Richard S. Cotler - Page 3




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          treatments.  Mr. Cotler worked hard to achieve success and hoped            
          to find a cure that would allow him to continue his business.               
               In order to keep the firm operational, Mr. Cotler began                
          lending the firm money in 1996.  At the end of 1996, the balance            
          of Mr. Cotler’s loan to the firm was $5,027.  As Mr. Cotler’s               
          health deteriorated, he was unable to work and had to lend more             
          money to the firm.  By the end of 1997, the firm owed Mr. Cotler            
          $74,934.  By the end of 1998, the firm owed Mr. Cotler $177,770.            
          As of the date of trial, Mr. Cotler’s condition had not improved.           
          Mr. Cotler closed the firm in 2000 and subsequently filed for               
          bankruptcy.  Mr. Cotler expects never to work in his profession             
          again.                                                                      
               Mr. Cotler filed a long-term disability claim with Standard            
          on April 8, 1997.  On the disability claim application, Mr.                 
          Cotler stated that he paid 100 percent of the premiums.  Standard           
          declared Mr. Cotler disabled and waived premiums on the policy,             
          in August 1997.  The total amount of Standard premiums                      
          attributable to Mr. Cotler in 1997 was $567.                                
               From approximately 1994 until 2000, Mr. Cotler employed                
          Arline Marlane as an outside bookkeeper for the firm.  Ms.                  
          Marlane wrote all the checks for the firm, completed the payroll            
          tax returns, and reconciled bank statements.  After each check              
          was written, the amount of the check would then be entered into a           
          specific column, representing a particular expense category.  The           







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