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Eulich’s real estate development activities were primarily
conducted through Vantage, Inc., a corporation that he owned. In
addition, Eulich later became a majority shareholder in Motor
Hotels Management, Inc. (MHM). During some of the years at
issue, MHM, IRA, THC, and Gateway Hotel Management Corp. were
partners in the Essex Partnership, which partnership is discussed
more fully below.
In 1968, Eulich acquired Rodeway Inns, a company that owned
a small chain of garden court motels. Over the years, Rodeway
Inns increased the number of its motels. In acquiring many of
Rodeway Inn’s additional motels, Rodeway Inns and Eulich obtained
financing from Prudential. From 1968 through about 1973, in
securing this financing for Rodeway Inns, Eulich dealt with
Ballard. In about 1974, Eulich and Prudential became
dissatisfied with the performance of the hotel management company
that was managing and operating some 16 Rodeway Inns motels that
had been financed by Prudential.
Eulich decided to establish his own hotel management
company, MHM, to operate the motels. Eulich arranged to have
Robert James (James), who had substantial hotel management
experience, serve as MHM’s president and manage MHM’s day-to-day
operations. MHM was incorporated on January 1, 1975. MHM’s
three shareholders eventually included Eulich (who was the
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