9
bank, without the approval of Northeast or knowledge of
petitioner, let McKee borrow money in Northeast's name that McKee
used for highly speculative investments unauthorized by Northeast
and for McKee's personal benefit. He also claimed that McKee and
one of the bank's officers intentionally misrepresented
Northeast's financial condition to induce petitioner to sign the
guaranty to the bank, and he sought indemnification from McKee
and the bank officer.
Petitioner initially contended during the Northeast
litigation that he had not guaranteed Northeast's indebtedness to
the bank and that he was not liable for payment on the guaranty.
However, in 1984, petitioner acknowledged that he had signed the
guaranty in January 1980 and was liable to the bank for payment
on the guaranty.
Robert Williams represented petitioner in the Northeast
litigation. These cases were settled in 1988. See paragraph I-
E-3, below.
2. Petitioner's Bankruptcy Case
In September 1983, petitioner filed a petition in the United
States Bankruptcy Court for the District of New Hampshire under
chapter 7 of the U.S. Bankruptcy Code, seeking a discharge of all
of his debts. On the schedules filed with the Bankruptcy Court,
petitioner listed personal property having a value of $7,000 and
no real property. Petitioner listed the following debts in his
bankruptcy petition: (a) Warner & Stackpole ($7,000); (b)
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