James H. Upchurch - Page 4

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          mathematics, biology, health, physical education, and was also                
          involved in coaching at the secondary school and college levels.              
               Petitioner and George Chalich (Mr. Chalich) were friends who             
          had met in high school, played high school football together,                 
          and, for a time, were teachers at the same school.  After Mr.                 
          Chalich retired from teaching, he solicited petitioner's interest             
          in certain tax-sheltered annuities and investment opportunities.              
          Mr. Chalich sold investments for Professional Investors Group,                
          Inc. (Professional), a Washington corporation.  Mr. Chalich asked             
          petitioner if he knew of any other teachers who were interested               
          in investing.  Ultimately, petitioner and another friend and                  
          teacher, Bill Pecha (Mr. Pecha) talked to Mr. Chalich about                   
          investing.  Mr. Pecha, whose educational background was in                    
          chemistry, and petitioner worked together in a college wrestling              
          program.                                                                      
               Petitioner and Mr. Pecha discussed, with Mr. Chalich,                    
          investment in an energy saving device through a promotion of                  
          Saxon Energy Investment (Saxon).  Petitioner had also discussed               
          other possible investments with Mr. Chalich, including one                    
          involving stamps (Philatelic) and another involving electrical                
          pain management (Xylocain).  Petitioner was interested in energy-             
          related investments because of increases in gasoline prices, the              
          effects of an oil embargo, and because sources of energy were                 
          becoming more limited.  Petitioner discussed with Mr. Pecha the               
          possibility of investing in Saxon, which was being offered or                 




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