BISHA letter

Greetings all-
Just wondering what others are thinking of the letter BISHA mailed out last week?
-sue

8/13 Court Hearing Update

This morning's Washington County Superior Court's hearing to consider Horace's group's petition proved to be a somewhat routine and, overall, uneventful proceeding.

Ramona O'Brien-Brisson represented the groups position and concerns before Judge Crawford.

She clearly expressed that it wasn't the group's interest to seek party status in the current complaint before the court. Expressed as well was, that while it wasn't the group's intentions to be divisive, their collective interest was to have "control of the film" in that, in their belief, it would prove more expedient in creating revenue with which to begin repayment of lenders. Also acknowledged was an unawareness of Mac's full intention to complete the "existing" film which is, indeed, the Birth of Innocence.

Judge Crawford, while expressing understanding of the group's concerns, made clear that the court would only proceed with the existing securities case presently before him - reconfirming the upcoming trial is set for early November with a status conference ("behind doors") in three weeks time. He did as well indicate that, should they choose, the concerned party could address their position, independently, at a later time following the conclusion of the current litigation.

Regards,

Christopher

** "Second Film" Allegation **

It's essential that a key allegation being drummed loudly and incessantly is addressed and laid to rest.

Mac has stated clearly to all of us as recently as ten days ago (and several times before), that he's fully committed to complete the Birth of Innocence - the very film which has been produced to date. Yes, of course, with editorial and necessary refinements to complete but with the very imagery and narrative that have inspired so many of us. There is absolutely no plan to begin something anew at this time. At one time an alternate idea was discussed and dismissed in full recognition of lenders immediate financial needs and the absolute worth of the very project we've all been a part.

The petition forwarded by Horace's group has been built on the patently false supposition that Mac has somehow abandoned the "original" film. This is "tommy rot" plain and true. We indeed have an extraordinary film and it will be completed by the artist.

Equally critical to be aware - shared with us all by Bill Kinzie and even, at one time, by Horace's group themselves - no film distributor, no marketing agency or any film finance company will touch a film that is under the pall of legal litigation. It doesn't matter who's in control or who completes the film. Whether ongoing litigation concerns Mac or infighting among divided lenders, the result will be the same - a solid stop of any marketable film until full resolution is accomplished. This can be confirmed with anyone in the film industry and (most) lawyers.

This is why, if others are allowed "status", we're all in the soup even further. It cannot, and will not, "simplify things" for us in any way. It will not "free" the film to be completed. It'll only succeed in furthering the distance between us, our financial needs and a marketable film. As legal affairs and challenges deepen, more money is spent, more time lost, more continued hardship for us all.

I'm genuinely sorry. You may choose to shoot the messenger, but I'd like to be very clear - regardless of some lender's feelings towards me - what I share here is not about my personal feelings; it is not a sentiment and it's not about "aligning myself with Mac" - it's a terribly real legal and commercial fact that will impact each and everyone of us. And, as I've always believed, we all deserve to be clearly and truthfully informed.

Painful as it may feel with this divisive air between many - I'll maintain this truth again, it is only in our being United that we will continue to stand or surely, Divided that we will truly fall. This choice can only come from each one of us regardless of our differences.

Thank you again for your consideration during this challenging time.

With real regard,

Christopher

Party Status not yet granted

Ramona O'Brien-Brisson misspoke when she maintained that "party status" had been granted and that Friday would be a court review of their group taking control of the film. This is not the case.

It's been confirmed with counsel that no such decision was made or could be made without arguments of existing parties first being heard. This is what will transpire this Friday in Washington County District Court. And, to be clear, why it's important to let your opinion regarding "party status", (and the divisions it will create) be clearly known.

- CCW

This is so depressing. If I'm reading all of this right (and there's been so much I'm losing track), then the judge has already granted 3rd party status to the AC group?

Then it's all over. Everyone will spend the next 20 years in a legal morass that will suck the life out of everyone but the lawyers. And this is supposed to fix things, how?

please correct me if I've not got it right.
~Marna Ehrech

I support a Compromise

We (the lenders) are NOT standing together...demeaning verbiage has no place in attempts to unify. Egos exclude...humbleness includes.

I have listened to the ones in the AC group. I have been upfront about my disagreement with their plan of action, but I respect each of them and their opinion. These are good people that Christopher puts efforts in shooting down personally. There does not need to be a battle. Fighting is a choice that you make. There is absolutely no reason why good, reasonable, caring people cannot come together and compromise. There is no black and white issue here. Polarization will cause the ultimate damage to Mac, the film and our group.

It is not too late to come together, find the common ground and stand on it. Even if the ground is simply the small piece that acknowledges we all want debts to be repaid... that is enough for now.

I will not sign the petition and I will not support Christopher’s efforts as they stand now. I support a compromise.

** 3rd Party signature clairification **

As many are aware, Sharon Gutwin recently wrote the lenders group that your "vote" concerning Horace's group's "3rd Party status" should be voiced on the Birth of Innocence blog rather than email. Maintaining that an email is, in fact, less viable in court.

I've been in touch with Mac's counsel, (both before yesterday's letter and again this morning) and I'd like to reassure the many of you who've been in touch over the last day and any of you that would prefer to be heard via email that both forms are equally valid. You do not, nor should you, "vote" in both formats. The choice of either is yours.

I will be attaching a legal affidavit attesting to the validity of the compiled list of all lenders responding via email (your original emails will also be on file). These in turn will be added to the names of any of you choosing to record your "vote" online. The sum total, as mentioned yesterday, will be submitted to Mac's counsel by end of business day Wednesday. We hope to hear your voice in this critical issue.

Thanks again for your consideration and on behalf of both Sharon and myself, I apologize for any confusion.

Christopher

Problem With Voting Solved

To sign in, click the button “Follow with Google Friend Connect” under the heading FOLLOWERS on the right side of the page. This will sign you into the application and allow you to vote or to change your vote in the polls.

Petition signature misinformation

I am a member of the AC group and I will be a regular contributer to this blog, but for now I would like to correct the misinformation regarding the number of signatures on our petition.  We asked everyone receiving the petition by email to print the entire petition and send it in with their signatures on the signature page.  Apparently the court clerk counted the number of petitions of which there were seven, but containing a total of thirteen signatures handed in on Tuesday.  The second batch was handed in on Wednesday with six more signatures for a total of nineteen.  We are expecting more.

Third Party status

I totally disagree with the current petition by a subset of the lenders to ask for third party status. (Expecting these) lenders to complete this film is ludicrous. Even if they were skilled in film production, how can they possibly believe that this film can be successfully completed "by committee". I fully support Mac Parker remaining in full control of the production and distribution of this film. I feel that this approach has the best chances of repaying the entire set of lenders. I supported Mac's creation of this film when I first lent him money and that's the project that I continue to support.

Please make sure that the court is aware of my position. If you need anything else from me, please let me know.

Thanks for asking my opinion.
M.S.

We hope and pray they are not successful ...

We have not responded to most of the emails, but have pondered them all. It has been sad and maddening to watch it all unfold. -. has been in contact with Mac off and on for about 40 years. He has great respect and admiration for Mac’s honor and integrity. We had no question in responding to the request for helping with Mac’s dream.

We cannot imagine what it would do to Mac if BOI was ripped from him after 10 years of all his life’s energy and creativity being invested in its birth. We are going on the reports Mac sent to us as we have never been where we could actually see any part of the film.

Based on his reports we also came to believe in this message and the need for Mac to give birth to it. We have helped as we could along the way. That is our planned path until his dream comes to fruition – or until big government and small people successfully kill the forward movement, which we believe would kill a huge part of Mac’s soul.

If the government and small minded and corrupt people are able to end this 10 year march toward victory in telling the story of BOI, than human history will once again, prove our inability to stay the course, to see the ultimate victory in this good and true story and the man behind it, to see what is good and right for all of us. We hope and pray they are not successful.

Most sincerely,

E.

No to Third Party status

To Whom It May Concern:

I disagree with the current action by some lenders in requesting the court to grant them 3rd party status.

All of us lenders are in the same situation; we all wish to have our loans repaid. However, to create a division among the lenders at this point will only delay the ultimate repayment of our loans. I therefore urge the court to deny the request for 3rd party status.

Furthermore, although we are all anxious to see the movie "Birth of Innocence" finished, it is only Mac Parker's vision and creativity that will successfully complete the film. In the contract I signed with Mac upon making my loan, I agreed that I would not have any say whatsoever in the creative aspects of the film. I was willing to lend money to Mac precisely because I trust his skill as an artist. For a group of lenders to try to wrestle control of the film away from Mac at this point would violate the terms of our agreements and would undermine the ultimate successful completion of the film.


- SC

"No" to "3rd Party Status" ** Please Respond**

Good afternoon.

For those unaware, a small but disaffected group of lenders, guided by Horace Williams' agenda, continue to make efforts to take control of the Birth of Innocence. This group's July 26th email appeal to our broad lenders group was firmly rejected by many, myself included in my follow up of the 28th. Having gained no real traction with a wider base prior to the August 2nd hearing, the group has now taken an unsupported legal step by themselves. - The group has requested of the court to be granted "3rd Party status" in the present complaint of State of Vermont (i.e.BISHCA) vs. Mac Parker.

To be clear, this request, is to afford Horace's group "equal status" to that of Mac's interests, and the State's, as the case moves forward. If such status were to be granted by the court, it will pose serious risk to us all including, ironically, the very individuals forwarding the petition. Without question, this action will open a legal tarpit that will make our current legal challenges pale in comparison. It's a road to ruin and it's essential this petition not be granted. Please allow me to explain -

As of the August 2nd hearing we're finally moving forward. Judge Crawford made it expressly clear he wants a quick progression to trial (since scheduled for the first week of November). Importantly, he's also scheduled a private meeting in chambers with both counsels in thirty days. The Judge has created a fast track proceeding and as structured, it has real potential to bring the State to the table in consideration of a timely settlement. Something we've all been hoping and waiting for. Hopefully, affording Mac the essential step of the legal opening to allow him to effectively complete and distribute the Birth of Innocence and begin our reimbursement.

Now - just as the judge is finally involved and recognizing our importance of resolution, this proposed petition, if successful, will bring all forward movement to a grinding halt. If granted, the legal precedent will allow potentially every single lender to claim similar "status" - each and all to chime in with their own beliefs, perceived needs, complaints and redress to the challenges facing us all. Whereas we currently have two parties addressing the finer points of the issues and the law, this petition will be precedent for four hundred and fifty others to equally petition and be heard. We're looking at the reality of years of ongoing litigation, separation from any successful film and growing and deepening division among us. It only takes just one dissenting viewpoint to Horace's petition to make this unfold exactly as described here. One of all we lenders and we all suffer the result together - a full blown legal morass stretching into a long and uncertain future.

If the reality which this group's actions will create concerns you, it's essential your voice be heard. You're requested to respond to this email with a simple acknowledgement that you disagree with this group's petition for "3rd party status". To make known that, as a lender, it does not represent your best interests to have the case against Mac opened to others (for sake of the exhausting legal ramifications alone; not to mention any number of reasons and beliefs contained in their further intentions). Mac's defense counsel will be arguing against the petition and, as many of Horace's group have been in active conversation with BISHCA's agents, it's fair to assume the State will be in favor of their aggrieved status. It sows further discord and division among we lenders. Our collected names in unison will be an important tool in seeing that this misguided effort does not ensnare us all.

Should you agree; your name and "No to 3rd Party status" (or the like) in the subject bar of your email (or posted here) is all that's needed. It's not necessary to reply in-depth, your answer will be noted and forwarded to counsel. A timely reply is essential however, as names need to be compiled no later than Wednesday noon.

In closing, while it may sound contradictory to the thrust of this letter, this necessary step of ours (while against the wishes of a few) is very much about preserving our unity as an interested body with a common and valuable goal. The real need for legal resolution and a timely finish of an extraordinary film. A film it's director remains committed to in all respects as well the restitution that will begin to meet the needs of us all.

Thanks for your consideration and your support for a greater good.

Respectfully,

Christopher

Petition Submitted to the Court by Some Lenders

Petition

RE: State of Vermont Department of Banking, Insurance, Securities and Health Care Administration

(BISCHA), Plaintiff, v. Malcolm H. Parker, Defendant

Washington County Docket No. 881-11-09 Wncv

PREFACE:

A great many investors/lenders in Malcolm H. (Mac) Parker’s movie project Birth of Innocence are currently

experiencing dire shortages of funds to live on, and many also risk losing what amounts to their entire life's

savings, saved college funds, and their credit because of his mishandling of funds. There are many

investors/lenders whose lives are on hold and real people have been affected not only financially but also

mentally, emotionally, and even physically. It is clear to us, the undersigned, given what is known, that the

legal case could take years to resolve.

Mac Parker has recently abandoned his original movie, Birth of Innocence, which is the principle asset that

could be used to begin to repay the investors/lenders. This is the movie that all investors/lenders know, have

embraced for its message, and financed. This situation is due in large part to and precipitated by the

improper dismissal of the film’s editor of five years, Horace Williams (Little Castle Studio, Starksboro, VT) on

May 8, 2010. The film, the only asset, is now in limbo and without value as long as Mac Parker remains in

litigation, as confirmed by his new editor, Bill Kinzie (2muchMedia, North Ferrisburg, VT) who clearly stated

that he will not proceed on any new movie while Mac Parker is in litigation. If the present course of action

continues for any length of time, and the legal case does take years to resolve, it will be years before any

revenue stream even begins to appear. This would be disastrous for many of us. Many elderly

investors/lenders could literally die before funds begin to appear if this present course of action is allowed to

prevail.

Further, a large number of investors/lenders, who are not part of the investor email network, the project’s

main method of communication, are unaware that these fundamental changes have occurred and have not

been informed of the true condition of the project and their chances of being repaid.

Therefore, a creative solution for swift completion of the film as we know it is in order. On behalf of the

interest of all investors/lenders (known and unknown), we several investors/lenders do hereby petition the

court to grant control for completion, marketing, and distribution of the film to the investors/lenders or

trustees appointed to represent investor/lender interest as quickly as possible.

BODY:

We, the investors/lenders in the movie project Birth of Innocence, entered into our financial

agreements with Mac Parker, believing, and being led to believe:

1 - That we were funding the creation of a film that was solely Mac Parker's idea.

2 - That we were funding the creation of a film that was Mac Parker's sole occupation.

3 - That all funds borrowed from us would be applied only toward the production of the film.

4 - That funds borrowed from us would not be used for any other purpose.

5 - That Mac Parker would be completely honest in his dealings with us in all ways.

6 - That Mac Parker would be completely open with material facts that could affect our collective chance of

being paid back.

7 - That Mac Parker would manage the project in a businesslike, timely, and legal manner, with due

diligence.

8 – That Mac Parker would complete the film according to the original concept.

---

Page 2

Petition to the Court

Re: State of Vermont v. Malcolm H. Parker

Washington County Docket No. 881-11-09 Wncv

2

We, the investors/lenders in the movie project Birth of Innocence, believe that we have been misled

as to the truth in these ways:

1 - Over a period of ten years, not a single one of us was told from the start that this film was not Mac

Parker's sole body of work; that Dr. Louis James Soteriou was working in the background the whole time as

the dominant partner from 1999 until November 2009.

2 - Failure to reveal that there was a “science” behind Birth of Innocence called "Neuro Cosmo Theosis"

when it was represented that this film was meant to be free of all belief systems and to be theologically

neutral.

3 - That an amount approaching half the borrowed principal, totaling more than 3.6 million dollars (from 1999

through mid-February 2007,according to court documents)

1

, was constantly being transferred or paid to Lou

Soteriou, and not being applied directly to the creation of the film.

4 - That Mac Parker has not provided a complete and plausible explanation for the real reason this significant

amount of money was paid out to Lou Soteriou, his “silent partner”.

5 - That Mac Parker failed to inform us all of this enormous transfer of borrowed principal until impending

BISHCA discovery forced him to do so.

6 - That Mac Parker engaged scores of us in the effort to raise tens of thousands of dollars in legal defense

funds from December 2009 through the beginning of March 2010 without telling any of us of these 3.6 million

dollars in payments to Lou Soteriou.

7 - That Mac Parker constantly represented for a number of years that the film was nearing completion, when

it clearly was not.

8 – That the actual cost of the film is about $1.2 million (from 1999 through mid-February 2007, according to

court documents)

2

, a small portion of the money raised.

9 – That Mac Parker maintained a life insurance policy in the amount of $2.5 million, “sufficient to pay back

all providers of capital,” which the policy did not, and for a period of time his wife was the primary beneficiary.

10 – That Mac Parker abruptly dismissed Horace Williams, the film’s editor of 5 years on May 8, 2010, over a

personal matter – severely damaging the possibility of completing the film - but the investors may never

have been informed of this critical information if Mr Williams had not alerted them himself on May 26, 2010.

There is a very real possibility that this information was deliberately withheld because donations to the new

legal defense and production funds (founded on Williams’s budget) would have slowed or stopped

completely had donors been informed.

11 – That Mac Parker had abandoned the film as originally conceived shortly after the abrupt dismissal of the

film’s editor.

12 – That Mac Parker would be able to honor, and would honor, all investment agreements in full (including

interest) independent of the completion of the film.

In addition - we, the lenders/investors in the movie project Birth of Innocence, believe that Mac

Parker has committed these critical management errors:

1 - Mac Parker failed to exercise due diligence in researching and understanding the legal requirements

necessary to set up a project of this scale.

2 - Mac Parker failed to set up the project in a manner compliant with securities law, needlessly endangering

the interests of all concerned.

3 - Mac Parker made a critical error in removing the film's editor of five years at a time when everybody's

interest, even his own, would clearly suffer in terms of the stability of the completion of the project.

4 - Mac Parker removed the musical score - a decision that could cost us all another unnecessary $30,000

outlay and a delay of at least 3 months to complete the project.

5 - Mac Parker has embarked on a totally new speculative replacement to the original movie at a time when

completion of the original project is vital to all concerned.

1

BISCHA Motion to Sanction Defendant for Failure to Comply with Court Order (June 8, 2010). See Email dated

3/21/2010 to Julianna Parker, attached as Exhibit B.

2

Ibid 

Page 3

Petition to the Court

Re: State of Vermont v. Malcolm H. Parker

Washington County Docket No. 881-11-09 Wncv

3

NOW - BE IT KNOWN THAT BECAUSE:

1 – We, the investors/lenders, have been and continue to be misled in so many ways regarding the truth.

2 - Mac Parker continues to withhold the real reasons for payment and transfer of so much of our money to

Lou Soteriou.

3 - The film and project are currently at a standstill as a result of the May 8, 2010 abrupt dismissal of the

film’s editor, Horace Williams, Jr. of Little Castle Studio, Starksboro, VT, when the film was within 3 months

of completion.

4 - The new editor, Bill Kinzie (2muchMedia, North Ferrisburg, VT), will not work on the film until litigation

ceases.

5 - Mac Parker has abandoned his original idea, in which we all invested, and he has embraced Bill Kinzie’s

idea of producing a documentary of the story of making the movie.

6 - All the above have combined to cause financial and life conditions that are dire for a great many of us.

WE FEAR THAT:

1 - These factors, combined with the legal challenges facing Mac Parker, represent a very real and present

danger to the successful and timely completion of the film at a time when the collective needs of many of us

have become dire.

2 - More erratic behavior on the part of Mac Parker could lead to business deals for finding finishing funds,

marketing, and distribution funds, that are not in best interest of the investors/lenders.

3- If Mac Parker is allowed to direct completion of the film, the film may never be finished.

THEREFORE -

WE THE UNDERSIGNED, HEREBY PETITION THE COURT

TO FREE US FROM RELYING ON MAC PARKER TO COMPLETE, MARKET, AND DISTRIBUTE THE

ORIGINAL FILM BIRTH OF INNOCENCE.

TO ALLOW US TO COMPLETE, MARKET, AND DISTRIBUTE THE ORIGINAL FILM BIRTH OF

INNOCENCE, STARTING IMMEDIATELY.

We specifically ask the Court:

1 - TO ASSIGN RECEIVERSHIP, OR MODIFY THE CURRENT ASSET FREEZE, OR THROUGH ANY

OTHER MEANS AVAILABLE TO THE COURT, CONVEY TO THE INVESTORS/LENDERS COMPLETE

CONTROL OF THE PROCESS OF COMPLETING, MARKETING, AND DISTRIBUTING THE ORIGINAL

FILM BIRTH OF INNOCENCE, INCLUDING THE LICENSING OF ALL COPYRIGHTS OWNED BY MAC

PARKER.

2 - TO ASSIGN RESPONSIBILITY TO THE INVESTORS/LENDERS TO CREATE A STRUCTURE, SUCH

AS A COOPERATIVE WITH AN ELECTED BOARD, TO REPRESENT THEIR INTEREST AS FAIRLY AS

POSSIBLE, IN ORDER TO DIRECT THE COMPLETION, MARKETING, AND DISTRIBUTION OF THE

FILM.

3 - TO MAKE AVAILABLE ALL POSTAL MAILING ADDRESSES OF ALL THE INVESTORS/LENDERS.

WE BELIEVE THAT A LARGE PORTION OF THE INVESTORS/LENDERS HAVE NOT BEEN INFORMED

OF RECENT DISCOVERIES AND EVENTS.

WE, THE UNDERSIGNED, RESPECTFULLY REQUEST THAT THE COURT TAKE THE SERIOUSNESS

OF THIS PETITION INTO CONSIDERATION. TIME IS CRUCIAL

Petition of Seven Lenders Filed Yesterday

The following in an excerpt from the "Scheduling Order" submitted to the court 8/4

"The Court has received a petition to intervene from seven investors in the Birth of Innocence Project. These investors are currently representing themselves....the court has scheduled a hearing on the petition for 8/13/10 at 9am..."

Dated 8/4/10 and signed by Judge Geoffrey Crawford, Superior Court Judge.

I know nothing more about this latest legal maneuver than what I was given. I do appreciate getting this, but I would like to know more! Please someone explain what this means. I know about the petition we were shown through email a short while back. Is this the same? Did BISCHA facilitate the filing of this petition? Just as it is important for Mac to be communicating, I feel it is important for everyone who makes decisions that affect all of us to be transparent.

Decision on Motion For Summary Judgement

This is the Court's Decision on the Matters Presented 8/2. It was given to me in a PDF format, which I had changed to a text document. In this transformation, there are some misspelled words...sorry...

DECISION ON MOTION FOR SUMMARY JUDGMENT

This is a civil action brought by the Vermont Department of Banking, Insurance, and

Health Administration (BISHCA) seeking injunctive relief. restitution, and civil penalties

against Malcolm Parker for offering and selling unregistered securities and failing to

register as an investment advisor, all in violation of the Vermont Unifonn Securitics Act

9 V.S.A. § 5101 et seq. In an amended complaint, BlSHCA has added one count of

securities fraud and one count of offering improper investment advice.

Plaintiff has moved for summary judgment on the ground that the promissory notes

issued by Mr. Parker to his investors are not securities within the meaning of 9 V.S.A. §

5101(28).

FACTS

The essential facts necessary to a decision in this case are undisputed. Malcolm Parker is

a Vermont resident who has earned his living as a storyteller and producer of children's

videos with themes of farm life. Since 1999 be has been engaged in producing a feature length

movie called "Birth of Innocence." The movie is inspirational in nature and

encourages people to reconnect with their simpler and sincere inner natures.

Over the last ten years, Mr. Parker has raised approximately $10,000,000 to support this

venture. The movie remains unfinished. The money has been raised from friends,

neighbors, and through the Intemet. Working from his home in Addison, Vermont. Mr.

Parker has sent out hundreds of "Investment Agreements" to people who are willing to

lend him money. The Investment Agreements acknowledge the amount of the initial

investment and provide for an above-market interest rate. Some investors have received

their money back; approximately 790 people are presently Owed several million dollars.

Since this case was filed in November 2009, investigators from BISHCA and defense

counsel and staff have been compiling a detailed accounting of the amounts invested by

individuals. In the absence of clear records, this has been an arduous task. To date the

parties have worked alphabetically through the list of investors and have reached the

letter "E."

BISHCA's favor. In making this decision, factual disputes must be resolved in favor of

the non-moving party (BISHCA) and inferences which may be in dispute at trial must be

drawn in favor of BISHCA's favor.

In plain English, the issue to be decided is whether BISHCA has presented enough

evidence to go forward to trial or, altematively, whether the case is so deficient that Mr..

Parker is entitled to a final ruling in his favor without a trial.

1. Are the "Investment Agreements" securities which are subject to

regulation by BISHC A '?

The "Investment Agreements" are promissory notes. They are evidence of loans as

opposed to equity investments like shares of stock. They provide for interest rates and a

schedule of repayment. They are unsecured (except in the event of the borrower's death).

The court starts with the language of the statute. 9 V.S.A. ~ 5102)(28) provides in

relevant part:

"Security" means a note; stock; treasury stock; security future; bond ... "

This does not mean that all notes automatically qualify as securities. Some promissory

notes are subject to state regulation as securities; others are not. A personal loan by a

relative or friend is not subject to regulation. A broader sale of notes to investors may

qualify for regulation. Commercial loans by banks and finance companies are typically

excluded from the definition of securities. The court rejects BISHCA's initial argument

that the inclusion of the word "note" in section 5102(28) is sufficient on its face to extend

state regulation to all promissory notes.

In Vermont law, cases involving the definition of "security" are few. In Northern

Terminals, Inc. v. Lena, 136 Vt. 369 (1978), the Vermont Supreme Court rejected a claim

that the lease for a service station was an unregistered security. The court adopted the

decision of the U.S. Supreme Court in S.E.C v. ~Y.J Howey Co., 328 U.S. 293 (1946)

which had announced a three-pari test for determining whether an investment was a

security for purposes of federal securities regulation. i

The Howey test ,vas adopted by the Vermont legislature as part of the definition of a

security. See 9 V.S.A. § 51 02(28)(D): a security "includes an investment in a common

enterprise with the expectation of profits to be derived primarily from the efforts of a

person other than the investor and a 'common enterprise' means an enterprise in which

the fortunes of the investor are interwoven with those of either the person offering the

investment, a third party, or other investors." The Howey test was rejected as irrelevant

to the determination of whether a note was a security in Reves v. Ernst & Young, 494

U.S. 56 (1990), and for that reason this COLlJi does not seek to apply the Howe)' criteria to

the facts of this case.

3

"Motivation" in this context means the purpose of the transaction 2 Both sides agree

that the purpose of the "Investment Agreements" was to raise money for the movie

project. They disagree about whether the investors were primarily interested in financial

retum. Mr. Parker relies upon affidavits from a number of enthusiastic supporters who

state that they wished to support his creative venture and were unconcerned about making

money. On the other hand, the "lnvestment Agreement" itself is exclusively about

making money· in theory, at least, quite a lot of it at interest rates of 15 .. 20 percent or

more.

The question of "motivation" is primarily directed at distinguishing betweeen notes issued

to support a purchase such as an auto loan or for some other limited purpose and notes

issued to raise capital for an entelvrise. On this issue, it is clear that the purpose or

motivation of the "Investment Agreements" was to raise funds generally for the movie

project. This is a factor which tends to identitfy, the "Investment Agreements" as

securities.

2. Plan of distribution of the notes

The Reves analysis requires the court to consider the plan of distribution of the notes. In

this case, as in Reves, the notes were offered to the public through advertisement and then

held only by the original investors. There is no evidence that they were sold to third

parties or where in any other way traded on an investment exchange.

Whether a promissory note trades on an exchange is not dispositive. The wide offering

of the notes to hundreds of people is a factor which makes it less likely that the notes wil1

be found to resemble one of the "family resemblance" exceptions. In addition, there is

some evidence, particularly in the "Investor Update # 9" issued by Mr. Parker in the

"Summer, 2008," that existing investors were invited to locate additional investors

willing to contribute money in a pyramid structure.3 This invitation to provide leads to

2 "If the seller's purpose is to raise money for the general use of a business enterpnse or to finance

substantial investments and the buyer is interested primarily lJ1 the profit the note is expected to generate,

the instrument is likely to be a 'security'. If the note is exchanged to facilitate the purchase and sale of a

minor asset or consumer good, to correct for the seller's cash· flow diffIculties, or to advance some other

commercial or consumer purpose. on the other hand, the note is les sensibly described as a 'security. '"

Reves. 494 U.S at 66.

] Mr Parker wrote:

One of the most time-consuming parts of fundraismg has always been finding new investors, and

here IS where I am asking for the favor.

lf you feel good about your experience investing in  Birth a/Innocence, would you be willing to

brainstorm a list of peop1c you know who might also be mterested'? Some of you have done this

already, and it is a big help to me. I am happy to do the follow-up work - to have the

conversations with people, to send them information. even to invite them to a screening - but it will

save me a lot of time and energy to simply' have the names and numbers of people who might be

receptive to a call.

Another way to approach this 1S for you to invite a group of friends/potential investors to a

screening at the studio. Most of you invested "slght unseen," but at this pomt. the film IS  very...

the definition. To the extent that some of the factors are in doubt. a trial is the

appropriate way to develop the factual record and resolve factual disputes.

II. Is there evidence that Mr. Parker could be found to be an "investment

adviser" within the meaning of Vermont securities law.

Mr. Parker makes two arguments in support of his claim that he was not required to

register as an investment adviser within the meaning of 9 V.S.A. ~ 5403. The first is that

since the "Investment Agreements" were not '·securities." the sale of these instruments

does not require registration. The court has already dealt with this issue.

The second argument is that there is no evidence that he provided advice for

compensation. To put it mildly, this is a factually disputed issue. There is evidence that

his wife received approximately $60,000 and that he supplied his family for a decade

through the sale of the notes. This is clearly an issue for trial.

m Issues related to Counts IV and V

Mr. Parker also argues that he is entitled to summary judgment with respect to Counts IV

(Securities Fraud) and Count V (Prohibited Conduct in Providing Investment Advice).

These are the counts added in the amended complaint.

With respect to the fraud count, he argues that there is no evidence of false statements of

material fact. BISHCA points to the apparent lapse of the life insurance policy, the use

of funds for personal use, and the transfer of $3.6million to a "silent partner" as potential

omissions or false statements. If  true, anyone of these issues is a potential basis for a

finding of false statement. These are factual issues for trial.

With respect to Count V, Mr. Parker raises the issue of compensation again. He argues

that he cannot be termed a person who "advises others for compensation" within the

meaning; of 9 V.S.A ~ 5502 because he charged no fees and rendered no advice in ~, ~

exchange for compensation.

BISHCA points to evidence of significant economic benefit to Mr. Parker. This is an

issue for trial.

CONCLUSION

The court denies the defendant's motion for summary judgment. The case shall be set for

trial during the first two weeks of November 2010.

Dated: 8/4/1 0

Geoffrey Crawford,

Superior Court Judge

12 years and counting...

When my husband and I started investing/lending it was at the encouragement of a friend who knew Mac and his family and we met him, liked him and decided to give him a significant sum of $ to invest in his “project” To be perfectly honest with you, I didn’t really know what is was all about – all I heard was “15-20% return” and “trusted Vermont Family” – at the time that seemed good enough. It didn’t hurt that I had met Mac at my Agency retreat a year earlier where he came to do a folksy VT show – and I laughed myself to tears. When I was asked to invest I remembered that special person with a gift for story-telling and deep roots in the area. And there was the money, of course. But it was years before we saw a return. My husband I and I are both social workers who are perhaps overly used to living lean and “investing” in things (and people) that don’t necessarily pan out - just set it aside.

After a time the returns started coming back – and we invested again – and the return-investment relationship became a pretty comfortable pas-de-deux. Each year when we had $ we would send it over and we would get regular returns. Do you think my husband and I ever looked at each other cross-eyed and thought: “Where do you suppose this $ is coming from?” You bet we did. And we stuffed it and smirked all the way to the bank and put up again – when we could – when Mac asked. We made – and shared – a significant amount of $ with Mac. Over the years I brought my mom in – who also received healthy returns, and then my brother. But….just then the spell had broken. The house of cards fell down, the emails started and the “reality” of the folksy letters and not exactly Wall-street type organization began to unfold and I have to say my husband and I took a deep breath, counted our blessings and stepped back. For us – now – we are only “a little in”. We made more than we lost. My brother lost a lot. My mom is just fine. We all invested what we could – when we were prepared to never see it again – because it was a risk.

For me – when I started to licked my little wounds from investing-lending-whatever - what made a huge difference was sitting in a dark room in Starksboro and watching a late version of The Film. It was a huge success as far as I was concerned. It was elegant and rich and although I was beginning to suspect that our investment/lending dance was spiraling into limbo – I was re-engaged in being a part of the process. It was fun to see Mac so obviously proud of his beautiful little film – he should be. It is precious.

Then of course the shit hit the fan. Who was Lou? Who was Horace? Who is Christopher? Who the hell is Mac Parker? I went through all of this with every one of you. I took Mac to task, I contacted Horace and Mac to try to mediate between them while I just hated the fact that yet another personal relationship was being broken down and dissected by a gaggle of strangers - us. I wondered - similar to you? - if it was possible for Christopher to be so eloquent, smart AND supportive of Mac given his proximity. Who does that? I had a lot of worry and suspicions. I finally believe he is that rare animal of devotion and intellect who has taken from his deep conviction and energy stores to try to shape us back into something good – as I think we were when we started. I think it’s shame that we have lost Christopher's voice – yet I am grateful for the time he gave. It was a terrifically selfless act and few of us stepped up to publicly thank him for his hard work and for weathering the storm we all created with our positions and personalities. I think the blog is a good, natural next step and many thank yous to Sharon for setting it up and taking time to coach us on its use.

From where I sit I see Mac pretty much the same as I always did. Earnest, vaguely irresponsible and fiercely devoted to his film and lenders/investors. I think we stand a good chance to get our $ back – and more importantly – to have our special little movie have it’s coming out to the world – if we allow Mac to clean himself up and get his ship back on course.

I do understand BISCHA’s and the AC Groups perspective – I think they truly believe that we have all been hoodwinked and played for fools. But really – when we were ALL getting those massive checks with the unseemly percentage earnings – did any of you really think that was happening by magic? Even a little Burlington-bound social worker like me can work out the math of where all the money went. It went to US. YOU. The people you invited to Invest. Years and years of high payments – way too high (….yet….many of us suspected this….) went out to all of us over the years. We all used that money and now some of you wonder where it went? Unless one of you has seen Mac churning up Addison County in a New Red Ferrari I think we can all be pretty secure in the fact that he - irresponsibly - mingled the assets, but didn’t abuse us or the use of the money. That he tried to appease us – and keep the money coming in – by selling us the hope of future returns on our investments for our loans, is clear. But we helped make that little storm happen, too. And that he made a very, very bad decision to give some of this money to a very unstable person (Lou). But – we gave it to him and every one of us has to deal with the repercussions of our decision.

I feel terribly for those of you who have lost huge amounts of money – and I understand that I cannot touch how foul and broken that would feel if I was in that position. I don’t know what I would do if my future had been destroyed by Macs carelessness, if my children couldn’t go to college or if I couldn’t retire the way I had saved for my whole life. I cannot speak to that other than to say that anger and disgust is perfectly real and deserved. I do think that those of you who are the most damaged by this terrible turning of attention from The Movie to The Man have all the justification in the world to feel the most hurt, to lash out the most violently and to splinter into upstart, angry retaliatory groups. It happens in business, too. Sometimes investors/lenders get angry and try to take over. I wish you wouldn’t – but as I have said – I don’t have your specific urgency or experience and I don’t share your need to take the rudder. I don’t think anyone else can steer this broken vessel better than Mac – who brought us to this lost island while each one of us paddled blindly with him. I am a little embarrassed at times to be a part of this debacle – and I am also proud (yet mystified) by my ability to endure another day of being a part of insecure and bewildering event of the Birth of Innocence. It has been a remarkable experience to be brought into this fiery and very raw exchange. There are no simple answers from our perspective – so I will continue to buckle down.

To approach any of this as black and white is irresponsible. There are shades of gray here – in each of the issues and people; Mac and the Lou, Mac and Horace, Mac and his Mad-accounting practices. But in my field I have stood across from a lot of liars – and although you never really know who has a clown suit hiding in their closet (with all due respect – clowns freak me out) – I have sat across from Mac and seen his earnestness and “truthiness” and I still see an honest man. He answered my candid questions – on several occasions - and I would rather continue to support someone who I know is good, frustratingly flawed and braver than most than be persuaded by money (alone), fear and further greed.

None of us are going to get out of this unchanged. I am aiming to be a little better.

Blessings to you all,

Elizabeth Sightler