receiver Mr. Mark Diel spent last night pondering a confession made by the failed businessman yesterday on the second day of bankruptcy proceedings against him.

The former Government Senator broke down and sobbed in Supreme Court as he read a statement admitting he used money he raised from selling jewellery and cashing in a pension fund to pay tuition fees for law school in England.

He admitted he had not, as he testified, given all of a $25,000 BF&M pension cheque to his ex-wife Mrs. Orreta Peniston with whom he shared the fund.

He also admitted he had not told the truth about a cheque from Astwood Dickinson.

Peniston begged to be allowed to continue his education so he could become a lawyer and meet his obligations to creditors. He allegedly owes more than $700,000.

After a ten-minute adjournment to discuss the unexpected statement, Mr. Diel posed several questions to Peniston, including where he was living in England, and whether he owned property and a car. Peniston said he was paying 420 a month rent and did not own a car.

Saying he was concerned at how long it had taken Peniston to arrive at the truth, Mr. Diel said he needed more time to decide what course to take. Mr.

Diel could bring a prosecution against Peniston for breaching the Bankruptcy Act.

He told Peniston he would be looking at certain sections of the Act which outline misdemeanours under the Act and make it a felony to quit Bermuda carrying more than $300. The offence carries a six-month prison term and/or a heavy fine.

"Probably in my nine years on the Bermuda Bar, this is one of the most serious decisions I have had to consider,'' Mr. Diel said.

Puisne Judge the Hon. Mrs. Justice Wade said that in any event she had to carry out justice.

Peniston said he prepared his statement after meeting with his entire family on Monday night to consider "all the facts in this long, acrimonious and most embarrassing proceedings''.

During the hearing on Monday, Mrs. Justice Wade warned him he must back up his claims or face going to jail.

Peniston had claimed the money used to pay his tuition fees came from his family.

He said he gave a $25,000 BF&M pension fund cheque he cashed between April and May 31 to his first ex-wife Mrs. Orreta Peniston for his son and her Florida timeshare.

But Mr. Diel said Mrs. Peniston only received $2,100 and he planned to put her on the witness stand.

Peniston insisted that was not the case, and stated that Mrs. Peniston did indeed receive the money regardless of the accusations.

Mr. Diel said that furthermore Mrs. Peniston denied attending Commissioner of Oaths Mr. Larry Scott's office with Peniston to sign an agreement saying she was entitled to the proceeds of the fund.

Mr. Diel said it was Mr. Scott's case that he brought a woman with him but he did not now recognise her as Mrs. Peniston.

Peniston yesterday conceded he had taken another woman with him "but that is Orreta's signature''.

As for the Astwood Dickinson cheque he cashed, Peniston had claimed he had taken jewellery there for cleaning and, being unable to afford to get it back, asked if he could sell it. He did not say he took the money overseas though.

Mr. Diel charged Peniston failed to alert the official receiver when he discovered he had assets of some $25,000 and $1,000.

He noted he had sworn an affidavit saying he had less than $1,000 in assets then took off for England where he enrolled in the University of Buckingham, failing to appear for a July court date.

In his statement, an emotional Peniston thanked Mr. Diel for telling him in a telephone call he made to the lawyer after Monday's hearing that he did not want to get in the way of his attempts to rebuild his life and establish a new career.

He said he wanted a speedy conclusion to the proceedings which have lasted more than three years. "Accordingly, I am prepared to concede and accept responsibility for any differences of opinion or impressions in respect of the matter of Astwood Dickinson..,'' he said. "Secondly, in respect of Orreta Peniston it is true that she was aware of the pension proceeds and she was advised of the policy termination and her beneficiary status when we met to discuss the proceeds.

"During this conversation it was accepted that it was impossible for me to gain meaningful employment in this community without new skills, which would enable me to meet my total obligations.

"Having discussed the last educational opportunity available to me, she agreed to accept a portion of the proceeds in connection with expenses for our son which is not disputed and an obligation from me as a loan for the remainder, and these proceeds along with other contributions from other members of my family were used for this purpose.'' He said she and his family had "honestly intended'' to assist him in his career objective.

He "hoped my fragile spirits and ambition to succeed at this juncture will not be further impaired'', and that he would be allowed to continue his studies abroad.

Mr. Peniston was taken to court by former business partner Mr. Robert Thomson, who withdrew from the proceedings on Monday.

He was ordered to bring the latest bank statements of all his accounts to court with him today.