Florida 8751 W. Broward Blvd. Suite 203 Plantation, FL O: F:

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1 Florida 8751 W. Broward Blvd. Suite 203 Plantation, FL O: F: New Jersey 2001 Rte. 46 Suite 310 Parsippany, NJ O: TRUGMAN

2 - 2 - and employees, all offering accounting and professional services on

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5 - 5 - reliance of the representations of said Defendants that the ESOP

6 - 6 - According to the Order of the United States District Court, Western District of Arkansas,

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8 - 8 - OPINIONS

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14 Deposition transcript of Stephen D. Jones in the matter of Thomas Sacks, et al. v.

15 Deposition transcript of the testimony of Stephen Jones in the matter Robert v.

16 Audited financial statements of ABC Jail Company, Inc. for December 31, 1991 and

17 Employment Agreement by and between ABC Jail Company, Inc. and J. Clifford

18 Proposal to recapitalize ABC Jail Company, Inc. (TA 558).

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22 Q. Okay. Did you belong, in 1993, upon taking this assignment to value

23 A. Well, most of their courses are, I'll say national courses developed by

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25 USPAP be followed for all types of engagements, even if they are not

26 fulfilling their obligations as a business valuer. Throughout the deposition, Mr. Jones kept

27 more. An experienced practitioner would also understand the limitations that this, or any,

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32 ESOP, how much ABC and the ESOP should consummate transactions for with Mr. Morris

33 Q. I agree. I'm just asking you where you got these other two points,

34 We have relied heavily in our valuation upon known operating results and the

35 Not only should the history and nature of the business section of the report provide the

36 and health care legislation. There is also no mention about consumer and business

37 During Mr. Jones deposition, he was questioned about information that he says he learned

38 therein. When he was asked whether health care legislation and deficit reduction would

39 again, Mr. Jones is relying on his statement of discussing it with management as

40 Q. Right

41 in the business operations to permit the company to perform services or sells goods, and

42 Sec. 5. Weight to Be Accorded Various Factors.

43 In calculating the adjusted book value, the only adjustment made to the balance sheet was

44 As a general rule, most appraisers are much more concerned with cash flow than they are

45 A. I don't believe it's in our work papers.

46 We knew that they were going to be needing capital to expand -- to finance

47 TA

48 A. We did not put together a work paper.

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50 The market approach is considered to the best indication of fair market value since this

51 recreation of a business asset from scratch. It is certainly not one of the approaches to

52 Once again, there is no valuation treatise that would support all of these methods under

53 TA

54 therefore available. Despite the fact that even the originator of this revenue ruling says

55 earnings method computes the company s equity value based on the appraised value of

56 performed regarding such offers if they were to be used, rather than merely relying on

57 Since, in the case of closely held stocks, no prevailing market prices are Linda B. Trugman CPA/ABV, MCBA, ASA, MBA is the Vice President of Trugman Valuation Associates, Inc., a firm specializing in business valuation and litigation support services. Linda is a Certified Public Accountant licensed in the states of Florida and New Jersey. She is designated as Accredited in Business Valuation by the American Institute of CPAs, a Master Certified Business Appraiser by The Institute of Business Appraisers and an Accredited Senior Appraiser by The American Society of Appraisers. Linda is a member of the Qualifications Review Committee of The Institute of Business Appraisers, and formerly served on the International Board of Examiners of the American Society of Appraisers. She is currently serving as International Vice President of the American Society of Appraisers as well as Past Chair of the Business Valuation Committee of that organization. Linda formerly served as chair of the American Society of Appraisers Business Valuation Education Committee. Linda is a Fellow and former Governor of The Institute of Business Appraisers. She formerly served as Chair of the FICPA s Relations with the Florida Bar Committee, and on the steering committee of the Valuation, Litigation and Forensic Accounting Section of the FICPA. Linda currently serves as Secretary of the ASA Educational Foundation. Linda is the former editor of the ABV e-alert, a publication of the AICPA s Business Valuation Committee. She formerly served as editor of Business Appraisal Practice, the professional journal of The Institute of Business Appraisers., and served on the editorial board of BV Q&A published by Business Valuation Resources. Linda formerly served on the Business Valuation and the Business Valuation/Forensic and Litigation Services Executive Committees of the AICPA. She currently serves on the editorial board of Financial Valuation and Litigation Expert published by Valuation Products, LLC. In November 2009, Linda was inducted into the AICPA s Business Valuation Hall of Fame. Linda teaches business valuation courses throughout the country for The Institute of Business Appraisers, the AICPA, various state societies of CPAs, and the American Society of Appraisers. She also lectures nationwide. She has served as faculty for the National Judicial College. Linda is a co-author of the first, second and third editions of Financial Valuation Applications and Models, published by Wiley Finance, has authored several self-study courses and has served as a technical reviewers on all four editions of the AICPA s Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses as well as The Lawyer's Business Valuation Handbook authored by Shannon Pratt and published by the American Bar Association. She is also the editor of BVR s Guide to Business Valuation Issues in Estate and Gift Tax, 2010 edition. Linda can be reached at linda@trugmanvaluation.com.