Paul S. Lindsey, Jr. and Kristen L. Lindsey - Page 3

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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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