Donald R. Martin - Page 9

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                              All security interests Jackson gave to petitioner were                                                                                       
                    signed over to petitioner, not Activewear.  Petitioner gave the                                                                                        
                    security interests to Trust Co. when he received them from                                                                                             
                    Jackson, except for the one for the restaurant building which he                                                                                       
                    gave to Trust Co. later.                                                                                                                               
                              Petitioner was personally liable for these bank loans.                                                                                       
                    F.  Civil Lawsuit Against Petitioner                                                                                                                   
                              In early 1991, Greg Garcia (Garcia), Activewear's tax                                                                                        
                    attorney, told Waddell that petitioner was lending Activewear's                                                                                        
                    money to Jackson and that Jackson usually repaid it in 2 to 4                                                                                          
                    days.  Garcia told Waddell that Garcia would tell Waddell if                                                                                           
                    repaying the loans ever became a problem.                                                                                                              
                              Around April 1991, Trust Co. told Waddell that Jackson had                                                                                   
                    insufficient funds for two checks.  Early in 1992, Trust Co. told                                                                                      
                    Waddell that more than $200,000 had been taken from Activewear.                                                                                        
                    Garcia advised Waddell to retain a lawyer, and referred him to                                                                                         
                    one.  Waddell did not ask petitioner for an explanation.                                                                                               
                    Instead, he hired a lawyer.  At that time, Waddell believed that                                                                                       
                    petitioner had embezzled money from Activewear.  In 1992, Waddell                                                                                      
                    sued petitioner in the Superior Court of Athens-Clarke County,                                                                                         
                    Georgia, on behalf of himself and Activewear to recover the                                                                                            
                    amounts Jackson had not repaid.  In the same lawsuit, petitioner                                                                                       
                    sued Jackson's corporations to recover the amounts Jackson had                                                                                         
                    not repaid.  Waddell deposed all parties and investigated the                                                                                          
                    case thoroughly.                                                                                                                                       



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