March, 1986

RE TAX AND FINANCIAL PROGRAMMING 1981 PARTNERSHIPS

Dear Investor:

Many of you have received a 30 or 90 day letter from IRS which claims a tax deficiency by denying all benefits from your partnership's trading in government securities. These partnerships were organized, advised, administrated and traded by John Disterdick and his companies, Tax & Financial Programming, Inc. (TFP], Data Programming Services [DPS], and International Government Securities [IGS] [Referred to as TFP].

IRS has taken the position that the partnerships have failed to prove that the trades took place. In addition they claim that you knew this when you entered the partnership and were a conspirator in this nonexistent [fraudulent] trading. The failure of certain securities dealers, along with the inaction of various individuals who were employed or had advised TFP to assist you in making these trades and verifying that these trades were real, at market prices, and had profit potential may result in your inability to claim the losses and expenses from your partnership and subject you to penalties and interest.

We have been challenging IRS's position in examination and have provided copies of all Partnership returns, Confirmations, and Accounting records of each Partnership to IRS. We have provided briefs supporting the trading and tax returns with IRS appeals section, and when requested, have filed the necessary Tax Court Petitions for individual investors.

In addition, we have been trying to monitor John Disterdick's [IGS) litigation against Leonard Weller, Joseph Karroll and Sandia Financial Instruments, Inc [Sandia]. In this case Disterdick claims these defendants defrauded him [as IGS], and in effect you, by misrepresenting and overcharging for the trades. You probably received a letter dated July 12, 1985 from John Disterdick where, among other things, he reported on the "Sandia litigation" stating that "discovery is continuing with lengthy depositions and material requests along with extensive accounting analysis", and that he would continue to pursue the interests of the investors as "best he could". Yet because of an agreement between TFP and the Defendants no data from this discovery can be released to assist you before IRS. In Fact, IRS claims that the trades did not occur because of language contained in the suit. Therefore this suit for "your benefit" has caused you great harm. Return to index

Because IRS's position is that the trades never took place and our own investigation of the IGS/Sandia litigation shows that no aggressive action has been taken by Disterdick for the benefit of the investors we believe immediate aggressive direct action by each Partnership is necessary. To that and we have been discussing, with various law firms, methods of protecting the rights the Partnership obtained in purchasing government securities through TFP.

Our firm [Sandra Eve Kardos, CPA] has retained Wyman Bautzer Rothman Kuchal & Silbert ("Wyman") to determine the feasibility of Litigation on behalf of the partnerships who would care to participate. This suit is needed to refute the IRS position that you were a Co-Conspirator and to prove that the trading was real. Wyman is a large prestigious firm with an excellent reputation for being aggressive litigators. A few of its clients are ABC, MGM/UA and some of the "Bell" Telephone Companies. Wyman does not currently represent the partnerships, but is willing to represent them.

We are dealing with a very complex case with a number of defendants and, of course, a well financed defense. Wyman will prepare a suit as follows [assuming a majority of the partnerships agree to participate]:

1. The Partnerships [the "Partnership Litigation"] will file an action in an attempt to obtain a declaration from the court and proof from the defendants [TFP, all Securities Dealers, and others involved with the trading) that the trades were valid government securities trades. We will vigorously pursue proof that these trades were real which world be persuasive, if not conclusive, before IRS. As IRS is not bound by the court's judgment [it cannot be made a party to the Litigation) This proof will show us that we have a case if the trades are real. If the trades are not real [fraudulent) as IRS contends, then it will show that the investors were trying to make a profit and will show the investors to be victims as opposed to conspirators.Return to index

2. An additional cause of action will be filed against John Disterdick, his companies - TFP, DPS, and IGS - and several individuals for negligence in their conduct insofar as advising, administrating, monitoring end supervising the securities program and their failure to use their best efforts on your behalf. [We are informed that Disterdick has an Errors and omissions insurance which may fund the cost of the suit]. The monetary and emotional damages which have resulted from this are, of course, inestimable. Even if we are successful in establishing the validity of the trades end defeat IRS, the damages suffered by the partners for costs, attorneys' fees and accountants' fees will still be substantial.

3. In an additional cause of action The Partnership litigation will seek an accounting from Sandia, Leonard Weller and Joseph Karroll in an attempt to confirm the pricing question. IGS in its suit claims that the trades were overpriced by Sandia and that overpricing wee passed through by IGS to most of the partnerships on the opening trades.

4. In the event that some or all of the trades proved to be invalid, we would seek a Judgment against the appropriate parties for fraud resulting in damages in the millions of dollars plus punitive damages.

To handle the mechanics and the funding of the Partnership Litigation, we suggest the following:

1. Each partner who Wants to participate, will agree to contribute to a litigation fund [fund"). The initial contribution to the Fund to get the Partnership litigation under way will equal 2% of your original Capital contribution, [$20.00 per $1,000). This amount is tax deductible. The maximum contribution will be 5% of your original capital contribution [$50 per $1,000).

2. Because the Partnerships were damaged, and not you as an individual, the Partnerships must be the plaintiffs. As there are 212 partnerships and over 1800 partners, [of which we represent 1200 before IRS] we are proposing that we be appointed as administrator of the Partnership Litigation and be authorized by the partnerships to maintain the Fund.Return to index

3. We will handle all communications between the attorneys and the partnerships. We will send a newsletter concerning all relevant progress. We will render an accounting of the Fund to each of the participating partners no less than yearly.

We are advised by Wyman that the partnerships will be expected to produce certain documents that relate to the partnership. We will provide copies of partnership files. It is also possible that a few partners may be asked to have their depositions taken during the course of any such litigation. Such inconvenience should be minimal and any requirements for your time will, of course, be co-ordinated by us with you.

It is our belief that the approach outlined above provides an effective and relatively inexpensive way to take all reasonable steps to protect your investment and to protect you from IRS penalties. The cost for an individual investor [even if he is allowed to bring an action) to pursue this case is prohibitive.

By Joining together, we can generate a sufficient war chest to show the defendants that we are well funded, represented by a large aggressive firm, that we are serious, that we intend to see the matter through to judgment, even if it is proven that they have defrauded us and are Judgment-proof.

We are not even sure if the promoter has any other funds except the insurance. Even though it is for 1 million dollars we do not believe that it will cover the cost of the civil and IRS litigation. We will try to save as much money as possible end do it as best we can with no funding except you 2% fees and whatever recovery we will get.

No money will be returned to any partner until every last tax case is settled. We can assure you we will do the best to protect you from the IRS and the pro motor's attorneys. But we don't think you will get any money back.Return to index

If you agree with our analysis, we ask that you sign the enclosed form authorizing us to retain Wyman to represent your partnership in the Partnership Litigation and agreeing to our firm acting as administrator of the Partnership Litigation program and the Fund.

TIME IS OF THE ESSENCE and we request that if you desire to participate, you return your check as soon as possible. If you have any questions, do not hesitate to contact me.

Very truly yours,

Sandra Eve Kardos

Certified Public Accountant

Charles E. Brink CEB/ma