On March 18, 2002, United States District Court Judge Louis F. Oberdorfer issued a scheduling order for United States of America, ex. rel., Ervin and Associates, Inc. v. The Hamilton Securities Group et al. (the qui tam case) and the related case filed by Hamilton against Ervin & Associates, a Ginnie Mae (HUD) contractor, and John Ervin, individually.

The order ends the mediation between the Department of Justice, Ervin and Associates, and The Hamilton Securities Group without settlement. A consolidated trial is scheduled for September, 2003 with discovery underway.

The mediation began in May 2001, shortly after a five year investigation of the HUD loan sales program by the Department of Justice (DOJ) and the Department of Housing and Urban Development (HUD) Office of Inspector General into Ervin's allegations concluded with no findings of any wrong doing. The governing statute provides for a 60 day investigation period.

During the five year investigation, Hamilton repeatedly produced affidavits and documents affirming the absence of any evidence to support Ervin's allegations, including from individuals associated with the loan sales program, affidavits of HUD auditors who informed the government in 1996 that there was no evidence to support Ervin's allegations and documents from FBI investigators who informed the government in 1999 that there was no such evidence. Hamilton also produced evidence suggesting that government investigators tried to falsify evidence against Hamilton.

Hamilton is waiting for the Court of Claims to proceed on Hamilton's litigation to force the government to pay outstanding bills on services rendered by Hamilton between 1994-97 which saved the FHA Funds at HUD $2.2 billion as calculated by the government and confirmed by an audit of the General Accounting Office (GAO).

Hamilton's efforts to support HUD reengineering efforts were terminated in 1997 when the government decided to return to traditional methods of resolving defaulted mortgages, including growing much larger inventories of government owned and controlled foreclosed properties maintained with traditionally much more expensive resolution methods.

Catherine Austin Fitts, founder of Hamilton and now President of Solari, Inc., said, "Hamilton has given DOJ and HUD every opportunity to do the right thing by Hamilton's shareholders and former employees, all whom served their government, the taxpayers and communities loyally and well. We are deeply disappointed that the government has not paid Hamilton for work performed and rated excellent by the government itself. We are also deeply disappointed that DOJ declined to seek dismissal of a meritless qui tam case brought in the name of the government despite declining to join in the case."

* - ABOUT THE AUTHOR: Catherine Austin Fitts is a former managing director and member of the board of directors of Dillon Read & Co, Inc, a former Assistant Secretary of Housing-Federal Housing Commissioner in the first Bush Administration, and President of The Hamilton Securities Group, Inc. She is the President of Solari, Inc, an investment advisory firm. Solari provides risk management services to investors through Sanders Research Associates in London.

For more information, see http://www.solari.com/gideon. All press inquiries should be directed to Hamilton's attorneys, Michael J. McManus or Kenneth E. Ryan at Drinker Biddle & Reath LLP (202/842-8830, mcmanumj@dbr.com; or 202/842-8807, ryanke@dbr.com) or Catherine Austin Fitts, Solari, Inc. (++1.731.764.2515, catherine@solari.com)