NMAC. ATC PROVIDED TFC INFO; BUT STATING THAT TFC WAS CLBING OUT OF 10500 FT FOR 11000 FT. RPTR ACFT; AT 10000 FT; ACQUIRED TFC VISUALLY AND SAW THAT IT WAS DSNDING THROUGH THEIR ALT. DEP CTLR DIDN'T RESPOND TO RPTR XMISSION REGARDING TFC.

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OUR INITIAL CLRNC FROM SDF WAS TO MAINTAIN 5000 FT AND EXPECT 9000 FT 10 MINS AFTER DEP. DEPT CTL (SDF) CLRED US TO 10000 FT AND GAVE US A 360 DEG HDG TO INTERCEPT V47 W OF CVG. WHILE CRUISING AT 10000 FT WE WERE GIVEN 'TFC AT 10 O'CLOCK 10500 FT CLBING BACK TO 11000 FT.' WE WERE IN AND OUT OF CLOUDS AT THE TIME. I; THE PF; SPOTTED THE TFC A FEW SECONDS LATER. IT WAS INITIALLY DIFFICULT TO TELL WHAT THE SECOND ACFT; A LIGHT TWIN; WAS DOING. I THEN REALIZED THAT THE TWIN WAS DSNDING AND ON A NEAR COLLISION COURSE WITH US. THE ACFT PASSED APPROX 200 FT BELOW AND 200 FT BEHIND US. I XMITTED TO DEP CTL THAT THE ACFT WAS NOT CLBING BUT DSNDING. THE CTLR DID NOT RESPOND. A FEW SECONDS LATER; THE CTLR CLRED US TO 9000 FT. AGAIN NOTHING FURTHER WAS SAID BY DEP CTL OR THE OTHER ACFT. A FEW MINS LATER; DEP CTL CLRED US BACK TO 10000 FT AND HANDED US OFF TO CVG APCH. I STRONGLY SUSPECT THE SECOND ACFT WAS TRYING TO MAINTAIN VFR IN MVFR CONDITIONS AS WELL AS THE POSSIBILITY OF CTLR ERROR. THE INSTALLATION OF TCASII MAY HAVE AIDED IN PREVENTING A NEAR DISASTER.