John was extremely competent in investigating internal problems. When I pointed out the little "flags" that were waving in the Sunbelt Distributing file, John began discussions with all the people in our office that might have had exposure to any aspect of the situation.

After two or three days, John called an "after hours board of director's meeting" in Mike's office to discuss what he had discovered.

After everyone had gone home, Mike, John and I met in Mike's office.

John asked us both a question, "What would we do if we discovered that someone in our office had started a business and was stealing information from our company?"

Without hesitation, both Mike and I said that we would fire them!

Then John asked the second question, " What if the person was a top management employee?"

It was again confirmed by Mike and me that we would fire them.

John then asked both Mike and me to think who each of us thought it might be.

Both Mike and I were not even close. We never in a thousand years thought that it was Mihalik.

When John confirmed that he had discussed Sunbelt with almost everyone in the office and each had confirmed knowledge that Mihalik had started the company with Doughty in Atlanta, we decided to confront Mihalik the next morning and confirm the information.

Mike, John and I met with Mihalik in Mike's office. Since Mihalik was now reporting directly to Mike, it was Mike responsibility to determine what was to be done if the information was true.

Mihalik's wife had just had a baby and with Mihalik being made Vice President of Sales in January, Mihalik had no idea that we had discovered Sunbelt.

When John asked Mihalik about Sunbelt, Mihalik denied everything. As we got deeper and deeper into the information, Mihalik finally caved in and admitted that he had invested his Farrah bonus money into Doughty's Sunbelt business.

He also stated that Dillon knew about it and that Useloff was part of the Sunbelt business.

After Mihalik left the office pending Mike, John and my decisions, we called Roger Ingraham, the Prosecuting Attorney for Medina County, who was also our corporate attorney for advice.

Roger suggested that we decide what direction the company was going to go before he would get involved with the Mihalik situation. Roger was also a friend of Mihalik and he found it difficult to believe that Mihalik would betray Mike, John and me after we had done so much with him.

We decided to give Mihalik a chance to "cleanse" him and remain with the company. If Mihalik agreed to take a Lie Detector Test, and pass the test without lying, we would demote him to Sales Manager and give him an opportunity to redeem him with us.

Mihalik took the test and failed.

The person conducting the test stated that in the twenty years he had been administering the test, Mihalik was the most untruthful person that he had ever tested.

With that evaluation, we terminated Mihalik.

We obtained a taped recorded statement from Frank Dillon regarding his involvement with Mihalik and Sunbelt and discovered that nearly every employee in the company knew about Mihalik and Sunbelt.

This prompted me to call a meeting of all our employees to set the record straight.

At the meeting, I told everyone that Mike, John and I were the sole shareholders of Pro Arts. If anyone including Mike, John or me ever did anything that seemed even slightly improper or illegal, it is that person's responsibility to bring it to the attention of anyone of the three of us.

If Mike, John or I were to discover any other situations from that date forward that was improper or illegal, any person having knowledge of the act would be terminated with the perpetrators because they would be considered an accessory after the fact.

It was later discovered from Frank Dillon that Mihalik had obtained a copy of our complete customer list and that the mailing of their literature to our Cheyenne Book Store account was sent to other accounts as well!

In Ohio, this act of obtaining an account list in this fashion for the purpose of doing that which Mihalik and Sunbelt had done was a Criminal Act. The customer list is a TRADE SECRET of Pro Arts and the theft of the mailing list violates Ohio's Trade Secret Laws.

Mihalik did not lose time in his quest for employment.

He worked for Bi-Rite Enterprises for a while. Then Western Graphics and ultimately became a sales manager for C C Sales in Chicago. All of these companies were competitors of Pro Arts and probably had acquired our account list indirectly from Mihalik.

In 1979, Mihalik had found an attorney firm to represent him and his associates, Useloff and Doughty.

In terminating Mihalik, we also terminated Doughty and Useloff for identical reasons.

Cantwell & Smith were Chicago attorneys that represented the threesome.

I can remember meeting Peter Cantwell the day he came to Pro Arts to discuss his clients' cases. He was a chubby tall person that reminded me of Baby Huey, the cartoon character. His attitude was very abrasive and he was not concerned with the circumstances that led to his clients' termination.

He demanded some outrageous amount of money and both John and I were determined not to pay them a single cent.

When Cantwell was leaving our office, he confidently stated in the normal legal sense, "Either pay me now or pay me later."

I responded, "I'll pay you in Hell!"

Shortly after this meeting, Cantwell and his partner, Steve Smith filed a federal lawsuit in Chicago against Pro Arts and Mike, John and me.

Again we had to hire local attorneys to defend our company on the grounds of Venue.

Here was a former Ohio resident, former employee of an Ohio corporation, suing three Ohio residents and the Ohio Corporation in the state of Illinois.

All acts occurred in Ohio. All defendants are in Ohio. The three Plaintiffs are in three different states (New York, Georgia and Illinois).

This was going to be a harassment lawsuit and Cantwell and Smith were going to cause us a lot of expense.

It appeared that Mihalik had contacted Boyd Page and Jim Rollins in Atlanta so that they could double-team their efforts in suing our company.

Our Chicago attorney had me appear in Chicago for a deposition.

Cantwell asked me if Pro Arts was doing business in Illinois. Since 1977, Pro Arts had not sold any merchandise in the state of Illinois. We did not have a salesperson there and we did not consider Illinois a state within which we conducted business. In fact, we had a creditor in Chicago that we owed over $50,000.oo from a Farrah return and we had yet to offset that return with any additional sales since 1977. That customer was Walgreen Drug Stores.

I was deposed in May of 1979 in Chicago. Later in September of 1979, I had to go to Atlanta for a five-day deposition with Boyd Page regarding the Treffinger/Macon lawsuit.

Page, sitting slovenly in a chair across from me asked hundreds of questions regarding the Pro Arts history and exhibits before us. Answering always with the truth, I did not try to hide anything since I felt that I had never done anything wrong.

Page asked a simple question: "Do you have any customers in Chicago?"

Nearly three weeks earlier I had consummated a sale of Strawberry Shortcake posters to Walgreen Drug to off-set the $50,000 credit that we owed the chain. So I answered, "Yes."

He asked a second question: "Who would that customer be?"

I replied, "Walgreen Drug Stores."

Little did I know that Page intended to send that portion of my deposition to Cantwell to be used in Cantwell's case before Federal Judge Shadur. Cantwell stated that I had deliberately perjured myself to avoid Venue and Shadur confirmed Cantwell's statement by granting Sanctions against Pro Arts in excess of $7,000.oo!

Then, without further recourse, Shadur dismissed the case suggesting that the lawsuit be brought in the Ohio District Court since it was not in his venue!

I was never given the opportunity to explain my answer to the judge and Cantwell used the Sanction decision to project the image that I lie under oath and that his clients are entitled to attorney's fees even though their action was a harassment suit