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Davis built the waterline under the supervision of Harold Hyrne
(Mr. Hyrne), the city manager of Upper Arlington, and his staff.
In September 1981, Mr. Davis sold 1,500 shares of Big Bite
to Mr. Hyrne.
On June 12, 1985, in a four-count indictment, the United
States charged Mr. Davis with violating 18 U.S.C. sections 1341
and 1342 (mail fraud). The indictment alleged that Mr. Hyrne
permitted Mr. Davis to inflate the cost of the waterline in
exchange for Mr. Davis' providing Mr. Hyrne a $3,000 credit for,
and an opportunity to purchase, common stock in Big Bite. Mr.
Davis pleaded not guilty to the charges, and eventually he was
acquitted of all wrongdoing (altogether, the Squirrel Bend
litigation).
2. SEC Litigation
In late 1984 or early 1985, the SEC commenced an inquiry
into the unusual amount of trading of Orange Co. securities in
late August 1984. This period surrounded Orange Co.'s public
announcement concerning the termination of acquisition talks with
potential suitors.
In February 1985, the president of Orange Co. received
notice of this inquiry from the SEC. The SEC requested a
chronology of events leading up to the public announcement, a
list of all persons aware that the talks had been terminated
before the announcement, and a description of any relationship
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