In early 1978, William Treffinger and Roger Macon sued Pro Arts, Mike, John and me in Atlanta, Georgia.

This suit alleged that we had run the company in a deliberate fashion to our own personal benefits and undermined the minority shareholders in our pursuit to be successful. It also stated that we had intended to expand the business into the lithography business and never disclosed to the minority shareholders the true value of the company.

In reality, Treffinger and Macon though Mike, John and I had "inside information" on the Farrah poster and the huge profit we made in 1977 should have increased the value of their stock at the time that they had sold their stock to John!

The fact that Treffinger had sold all of his stock to John four months prior to me ever hearing the name, "Farrah Fawcett," was not important to Treffinger and Macon's Attorney Boyd Page. Page had taken the case on a contingency since Macon did not have any money and the fact that Pro Arts had this huge exposure in the media made Pro Arts a "big whale" ready for the shark attacks.

It is my firm belief that Macon was the party responsible for the lawsuit. Even after John had overpaid Macon on the last 4 shares of stock in early January of 1977, Macon probably felt that if Pro Arts became successful, he could find an attorney somewhere that would like to sue the big whale on a contingency basis.

Treffinger had sold his stock for three times what he had paid for the stock in 1969. This was after Pro Arts had been foreclosed upon by Old Phoenix National Bank in 1972 and after the company had moved to Medina with no Net Worth.

Treffinger had lied on his 1975 Tax Return stating that he only received $4,000.00 for the nine shares of stock John had purchased from him that December. The $5,000.oo Cash Treffinger had also received was not reported until a few months prior to the Lawsuit being filed in Atlanta.

I believe Macon first contacted Boyd Page to represent Macon in the lawsuit. When Page discovered that only 4 shares of stock are the possible real damages that might be questionable, Page encourages Macon to find Treffinger to bring a 10% shareholder into their lawsuit. I believe that Treffinger was reluctant to get involved since he had not reported the $5,000.oo cash payment he received and Macon "smells something afoul" at this point.

Perhaps Macon intimidates Treffinger threatening to bring him in as a Third Party Defendant instead of a Plaintiff and this makes Treffinger join Macon in the lawsuit. After all, it is better to be a Plaintiff with your attorney on a contingency than to be a Defendant and have to pay an attorney to defend you!

I believe once Page discovers that Treffinger has "dirty hands" with the IRS, he encourages Treffinger to amend his 1975 Tax Return and by doing this, Treffinger appears to be "clean" should this case ever go to trial.

It is also my belief that Macon, Treffinger and Boyd Page believed they would grind us down to a point that we would be willing to settle the lawsuit especially since Pro Arts had all this money from the Farrah poster.

Little did they realize that the 5,000 poster racks would drain over $1,000,000.oo from the company and that other pending litigation would drain the remainder of the working capital when it was attached to run-away inflation and the on-coming rising interest rates!

When we were sued in Atlanta, we had to obtain legal representation in Atlanta to defend ourselves. This required a Retainer and we instructed the attorneys to break the venue and have the lawsuit removed to a Cleveland Federal District Court.

It is really quite simple. 1. Treffinger and Macon were residents in Ohio when they purchased their Pro Arts stock; 2. Pro Arts is an Ohio corporation; 3. Mike, John and I were at the time Ohio residents; 4. Treffinger came to Ohio to sell his stock to John; 5. All the evidence is in Ohio;

With all these facts, our attorneys were unable to persuade the Federal Judge to dismiss the case on venue and the case remained in Atlanta! Why?

It is really quite simple; our Atlanta attorneys would reap huge legal fees defending the great Farrah poster company if the case remained in Atlanta. It would also mean great income to the Atlanta firm that represented Treffinger and Macon.

In the Federal Rules of Civil Procedure, Rule 11 is sometimes invoked to punish attorneys and their clients for bring harassment and frivolous lawsuits against defendants.

Boyd Page with his associate attorney, Jim Rollins, began a barrage of Interrogatories and Production of Documents that would make any federal judge angry under any circumstances! The Interrogatories were several pages and there were at least three different sets of questions directed to each of us. Additionally, we had to produce all the checks that we had from 1969 to 1978. All memos, expense reports, Director Meetings, both personal and corporate tax returns, all correspondences, letters, catalogues, sales sheets, reports, invoices, purchase orders, etc.

During this lawsuit, which lasted from 1978 through 1985, Mike, John and I refused to settle under any circumstances! During the Chapter 11 Re-organization, we were betrayed by the conspirators even though they had agreed not to settle the lawsuit on behalf of the Pro Arts, they conspired to give Macon and Treffinger a $500,000 pre-petitioned claim providing Macon and Treffinger (through their attorneys Page and Rollins) did NOT APPEAL THE PLAN AT TIME OF CONFIRMATION!

Throughout the rest of this book, I will refer to the Pro Arts Chapter 11 Plan and its Confirmation Hearing on June 10, 1983, as these are significant areas where massive frauds were perpetrated upon me, the Federal Bankruptcy Court and the REAL CREDITORS OF PRO ARTS!

Treffinger and Macon were not creditors and should never have been given one cent from any distribution of funds at the time of confirmation.

But, as I mentioned earlier, Dietrich and Roetzel & Andress were the attorneys representing Pro Arts during the Chapter 11 bankruptcy. The need to bribe all individuals that might object to the plan was foremost in their objectives.

The numerous fraudulent representations throughout the bankruptcy to gain control of Pro Arts were deliberate and well planned! It involved the Old Phoenix National Bank, its Vice Presidents Gary Hallman and Donald Bramley, the bank's attorney, John Schwemler and his firm Brouse & McDowell, Medina County Prosecutor Gregory Happ, and the New York investors!

The details that will be stated later are supported by these individuals' representations in written form filed with the Akron Federal Bankruptcy Court with Judge Harold F. White the acting judge!

It was in July of l978, after the filing of the Treffinger and Macon lawsuit that I discovered another conspiracy within the Pro Arts organization.

It happened that Richard P. Mihalik, our National Sales Manager, who had been with Pro Arts from 1971 through the present time, conspired with our Atlanta Sales Representative, Donald Doughty, and our New York City Sales Manager, Paul Useloff, to form a company in Atlanta called "Sunbelt Distributing."

Shortly after the Farrah poster's success, Pro Arts paid Rick Mihalik a $20,000.oo bonus. This was given to Rick in September of 1977 in addition to Rick's new company car, raise and profit sharing contribution to his retirement program.

Rick was a friend of all three of us. Though Mike and John socialized more with Rick at the local country club, Rick and I would travel to the trade shows and spend a great deal of time together in sales.

Rick worked directly under me and I had trained Rick to be my Sales Manager. Even though Rick began as our Purchasing Agent, the need to help me in Sales became evident especially during the Farrah period.

After Rick received the $20,000 bonus check and after he had paid the taxes on the bonus, Rick took ten thousand dollars and invested it into a company in Atlanta with Doughty and Useloff.

Prior to Don Doughty starting with Pro Arts, he had been a Buyer with Daylin Retail Stores in Texas. He had purchased our poster program first, and then replaced us with a competitor's poster line shortly thereafter.

When Daylin's went out of business, Doughty moved to Atlanta and contacted me about representing Pro Arts in the three state area. Though we had a few accounts in the area, I had administered to those accounts as the poster business was run primarily through our distributors in those states.

Doughty called on my accounts and as our flocked poster business grew, Doughty began to obtain accounts other than the accounts Pro Arts had established.

When Doughty contacted our office requesting an advance on his future commissions, he pleaded with Mike, John and me for the advance as he had an opportunity to purchase a condo in the Atlanta area at a super price, but did not have the thousands needed for the down payment.

Pro Arts felt that Doughty was a worthy representative and we felt that if Doughty did buy this condo, he would work harder and be more loyal to our company.

This proved to be wrong!

Paul Useloff had been a salesman for our Representative Organization in New York. When the partnership broke-up, Useloff was the only salesman that had diligently tried to sell our posters to the New York based Chain Stores.

Pro Arts never had a good salesman in New York. It seemed that we were replacing the salesman every six months.

Useloff agreed that if we paid him $200.oo per week and put him on our hospitalization plan, he would continue to call on the accounts he had been calling on for the past six months. I convinced both Mike and John that this was in the best interest of the company and by making Useloff our New York Sales Manager; we would have established a permanent office within that city.

Useloff proved to be very good and we advanced him money even when we could not afford to do it. But we had made a commitment and we were determined to keep our word.

This became important especially since the Farrah poster was about to become part of our history. Because Useloff had represented us for several months, when the Farrah poster took off, the Buyers in New York knew about Useloff and they began to purchase the Farrah poster through Useloff.

It was this success that generated several thousands of dollars for Useloff and unfortunately, Useloff also became a shareholder in Sunbelt.

The significant aspect about Sunbelt was the fact that the company did not become a distributor of Pro Arts products by the normal corporate policy.

An Atlanta distributor had gone out of business prior to Sunbelt going into business. This gave Mihalik, Doughty and Useloff an opportunity to steal the old distributor's computer number and establish distributor prices through that number for Sunbelt.

Mihalik was considered to be the #4 man in Pro Arts' management team. Mike, John and I were the first three numbers. Mihalik had threatened individuals in Pro Arts with termination of their employment IF IT WERE EVER DISCLOSED THAT SUNBELT EXISTED!

Mihalik had obtained the cooperation of Frank Dillon, Pro Arts' Controller, in order to establish the distribution number in the computer. Dillon had even flown to Atlanta with Mihalik to help set up the books and warehouse of Sunbelt.

From September of 1977 through mid-July of 1978, Mihalik, Doughty and Useloff operated Sunbelt without John, Mike or me discovering the company.

In January of 1978, after Mike took the Sales area from my responsibility, Mike made Rick Mihalik the Vice President of Sales and Joe Orlinsky and Tex Elzy became Mihalik's East and West Coast Sales Managers. In March of 1978, after Mihalik had been made Vice President of Sales for Pro Art, pressure to discontinue the sale of posters to distributors prompted Mihalik to extend a large credit for inventory to Sunbelt.

Mike had earlier indicated that no distributors were to be given credit for posters after January of 1978. Since the company was in the process of releasing the new Cheryl Tiegs poster in the pink bikini swimsuit, the opportunity to have a "second Farrah" was at hand. The sales representatives had expressed the desire to sell directly to the 5,000 chain stores the company presently had as Farrah customers and with the wholesale price of $0.80 per poster instead of the $0.40 flat price to distributors, the company could made huge profits by cutting out the distributors.

John was reluctant to cut the distributor from our selling price list.

I was unsure of the problems that might be generated with this move, however Mike, Mihalik, Elzy and Orlinsky were keen on the idea of discontinuing the distributors. Mihalik was not as enthusiastic as the rest, however no one knew about Sunbelt at the time and this lack of enthusiasm was not very noticeable at that time.

It was in mid-July after the Chicago Transworld Trade Show that I discovered something that did not appear to be correct.

Bonnie Yost, our in-house sales and office person, brought me an order that she had received in the mail from our account in Cheyenne, Wyoming.

She asked me to inspect the order form carefully.

I recognized the form as a Pro Arts preprinted order form only the prices on the form we lesser than our normal wholesale prices.

Instead of incense priced at $6.00 per dozen wholesale, the price was $5.40 per dozen.

The poster prices were also discounted.

Then I noticed that the name on the bottom of the order blank was not Pro Arts, Inc. but Sunbelt Distributing from Atlanta, Georgia!

I asked Bonnie to bring me the Sunbelt file since I assumed Sunbelt was a Pro Arts distributor. Everything on their price list was everything that Pro Arts sold EXCEPT IT WAS 10% CHEAPER!

Upon reviewing the sales made to Sunbelt by Pro Arts, I immediately saw that the sales representative receiving a 5% commission on the sale was Doughty in Atlanta.

I saw each sale as it progressed through the Computer.

First Sunbelt used the old distributor's number and name to establish sales to their location.

The next order had the Sunbelt name with the Old Distributor's number.

The most distressing thing that I saw was a large order shipped to Sunbelt long after credit to the distributors had been extinguished!

And to make the order even more perplexing, the money due Pro Arts was over sixty days old!

On all the orders, Doughty received a 5% commission.

On the last order, the C.O.D. instructions on the packing slip had been changed (hand written) by R.P.M. to Net 30 day terms.

Since I knew very little about Sunbelt, I called Sunbelt to inquire about the money over-due Pro Arts.

When the secretary answered the telephone for Sunbelt, I asked to speak to the owner.

After a short pause, a man picked up the telephone and I asked him his name. He said that his name was Don. I recognized his voice as being Don Doughty since I had talked to Don hundreds of times before and he had the kind of voice that you could recognize immediately.

When I told him that I was Ted Trikilis, I sensed that he immediately put something over the telephone to disguise his voice. His first friendly response turned to short one-word responses.

I told him that I was calling about the money due on an old invoice and he immediately apologizes and said that he would pay the invoice immediately.

Because Doughty failed to respond in his normal friendly manner and his short direct responses, I took the file of Sunbelt to John and told him about my preliminary investigation.

Little did I know that what was about to be discovered would affect Pro Arts and all our lives for years to come.