Agency: FBI
Originator: FBI
From: REGINATO, ALFRED A.
To: DIRECTOR, FBI
Document date: 12/19/1973
Document type: PAPER, TEXTUAL DOCUMENT

## Page 1

JFK Assassination System

Identification Form

Agency Information

Date:

4/16/201

AGENCY: FBI

RECORD NUMBER:

124-10282-10421

RECORD SERIES: HQ

AGENCY FILE NUMBER :

92-11741-12, 13

Released under the John

issassination Records

Collection Act of 1992

144 USO 2107 Motel.

Case#:N! 45956 Date:

Document Information

ORIGINATOR: FBI

FROM:

REGINATO, ALFRED A.

TO :

DIRECTOR, FBI

TITLE :

DATE: 12/19/1973

PAGES:

217

SUBJECTS :

DS, RCK, ASSOC, B/F INT, MED/PERS HIST, TELEPHONE

TOLL RECORDS

DOCUMENT TYPE: PAPER, TEXTUAL DOCUMENT

CLASSIFICATION : Unclassified

RESTRICTIONS: Consulted; 4; 10(a)2; 11(a)

CURRENT STATUS : Redact

DATE OF LAST REVIEW: 01/26/1999

OPENING CRITERIA: INDEFINITE, APPROVAL OF IRS, DOJ

COMMENTS: REFERRED TO DOJ, INC RPT

v9.1

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SD 92-577

IDENTITY OF INFORMANTS

Identity of Source

Contacted By

SD T-1 is

NO 1283-C-TE

SD T-2 is

CSLA 4178-S

SD T-3 is

CSLA 6679-S

SD T-4 is

CSLA 4143-S

SD T-5

SD T-6

SA HAROLD V. HUGHES

Identity of contacting

Agent is unknown

Identity of contacting

Agent is unknown

Identity of contacting

Agent is unknown

See Non-Symbol Source

Administrative Page

See Non-Symbol Source

Administrative Page

Toll information in San Diego was furnished

by Mrs. CAROL MILLER, Clerk, Pacific Telephone Company,

but should this information be made public, a subpoena

duces tecum should be directed to Mr. V. G. CAVEY, Chief

Special Agent, Pacific Telephone Company, or his repre-

sentative.

Toll information in Cleveland was furnished by

CSCD 2744-C.. In the event it is necessary to publicly

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SD 92-577

The identities of the sources utilized in this

report are as follows:

SD T-1 is LA 4622-PC

Identity of contacting agent is unknown

SD T-2 is LA 6962-PC

Identity of contacting agent is unknown

SD T-3 is NO 1283-C-TE

Identity of contacting agent is

SA HAROLD V. HUGHES

SD T-4 is MICHAEL A. BERTZ,

Attorney, SEC, Los Angeles

SD T-5 is NO 1283-C-TE

Identity of contacting agent is

SA HAROLD V. HUGHES

SD T-6 is OC CS 999-C

Identity of contacting agent is unknown

SD T-7 is CS SF 50-X

Identity of contacting agent is unknown

SD I-8 is identified on the

Non-Symbol Source, Administrative Page

SD T-9 is SD 919-C

Identity of contacting agent is

SA LOUIS A. MUNOZ

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SD 92-577

intormation coples are being submitted to

auxillary offices who

still have leads outstanding as

set forth in San Diego letter to Los Angeles dated

9/11/73.

An information copy is also being furnished to

New Orleans as the Strike Force Attorney in New Orleans

is interested in

SMITH's activities and

SMITH still has

close ties in that Division.

In addition,

1s the subject in a case

NBA, 00: Indianapolis"

On 10/5/73, ROBERT THALLER, Strike Force Attorney,

Los Angeles, California, furnished the

communication, directed to Mr. Feather-

stone from Fred I. Bennett, Special Attorney, New Orleans

Strike Force, subject matter is Securities Investigation -

Nationwide, dated 6/6/73:

The writer, along with an FBI agent, recently

interviewed an informant, herein referred to as Source

Number Onevon May 3 and 4, 1973,

las to S-l's knowledge of

organized crime involvement in illegal stock schemes

throughout the United States.

Prior to this interview, S-1

had been interviewed by the FBI concerning organized crime

involvement in the stock schemes and the information supplied

had been verified and corroborated and had proved highly

reliable.

All interviews were commenced with a reading of

rights,

and S-1

agreeing to have the interviews taped.

SIs indicating his indicating of such rs background,

S-l is an attorney in Louisiana and has practiced law for

approximately 20

with a number of individuals who were themselves involved

bet of yan outs

years. In about 1964, S-1 became involvec

in various stock

schemes (individuals and related companies

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SD 92-577

listed below). The information provided by S-1 has

been

recorded and is either first hand or hearsay (of which he

indicates from whom he obtained the information).

The main premise of S-l's information is that

Santo Trafficante of Miami, Florida, is involved in operation

in which large amounts of stocks and securities are taken out

of the United States to Europe and eventually

" europe and ev

the proceeds

from these securities are used by Trafficante's organization

Trafficante has

the head of it that

has been involved in numerous stock schemes across

the United

States.

Some of these stock schemes will be described

below.

The arrangement between Trafficante and McConnell as

stated by S-1 is as follows: (S-1's information on the

following comes from an

individual by the nameC. W. Deaton).

Trafficante is involved in the business of

financing and/or selling narcotics in the United States.

Due to the problem inherent in the transfer of narcotics

and the payment for these narcotics simultaneously,

Trafficante and his associates have deviced a scheme to

finance these narcotics deals.

The scheme involves the

raising of capital by stock frauds throughout the United

States.

These frauds are supervised generally by McConnell

(the fraud schemes will be set out in subsequent paragraphs).

After the stock frauds are perpetrated McConnell will pick

up the proceeds being in cash or securities.

If the proceeds

are in cash McConnell will convert this cash into good

securities, and of course it the proceeds are in securities

good"

securities.

McConnell will then take the

securities out of the country, usually going to Liechtenstein.

The reason that cash is not taken out of the country is due

to allegedly a $5,000 maximum limit of cash that can

be

taken legally out of the United States).

McConnell will

meet an attorney in Liechtenstein who will set up a trust

account, either with the securities or arrange for the

sale of

the securities and set up a trust account with cash.

After the trust account is set up the proceeds in the

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account are transferred to Swiss numbered bank accounts.

Then narcotics deals are arranged in which narcotics are

delivered to the United States and after the delivery of

the narcotics to the United States arrangements were made

for the transfer of these narcotics to or through Trafficante's

organization.

Payment for the narcotics and the delivery

of the narcotics are made simultaneously by the placing of

transatlantic telephone calls in which funds are exchanged

between Swiss numbered bank accounts (transfers also have

occurred in banks in Paris, France and Lebanon).

According to S-1 the above system affords Traffi-

have informant

in which Trafficante and his associates were gathered

and discussing the availability and use of securities to

finance their operations. Although at this meeting there

was no mention of the use of securities to purchase narcotics,

there was reference to Trafficante's connections and interest

in securities as a basis for raising capital.

The following is a general description of the type

of security schemes and frauds which have been described by

S-1 as being used by McConnell and his group throughout the

United States.

These schemes have occurred in many states

throughout the United States, including Louisiana, Arizona,

Texas, Utah, Indiana, etc.

There are three general types

of schemes, one involving the setting up of a shell corporation.

The shell corporation is a legal and legitimate company

which has very few assets. McConnell and his group will purchase

this company or gain control of the company and through a

systematic plan will begin to build up the corporation by

increasing the balance sheet of the company.

shell corporation will have stock and when the value of the

corporation is increased the value of the stock will

increase. McConnell and his group will stuff the corporation

with some capital and also with worthless stock and then make

a market for the shell corporation's stock.

This market is

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SD 92-577

made by culpable individuals who trade among themselves in

order to increase the price of the stock.

McConnell has

number of individuals who are brokers and who work for him

in inflating the value of the stocks and making a market for

the stocks.

Examples of

such companies in which this system

was used

are Arizona Bio-Chemical, Norda

Micro-Wave

Electronics, Computronix, Telstar

and Hotei. Also during

the time in which McConnell and his group are manipulating

the stock of this company, spin-off companies from the

original shell companies will be formed and the entire

will pyramid with the same goals of making a market for the

stock of the spin-off corporations which market value of the

stock is far inflated from the true value of the stock.

Some of these companies have legitimate individuals on the

board of directors,

such as Telstar which had ex-astronaut

Scott Carpenter and now deceased actor Audie Murphy. After

the market value of the stocks has been inflated McConnell

and his organization trade the stocks for other securities

which are good or sell their stock and take cash.

This cash

for securities is turned over to McConnell finds its way into

the Swiss numbered bank accounts.

McConnell according to

S-1, travels across the country

and supervises many of

these stock schemes.

McConnell is known to travel with a

suitcase full of money or stocks, collecting most of the

roceeds

from the stock schemes

in which he and his con-

ederates are involved

The second method in which the

stock schemes are perpetrated is the taking over of wholly

intrastate corporations by McConnell and his associates.

After the corporations are taken over,

"insiders stock"

of

the corporation is pledged for cash, with the cash eventually

going to McConnell and his associates.

Then the cash is

converted into good securities, as described above, and taken

out of the country. The third method used by McConnell and

associates is a scheme involving investing of some worthless

stock, as described in

schemes one and two, in casualty

insurance companies.

By this method, McConnell and his

associates through an intermediarv pledge worthless stock

for a loan from the casualty insurance company. Of course

the stock which is being referred to as worthless is not

known by the company to be worthless, and on paper the

stock appears to be solid security.

The cash that is obtained

by the pledging of these securities goes to McConnell and

then is converted and taken out of the country. The end

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result of all the schemes explained above is that in one

point in time the corporations fold and all the individuals

who are in possession of the stock are losers.

By this

time McConnell and his associates

have converted the

proceeds from the stock deals and the money is gone.

Eventually the insurance companies go under when the

stock that is pledged to them turns out to be worthless

and the individuals default in the payment of the loans.

Insurance companies in which this particular scheme was

used are Trans Plains, State Farm and Casualty of Florida,

and American Casualty

of Louisiana.

After the companies or

insurance companies fold an investigation usually turns up

a few individuals and these individuals are prosecuted.

In most cases these individuals are so called ten percenters

and the investigation never leads to McConnell or any of his

important lieutenants.

S-1 states that McConnell is one of the major

individuals of a group of individuals who are involved in the

stock schemes.

McConnell is known as the Chairman of the

Board and deals directly with Trafficante. Under McConnell

and working for him are approximately two hundred individuals

across the United States, among thêm are Buddy Reed, Cliftorc

Noe, Paul Noe, Peter Crosby, Dig Kozak and ai

the name of James Donadge (many of these individuals being so

called ten percenters to have been indicted, and in some

cases convicted for their stock schemes

in the last

three or

four years) Besides these individuals,.

S-1 has provided

information on a number of other individuals associated with

McConnell and has described their association with McConnell

mong these individuals are Dalton mith

and the different companies involved in ey valenthriles.

GiucPherens

eight states).

S-1 has provided the FBI with information about all

of the above listed individuals plus numerous other individuals

involved in this loosely knit organization which sets up

specific securities transactions.

S-1 has also provided the

FBi with intormation about certain individuals who will talk

to the government and provide information about the leaders,

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SD 92-577

including McConnell. While S-1 has no further information

on the Trafficante link, S-1 believes that if the govern-

ment was able to make a

case against McConnell, that

McConnell would implicate Trafficante. Furthermore, S-1

has supplied the FBI with information

that an individual

by the name of James J. Ryan is associated with the New

York ICN in the same capacity that McConnell is associated

with Trafficante.

S-1 has furnished the FBI a large amount of infor-

mation concerning

stock schemes throughout the United States

and the individuals involved.

One incident which he

related to the FBI concerned the meeting he had in Chicago,

Illinois, in September of 1968 or 1969g at the Palmer House.

At the meeting was Dalton Smith (New Orleans Strike Force

of Distefano.

S-l's rao l was called at which initially Sel was not

present.

up to the room at which time he

saw numerous stock certificates on the bed, some of the names

of the companies were Coca Cola Bottling Company of Los

Angeles, Truckers Association, and California Truckers

Association.

All the stock certificates were in the name of

an individual by the name of Fildes.

When S-l arrived he was

asked numerous questions

about the stock certificates and in

particular questioned as

to how to transfer stock certificates.

S-1 has numerous other instances in which he was party to

stock deals and has provided the FBI with this information.

stock schemes has been in most cases corroborated by

i sat ton

up tied by

piet cooperation

i a che presen another individual wur detains toothe

link with Trafficante, but the stock schemes by McConnell

and his associates.

ILl

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The New Orleans Strike Force's interest in the

above is the relation to the stock schemes as perpetrated

by McConnell and his group and their link with organized

crime.

If S-1's information concerning the Trafficante

link is true the network for the Trafficante organization

securities transaction crosses

many state lines and would

involve numerous

strike force jurisdictions. It has been

or four years

the our veration of the stock a he a hero much

over the last three

the perpetration of the stock frauds.

the worthless stocks initiated out of the particular stock

schemes are pledged to banks in order to secure loans and

generate "claim"

The true loss to this country as

perpetrated by these individuals has never been measured

in that most of these schemes are uncovered many months after

the individuals have bilked the public and the

institutions of the country..

If the Trafficante link is true,

the amount of money that has been supplied to his organization

through these financial

schemes is immeasurable.

On 12/10/73, Mr. THALLER brought to the San Diego

Office of the FBI copies of documents subpoenaed by the

Securities Exchange Commission (SEC) in Los Angeles with

the understanding that these documents would be reviewed for

a violation of statutes within the investigative jurisdiction

of the FBl. A separate case has been opened for the purpose

of reviewing these documents under file number 29-1040.

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Telephone number (714) 459-4027uwas subscribed

to by Algernon, Inc., which was

a front organization for

DALTON SMITH who now does business under the front ofPc.

Telephone number (714) 453-0794 is the non-

published. telephone number for DALTON SMITH, 8515 Cliffridge,

La Jolla, California.

A query of the California Law Enforcement Tele-

communications System (GLETS) reveals that California Driver's

License Number W617929 is issued to WALTER HAROLD SHOLLIN,

1020 East Rustic, Escondido, California. He is described

as follows:

Sex

Height

Weight

Hair

Eyes

Male

5'9"

160 pounds

Gray

Blue

On October 5, 19/3, a meeting was held in san Diego,

California,

with representatives of the Los Angeles Strike

Force as well as other local and Federal agencies which would

have an investigative interest in DALTON SMITH. At this

neeting it was decided that the most direct means to.

investigates StiltH was to pursue vigirously nis purposec

shipment of helicopter parts to El Salvadore which would be

in violation of the Munitions Control Act. United States

Customs

the nations con

as well as the San Diego Police Department had under

physical surveillance helicopter parts physically stored

in Whittier, California.

On October 25, 1973, Detective SHARON SULLIVAN,

Investigative Support Unit, San Diego Police Department,

s helicopter parts had been moved from

Whittier, California, to Wilmington Harbor, California, anc

that they were stored in the facilities of

American Trans-

port Systems.

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DRINKWATER has since quit United California Bank and is

the president of his own bank, Bank of Irvine, which is

presently in the planning stage.

American State Bank of Orange, California, made a

$100,000 loan to Bob Hatch Crane and Rigging, but this loan

has

since been offset by the funds in the Hatch Crane operating

account.

Patterson acquired the assets of International

Supply, Inc. (military helicopter parts) through an exchange

of Patterson stock.

To date, no permit to allow the

exportation of the parts to a foreign country has been

secured.

Nonetheless, the principals of Patterson Corporation

have made the necessary negotiations with the government of

El Salvadore for the five million dollar sale.

It is

anticipated that the deal will be finalized on October 15,

1973.

On November 22, 1973, another conférence with

individuals representing

State

and Federal agencies interested

in the activities of DALION SMITH was held.

At this time

Postal Inspector JAMES INGRHAM attached to

the Los Angeles

Strike Force advised that in their efforts to sell helicopter

parts to El Salvadore, AL PADILLA and JOSEPH MEROLADand SMITH

flew to El Salvadore.

Finally a meeting was held with El

Salvadore officials at the Beverly Hyatt House in Los Angeles,

which was attended by J. EDGARD GUEVARA and GUILLERMO A.

ROEDER, e GERENTE. At this meeting was former astronaut

GORDON COOPER who was introduced as the Vice President in

Charge of Sales for PC, MARK STEVEN MORRISON, Vice President

in Charge of Finance and RICHARD BRADFORD ANDERSON, President

of PC, along with DALTON SMITH who appeared to be running

the show.

The El Salvadorians were expecting to get

helicopter parts owned by PC for $1.25 million cash and were

willing to put another $3.75 million into the corporation

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as they were to set up a factory in El Salvadore for

the manufacturing of commercial helicopters and run the

operation for the country.

The background of the PC officials was furnished

conficentially by the United States Commerce Department to

the El Salvadorian representatives but they seemd not to

be dissuaded in their pursuits of PC because they felt with

GORDON COOPER it could not be shady.

At this meeting INGRHAM stated that PC on May 31,

1973, had an inhouse balance sheet prepared by Baranov and

Earanov, Certified Public Accountants,

Cosgrove builaing,

San Diego, California,

and this

balance sheet reflected

assets over $22.5 million consisting principally of

helicopter parts.: INGRHAM stated that the See in los

Angeles has subpoenaed most of the stockholders of record

of PC as of October 29, 1973, and have also subpoenaed

BARANOV to appear before the

Commission in Los Angeles.

California.

de furnished the photocopy of the shareholder:

of record of PC as reflected in the record of the transfer

agent in Las Vegas, Nevada, on October 29, 1973.

Names

Number of Shares

Amcourt Systens, Inc.

Bache

& Co., Inc.

Banister, James M.

Banister, John R.

Brady, D. A.

Burns, Rex

Burstein, Mrs. Margery G.

115,000

• 200

20,000

10,000

10,000

40, 000

1,000

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Names

Byrd, John P.

Carr, Larry A.

Cary, Elgin

Daniel, Lewis

Degn, Dwayne - Trustee

Du Pont Glore Forgan, Inc.

Feichtinger, Sylvester

Gavrel, Louis John

Gotthelf, Col. Edward

Graure, Nellie

Higson, Michele

Hy-- Wallace J. & Marion A.

Jones, Keith T.

Jordan, Jord H. JI.

Jordan Investment Company

Kalish, Marc

Kamrar, Cynthia

Number of Shares

10, 000

128,000

400

8, 000

50,000

1, 500

10,000

50,000

10,000

85, 000

40,000

2, 000

10,000

7,650

7,650

500

10,000

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Names

Kowalewski, Mary H.

Linza, Charles D.

Lockhart, Frank

Lunco

Maher, John R.

Marty,

Frederick S.

Mason, Lorraine

Merola, Joseph R.

Morrison, Mark

Oliver,

Robert M. III

0 'Shaughnessy, James P.

Pitler, Robert L. - Trustee

Poretto, Mario

Rodda, William E.

Schwenn, Mary K.

Slutsky, Martin H.

Wall, Leo I.

Wiles, Gary

Dean Witter & Co. Inc.

Young, Lois H.

Number of Shares

6, 500

85,000

5,000

61,800

3,300

500

10,000

32, 000

20,000

1,700

500

50, 000

25, 000

10,000

10,000

100

8, 400

50,000

300

517

Total

1,007,517

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It was the consensus of investigators attending

nis meeting that the helicopter parts stored in wilmington.

California, would probably never be shipped to El Salvadore

HOOPER that the containers were too large to be placed

aboard a vessell for El Salvadore unless they were repacked

into something else.

HOOPER also stated that HENRY FRANK

MEIERHOFFER, white male American,

born April 8, 1924, who

save the last apprisal of the helicopter parts

which are

currently warehoused at Wilmington, is suspected by United

States Customs of smuggling activities.

Postal Inspector INGRHAM advised that all known

bank records pertaining to the activities of SMITH's

associates and the records of PC have been subpoenaed by

the SEC in Los Angeles. This includes the

in Atlanta, Georgia, since RICHARD ANDERSON was deposed as

PC President after he testified before the SEC on October 9,

1973.

LARRY A. CARR, 37 Arpege Way was made President of

INGRHAM stated that the subpoenaed records would be

made available to any interested

agency for their review

and discovery of any violation within their jurisdiction.

On December 17, 1973, INGRHAM telephonically

advised that when shareholder of record GARY WILES, an

attorney who was subpoenaed before the SEC in Los Angeles,

American Oil Company came to him to pick up his stock

powers for PC and the powers of DWAYNE DEGN. At this time

WILES drafted an acquisition letter to PC stating he was

signing the stock powers at the direction of DALTON SMITH.

Certified Public Accountant EDWARD BARANOV, wher

subpoenaed by the Sel, stated that at the request of RICHARI

ANDERSON and in the offices of PC in La Jolla, California,

he drafted a letter

on August 17, 1973, certifying a

financial statement.

He subsequently returned to his own

office and dictated

a rescission letter and went to PC

headquarters asking for his original.

He was advised

that the original

letter had already been sent to El

Salvadore by RICHARD ANDERSON.

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BARANOV received a call

Erom Mr. VIE with old Reliable fire Insurance Company ol

St. Louis, Missouri, who indicated PC owed his company

money and wanted to know if the corporation had the means

to pay their debt. INGRHAM noted that Midland Service

Agency of Atlanta, Georgia, wrote business casualty insur-

ance on PC but could not understand where Old Reliable

Fire Insurance Company of St. Louis would be involved.

DONNA and JERRY JEWITT, former stockholders of

record of PC have been called for subpoena before the SEC.

of age and is a friend of WILLIAM CAMPBELL. She worked as a

no lend of it. 14N

DONNA is approximately 20 years

secretary at United California Bank in Escondido and is well

acquainted with DAVID DRINKWATER. CAMPBELL Came to the bank

asked her and her brother to sign stock powers.

CAMPBELL

put the JEWITT names on some shares of stocks and also the

names of other individuals.

ocher innes datone shares

ARMOND MINGIONE, also of Escondido, California,

telephonically advised that he was a friend of CAMPBELL and

did not know much about PC but had received stock through

CAMPBELL.

NELLIE GRAUERE Owner of record of 85,000 shares of

PC was subpoenaed before the SEC and advised that she

received her stock through CHARLES LINZA. She acknowledged

that she was the wife of EDWARD ZUBER, who accompanied her

to SEC offices and that her married name is Mrs. ANN ZUBER.

She claimed

have the stock in her name as he was in bad health at the

time. ZUBER was also placed under oath and gave his

residence address as 3073 Yukon, Costa Mesa, California,

and claimed to have lived there

for six to seven years.

ZUBER claimed that he was

more or less victimized and that

he knew that LINA had been trying to sell his helicopter

company for two or three years and that he only acted as

a middle-man placing International Supply Systems together

with PC and was given 85,000 shares for his efforts.

LINZA

turned over books and records showing liens and other

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SD 92-577

indebtedness against International Supply Company and he

was guaranteed by PC that the shares of stock that he took

he was dealing with RICHARD ANDERSON

as President or soon

to be President of PC.

Off the record, ZURER then stated that DALTON SMITH

was behind the corporation and that he had personally seei

Five different financial statements for PC and that he

stated that he would be willing to speakto the SEC again

after he consulted with his attorney. The SEC also

subpoenaed R. M. SCOTT, who wrote an appraisal inventory

on the helicopter parts owned by PC. He brought no work

papers with him and stated that the as is value of the

helicopter parts would be about $2 million, but if the

parts were brought up to FAA standards and the obsolete

parts up-graded in a control liquidation properly

advertized, the parts could bring $22 million in the oper

market.

parts that were in opened containers.

INGRHAM stated that trading was suspended in the

shares of PC on October 29, 1973, for a period of ten days

and this ten day suspension has been renewed as needed.

Set forth are the subscribers to telephone

numbers called from the two resident telephones of DALTON

SMITH during the months of April, May and June 1973.

nine of apesid

AT ATLANTA, GEORGIA

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