accurate copy of which is attached as Exhibit 27.

52. The only other specific reference to a contract to sell frequent flier miles with Atlantic Pacific, or World Plus, that I have found is in correspondence between James Burns, Securities Examiner for the State of Idaho, and David Humphrey, Idaho counsel for Bonham/Atlantic Pacific. A copy of the letter dated March 17, 1994, is attached as Exhibit 28. In correspondence, mention is made of a contract with Apple Corporation - a fictitious corporation apparently intended to be confused with the computer manufacturer - for the purchase of 2.5 million air miles for $60,000. Humphrey enclosed the contract, which was signed by Terry Franklin (Bonham's brother) on behalf of Apple, in response to a letter from Burns dated March 15, 1994, casting doubt on the existence of contracts to purchase frequent flier miles from corporations such as "IBM, Sony, Magnavox, and Apple." A copy of the letter dated March 15, 1994, is attached as Exhibit 29. The basis of the letter was a conversation between Bonham and an Idaho resident. A transcript of the conversation was attached to the letter, in which Bonham states that she has had been buying frequent flier miles from IBM, Magnavox, Apple, and Sony for four years, and each was currently on a three year contract to sell their miles to her. Id. Later in the conversation, Bonham explained that the 50% rate she was then offering was only because Xerox had offered to sell her miles at a discount to get their foot in the door of the frequent flier business. Id.

54. I have not found any contracts between Bonham, World Plus, or Atlantic Pacific and IBM, Magnavox, Apple, or Sony. Nor have I found a copy of the purported contract with "Apple Corporation." Terry Franklin, the purported signatory, is Bonham's brother. The trustee has sued him to recover payments to him individually in the amount of $199,006 from February 1994 through December 1995. A true and accurate copy of the complaint in Compton v. Franklin, F95-00897-172 HAR, is attached as Exhibit 30.

55. When I took control of the business I did find six to eight actual tickets awaiting pick-up by the purchaser. All of the tickets were on Delta Airlines. From the ticket records, it appears that World Plus gave every ticket purchaser an instruction sheet when he or she picked up the ticket. The sheet informs the purchaser that the tickets were acquired with frequent flier awards, and that the purchaser would be given a fictitious familial relationship with the actual frequent flier to be used if questioned by the airlines. A true and accurate copy of the form used is attached as Exhibit 31.

56. Also consistent with the deposition testimony, the debtors' records show that World Plus did issue a number of checks to Westdale Holdings for the purchase of frequent flier tickets. From December 1993 through the petition date, World Plus wrote $420,938.35 in checks to Westdale Holdings. A summary of the known payments made to Westdale created from the debtor's cancelled checks is attached as Exhibit 32. Atlantic Pacific never wrote a single check to Westdale Holdings.

57. During the depositions in the Delta case, Bonham testified that World Plus had purchased approximately 300-400 tickets per year, and never purchased a ticket unless she had a buyer. See Exhibit 25, Bonham Deposition, pp. 34, 35, and 42. World Plus' gross profit per ticket varied between $75-100. Id. at 75-76. Consistent with this testimony, the debtors' records show that for the period of January 1994 through January 1995, World Plus usually sold approximately 50 tickets a month for a gross profit of approximately $5,000 - $6,000 per month. True and accurate copies of World Plus' summary of ticket sales for the period January 1994 - January 1995 are attached as Exhibit 33. The sales of tickets for this period were as follows:

Id.

58. In my review of the debtors' records, the only entity that sold or issued airline tickets was World Plus. Revenue from the sale of tickets when compared to the total revenue for World Plus and Atlantic Pacific averaged approximately 4% of the total revenue per month. Investment revenue averaged 95% of the total revenue, and other sources accounted for the remainder. A summary of the monthly revenue for World Plus and Atlantic Pacific is attached as Exhibit 34.

59. When I did learn of the existence of Atlantic Pacific Funding Corporation, it was described as the corporation Bonham used to purchase the frequent flier mileage from the large corporations which allegedly included Sony, Magnavox, IBM, and Apple. As it was described to me, Atlantic Pacific was supposed to purchase the mileage, and World Plus was supposed to sell the tickets. However, in Bonham's deposition in the Delta case, she testified that Atlantic Pacific was an inactive corporation that was used only to engage in land deals in Nevada. See Exhibit 25 at Bonham Deposition, pp. 9-10

60. At the very outset of the case, I asked Paul Carter (an investor who is in frequent contact with the debtor) to supply me with the name of one person - just one person - from Sony, Magnavox, IBM, Apple, or other large company who could confirm that that company did in fact have a frequent flier sales arrangement with the debtor. The only response I received was that no names could be supplied because then the named persons would get into trouble.

61. In my experience as trustee for businesses, I expected to find some records of transactions for the purchase of the frequent flier mileage, an agreement between World Plus and Atlantic Pacific, and a record for the transfer of those miles between World Plus and Atlantic Pacific. I never found any evidence of the purchase of frequent flier records, any agreement between World Plus and Atlantic Pacific, or any transfers of frequent flier miles from Atlantic Pacific to World Plus.

62. The loans given by "investors," whether made by World Plus or Atlantic Pacific, were generally made for 20% and 50% interest for periods of six to eight months, although I have discovered that as far back as August 1988, World Plus issued investment contracts for 50% return for periods of 60-90 working days. See August 5, 1988 contract to John and Anita Dutton, a true and accurate copy of which is attached as Exhibit 35. Beginning in June 1995, World Plus began issuing contracts for 50% interest for periods as short as ten days.

63. The first investment contract by Atlantic Pacific that I have found was issued on October 30, 1992, to Jack C. Mellor for a 50% return in six months. A copy of the Mellor investment contract is attached as Exhibit 36. Most of the Atlantic Pacific investment contracts were issued in 1993 and 1994.

64. In reviewing the investment contracts found in the debtors' offices, I have concluded that the debtor had some 1,192 investors located in at least 42 states over the years 1991-1995. These investors had a total of over 6,000 investment contracts. Of this number, there were over 2,000 separate investment contracts spread among approximately 1,009 investors in 1995.

65. While a review of the debtors' finances is ongoing, it is clear that large transfers were routinely made from World Plus accounts to Atlantic Pacific. A summary of the transfers from World Plus to Atlantic Pacific is attached as Exhibit 37. For the years ending December 19, 1993, 1994, and 1995 World Plus directly transferred the following amounts to Atlantic Pacific's FNBA account:

66. The above chart of transfers does not account for the number of checks made payable to World Plus that were directly deposited into the APFC account. A quick review of the checks deposited into the FNBA account show numerous investment checks made payable to World Plus. See Exhibit 38.

67. From my review of the investment contracts, it appears that Bonham began issuing investment contracts on behalf of Atlantic Pacific in late 1992, approximately the same time that the State of Alaska was conducting its investigation of World Plus. Investors would be rolled over, or given new contracts, with Atlantic Pacific with no explanation that I have found. During my review of investment contracts and proof of claims, I have also noticed that it appears that Atlantic Pacific did not issue any investment contracts in 1995, though it continued to have monthly deposits in the range of $750,000 - 1,500,000. See Exhibit 34. Thus, it appears that after deflecting the State of Idaho's investigation, she shifted all investment contracts back to World Plus, and continued to use the FNBA account only to hide her investment income. See summaries of investment history for Sandra and Eddie Benson, Chris Parkan, Mark Harris and Rebecca Eames, and Chrsitine O'Niell, and applicable supporting documents, which are attached as Exhibit 39. Bonham continued to use Atlantic Pacific's FNBA account to pay World Plus contracts until the account was depleted in October 1995. Id.

Bank Accounts

68. I have also reviewed the debtor's bank accounts. Upon taking control of the business, I discovered several banking accounts that had been closed. As part of my investigation, I discovered the following bank accounts:

69. The checks used for World Plus' Key Bank account shows that the account was originally a business account in the name of "World Plus Raejean Bonham." A true and accurate copy of cancelled check No. 2962 is attached as Exhibit 82.

70. Bonham opened the account at First National Bank of Anchorage on February 26, 1993, in the name of Raejean Bonham d/b/a Atlantic Pacific Funding Corporation. Bonham opened the account with a $5,000 deposit from World Plus. At the time Bonham opened the FNBA account, Atlantic Pacific operated as the "dba" of Raejean Bonham, and was funded in large part by investments payable to World Plus. In November 1993, the bank statements were changed to read "Atlantic Pacific Funding Corporation."

71. The debtors' records show that World Plus transferred approximately $3.8 million to Atlantic Pacific. See Exhibit 37. These records also reflect over $700,000 in transfers from Atlantic Pacific to World Plus. Id. There are no records setting forth the relationship between the corporations. There are no records reflecting or recording the transfer of funds between the corporations.

72. A review of Atlantic Pacific's banking records shows that Bonham directly and frequently deposited World Plus investments into Atlantic Pacific's bank account. Bonham would take checks made payable to World Plus and endorse the check for deposit in Atlantic Pacific's FNBA account. See Exhibit 38. Other times, Bonham would simply line out "World Plus" as payee and write "Atlantic Pacific." See Exhibit 40.

73. By at least by March 1995, Bonham circumvented the problem of depositing World Plus checks into Atlantic Pacific's FNBA account by creating a deposit stamp that read:

FOR DEPOSIT ONLY
ATLANTIC PACIFIC FUNDING CORP.
DBA ATLANTIC PACIFIC CORP.
WORLD PLUS INC.

True and accurate copies of investor checks containing this stamp are attached as Exhibit 41.

74. In August 1995, Bonham opened up Account No. 102-8281 with Denali State Bank. A copy of the initial bank statement is attached as Exhibit 42. The name of the account, according to the bank statements was "World Plus, Inc, dba Atlantic Pacific Funding." Id. Additionally investment income was endorsed with a deposit stamp that read "World Plus Inc. dba Atlantic Pacific Funding." See Exhibit 43.

75. In October 1995, Bonham opened a cash management account in Juneau with Merrill Lynch Pierce Fenner & Smith, Account No. 28H-07015. Bonham requested that the account be set up as "World Plus, Inc. dba Atlantic Pacific Funding Corp." See Application for New Account, a true and accurate copy of which is attached as Exhibit 44. Merril Lynch refused and required Bonham to choose one name or the other. Bonham opened the account in the name of World Plus. However, her checks on the account still read "World Plus, Inc. dba Atlantic Pacific Funding Corp." See Check No. 1001 dated November 20, 1995 to Dean and Heidi Haller, a copy of which is attached as Exhibit 45.

76. Bonham also began to place investments into her personal account with her husband Steve Bonham, Key Bank Account No. 75019140. In the months of September and October, 1995, Bonham deposited a total of $502,185.00 into the account. See Key Bank Personal Checking Statements, copies of which are attached as Exhibit 46. For the two months prior to September, she had deposited a total of $10,088.91. Id. The money did not stay in the account for any period of time as by the end of November, the account had a negative balance of $3,651.64. Id.

77. Additionally, Bonham began to transfer investment income from one investor directly to another investor in satisfaction of a prior investment contract. Bonham would simply endorse the check to another investor or add his name as an additional payee. A list of the lateral transfers discovered to date, and copies of checks obtained through disclosure from defendants, are attached as Exhibit 70. The scope of these lateral transfers is difficult to determine because the money was never entered on the debtors books, and never made it into any bank account.

78. The only account that was still open as of the Petition Date was the Cash Management Account with Merril Lynch Pierce Fenner & Smith.

State of Alaska Investigation

79. In August and September 1992, Ed Watkins, Alaska Securities Examiner, talked with several investors of World Plus, Inc., including Ed Maynard, Asst. US Attorney Ken Roosa, and David Curwen of the Fairbanks police department regarding the nature and extent of the "investment program." On September 4, 1992, Ed Watkins spoke to Bonham who told him that she had no idea the investment might be a security. See Memorandum of Ed Watkins, a true and accurate copy of which is attached as Exhibit 47. Bonham represented to Watkins that there would be no new investment sales or rollovers would occur until the matter was resolved. Id. Undaunted by her promises she continued to sign investment contracts. Attached as Exhibit 48 is a printout of the investment contracts the trustee has identified were issued between September 1992 and March 1993. Counsel for the trustee is in the process of entering all investment contracts into a database, and this is only a partial list of those contracts issued during this period.

80. Unhappy about the State of Alaska's investigation and in apparent response to the inquiries about her investment program, Bonham wrote a letter to the "Investors of World Plus, Inc." dated September 28, 1992. Specifically, Bonham informed her investors:

It has come to my attention once again that a few investors have been violating the understood agreement that this a confidential program and is not to be discussed with anyone. It is extremely important to observe this rule in the program and not give out any information to family members, friends or financial institutions.

A true and accurate copy of the Letter dated September 28, 1992 from Raejean Bonham, a copy of which is attached as Exhibit 49.

81. On November 17, 1992, Richard Hompesch, World Plus' Alaska counsel, wrote to Ed Watkins about the World Plus investigation. Hompesch enclosed a list of active investors showing the date they first became involved and total invested. The enclosures included testimonials from: Chris Farwell (U.S Airlines pilot), Ken Goldman (Palmer asst. D.A.), Robert Ginther (general manager of Tip-Top Chevrolet), William Dutton (President/CEO Northern Schools Fed. Credit Union), Ken and Helen Roosa (Asst. U.S. Atty), Wayne S. Nelson (Bonham's landlord), Jack C. Mellor (Assoc. District Manager, BLM), Cathy Voight (Alaska Atty. General), Victor R. Gunn (Lt. Fbks. Police Dept.), Richard Ray, John F. Rosie (attorney), John Hagey (Asst Public Defender-wife works for Office of Public Advocacy), and Margo Savell (wife of Superior Court Judge Richard Savell). A copy of the November 17, 1992 letter and enclosures are attached as Exhibit 50.

82. Throughout the remainder of the year, and in early 1993, Watkins continued to discuss World Plus and the investment program, under assurances from Bonham/World Plus' attorney that there would be no further investment activity.

83. Hompesch wrote Watkins on February 9, 1993, about the World Plus investments in response to Watkins' stated concerns over the investment program. In his letter Hompesch enclosed a list of investors and the investment balances while stating, "It is my understanding that this list of active investors and the outstanding balances has not changed since November 17, other than the accrual of additional interest. " See Letter of February 9, 1993, a copy of which is attached as Exhibit 51.

84. However, on January 6, 1993, Raejean Bonham had written to Phyllis Lassin (Bullion), about a new investment, a decision on which had to be made by January 6, 1993:

There is a currently a block available in the World Plus, Inc. investment program for $5,000.00. To secure this block, I will need your check, the name or names as they shall appear on the contract, a Social Security Number for the contract, and the address and phone number which will be used for all correspondence. Please make your check payable to World Plus.

See Letter of January 6, 1993, a copy of which is attached as Exhibit 52.

85. Hompesch wrote another letter to Watkins on February 26, 1993, in which he attached a revised list of investors showing 17 contracts coming due in March 1993 for a total of $280,000. See Letter of February 26, 1993, a copy of which is attached as Exhibit 53. Hompesch also provided a schedule of contracts that had been paid since September 1992 which indicated $285,000 had been paid to 21 investors. Id.

86. In March 1993, Hompesch submitted to the Alaska DCED World Plus' application to offer exempt securities. A copy of the March 3, 1993 letter is attached as Exhibit 54. Hompesch states "Assuming that all prior sales have been resolved to your satisfaction and that all investors are paid in full, World Plus, Inc. would like to begin selling new contracts on March 15, 1993 totalling approximately $300,000." Id. Hompesch enclosed a Notice of Exempt Offering for World Plus to raise up to $500,000 through contracts bearing 20% interest which would be limited to no more 25 Alaska residents. Id.

87. World Plus submitted a series of exemptions to issue securities with the Alaska Department of Commerce and Economic Development. The exemptions from the securities registration issued to World Plus by the DCED was revoked on December 20, 1995. A true and accurate copy of the Summary Order is attached as Exhibit 55. I have not found any evidence of other efforts by World Plus or Atlantic Pacific to register to offer securities in any state or with the appropriate federal agencies.

The Idaho Investigation

88. On November 17, 1993, James Burns, Securities Investigator, Idaho Department of Finance, wrote to Raejean Bonham requesting information regarding solicitation of investments in Idaho. See Letter dated November 17, 1993, a copy of which is attached as Exhibit 56. Bonham responded to the request for information on December 21, 1993 on Atlantic Pacific letterhead with a Nevada address, sending names of Idaho investors in World Plus and Atlantic Pacific. See Letter dated December 21, 1993, a copy of which is attached as Exhibit 57. She explained her business as buying large blocks of frequent flier miles. She also explained that all lenders were Alaska residents when they first invested, but some later moved to Idaho. Id. The investors she identified were: Robert Beeson (c/o Chuck Joy), John Davidson, Howard Hall, Sherman Hart (c/o John Hart), Betty Jordan, Al Knapp, Donna Kreiensieck, Niki Leclair. (State file 0124). Once again Bonham convinced her Idaho investors to write letters of support for Atlantic Pacific. See letters dated January 10-12, 1994, copies of which are attached as Exhibit 58.

89. On January 20, 1994, Bonham, on Atlantic Pacific letterhead, responded to Burns' request for information on the investment contracts. She again stated that she never solicited investments in Idaho. Rather, according to her, people contacted her to invest, to see if there is an "open slot." To explain her business, she wrote:

Atlantic Pacific Funding Corporation is my company I use to buy blocks of airline miles from large corporations at a cheaper price and World Plus is my travel company which sells airline tickets to the public. We sell those tickets at a much higher price than what we purchased them for, enabling us to pay the interest to my investors.

A true and accurate copy of the letter dated January 20, 1994, is attached as Exhibit 59.

90. James Burns wrote to Bonham on February 3, 1994, informing her that the Nevada Corporations Department records showed someone else as the president, secretary and treasurer. See letter dated February 3, 1994, a copy of which is attached as Exhibit 60.

91. On February 16, 1994, Cumer Green, Bonham's Idaho counsel, wrote to James Burns, enclosing a recent filing in Nevada to revise the officers and directors to show Bonham as the president, treasurer, and secretary, as well as sole shareholder. The only other officer was Steve Bonham, her husband. Green explained that there was an oversight and Bonham's omission from the biennial report was just a housekeeping item that needed to be done. See letter dated February 16, 1994, a copy of which is attached as Exhibit 61.

92. Approximately a week later, Ed Watkins, Alaska DCED, wrote to Bonham's Alaska counsel, Daniel Winfree, to inform her that World Plus' exemption from registration for World Plus would not be renewed unless the Idaho securities investigation was resolved. See Letter dated February 24, 1994, a copy of which is attached as Exhibit 62.

93. The State of Idaho concluded its investigation on April 5, 1994 when the Idaho Securities Bureau (Department of Finance) issued its Findings against Raejean Bonham, World Plus and Atlantic Pacific Funding Corporation regarding the sales of unregistered securities by unlicensed sales persons and disclosure violations per settlement agreement. A true and accurate copy of the Findings is attached as Exhibit 73.

94. After the conclusion of the Idaho investigation, Hompesch wrote to Lawrence Carroll regarding World Plus' Notice of Exempt Offering. See Letter dated May 24, 1994 from Richard Hompesch, a true and accurate copy of which is attached as Exhibit 63. Hompesch enclosed a proposed Notice of Exempt Offering, a copy of the Agreement and Order of Idaho investigation and an affidavit from Bonham stating that all outstanding investors had been paid in full and there were no outstanding contracts. Id. Lawrence P. Carroll, Senior Securities Examiner for the State of Alaska DCED, responded to Hompesch's letter on June 6, 1994. A true and accurate copy of the letter from Lawrence P. Carroll to Richard W. Hompesch, II is attached as Exhibit 64. Under the agreement for World Plus and Atlantic Pacific to offer exempt securities, World Plus and Atlantic Pacific were required to file a report on September 15, 1994 and every three months thereafter. Additionally, Carroll wrote:

Please understand that we are concerned that the limitations imposed by the Statutes are observed, and that there be no commingling of funds from other entities or other jurisdictions.

Please note, as well, that the exemption at AS 45.55.140(b)(5)(B) is limited to Alaska residents only.

Id.

95. Hompesch acknowledged and accepted the State of Alaska's conditions by letter on June 16, 1994. See Letter dated June 16, 1994, from Richard Hompesch, a true and accurate copy of which is attached as Exhibit 65. Again, this did not deter Bonham, as she continued to bring in new investors, through both Atlantic Pacific and World Plus.

Miscellaneous

96. During my review of the debtor's financial records, I have discovered numerous transfers from World Plus to, or on behalf of, Bonham or her husband Steven Bonham. These transfers have been the subject of several adversary proceedings, but specifically, Compton v. Bonham, Case No. F95-00897 HAR. The court held a trial in this adversary on June 24, 1996, and issued its Findings of Fact and Conclusions of Law on July 2, 1996. A true and accurate copy of the Findings of Fact and Conclusions of Law attached as Exhibit 66. As part of the My review of the debtor's records shows that World Plus made $199,008 in transfers to S&S Services, Steve Bonham's business as follows:

Id. at ¶ 37.

97. Since January 1990, World Plus has paid $11,652.60 in automobile payments to GMAC on behalf of Raejean or Steve Bonham. Id. at ¶ 40.

98. Since January 1990, World Plus has paid $6,573.67 for heating oil to Saupe Enterprises, $8,306.07 in utility bills to GVEA, and $24,651 in mortgage payments on the Bonham's personal residence on behalf of Raejean or Steve Bonham. Id. at ¶¶ 42, 44.

99. World Plus purchased life insurance policies on the lives of Steve and Raejean Bonham, and paid premiums totalling $26,843. Id. at ¶ 43.

100. My investigation of World Plus' payments shows the following payments made to purchase personal goods or services for Raejean or Steve Bonham:

Date	Check No.	Amount	Payee	Item
Sept. 7, 1990	2723	24,000.00	Mike Gutman	Case 580D Backhoe, JD 450 Cat
June 3, 1991	3530	19,000.00	WJR, Ltd.	Case 580D Backhoe, Serial No. 9056304
Feb. 19, 1992	4556	7,000.00	Gail McQuade	1992 Harley Davidson motorcycle VIN 1HD1GAL16NY305178
Jan. 14, 1993	5548	3,000.00	Craig Taylor Equip. Co.	Melroe 853 Bobcat Loader, Serial No. 510125500
Jan. 18, 1993	5563	22,130.00	Craig Taylor Equip. Co.	Melroe 853 Bobcat Loader, Serial No. 510125500
Dec. 14, 1994	7262	15,408.45	Farthest North Harley Davidson	1995 Harley Davidson Motorcycle, VIN 1HD1DPL1XSY504483
TOTAL		$90,538.45

Id. at ¶¶ 10-29.

101. Additionally, the court concluded that Bonham had used World Plus assets to pay for personal expenses incurred on various credit cards. Id. at ¶¶ 39 and 41.

102. There is no question in my mind that Raejean Bonham, World Plus, World Plus, Inc., and Atlantic Pacific Funding, Inc., are one and the same entities. It is impossible to disentangle their financial affairs. I have not found any evidence that Raejean Bonham respected the corporate form or that the creditors knew or cared about the difference between these entities. As nearly as I can tell, the sole reason for Bonham bothering to sell contracts through Atlantic Pacific Funding, Inc. was to avoid the Alaska securities regulators. World Plus was an official dba of Raejean Bonham in 1993 and a de facto dba of Bonham thereafter until the corporation dissolved in 1995 at which point it once again became an official dba.

DATED this 22nd day of January, 1997

/s/Larry D. Compton,

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