McCoy

In early 1971 Lee McCoy (hereafter McCoy) owned a moving and storage business with offices located in the cities of Fresno, Tulare and Bakersfield; the business included a lease on a warehouse in Fresno, a lease on a warehouse in Tulare, and apparently a fee interest in a warehouse and the real property on which it was situated in Bakersfield; the business also included storage accounts, various items of furniture and fixtures, motor vehicles and moving equipment.

In April 1971 McCoy commenced negotiations to sell the business to Gary Workman and Workman’s two partners; he represented to Workman that the business had an average gross income of $300,000. However, when McCoy refused to display the business’ accounting records and the income tax returns, negotiations were terminated.

In June 1971 Lee West and Stuart McCreight became interested m purchasing McCoy’s moving and storage business; McCoy led the prospective purchasers to believe that for the previous five years the business had an average annual gross income of $180,000 and an average annual net income of $59,000. When West and McCreight asked to see the income tax returns, McCoy refused; however, he told them…