Sa Timis

3/29/88

New

Offerings

9.50%

1YEAR

10.50%

2-YEAR

SUBORDINATE DEBENTURES
Minimum investment $2,000
Monthly interest

Offered exclusively in California
Eligible for Self-Directed IRAs
Visit our representatives at any
Lincoln Savings

A

AMERICAN
CONTINENTAL
CORPORATION

EXHIBIT 2

This information is believed to be accurate but is not guaranteed. This form is being supplied to the recipient solely as a courtesy, and no warranty is expressed or implied.

d) of the Company.

JUN 26 1987

The Debentures will be subordinated to all Senior Indebtedness (as
Indenture under which the Debentures are to be issued does not limit the mount of Senior Indebtedness the
Company may incur. At December 31, 1986, the Company had outstanding approximately $252,350,000 of
Senior Indebtednem. Unless otherwise stated in a Prospectus Supplement, the Debentures will be sold in
ons of $2,000

tures."

!

५०

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE

THE DEBENTURES BEING OFFERED ARE THE SOLE OBLIGATION OF THE COMPANY AND
ARE NOT BEING OFFERED AS SAVINGS ACCOUNTS OR DEPOSITS AND ARE
NOT INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION.

(1) If any Debentures are issued at an original issue discount (Zero Coupon Debentures) the Price to Public and the corresponding Proceeds to Company per Debenture will be such lesser amounts as set forth in the Prospectus Supplement for that series. In no case shall the Maximum Price to Public of all series of Debentures exceed the amount set forth under Maximum Aggregate Offering Price.

(2) Before deducting expenses payable by the Company, estimated to be $195.000 phus $25.000 per series. See "Use of Proceeds."

(3) There is no minimum amount of Debentures required to be sold by the Company

This Prospectus does not contain complete information with respect to each series of Debentures proposed to be sold. A Prospectus Supplement with respect to each series of Debentares offered bereunder will set forth, with regard to such senes, (1) the maximum aggregate principal amount, interest rate and maturity date of the Debentures of such serves and (ii) the redemption provisions with respect to such senes. Debentures of any series may not be sold and offers to buy may not be accepted unless the purchaser has received both this Prospectus and the Prospectus Supplement relating to such series.

The date of the Prospectus is May 1, 1987

EXHIBIT 5

Mr. DINGELL. Mr. Simon, you have given us most valuable assistance and your kindness to the committee is very much appreciated. The Chair is going to recognize my good friend from Colorado, Mr. Schaefer.

Mr. SCHAEFER. Thank you, Mr. Chairman, and Mr. Simon, thank you for that-you're right. I didn't have a complete answer. As I see it now, I can understand it.

You are all to be commended for what you have been able to accomplish in this situation. Let me ask a question. Were any of the sellers, who were basically defrauding, prosecuted?

Mr. HODGMAN. Mr. Schaefer, if I may address that first, in our particular prosecution in California at the State level the bond seller representatives who testified were all given immunity because technically under California State law they were strictly liable for the representations or omissions that they had made.

The irony of the situation is, as has been described in the testimony, many of these bond sellers were young, enthusiastic individuals who really believed in their product. They sold these bonds to their parents. They sold these bonds to their neighbors. They sold these bonds to their in-laws, and they too never realized the truth about the riskiness of the bonds that they were selling.

They, too, in a sense were duped.

Now as a matter of California State law, they had to be immunized in order to obtain their testimony.

Ms. HILL. Mr. Schaefer, to answer your question, with regard to the Federal criminal trial, none of the bond representatives were prosecuted. Essentially we targeted the individual who was in charge of the program, Ray Fidel. He was the President of the bank. He recruited personally all of these young, energetic bond representatives.

Mr. SCHAEFER. So none of the managers-Fidel was the one you really went after.

Ms. HILL. In our trial the focus of the investigation was the fraudulent financial statements. It was not the manner in which the bonds were sold, so all of the bond representatives including Mr. Fidel himself to some extent did not know about the financial fraud that was occurring in Arizona. That was hidden from view to almost everyone involved except for a very select number of people.

Mr. SCHAEFER. Interesting. Mr. Simon, I was looking through your testimony here and at some of the various documents you had. There is one here, a letter from Continental Corporation of November 11th, 1987. It starts, "Hi, again"-what, may I ask, in the second paragraph does it mean when it says "I have enclosed a visual aid for your ease and convenience, quite a gal, huh?" What was this all about?

Mr. SIMON. This is, first of all, an internal document they sent around to bond salespeople. I am happy you brought it up. It also may make us all cynical about how the world runs, but if you turn a couple of pages, Mr. Schaefer, you will see the visual aid is the it is the document marked Draft up at the top. It is how to fill out a form to have someone switch-the Edna Gert Snidlip, 1 Geriatric Way, Retiredville, California. That's the gal they are referring to.