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FOR IMMEDIATE RELEASE:

Friday - April 29, 2005

FORMER INTERNATIONAL HERITAGE, INC. FOUNDER/CEO AND INVESTMENT FUND BROKER VAN ETTEN PLEADS GUILTY TO FRAUD CHARGES
RELATED TO IHI AND MAYFLOWER FUND III

RALEIGH - United States Attorney Frank D. Whitney announced that STANLEY H. VAN ETTEN pled guilty in federal court in Raleigh on Friday, April 29, 2005, to charges related to his misconduct as founder and CEO of the former International Heritage, Inc. (IHI), a Raleigh-based multilevel marketing company and for fraud related to Mayflower Venture Capital Fund III (MAYFLOWER FUND III) and its purported investment in BuildNet, a Durham-based software company. Under the Plea Agreement filed, STANLEY H. VAN ETTEN, 44, of Orlando, Florida (formerly of Raleigh), pled guilty to the following: (1) As to IHI, a count of Conspiracy to Commit Mail Fraud, Wire Fraud, Securities Fraud, Obstruction of Justice, Subornation of Perjury, and to Make False Statements to the United States; and (2) As to Mayflower, a count of Conspiracy to Commit Wire and Mail Fraud.

Related to IHI, VAN ETTEN, three other IHI senior executives, and the company's outside public accountant were originally indicted by a federal grand jury on October 16, 2002. (A superseding indictment was filed on March 20, 2003.) Additionally,VAN ETTEN was one of four individuals associated with defunct Mayflower Venture Capital Fund III, a bankrupt $15,000,000 venture capital company indicted by a federal grand jury in Raleigh on February 17, 2005. (A superseding indictment was filed on March 17, 2005.)

INTERNATIONAL HERITAGE

The indictment for activities associated with INTERNATIONAL HERITAGE, INC. resulted from an investigation, by a multi-agency task force coordinated by the United States Attorney's Office for the Eastern District of North Carolina.

Originally named in the indictment were STANLEY H. VAN ETTEN, then of Raleigh, N. C.; CLAUDE WILLIAM SAVAGE, of Charlotte, N. C.; LARRY G. SMITH, of Greenville, S. C.; JOHN DAVID BROTHERS, of Plano, Texas; and DAVIN WALTER BROWN, of Raleigh, N. C.

Savage, Brothers, Smith, Brown, and now VAN ETTEN have entered guilty pleas and are awaiting sentencing.

According to the indictment: INTERNATIONAL HERITAGE, INC. (IHI) was a corporation formerly located at 2626 Glenwood Avenue, Suite 200, Raleigh, N. C. VAN ETTEN served as the president and chief executive officer of IHI. SAVAGE and SMITH were founding directors and leading sales representatives. BROTHERS was the chief operating officer and compliance officer. BROWN served as IHI's outside accountant.

In each of its first three years of operation (1995, 1996, and 1997), IHI derived approximately 90% of its revenue from the recruitment of sales representatives, who purchased what IHI called "business centers." In the indictment, IHI and the charged individuals are alleged to have materially misrepresented the financial condition of IHI in connection with the sale of corporate notes in 1997.

Specifically, it is alleged that the defendants created a 1.7 million dollar receivable and added it as an accounting entry retroactive for the year ending December 31, 1996, in order to create the impression that IHI had made a profit in the year 1996. The receivable was based on a so-called "technology fee" assessed to IHI's sales representatives despite the fact that there was no contractual basis for the fee. Later in 1997, the 1.7 million dollar receivable was written off by IHI as uncollectible.

From July to October, 1997, IHI made a five million dollar private offering of unsecured 10% notes convertible to IHI stock in the future. IHI successfully sold 4.3 million dollars worth of these convertible notes to over 100 private investors. In offering the notes for sale, IHI materially misled investors, claiming that the company had "achieved profitability" in 1996. This claim was made despite the fact that IHI had, at the time of the offering, already written off the 1.7 million dollar receivable from the "tech fee." IHI also failed to disclose to potential investors that the company continued to lose large amounts of money during the year 1997, which eventually resulted in a net loss for the year of approximately 12.5 million dollars. Proceeds from the sale of the notes were used to operate IHI, including paying executives.

Court papers alleged that on March 13, 1998, the Securities and Exchange Commission suspended trading in IHI stock because of its concerns about VAN ETTEN, the accuracy of statements made to investors, and the regulatory background of IHI. Three days later, on March 16, 1998, the SEC filed a civil complaint in the Northern District of Georgia against IHI, VAN ETTEN, SAVAGE, SMITH, and others, for, among other things, the sale of unregistered securities, false representations, and material omissions regarding IHI's financial condition and failing to disclose that IHI was a pyramid scheme.

The indictment revealed that between March 16, 1998, and on or about May 5, 1998, VAN ETTEN, BROTHERS, and others attempted to, and did, mislead the United States District Court in the Northern District of Georgia regarding the SEC's allegation that IHI had made material misrepresentations or omitted material facts in the offer or sale of the convertible notes. Sworn declarations were sought from investors falsely averring that said investors had been informed that IHI had had losses for the first six months of 1997 of approximately $7.5 million, constituting subornation of perjury.

MAYFLOWER FUND III

It was previously announced that four individuals associated with Mayflower Venture Capital Fund III were indicted along with STANLEY H. VAN ETTEN. Mayflower Fund III was a bankrupt venture capital company, which solicited $15,000,000 from investors to participate in an IPO for the BuildNet Company. In addition to VAN ETTEN, the indictment charged BRENT E. WOOD, 42, of Cary, N. C.; TOM D. EILERS, 72, of Cary, N. C.; and DIANE W. PACE, 42, of Cary, N. C. Tom D. Eilers pled guilty in February, 2005 to conspiracy; the other defendants are awaiting trial for conduct associated with the bankrupt Mayflower Venture Capital Fund III, LLC ("FUND III").

The indictment charged conspiracy, wire and mail fraud, and money laundering related to the use of approximately $15,000,000 collected by FUND III from about 120 investors between February, 2000 and November, 2000.

According to the indictment, a series of venture capital companies using the name "Mayflower" were established between 1996 and 2000 for the purpose of investing in start-up companies and on-going businesses. All were partially owned, principally controlled by, or otherwise related to STANLEY H. VAN ETTEN. FUND III was specifically established to invest in a planned initial public offering (IPO) by the Durham, N. C., based company named BuildNet. FUND III was managed by a "Management Committee" consisting of defendants DIANE W. PACE, TOM D. EILERS, BRENT E. WOOD, Esq., and others, and had offices in Raleigh, N. C., Dallas, Texas, London, England, and Zurich, Switzerland.

The indictment sets forth that DIANE W. PACE was an Investment Advisor and Contact Person; TOM D. EILERS was the Certified Public Accountant; BRENT E. WOOD was the Lawyer; an unnamed person was an Investment Advisor and Contact Person; and John Brothers, was an Investment Advisor and Contact Person.

The indictment further alleges that STANLEY H. VAN ETTEN, although not a named Fund Manager or member of the Management Committee, controlled and directed the use of funds, while DIANE W. PACE, M.B.A., and TOM D. EILERS, C.P.A., managed bank accounts and fund records. John Brothers and two other unnamed persons solicited investors and worked out of the Dallas, Texas, office. BRENT E. WOOD served as legal counsel for the fund, as well as a member of the Management Committee.

According to the court documents, FUND III obtained approximately $15,000,000 from investors for investment in the BuildNet IPO. Subsequently, the funds were fraudulently diverted to other unauthorized investments and purposes without the knowledge or consent of the investors. Overt acts included a series of "updates" the defendants sent to investors between about May, 2000, and November, 2000, wherein they falsely represented and assured the investors that FUND III money was exclusively reserved for the BuildNet IPO. In fact, the FUND III money had already been used for other purposes without the knowledge or consent of the investors. According to the court records, the scheme began to unravel when BuildNet withdrew their IPO, and FUND III was unable to return the investors' money as promised.

TRIALS AND SENTENCING HEARINGS PENDING

As of this date, six former VAN ETTEN associates have pled guilty to IHI related charges and other matters. A trial date for remaining defendants has not been set.

Investigations of the IHI, Mayflower, and other VAN ETTEN- related cases were conducted by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division, with the assistance of the Securities and Exchange Commission (SEC), Atlanta, Georgia. Assistant U. S. Attorneys

J. Gaston B. Williams and Clay C. Wheeler are prosecuting the case for the United States.

News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.

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