Stanley P. Zurn - Page 8

          about $600,000 in the lawsuit because about 60 percent of the               
          work had been finished.  The prime contractor contended that the            
          total Lake Elsinore project was worth no more than $380,000.                
          Consequently, and as a result of the litigation, Cities was                 
          experiencing financial problems.  As a result, Ms. Jackson began            
          searching for additional financing to supplement Cities' working            
               In mid-1986, Cities had applied for a bank loan, and, while            
          the application was under consideration, Cities was awarded the             
          MCM Century Freeway project (Century project).  Because Cities              
          was required to present insurance certificates as a prerequisite            
          to working on the Century project, Ms. Jackson was under                    
          substantial pressure to obtain financing.  During August 1986,              
          petitioner met with Ms. Jackson to discuss Cities’ financial                
          situation.  Ms. Jackson was interested in securing assistance               
          with Cities’ financial needs, believing that the Century project            
          would make Cities viable.  Petitioner was advised of the pending            
          Federal court litigation, and, as of mid-1986, it appeared that             
          Cities would prevail in that proceeding.  Petitioner paid $40,000           
          for the insurance so that Cities' insurance certificates could be           
          obtained as a prerequisite to bidding on the Century project.               
               Ms. Jackson was not well acquainted with petitioner, and she           
          insisted that the business arrangement be reduced to writing.               
          Although petitioner advanced relatively large sums of money, he             

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