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total equity in CKH. Among other things, petitioner’s ownership
of the CKH preferred stock gave petitioner a liquidation
preference upon CKH’s liquidation.
After December 1, 1996, petitioner offered CKH as a
prospective buyer for Corisma and negotiated with NSI the terms
of CKH’s purchase of Corisma. Immediately before selling Corisma
to CKH, NSI changed Corisma’s name to LLDEC, Inc. (LLDEC). CKH
employees did not participate in the negotiations for purchase of
LLDEC (Corisma); petitioner alone conducted the negotiations.
Meder was unaware that CKH was to be LLDEC’s buyer until the
final stages of the transaction. Meder learned that CKH would be
the prospective buyer probably no earlier than January 29, 1997,
when Koehler issued a document authorizing CKH to purchase
LLDEC’s stock from NSI Enterprises.
On January 30, 1997, Earl Lester (Lester) on CKH’s behalf
executed the closing documents for purchase from NSI of the LLDEC
stock and LLDEC’s sale of the Decatur realty to Wachovia Capital
Markets, Inc. (Wachovia). Lester worked as a salesman for CKS in
Lexington, Kentucky, primarily selling Jet Fleet partnership
interests. Koehler asked Lester to travel to Atlanta to sign the
closing documents. Lester was appointed an officer of CKH on the
same day that he executed these documents for CKH. Lester was
not a knowledgeable participant in the transactions and was under
the impression that he was in Atlanta to sign documents for
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