Investment Research Associates - Page 174




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         additional property management business with Prudential.  Thus,               
         although we find that Schnitzer sold the stock to IRA at a                    
         bargain price for Kanter's influence, we cannot say that                      
         Schnitzer intended the payments to repurchase the stock as                    
         kickbacks to Ballard and Lisle.                                               
              The flow of the money, however, makes it clear that Kanter               
         agreed to share the money received from the transaction with                  
         Ballard and Lisle in exchange for their assistance in giving more             
         Prudential business to Schnitzer-PMS.  The increase in the                    
         Prudential business greatly increased the pretax income and,                  
         thus, the value of the Schnitzer-PMS stock.  IRA, as with the                 
         other transactions involving the Five, held for the benefit of                
         Ballard, Lisle, and Kanter the funds received from the repurchase             
         of its stock in Schnittzer-PMS, and distributed the funds to the              
         individuals through Carlco, TMT, and BWK, Inc.                                
         5.   The Eulich/Essex Arrangement                                             
              The final arrangement involved petitioners, Eulich, and                  
         Connolly.  Eulich was a real estate developer and had known                   
         Ballard and Lisle since at least 1965.  Eulich dealt with Ballard             
         and Lisle in connection with Prudential's financing his                       
         development of real estate.  Eulich and Kanter had also known                 
         each other since the late 1960's or early 1970's and had had many             
         business dealings with each other.   Eulich owned a hotel                     
         management company called Eulich-Management.  Connolly was an                 






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