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subsequently submitted an application and were accepted to become
Toyota dealers.
Prior to entering into a dealership agreement, petitioner
met with an executive of Southeast Toyota Distributors, Inc.
(SET), one of a group of related companies that controlled the
financing and distribution of the Toyota automobiles until they
arrived at the dealers within the regional area. On April 24,
1987, petitioner and Jordan formed an Alabama corporation, Hamp
Griffin Toyota-GMC, Inc.(HGTG), to operate the Toyota dealership,
which was purchased on May 27, 1987. Based on representations of
SET employees and others, petitioner had invested in the
dealership with the expectation of selling approximately 30 cars
and 30 trucks per month at a profit of about $800 or $900 per
vehicle.
Petitioner arranged for and became guarantor of a $1 million
line of credit and personally borrowed $350,000 to lend to HGTG
to commence its business. After beginning operations, petitioner
learned that some of the representations were exaggerated and/or
false, including the ability to generate income in the expected
amounts. Petitioner also discovered that SET encouraged dealers
to falsely report their vehicle information in order to cause an
increase in their allocation of Toyota automobiles. Petitioner
and Jordan did not participate in the false reporting. As a
result, HGTG did not receive as large an allocation of vehicles
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