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I wine which is at odds with what has occurred over the last six months, and over the last 2 two years, where the Debtor has been unable to even pay trust fund taxes due to cash flow 3 restraints. It is interesting to note that the Debtor values Mr. Leitz' wine inventory in their a possession at $28,320, or $247,503 full projected value, and then notes however that Mr. 5 Leitz has apparently "abandoned" that inventory. Questions arise as to whether the 6 inventory is worth much at all if Mr. Leitz is simply abandoning it. 7 17. The Debtor then takes what appears to be a significantly inflated $423,021 8 figure for the value of its own wine inventory, and claims on the March 2009 inventory 9 that the projected value of the inventory is $1,942.114. This is fanciful. 10 18. The Debtor initially reported to the Colafrancescos that the value 'of its 11 fossil/mineral collection was $800,000. On its Schedules, the Debtor states that the value is $300,000. At the 341 meeting, Ms. Litchfield testified that the $800,000 value for 12 fossils previously on its books was "overstated" and that the $300,000 figure was "a more 13 fair and accurate accounting." The Debtor agreed to provide a detailed report of its fossils la and minerals collection, but have not done so. See Phinney Declaration, Exhibit 2. 15 19. The Debtor is losing paying tenants and is running the operation into the 16 ground. The March operating report shows rental income of $16,676, although the rent 17 roll (also attached to the March MOR) shows total monthly rent owing of $27,489.39. 18 Excluding Gigolos and Central Valley Construction, the total should still be $22,000. The 19 Litchfields have earned a widespread reputation in the wine community for dishonesty and 20 sharp business practices. Their management has caused numerous tenants to vacate the 21 property, and all but forecloses their ability to find new tenants. 22 20. Finally, the Debtor has employed John McKinley as special counsel in this 23 case in connection with the Colafrancesco adversary. Mr. McKinley represented both the za Debtor and insider Karyn Litchfield in state court, and is currently representing both the 25 Debtor and Karyn Litchfield in the adversary proceeding. He has objected to the Colafrancesco's 2004 subpoena as to any documents "relating to the adversary 26 proceeding." Mr. McKinley's employment application did not disclose that he had 27 previously represented the insider of the Debtor along with the Debtor in the state court 28 litigation, nor did he disclose that he is currently representing an insider of the Debtor 128/000011IRP/A0075902.DOC) 6