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					                                 SUPERIOR STATE OF VERMONT
                                   WASHINGTON COUNTY, SS.


STATE OF VERMONT DEPARTMENT
OF BANKING, INSURANCE,
SECURITIES AND HEALTH CARE
ADMINISTRATION,
                Plaintiff,                           Washington Superior Court
                                                     Docket No. 881-11-09 Wncv
       v.

MALCOLM H. PARKER,
               Defendant.

            VERIFIED STATEMENT OF UNDISPUTED MATERIAL FACTS
              IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

       Defendant Malcolm H. Parker (―Mac‖), by and through his attorneys Langrock Sperry &

Wool, LLP, submits the following Statement of Undisputed Material Facts:

       1.      Well-known Vermont storyteller and artist Mac Parker has been a household

name in homes throughout this State and others for many years. He has an established track

record of excellence decades long.

       2.      Mac has historically commanded video sales on the order of almost 100,000

pieces, even without the benefit of internet and viral marketing available today.

       3.      During the earlier part of his career, Mac focused on a number of audio projects

including, but not limited to:

               a.     ―The Givin’ War‖ (Audio cassette, storytelling, 1987). A mix of
                      humorous and poignant stories about farm and rural life. Sold
               approximately 10,000 copies at $10-12 per tape.

              b.       ―Changes‖ (Audio cassette, storytelling, 1989). Tales of rural
              living, including many people's all-time favorite, "Arnie's Hay Truck."
       Sold approx. 6,000 copies.

               c.     ―Wild Woods‖ (Audio cassette, storytelling, 1992). All new stories,
               including ―The Wagon Wheel.‖ Sold approx. 8,000 copies.
                d.      ―Sex Education‖ (Audio cassette, storytelling, 1997). Final collection
                of stories. Sold approx. 5,000 copies.

        4.      Mac moved into video projects next. It is worth noting that his video cassettes

became available before internet advertising and marketing were really available. His children’s

video cassette, ―Let’s Go To The Farm,‖ was originally filmed in 1994, capturing a year of life

and work on Elgin Spring Farm in New Haven, Vermont, with the Bessette Family and Mac

Parker. The film won top awards, including ―Best Children's Video of the Year‖ by the

National Library Association, Parent's Choice Award highest rating, and       Oppenheim Toy

Portfolio's Platinum Award.

        5.      It also garnered glowing reviews from the national press. Publisher's Weekly

praised Let's Go To The Farm as ―...a superior live-action video that will have even the most

jaded viewer riveted to the screen.‖ Los Angeles Times wrote, "Farm takes top honors among

several new offerings... Beautifully filmed, informative, and narrated with easy humor..." And

the Washington Post: "Farm's carefully crafted child level script, camera work, tight editing,

and soundtrack are PBS ready..."       "Let's Go To The Farm is a winner." wrote Providence

Journal-Bulletin.       This video sold approx. 70,000 copies nationwide at $15 per video

cassette. It continues to sell well to this day.

        6.      Another of Mac’s video projects was ―Farm Stories for Families (1999).‖ This

children's storytelling video/live performance featured a family-friendly selection of farm and

rural stories. Filmed in conjunction with Vermont Public Television (―VPT‖), it was sold to

VPT in 1999 for $90,000.

        7.      The new DVD version of ―Let's Go To The Farm” was released just last month,

with 2% of profits from sales going to direct aid for family farmers. Although it has only been

available for a few weeks, it is expected to do very well.
        8.      Mac’s latest project is called Birth of Innocence. Mac has described the project

as follows:

         Birth of Innocence is a narrated, feature-length film about the power that is
         waiting inside every single one of us. It is a reminder that we all have the
         potential to become infinite and eternal beings, with creative abilities beyond
         our memory, yet within our reach if we are willing to go inward and call them
         forth.

         The voice of the narration speaks directly to our own long-buried essence, to a
         deeper sense of ourselves and of our purpose in life. More than two years in
         the filming, the visuals are a stunning combination of human images and
         nature cinematography. An original score being written for the project adds a
         richness and depth of feeling that only music can evoke.

         The resulting film offers a loving reflection of our own true greatness, “close
         as breath.” It is a calling into our absolute stillness, to the abundant,
         outrageous and transformative power sitting within us, waiting to be brought
         forth into our lives, through our innocence.

        9.      Birth of Innocence is in the final stages of post-production. Mac projects the film

can be completed in two to six months, depending.upon how much time Mac and his editor,

Horace Williams, Jr., of Little Castle Studios, are able to devote, depending upon how much time

Mac and his editor, Horace Williams, Jr., of Little Castle Studios, are able to devote to the work,

given the constraints of this legal proceeding; and, how much time and effort various

individuals are able to contribute, given the current situation in which Mac is unable to pay for

anyone’s work on the film. Little Castle Studios is continuing work on the film without pay.

Once this final phase is complete, the film will be submitted to film festivals and potential

distributors, unless this is precluded.

        10.     Mac has been working on Birth of Innocence for approximately ten years. During

that time, he has borrowed funds from numerous lenders in private loan transactions.         The loan

funds have been used, inter alia, for consulting fees and production costs associated with the

film at every stage, to cover cash short-falls during the project, to service or retire existing debt
and to provide a modest living for Mac’s family while he worked on the film.

       11.     Part of Mac’s plan for repayment of the money loaned to him involved using

proceeds from the sales of DVD’s of Let’s Go To The Farm. This was originally filmed in

1994, capturing a year of life and work on Elgin Spring Farm in New Haven, Vermont, with the

Bessette Family. The film won top awards, including Best Children's Video 1995 Notable

Award from the American Library Association; Parent's Choice Award Winner; Oppenheim

Toy Portfolio Platinum Award, and several others. It also garnered glowing reviews from the

national press. The new DVD version of Let's Go To The Farm was released in December

2009, with 2% of profits from sales earmarked for direct aid to Vermont family farmers.

       12.     In addition, Mac owns a domain for an e-commerce store package that will have

as one of its anchors the Let's Go The Farm DVD, but will also include other high quality

family-friendly products to sell. These products should include another children's video made

by Mac with Vermont Public Television (―VPT‖): Farm Stories for Families. VPT presently

owns the rights but would likely provide a good wholesale price.

       13.     Mac also own the rights to two additional Vermont StoryWorks Childrens’

videos: Baby Animals and How to Build a Playhouse. Other products would include books,

tapes, videos, toys, clothing items, baby products, natural health items, nutrition resources, and

other specialty Vermont products, as well as special family-friendly products from other top

quality producers beyond Vermont.

       14.     In addition, Mac produced four full-length storytelling cassettes during his years

as a storyteller and is presently engaged in discussions to produce a ―Greatest Hits‖ CD of these

stories. These will be sold in the e-commerce store and locally. Horace Williams, Jr., of Little

Castle Studios, will produce both the ―Greatest Hits‖ CD and a CD of both new and newly
re-recorded stories.

        15.     Finally, there is Birth of Innocence. This is a full-length feature film with

breathtaking photography, an inspiring message, and the capacity to move its audiences to open

more deeply and more gratefully to the precious, potent flows of life inside them and all around

them. The film speaks directly to the human condition, overcoming hardship and obstacles and

realizing the full potential of one’s life.

        16.     The Birth of Innocence project is expected to generate income in several ways.

The film is in the final stages of post-production and will then be available for distribution and

marketing. It is a desirable package for a producer, who could sign on to the project and

provide capital upfront, in exchange for producer credits and eventual profits. Mac also plans to

write a book about the making of Birth of Innocence. What is envisioned is a story about the

creative process behind the film; about a process of awakening to a greater consciousness;

about the extraordinary sincerity, good will, trust, courage and creativity of people from all

walks of life who have been involved with the project in countless ways and whose lives have

been touched by it.

        17.     In March 2003, Mac Parker purchased a Midland National Life Insurance

Company Policy through the Fleischer Jacobs Group (FJG), one of Vermont’s largest insurance

providers. The primary beneficiary of the $2,500,000.00 death benefit is a local law firm, as

escrow agent. An escrow agreement executed by the firm explains that ―Parker has executed

certain promissory notes in favor of various parties,‖ designated in the agreement as ―Project

Lenders.‖ (emphasis added) It specifically documents that ―Parker has obtained life insurance

on Parker’s life in order to help assure the Project Lenders that they will be repaid in the event of

the death of Parker prior to completion of the project.‖ The agreement directs the escrow agent
to ―disburse sums from the Escrow Fund to repay the unpaid balance of any promissory notes

executed by Parker in favor of Project Lenders.‖ (emphasis added)

         18.    On Friday, September 25, 2009, Mac received a telephone message from a

BISHCA investigator. He was able to reach the investigator on Monday, September, 28, 2009

and was asked to come to Montpelier for a meeting to answer some questions about Birth of

Innocence. Mac readily agreed and a meeting was scheduled.

         19.   On October 1, 2009, Mac met with BISHCA investigators, who thanked him for

coming in and asked him to tell them about the Birth of Innocence project. Mac talked

extensively about the creative concept behind film, the process for its creation, his experience of

the project coming together, its near-completion status, the people who had loaned him money to

help him make the film, the loan repayment terms, and his understanding that he was legally

bound to repay the loans regardless of the outcome of the project. Mac repeatedly asked the

investigators whether this was helpful and whether this was the type of information they were

seeking and was assured that it was both.

         20.   Following Mac’s account regarding the film, he was informed that there might be

violations of Vermont securities laws in the agreements whereby individuals had provided funds

to Mac and expressed concern about whether it was permissible for Mac to continue to raise

money until BISHCA’s investigation was concluded. When Mac responded that he had specific

obligations, both to the film and to his lenders, the investigator’s response was:   ―I am not

telling you to raise money, and I am not telling you not to raise money. I am telling you that

your fundraising activities to this point will be viewed in one light, your future fundraising

activities after this meeting may be viewed in another light.‖ He did not explain what this

meant.
       21.     At the conclusion of the interview, the investigators thanked Mac for coming in

and for being so open in speaking with them. They assured him that their commitment, like his,

was to protect the people that had loaned money. Mac offered his full cooperation with their

investigation, explaining that if he had unknowingly violated any rules, he would certainly

bring himself into compliance and cooperate with the State in any way necessary to achieve this.

He stated unequivocally that his primary concern was that the people who had supported him and

his work not be violated or harmed in any way.

       22.     Also at the conclusion of the meeting, the investigators requested that one of them

be allowed to come to Mac’s home to review his financial records. Again, Mac readily agreed.

Following the departure of one investigator, the other investigator expressed his relief at the tone

of the meeting and noted that it could have gone very differently and that if the other investigator

had not liked the tone of what Mac said, Mac ―could have been shut down immediately.‖ He

did not explain what this meant.

       23.     Because the investigator was going to be traveling for a couple of weeks, it was

agreed that Mac would call the following week to schedule the next meeting. The investigator

commented that it might be sensible for Mac to speak with an attorney. Mac had no idea why

he would need one. He chose not to hire a lawyer, still believing that a truthful, cooperative

approach with the State would be sufficient to rectify any mistakes that might have occurred.

       24.     Following the meeting with BISHCA, Mac continued post-production work on

Birth of Innocence as well as other sources of planned income to complete the project and to

fulfill existing financial commitments. Among other things, he continued to move forward

with the plan to release his ―Let’s Go to the Farm‖ video on DVD just before the holidays.

Unfortunately, the release was ultimately delayed by BISHCA’s actions in the instant
proceeding.

       25.     Mac spoke with BISHCA investigators again via telephone at the appointed time

but a second meeting was not scheduled due to the investigator’s unavailability. In addition,

Mac was in the final push of post-production on Birth of Innocence and it was going to take him

some time to pull together the financial records that the State wished to review.

       26.     After numerous telephone conversations, a second meeting with BISHCA was

scheduled for November 12, 2009. Mac again traveled to BISHCA’s offices in Montpelier, this

time bringing his financial records. Mac explained his plan for repayment of existing loan

obligations including, inter alia, marketing the ―Let’s Go to the Farm‖ DVD; and again

expressed his willingness to take whatever steps might be needed to achieve compliance if in fact

some violation had occurred. He also repeated his offer to allow oversight by the State as he

moved forward with the Birth of Innocence project. Finally, Mac expressed his sincere belief

that the State’s goals and his own were ultimately the same – to protect the interest of the people

that had provided loans to help him make the film – and he stated his agreement to work

together with the State to resolve any issues and achieve this common purpose.

       27.     At the conclusion of the second meeting, Mac turned over two banker’s boxes

filled with his financial records to BISHCA and explained how the files were organized. He

agreed, without hesitation, to let BISHCA retain the records for copying. At one investigator’s

observation that there was a contract that appeared to have been executed since Mac’s last

meeting with BISHCA, Mac again explained that he was continuing to work on the film and that

he applied loan funds to meet debt service obligations, in addition to making payments for direct

project costs such as consulting fees, studio time, film crews, and the like. He again assured

BISHCA that his primary goal was to ensure that he did not violate commitments that he had
made to lenders. Mac left his financial records with the State over the weekend, with the

understanding that they would be returned to him the following week. Before he departed, he

was told that he should retain a lawyer.

       28.     Although he still did not understand why he needed one, Mac contacted present

counsel after the meeting. Counsel in turn contacted BISHCA to obtain information and, at

Mac’s direction, reiterated his willingness to work cooperatively with the State to remedy any

violations which might have occurred, as quickly and efficiently as possible so that he could get

back to work. During Mac’s first meeting with counsel on November 18, 2009, counsel

received via e-mail, the State’s Complaint, Ex Parte Motion and Memorandum in Support of

Temporary Restraining Order and Asset Freeze, the Court’s Order enjoining Mac from soliciting

or accepting funds for the Birth of Innocence project and freezing all assets held by him or on his

behalf, and a Notice of Hearing.

       29.     Mac promptly notified the lenders of BISHCA’s complaint and the Court action.

He then wrote an Intent Statement.‖ Exhibit E. What followed was an immense outpouring of

support and goodwill for Mac, by the very people that BISHCA purports to represent. When

lenders learned of BISHCA’s investigation, they were supportive of Mac’s intent to come into

compliance with any State regulations that he might inadvertently have violated. When they

learned that the State had obtained an injunction freezing Mac’s assets and prohibiting him from

soliciting or accepting any funds to complete the final steps in the post-production phase of Birth

of Innocence, lenders formed a ―Lenders Network‖ and the Birth of Innocence Legal Defense

Fund was created to assist Mac in mounting a defense against the State. To date, the bill for

Mac’s legal defense totals $39,850.00.

       30.     Mac has stated, and the individuals who loaned him money agree, that they all
understood the transactions with Mac to be loans, which Mac agreed to repay unconditionally,

regardless of the success or failure, or even the completion, of Birth of Innocence.

       31.     Not a single lender to date has asserted that they thought they were purchasing a

security or purchasing some specific interest in the film or its profits. Not a single lender has

stated that they believed repayment under the terms of the note executed by Mac was tied to the

film’s completion or performance. Not a single lender has alleged that they have suffered

financial damage as a result of Mac’s actions, as opposed to the State’s. Not a single lender has

accepted the State’s assertion that this action is necessary to protect them.

       32.     Numerous lenders have submitted affidavits in support of Mac. While their

stories are different, the common thread is this: Mac is a man of tremendous integrity. He was

always clear with lenders that the transactions involved were loans that would be repaid with

interest unconditionally. Mac met his financial obligations to the lenders’ satisfaction until the

time that BISHCA intervened to ―protect‖ them. Birth of Innocence is not a scam. It is a very

real product with tremendous potential value. This proceeding needs to end so that Mac can get

back to what he is supposed to be doing—finishing Birth of Innocence.

       33.     As he always has been, Mac is completely committed to fulfilling his promises

and his commitments to his lenders, regardless of the obstacles. He is asking the State to join

him in a cooperative effort to succeed in this goal, instead of pursuing an adversarial approach

that greatly impedes this effort.

       DATED at Middlebury, Vermont this ____ day of February, 2010.

                                                 LANGROCK SPERRY & WOOL, LLP



                                                ___________________________________
                                                 Wanda I. Otero-Ziegler, Esq.
                                                 PO Drawer 351, 111 S. Pleasant Street
                                               Middlebury, VT 05753

                                               Attorneys for Defendant Malcolm H. Parker

           DATED at Middlebury, Vermont this ____ day of February, 2010.

                                               ___________________________________
                                                Malcolm H. Parker



STATE OF VERMONT

ADDISON COUNTY, SS

           At Middlebury this _____ day of February A.D. 2010, personally appeared Malcolm H.

Parker, and she acknowledged this instrument, by his sealed and subscribed, to be his free act

and deed.


                                       Before me _________________________________
                                                 Notary Public
                                       Commission Expires:     2/10/2011


509470.1

				
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