Michael W. Rehtorik, et al. - Page 4

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          director of GSC.  These funds were referred to in the relevant              
          written materials as “managed accounts”.  Funds received from               
          investors as managed accounts (managed account funds) were to be            
          invested in various securities to be selected by and at the                 
          discretion of GSC, of petitioner, and of Gomez, and apparently              
          were not limited to Government-backed securities.                           
               Managed account funds had the characteristics of loans from            
          the investors to GSC.  Receipt of managed account funds was                 
          documented by written agreements that were signed by the                    
          individual investors, and, on behalf of GSC, by petitioner and              
          Gomez.  The written agreements reflected total funds invested, a            
          fixed term for repayment to individual investors of the funds               
          invested, and a stated interest rate.  Interest was due monthly.            
               Under each managed account investment agreement, at the end            
          of a stated fixed term, the term of each managed account                    
          investment would be automatically renewed unless the investor               
          gave 30 days’ notice of cancellation.  Upon cancellation, the               
          principal amount of the investor’s managed account funds was to             
          be repaid with any interest due.                                            
               Investors expected to be repaid the total principal amount             
          invested in managed accounts.  Repayments of principal on some              
          occasions were made, and payments of interest on many occasions             
          were made.                                                                  
               Most of the principal repayments and much of the interest              
          payments that were due managed account investors, however, were             




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