Day, Date Tuesday, April 20, 2004

Q. Let me show you Exhibit 17. This is a check, front and back, copy of a check from C. Palmieri Enterprises, Inc. Fund Control. It was payable to Therrel and Delores Mortimore. And it's dated July 26, 2001. And the check is stamped "Nonsufficient Funds."

A. Yes.

Q. Does that document help refresh your recollection that you issued that check on or about the date that's indicated?

A. Yes.

Q. And that check was returned nonsufficient funds?

A. Yes.

Q. And you had, as of the time, Exhibit 17, the bounced Mortimore check --

A. Uh-huh.

Q. --- you hadn't told Mr. Shearburn or his son that you diverted the investor funds fromthe viatical settlements to other investments; is that right, sir?

A. No, I did not.

Q. You hadn't told him at that time?

A. No.

Q. And you didn't tell Mr. Shearburn about XL Capital Management; is that correct?

A. No.

Q. You didn't tell him about Jade Asset Management, did you?

A. No.

Q. You didn't tell him that the reason that these checks were bouncing was because the viatical settlement money had been diverted into other settlements.

A. No.

Q. Bob said in his testimony that this is the first point in time when he realized there was a serious problem, because Exhibit 17 represented a check that was supposed to pay an investor.

A. I remember that in his deposition.

Q. Okay. And that was the intention for this particular check, was it not, sir?

A. Correct.

Q. That was to pay an investor, correct?

A. Yes

Q. And Mr. Shearburn to your knowledge never sold another National Medical Funding viatical investment after July 24, 2000, correct, sir?

A. Not that -- no, not that I can remember.

Q. And you understood that throughout the relationship, Mr. Shearburn was relying on National Medical Funding to acquire policies, correct.

A. Yes.

Q. And relying on National Medical Funding to ensure that investor funds were used to purchase insurance policies, correct?

A. Correct, uh-huh.

>Q. And to properly account for how the proceeds of this purchase of the insurance policies were used.

A. Yes.

Q. Both going into the deal and paying out, is that right, sir?

A. Yes

Q. You didn't want Mr. Shearburn to know that Trust Management Services was not independent of C. Palmieri Enterprises, correct?

A. I wanted Trust Management Services to be an independent company.

Q. You wanted it to appear to the outside world as independent as possible, didn't you, sir?

A. Correct

Q. And in terms of Lawrence Reed, you wanted the world to believe that Lawrence Reed was a trust officer for Trust Management Services, correct?

A. Correct.

Q. And you wanted Mr. Shearburn to believe that, didn't you?

A. Correct.

Q. And you wanted Mr. Shearburn and his investors to rely on that, didn't you, sir?

A. Yes.

Q. And you never at any time disclosed to Mr. Shearburn or his investors that Lawrence Reed was not associated in any way with Trust Management Services, did you, sir?

A. No, I did not.