Estate of Burton W. Kanter, Deceased, Joshua S. Kanter, Executor, and Naomi R. Kanter, et al. - Page 188

                                                -261-                                                   
                  Ballard introduced Eulich to Connolly as someone who would                            
            assist Connolly with the support services he needed to properly                             
            manage the Gateway Hilton.  Eulich then organized Gateway Hotel                             
            Management Co. (GHM) to make it appear as if Connolly was the                               
            owner of a hotel management company.  In early 1982, Connolly and                           
            Essex Corp. executed the GHM option agreement, which they                                   
            purportedly agreed to on September 18, 1981, and which recited                              
            that (1) Connolly owned 100 percent of GHM, (2) Connolly was                                
            transferring to Essex Corp. an option to acquire 80 percent of                              
            GHM (80 shares at $100 per share) for 10 years and, (3) in                                  
            exchange for the option, Essex Corp. would pay Connolly $1,000                              
            per year for 10 years.  The record also includes the Connolly                               
            promissory note dated December 15, 1981, from Connolly to Essex                             
            Corp., in the amount of $8,000, subject to 8 percent interest,                              
            payable for 9 years with a final balloon payment due in 1991.                               
            Because the payments under the Essex option offset the amounts                              
            due from Connolly under the promissory note, we infer that these                            
            transactions were nothing more than a sham to make it appear that                           















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