   2.   The Hyatt Transaction

     Kanter first met Lisle in the late 1960s, and he met Ballard

no later than the early 1970s, in connection with the
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construction and opening of the Houston Hyatt Hotel.   Ballard and

Lisle had been involved in the development of the Houston Hyatt

Hotel as Prudential representatives.   Kanter was connected to the

project through his representation of the Pritzker family and the

award to Hyatt Corp. of the management contract for the hotel.

J.D. Weaver was also involved in this project as a representative

of Tenneco, which hadby

Kanter, Frey understood that it was Kanter who would bring the

deep-pocket investors to his projects.
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     Kanter also arranged for subsidiaries of IRA (Zeus) and of

THC (Zion) to invest in some of Frey’s projects as limited

partners.

     In early 1980, Ballard approved the sale by a pension fund

managed by Prudential of a large apartment complex in Florida

known as Village of Kings Creek to a limited partnership

organized by Frey.   Ballard visited the project during the

conversion period.   Frey was very successful in converting the

property to condominiums.   Shortly