Melvyn L. Bell - Page 5

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          distressed companies and turn them into profitable businesses.              
          Petitioner believed that he could make the companies successful             
          because of his past business success.  In August 1986, petitioner           
          formed Bell Equities, Inc. (BEI), a holding company, for this               
          purpose.  From 1986 to 1988, petitioner was the sole shareholder.           
          During this period, he made capital contributions to the company            
          of over $424,963.  Petitioner made all decisions regarding which            
          businesses BEI would acquire.  During 1986 through 1987, BEI                
          acquired a number of subsidiaries that were insolvent or                    
          operating at a loss.  Petitioner was unable to turn any of the              
          subsidiaries into profitable businesses.  BEI had also acquired             
          one subsidiary, Kaufman Lumber Co., that was profitable at the              
          time of acquisition.  None of the subsidiaries were sold or even            
          offered or advertised for sale.                                             
               BEI's subsidiaries engaged in a variety of business                    
          activities, including manufacturing, lumber, radio and television           
          broadcasting, advertising, and theme parks.  BEI acquired                   
          majority interests in the following entities:                               
          Subsidiary                 Date of Acquisition    Percentage Ownership      
          Kaufman Lumber Co.            12/86               50                        
                                        3/89                50                        
          Monarch Mill and Lumber Co.   8/86                90                        
                                        *                   10                        
          Reelcraft, Inc.               12/86               80                        
          Ainsley Communications, Inc.  4/87                100                       
          The Entertainment and Leisure Corp.   12/86       90                        
          Shotts-Vines, Inc.            6/87                80                        
          PPD&G, Inc.                   5/87                100                       
               * Date of acquisition is not available in record.                      
          The Entertainment and Leisure Corp. (TELCOR), a 90-percent                  
          subsidiary of BEI, was also a holding company.  TELCOR wholly               



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