Investment Research Associates - Page 167




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         asserted that the arrangement should continue because, in his                 
         view, Travelers had replaced Prudential as the principal source               
         of the transactions because of the "very personnel" to whom                   
         Schaffel had been introduced.  It is clear that the reference to              
         personnel was to Ballard and Lisle.                                           
              After discussing the situation with Lisle, Schaffel agreed               
         to resume payments for fees earned on Travelers transactions.                 
         Instead of paying IRA, however, Kanter had Schaffel send the                  
         payments from Travelers transactions to Holding Co.                           
              Ballard and Lisle knew that Kanter had an arrangement with               
         Schaffel to share in the fees Schaffel earned on certain business             
         deals, because they were present at the dinner meeting when                   
         Kanter initially proposed and discussed the arrangement with                  
         Schaffel.  When Kanter and Schaffel had their dispute over                    
         whether IRA was entitled to a share of Schaffel's fees on                     
         business deals with Travelers, Lisle was concerned that a lawsuit             
         between the two might cause problems for Lisle with Travelers.                
         Lisle was concerned because he was involved with the arrangement              
         and benefited from it.                                                        
              The payments from Schaffel for the Prudential transactions               
         were accumulated in IRA until the formation of Carlco, TMT, and               
         BWK, Inc.  In 1984, IRA transferred funds to the three new                    
         corporations in a 45-45-10 ratio, effectively transferring 45                 
         percent to Lisle, 45 percent to Ballard, and 10 percent to                    






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