U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17968 / February 4, 2003

   SECURITIES AND EXCHANGE COMMISSION V. PINNFUND USA, INC., PEREGRINE
   FUNDING, INC., ALLIED CAPITAL PARTNERS, GRAFTON PARTNERS, SIX SIGMA,
   LLC A/K/A 6 SIGMA, LLC, RELIANCE HOLDINGS, LLC, MICHAEL J. FANGHELLA,
   JAMES L. HILLMAN, and KELLY COOK A/K/A KELLY JAYE A/K/A KELLY
   SPAGNOLA, Civil Action No. 01-CV-0496 H (LAB) (S.D. Cal.)

   United States v. James L. Hillman and Piotr Kodzis, Case No. 03-CR-275
   (S.D. Cal.)

   On January 30, 2003, the United States Attorney for the Southern
   District of California announced that a federal grand jury had
   returned indictments of James L. Hillman, a 62 year old resident of
   Minden, Nevada, and three other individuals, charging them with
   intentionally defrauding investors out of hundreds of millions of
   dollars. Hillman is charged with conspiracy, mail fraud, and wire
   fraud in connection with misrepresentations relating to investments in
   PinnFund USA, Inc. Specifically, the indictment charges that Hillman
   misrepresented the extent of his oversight and review of PinnFund's
   operations, and concealed various material facts, including his
   knowledge of multiple sets of contradictory PinnFund financial
   statements.

   PinnFund was a Carlsbad, California-based mortgage lender placed under
   receivership by court order as a result of an emergency civil action
   filed by the Securities and Exchange Commission in March 2001. The
   Commission alleged that Hillman raised $330 million of investor
   proceeds through his control of Peregrine Funding, Inc. and by selling
   securities in Allied Capital Partners, Grafton Partners and Six Sigma,
   LLC. The Commission's complaint also alleged that Hillman and the
   other defendants misused the proceeds for their own purposes, to pay
   for operational losses of defendant PinnFund, and to make repayments
   to investors as part of a Ponzi-like scheme. See Litigation Release
   16941, March 22, 2001.

   In December 2001, a Final Judgment was entered against Hillman,
   concluding the Commission's litigation in this action. The final
   judgment permanently enjoined Hillman from committing any future
   violations of the registration and antifraud provisions of the federal
   securities laws, and required Hillman to pay disgorgement of
   $67,749,192.39 and $110,000 in civil penalties. See Litigation Release
   , January 16, 2002.
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Modified 02/05/2003