6
uninterrupted, and the clients of IMG were told that there had
been a name change. Payments were made to Ivan pursuant to the
deferred compensation agreement previously executed by IMG.
Sometime after Ivan's departure, his son, Richard West (Richard),
who had been employed by IMG and PGWV, became a shareholder of
PGWV. On January 7, 1987, the corporation adopted a resolution
that stated:
RESOLVED, that the Corporation continue to pay legal
expenses for attorneys engaged by Mr. Don Peters in
connection with the investigation by the Securities
Exchange Commission with respect to sales of stock of
ERG. The payment of such expenses is subject to the
understanding and acknowledgment by Mr. Peters that
payment of such expenses is not to be construed by
[sic] any indication that the Corporation has any
responsibility with respect to the particular matters
being investigated or obligated as to any liability,
damages, penalties or fines that may result from said
investigation. It is to be understood that the
Corporation may at any time discontinue the payment of
such legal expenses and thereupon will have no
obligation with respect to such expenses.
Based on this resolution, we conclude that at the time of
incorporation, the PGWV shareholders knew that the investigation
was focused on the activities of Peters. Peters owned 42.5
percent, 40 percent, and 35 percent of PGWV during the years 1988
through 1990, respectively.
On January 9, 1987, the corporation filed an amendment to
the ADV form with the SEC, which indicated that its name had
changed from IMG to PGWV. At the end of 1990, the name was
amended to Peters, Gamm, West & Vincent, Inc., to reflect the
addition of a shareholder, Mark A. Vincent, in January 1989.
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