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began working for Empire Gas Corp. (EGC), a corporation engaged
in the liquefied petroleum business.
In June 1994, petitioner and his wife, Kristen L. Lindsey
(Lindsey), acquired a controlling interest in EGC. On or about
June 30, 1994, petitioner became chief executive officer and
chairman of the board of EGC.
EGC’s Agreement With Northwestern Growth Co.
In late summer of 1994, petitioner was introduced by Morgan
Stanley, the investment banking house used by EGC, to
representatives from Northwest Public Service Co. (NPSC), a
utility company. In 1995, EGC entered into an agreement with
Northwestern Growth Co. (NGC), a subsidiary of NPSC, to acquire
Synergy, a propane company. In furtherance of their agreement,
EGC and NGC formed SYN, Inc. (SYN), which was to acquire Synergy.
Once Synergy was acquired, EGC was to supply the management team
to operate it, and NGC was to supply the necessary financial
resources. EGC also was to manage any other propane companies
acquired by NGC through SYN. In exchange for its management
services, EGC was to receive a 30-percent ownership interest in
SYN. SYN acquired Synergy in August 1995.
NGC wanted SYN to grow, with the ultimate goal of entering
the public financial market through the sale of interests in a
master limited partnership (MLP). To that end, petitioner used
his contacts in the propane industry to pursue the acquisition of
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