The Scales of Justice, the Notebook of Rationality

Lady Justice is widely depicted as carrying a scales.  A scales has the property that whatever pulls one side down, pushes the other side up.  This makes things very convenient and easy to track.  It's also usually a gross distortion.

In human discourse there is a natural tendency to treat discussion as a form of combat, an extension of war, a sport; and in sports you only need to keep track of how many points have been scored by each team.  There are only two sides, and every point scored against one side, is a point in favor of the other.  Everyone in the audience keeps a mental running count of how many points each speaker scores against the other.  At the end of the debate, the speaker who has scored more points is, obviously, the winner; so everything he says must be true, and everything the loser says must be wrong.

"The Affect Heuristic in Judgments of Risks and Benefits" studied whether subjects mixed up their judgments of the possible benefits of a technology (e.g. nuclear power), and the possible risks of that technology, into a single overall good or bad feeling about the technology.  Suppose that I first tell you that a particular kind of nuclear reactor generates less nuclear waste than competing reactor designs.  But then I tell you that the reactor is more unstable than competing designs, with a greater danger of undergoing meltdown if a sufficiently large number of things go wrong simultaneously.

If the reactor is more likely to melt down, this seems like a 'point against' the reactor, or a 'point against' someone who argues for building the reactor.  And if the reactor produces less waste, this is a 'point for' the reactor, or a 'point for' building it.  So are these two facts opposed to each other?  No.  In the real world, no.  These two facts may be cited by different sides of the same debate, but they are logically distinct; the facts don't know whose side they're on.  The amount of waste produced by the reactor arises from physical properties of that reactor design.  Other physical properties of the reactor make the nuclear reaction more unstable.  Even if some of the same design properties are involved, you have to separately consider the probability of meltdown, and the expected annual waste generated.  These are two different physical questions with two different factual answers.

But studies such as the above show that people tend to judge technologies—and many other problems—by an overall good or bad feeling.  If you tell people a reactor design produces less waste, they rate its probability of meltdown as lower.  This means getting the wrong answer to physical questions with definite factual answers, because you have mixed up logically distinct questions—treated facts like human soldiers on different sides of a war, thinking that any soldier on one side can be used to fight any soldier on the other side.

A scales is not wholly inappropriate for Lady Justice if she is investigating a strictly factual question of guilt or innocence.  Either John Smith killed John Doe, or not.  We are taught (by E. T. Jaynes) that all Bayesian evidence consists of probability flows between hypotheses; there is no such thing as evidence that "supports" or "contradicts" a single hypothesis, except insofar as other hypotheses do worse or better.  So long as Lady Justice is investigating a single, strictly factual question with a binary answer space, a scales would be an appropriate tool.  If Justitia must consider any more complex issue, she should relinquish her scales or relinquish her sword.

Not all arguments reduce to mere up or down.  Lady Rationality carries a notebook, wherein she writes down all the facts that aren't on anyone's side.

 

Part of the Politics Is the Mind-Killer subsequence of How To Actually Change Your Mind

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This two-side bias appears to fit in nicely with the neuroscience of decisionmaking where anticipatory affect appears to be weighed together to decide wheter an action or option is "good enough" to act on. For example, in http://sds.hss.cmu.edu/media/pdfs/Loewenstein/knutsonetal_NeuralPredictors.pdf there seems to be an integration of positive reward in the nucleus accumbens linked to the value of the product and negative affect related to the price in the insula, while and medial prefrontal cortex apparently tracks the difference between them.

There is definitely room for a more complex decision system based on this kind of anticipatory emotional integration, since there might be more emotions than just good/bad - maybe some aspects of a choice could trigger curiosity (resulting in further information gathering), aggression (perhaps when the potential loss becomes very high and personal) or qualitative tradeoffs between different emotions. And the prefrontal cortex could jump between considering different options and check if any gains enough support to be acted upon, returning to cycle if none seem to get quite the clearcut support it ought to.

This makes a lot of sense from a neuroscience perspective, but as an approximation to rationality it is of course a total kludge.

Hal, even on binary decisions, the affect heuristic still leads to double-counting the evidence. If being told that the plant produces less waste causes us to feel, factually incorrectly, that the plant is less likely to melt down, then the same argument is being counted as two weighting factors instead of one.

I would call coming to conclusions like this a shortcoming of our rational thinking, rather than the weighing of benefits and costs to a decision. What HalFinney said is completely right, in that we very often have to pick alternatives as a package, and in doing so we are forced to weigh factors for and against a proposition.

Personally, I wouldn't have "factually incorrectly" jumped to the conclusion you stated here (especially if the converse is stated explicitly as you did here), and I think this is a diversion to the point that you are necessarily (and rationally) weighing between two alternatives in this particular example that you chose.

That being said, I wholeheartedly agree with the idea of evaluating claims based on their merits rather than the people who propose them - that's the rational way to do things - and rational people would indeed keep a notebook even if, in the end, it was going to end up on a scale (or a decision matrix).

I believe that there was something about a similar approach in a paper "Risk at a Turning Point?" by Andrew Stirling. He argued that analysis of risk should group all the risks as a vector valued quantity, rather than a scalar. That should be just a valid in this more general context: risks, costs and opportunities of a particular scenario can then be represented on a big vector, and each interest group applies their own method to bring it down to a scalar value (or probablility distribution) along the "support/oppose" continuum.

Andrew was focusing on the fact that generally the one to do the estimate was a government or a corporation that would apply their own method to get from the vector to the scalar, and only the scalar was announced. If the full vector was announced, however, it was easier for groups with different values to come up with their own estimate of the scalar "support/oppose" distribution. As well, they could easily add extra elements to the vector (things like "the project is an eyesore"), and see how that changed their estimate, rather than adding it as an extra and having those fruitless "the project is an eyesore" vs "yes, but it'll bring in cash" debates.

The vector could be what little ol' dame rationality writes down in her notebook.

To be clear: I’m not arguing against. I’m asking to clarify. I find myself thoroughly confused by this article.

How is a higher probability for meltdown NOT a “point against” the reactor—and how is less waste NOT a “point for?” I think I’m missing some underlying principle here.

If you tell people a reactor design produces less waste, they rate its probability of meltdown as lower.

Wait. WHAT? How does that even make sense?

I suppose if you gave me a long boring lecture about reactors, and then quizzed me on it before I remembered the facts (with my house cat memory), I would could get this wrong for the exact reasons you described, without being irrational.

Suppose there’s a multiple choice question, “How much waste does reactor 1 produce?” and I know that reactor 1 is the best across most categories (has the most points in its favor), and I know that all reactors produce between 10 and 15 units of waste, then my answer would be (b) below:

(a) 8 units

(b) 10 units

(c) 12 units

(d) 14 units

And of course, there’s every possibility that “reactor 1” didn’t get the best score in waste production. Didn’t I just make the same mistake as Eliezer described, for completely logical reasons (maximum likelihood guess under uncertainty)? This isn’t a failure of my logic; it’s a failure of my memory.

In real life, if I expected a quiz like this, I would have STUDIED.

Why else would anyone expect an overall-best-ranking reactor to necessarily be the best at waste production?

Here’s another idea. Suppose that long boring hypothetical lecture were on top of that so confusing that the listener carries away a message that “a meltdown is when a reactor has produced more waste than its capacity.” Then it is a perfectly logical chain of reasoning that if a reactor produces less waste, then its probability of meltdown as lower. But this is poor communication, not poor reasoning.

I believe the way it worked out was that when they heard a particular design produced less toxic waste, they also assumed a reactor that produced less waste was less likely to melt down.

That's +1 for less waste and +1 for less chance of meltdown.

When they are then told that this same design has a higher chance of meltdown, they subtract one point for meltdown without subtracting for less waste, even though they did the inverse earlier.

So, the audience tallies like so: +1 (less waste) +1 (inferred for less meltdown) -1 (more meltdown) = +1

When they should have tallied like so: +1 (less waste) -1 (more meltdown) = 0

The net ends up being +1 for the reactor, instead of 0.

This results in a good feeling for the reactor, when in reality they shouldn't have felt positive or negative.

You're right, of course.

I'd written the above before I read this defense of researchers, before I knew to watch myself when I'm defending research subjects. Maybe I was far too in shock to actually believe that people would honestly think that.

Yeah, it's a roundabout inference that I think happens a lot. I notice it myself sometimes when I hear X, assume X implies Y, and then later find out Y is not true. It's pretty difficult to avoid, since it's so natural, but I think the key is when you get surprised like that (and even if you don't), you should re-evaluate the whole thing instead of just adjusting your overall opinion slightly to account for the new evidence. Your accounting could be faulty if you don't go back and audit it.

I think we should also separate the subjects of the psychology behind when this might happen and whether or not we are using scales.

It may indeed be the case that people are bad accountants (although I rarely find myself assuming these implied things, and further if I find that my assumptions are wrong I adjust accordingly), but this doesn't change the fact that we are adding +/- points (much like you're keeping score/weighing the two alternatives).

Assuming a perfectly rational mind was approaching the proposition of reactor A vs reactor B (and we can even do reactor C...), then the way it would decide which proposition is best is by tallying the pros/cons to each proposition. Of course, in reality we are not perfectly rational and moreover different people assign different point-values to different categories. But it is still a scale.

In response to the statement, "If you tell people a reactor design produces less waste, they rate its probability of meltdown as lower", this may be the result of a useful heuristic if technologies generally improve overall. Consider computers: if I asked people to guess if the amount of memory in a desktop computer with a 300MHz processor is less than or greater than that in a system with a 2GHz processor, they might reason that the computer with the faster processor is newer, that both technologies have improved, and the 2GHz system most likely has more memory as well. Similarly in the example, people may think that both anti-meltdown and anti-waste technologies are likely to have improved concurrently. This isn't to say that both factors don't need to be looked at separately in the "real world" - only that I'm not sure how we could consider any other answer rational in the absence of further information.

Basically, I'm curious if benefits and costs are really positively correlated to one another in the real world, as shown in Exhibit 1 in the PDF.

Keep in mind that in many situations we do in fact have to make a binary decision between two alternatives. Often it reduces to a go/no-go decision. In that case this heuristic of reducing multi-valued vectors to a single scalar weighting factor is a necessary step.

Lady Rationality... love it. I think I want her as a tattoo.

The paper "The Affect Heuristic in Judgments of Risks and Benefits" doesn't mention explicitly separating benefit from risk in the critical second experiment (and probably not the first either, which I didn't read). If I were brought in and given the question, 'In general, how beneficial do you consider the use of X in the U.S. as a whole?', then I would weigh all positive and negative aspects together to get a final judgment on whether or not it's worth using. "Benefit" CAN be a distinct concept from risks, but language is messy, and it can be (and I would) interpreted as "sufficiency to employ". As a result, depending on the reader's interpretation of "benefit", it's possible that any lowering of perceived risk will NECESSARILY increase perceived benefit, no logical error required.

Rather sloppy science, if you ask me.

My guess is that nuclear waste production and chance of reactor meltdown are very weakly correlated. Both are decreased if the reactor is designed by a particularly conscientious group of researchers.

My expectation would be the opposite, a slight anticorrelation. (after further thought this changed, see below)

I would expect most reactor designs to be pretty heavily studied and worked on, making the conscientiousness factor reasonably small.

In two designs that were approximately contemporary I would therefore expect to see a tradeoff between different design goals (ie. waste production, chance of meltdown, fuel efficiency, total output, cost of production etc.)

Actually, no, that wouldn't necessarily result in an anticorrelation, in fact it would likely result in a correlation, because waste production and meltdown chance both fall under the same supergoal (environmental safety)

Great post. You're on a roll, Eliezer. Hal, I query how often the best decision-making process really is binary go/non-go. That humans often reduce a decision making instant to go/non-go "as an approximation to rationality it is of course a total kludge" seems plausible to me (to use Anders Sandburg's words).

Eliezer, I doubt the justice system's guilty/not guilty approach is grounded in rationality either. "If Justitia must consider any more complex issue, she should relinquish her scales or relinquish her sword" -and I think the underlying issues regarding "justice" are almost always more complex. But then again, I think the approach with justice should be economic, incentive-based, and empirically grounded, rather than punitive and grounded in social norms the way it is now (in the U.S.).

Anders, is there any research on the degree to which human predisposition to "treat discussion as a form of combat, an extension of war" reduced to 2 binary and oppositional players is grounded in a primate aesthetic. The parallel to primate researcher discussions of alpha and challenger males seems strong to me.

this may be the result of a useful heuristic

Another heuristic may be our habit of expecting some sources - say, newspapers - to present the arguments pro and agaisnt the issue ("this will clean up the beach, but costs money"). If they say "this will produce more waste" and leave it at that, we may assume that's the only way the reactor is different.

But, by thew same token, wouldn't then being told that the reactor is more likely to meltdown lead people to think it produces more waste. If I multiply the true effects of everything by 10, wy will tht affet the binary choice?

Perhaps it wouldn't affect the choice. For instance, if you have two reactors, and the only thing you've been told about them is which is more likely to melt down, then (assuming you don't want waste or nuclear meltdowns), you'll prefer the one that produces less waste regardless of whether you draw any illogical conclusions from the data you have, because the conclusions will be based on the emotions you have already. However, unless I am mistaken, this blog is about rationality in general, not just in decision-making. Many of the people here (including myself) probably want their information to be accurate just for the sake of accuracy, not just because of its influence on decisions. For them, this is important whether or not it will affect their decisions.

Dynegy vs Multiut, Nachshon Draiman, Future Associates et al - 02 C 7446. (A $22 million dollar lawsuit for fraud and insolvency) (Numerous contempt of court) IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION DYNEGY MARKETING and TRADE, a Colorado Partnership, ) Plaintiff, ) ) No. 02 C 7446 v. ) ) Judge Nordberg MULTIUT CORPORATION, an Illinois Corporation and NACHSHON DRAIMAN, ) an Illinois Resident, FUTURE ASSOCIATES, ) an Illinois General Partnership, ) Defendants. ) THIRD AMENDED COMPLAINT Dynegy Marketing and Trade ("Dynegy"), by its attorneys, complains of Multiut Corporation ("Multiut"), Nachshon Draiman ("Draiman"), and Future Associates, as follows: THE PARTIES

  1. Dynegy is a Colorado general partnership with its principle place of business in Houston, Texas. The only partners of the partnership are Dynegy GP, Inc., a Delaware corporation which maintains its principle place of business in Texas, and DMT Holdings, LP, a Delaware limited partnership (f7k/a NGC GP, Inc.).
  2. The only partners of DMT Holdings LP are (1) DMT G.P., LLC, a Delaware limited liability company and (2) DMT L.P., LLC, a Delaware limited liability corporation.
  3. The sole member of DMT G.P., LLC is DMT Holdings, Inc., a Delaware corporation which maintains its principle place of business in Texas.
  4. The sole member of DMT L.P., LLC is DMT Holdings, Inc., a Delaware corporation which maintains its principle place of business in Texas.

  5. Multiut is an Illinois corporation with its principle place of business located in Cook County, Illinois.

  6. Future Associates has its principal place of business located in Cook County, and is, upon information and belief, an Illinois general partnership.
  7. Draiman is an individual residing in Cook County, Illinois. JURISDICTION AND VENUE
  8. This Court has jurisdiction, under 28 U.S.C. § 1332(a)(l), because the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states.
  9. Venue is proper, under 28 U.S.C. § 1391(a), because the defendants reside in and a substantial part of the events or omissions giving rise to the claim occurred in this judicial district. COUNTI (Breach of Agreement)
  10. On or about January 1, 1994, Multiut signed a Natural Gas Sales Agreement with Natural Gas Clearinghouse ("NGC") for the purchase and sale of natural gas (the "Agreement"). A true and correct copy of the Agreement, with Exhibits A and B, is attached as Exhibit 1.
  11. On July 7, 1998, NGC changed its name to Dynegy Marketing and Trade.
  12. Under the Agreement, Multiut "[acted] as the duly authorized agent and representative of ultimate consumers and users of natural gas delivered to Multiut under the Agreement." (Agreement, page 1.)
  13. Under the Agreement, Multiut is "responsible for collecting payment from its principals. The payment to [Dynegy] by Multiut on behalf of Multiut's principals shall be due on -2-

the twentieth (20th) day of the month, or as to statements delivered after the tenth (10th), within ten (10) days after receipt of such statements." (Agreement, page 5, Article V-A (2).)

  1. For natural gas Dynegy delivered to Multiut through December 2000, there existed an outstanding balance owed to Dynegy by Multiut of $1,664,501.06 (after offsets for payments made by Multiut through March 1, 2001).
  2. Dynegy sent and/or Multiut received monthly invoices for the purchase and sale of natural gas under the Agreement from January 1, 2001 through December 31,2002 (the "Invoices").
  3. Multiut breached the Agreement by failing and/or refusing to pay the Invoices in full when due.
  4. As of April 30,2003, the unpaid principal balance due to Dynegy under the Invoices, after application of payments in accordance with Article V-A(3) of the Agreement, is $12,504,912.51 (the "Unpaid Principal Balance").
  5. Under the Agreement, "Should Multiut fail to pay all of the amount of any bill when the same becomes due, Multiut shall pay [Dynegy] a late charge on the unpaid balance that shall accrue on each calendar day from the due date at a rate equal to two percent (2%) above the then-effective monthly prime commercial lending rate per annum announced by The Federal Reserve Bulletin from time to time . . . . " In addition, "the late charge . . . shall compound monthly." (Agreement, page 5, Article V-A (3).)
  6. Under the-Agreement, "If either principal or late charges are due, any payments thereafter received shall first be applied to the late charges due, then to the previously outstanding principal due and lastly, to the most current principal due." (Agreement, page 5, Article V-A (3).) -3-

  7. As of April 30, 2003, the amount of interest due, in accordance with Article V-A(3) of the Agreement, is $593,997.74 (the "Interest").

  8. Dynegy has performed all of its obligations under the Agreement. WHEREFORE, Dynegy requests entry of a judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of 5593,997.74, and such other relief as the Court deems appropriate. COUNT II (Breach of Guaranty)
  9. Dynegy repeats and reasserts the allegations of paragraphs 1 through 21, inclusive, as paragraph 22.
  10. On or about October 31,1995, Draiman and Multiut executed a Guaranty (the "Guaranty"). A true and correct copy of the Guaranty is attached as Exhibit 2.
  11. Under the Guaranty, Draiman and Multiut, jointly, severally, and unconditionally "[guaranteed] the payment to NGC promptly when due, or upon demand thereafter, pursuant to the terms of the Agreement, the full amount of all obligation or indebtedness due to NGC under the Agreement."
  12. Draiman and Multiut are jointly and severally liable for their obligations under the Guaranty.
  13. Draiman and Multiut breached the Guaranty by failing to pay after demand, when due, the Unpaid Principal. Balance and the Interest. WHEREFORE, Dynegy requests entry of a judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgement, in an amount in excess of $593,997.74, and such other relief as the Court deems appropriate. -4-

COUNT III (Fraudulent Transfer In Law- Multiut)

  1. Dynegy repeats and reasserts the allegations of paragraphs 1 through 26, inclusive, as paragraph 27.
  2. At all relevant times, Draiman has been a director, officer and/or control ling shareholder of Multiut.
  3. At all relevant times, Draiman has been a general partner in Future Associates or otherwise had authority and/or control over the business affairs of Futures Associates or an entity that had authority over the business affairs of Futures Associates.
  4. Since at least January 1999, Multiut failed to make timely payment, when due, for some or all of the natural gas delivered by Dynegy.
  5. On March 7, 2001, Ginger Wright of Dynegy and Lenore Kamien of Multiut ' agreed that Multiut owed Dynegy approximately $11,000,000, excluding interest.
  6. On September 5, 2001, Dynegy representatives Pete Pavluk and Mark Ludwig met with Multiut representatives Lenore Kamien and/or Nachshon Draiman at Multiut's offices to discuss the amount owed by Multiut.
  7. At that meeting, Mr. Draiman said that Multiut did not have funds sufficient to pay the debt owed and that Multiut would propose a payment plan by September 17, 2001.
  8. In a September 17, 2001 letter, Multiut proposed a payment plan by which it would make monthly payments, from October 2001 through March 2002, in order to pay down the amount owed to Dynegy. The proposed payments ranged from $600,000 in some months to $1,800,000 in other months. According to Mr. Draiman, Multiut was, "insurefd] [sic] an additional annual profit of $2,000,000" and that, "in the meantime, [Multiut] was working on bank financing as well as funds from private sources for capital infusion." -5-

35 . In an October 4, 2001 letter to Multiut, Dynegy responded to Multiut's September 17, 2001 proposal by asking for "a detailed formal plan by no later than Wednesday, October 10, 2001 that outlines bringing your account balance current by no later that [sic]-January 15, 2002."

  1. In an October 12, 2001 letter, Multiut responded to Dynegy's October 4, 2001 letter by proposing "weekly payments for October through January." The weekly payments proposed by Multiut totaled $7,700,000.
  2. Multiut did not make all the weekly payments described in its October 12, 2001 letter.
  3. Multiut's check , dated August 23, 2001, made payable to Dynegy for $300,000, was returned for insufficient funds.
  4. Multiut's check, dated October 26, 2001, made payable to Dynegy for $150,000, was returned for insufficient funds.
  5. Multiut's check, dated November 9, 2001, made payable to Dynegy for $200,000, was returned for insufficient funds.
  6. Multiut check no. 1946, made payable to Dynegy for $200,000 and deposited on December 7, 2001, was returned twice due to insufficient funds.
  7. On January 8, 2002, Multiut claimed it could not pay the amounts owed to Dynegy because of slow payment by the government in connection with Mr. Draiman's nursing homes.
  8. On January 31, 2002, Multiut told Dynegy that it would make a $200,000 payment while it worked to raise cash through a factoring company and while it attempted to arrange a line of credit with Bank Leumi.
  9. Multiut never raised cash through a factoring company or arranged a line of credit with Bank Leumi in 2002 or 2003.
  10. In 2002 and 2003, Multiut did not have cash sufficient to pay the Invoices when due.
  11. During 2000 and 2001, Multiut had creditors, in addition to Dynegy, to whom it did not make payments when due in the normal course of its business.
  12. On June 19, 1998, Multiut entered into a Natural Gas Sales Agreement with WPS Energy Services, Inc. (“WPS”) for the purchase and sale of natural gas.
  13. By June 2000, Multiut was indebted to WPS in the amount of $1,625,472 for natural gas delivered to Multiut prior to May 2000.
  14. On September 27, 2000, Multiut gave WPS its promissory note in the amount of $1,570,337.87 (the “WPS” Promissory Note).
  15. The WPS Promissory Note was a reaffirmation by Multiut of its debt to WPS incurred under the terms of the Natural Gas Sales Agreement between WPS and Multiut.
  16. In the summer and fall of 2001, Multiut did not make payments, when due, in accordance with the WPS Promissory Note.
  17. On September 27, 2001, WPS filed a lawsuit against Multiut alleging that Multiut defaulted on its obligation under the WPS Promissory Note by failing to make the required payments due on July 10, 2001, August 10, 2001 and September 10, 2001.
  18. According to Multiut’s 2002 tax return, Multiut transferred approximately $2,000,000 (or more) to Future Associates, Draiman and/or other entities, including Draiman’s nursing home, hotel and/or other business ventures, at some time during 2001 when Multiut was indebted to Dynegy. -6-

  19. Multiut did not receive reasonably equivalent value for the transfer described in paragraph 53.

  20. In the years 1999 through 2003, Multiut transferred cash or other assets to Future Associates, Draiman and/or other entities, including Draiman's nursing home, hotel or other business interests when Multiut was indebted to Dynegy.
  21. Multiut did not receive reasonably equivalent value for the transfers described in paragraph 55.
  22. When Multiut made the transfers described in paragraphs 53 and 55 (the "Transfers"), Multiut was insolvent and/or became insolvent as a result of the Transfers.
  23. The Transfers were fraudulent conveyances in violation of applicable laws. WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74; voiding the fraudulent transfers and returning the Transfers to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate. COUNT IV (Fraudulent Transfer In Fact- Multiut)
  24. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 59.
  25. The Transfers were made with actual intent to hinder, delay or defraud Dynegy, a creditor of Multiut and as-such constituted fraudulent conveyances in violation of applicable laws. WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74; voiding the fraudulent transfers and returning the money to Multiut to be -8-

used to satisfy the debt to Dynegy; punitive damages and such other relief as this Court deems appropriate. COUNT V (Fraudulent Transfer in Law- Future Associates)

  1. Dynegy repeats and reasserts the allegations of paragraphs 1 thorough 58, inclusive, as paragraph 61.
  2. Future Associates accepted the Transfers of the assets without having provided adequate consideration for the Transfers. WHEREFORE, Dynegy requests entry of order granting judgment in. its favor and against Future Associates, voiding the fraudulent transfers and returning the money to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate. COUNT VI (Fraudulent Transfer in Law- Diraiman)
  3. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 63.
  4. Draiman accepted the Transfers without having provided adequate consideration or reasonably equivalent value for the Transfers. WHEREFORE, Dynegy requests entry of order granting judgment in its favor and against Nachshon Draiman, voiding the fraudulent transfers and returning the money to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate. COUNT VII (Breach of Fiduciary Duty)
  5. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 65. -9-

  6. When Multiut purchased natural gas from Dynegy in 2001 and 2002, Multiut was insolvent.

  7. Because Multiut was insolvent, Draiman, as a director and officer of Multiut, owed a fiduciary duty to Dynegy, as a creditor of Multiut.
  8. Draiman breached his fiduciary duty to Dynegy by causing Multiut to take natural gas from Dynegy when Draiman knew that Multiut did not intend to and/or could not pay for it. Draiman also breached his fiduciary duties to Dynegy by making and/or authorizing the Transfers. WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Draiman, for $ 12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74, and for punitive damages and any further relief that this Court deems appropriate. DYNEGY MARKETING and TRADE

Barry S. Hyman (#6188142) Helen Wilson SCHIFF HARDIN & WATTE 6600 Sears Tower Chicago, IL 60606 -10-

(312)258-5500 See: www.antidefamationusa.com

Energy Billing Fraud Charges vs Multiut owned by Nachshon Draiman! Multiut Admitted to holding money belonging to customers Chicago Metro Area Consumers are taken for a ride by Multiut – Nachshon Draiman – Energy Billing fraud

In a Class Action proceeding initiated in November 2001 - The case after numerous delays by Multiut, is now proceeding. Gore vs Multiut - IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS Case No. 01 CH 19688 Posted on September 11th, 2007: IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT - CHANCERY DIVISION FILED JACK GORE on behalf of himself and all ) NOV 28, 2002 other persons or entitles similarly situated, | • vs. No. 01 CH 19688 DOROTHY 8ROWN CLERK OF CIRCUIT COURT MULTIUT CORP, an Illinois corporation, } Judge Stephen A, Schiller Defendant ) Courtroom 2402 RESPONSE TO §2-619.1 MOTION TO DISMISS J/ Plaintiff JACK GORE (“Gore”). by his attorneys LARRY D DRURY LTD., hereby responds to the Motion to Dismiss 2nd Amended Complaint, pursuant to 735 ILCS 5/2-615 and 619, brought as a combined 2-619.1 motion by defendant MULTIUT CORP. (“Multiut”). Introduction Multiut is trying to time-bar this case by transforming express a written agency-service contract drafted by Multiut into a contract for sale of goods, and by disputing Gore's allegations as to concealment and discovery of the wrong – but without submitting any Rule 191 affidavit or documentation. This is a class action arising out of a written contract drafted by Multiut, attached here and to the 2nd Amended Complaint as Exhibit A and B collectively referred to herein as the "contract" or "agreement “ unless otherwise indicated by context): (1) (A) A service contract to act as Gore's "purchasing representatives" in obtaining natural gas from “off system" suppliers. This contract, entered into on or about December 1990, was titled “Agreement," Exh. A 1, 3-6, 10. And, {B} A series of supplemental agency contracts to act as Gore’s agent, in so doing with respect to various Properties. These were entered into contemporaneously with the service contract and thereafter, and titled "Natural Gas Purchasing and Agency Agreement.” Exh.-B. (2) (1) Similarly Multiut refers to them collectively as “the agreement” in its brief (Mem. p. 2, fn. 1). Although the documents are on separately filed pages, they are mutually inclusive and one could not be entered into without the other; e.g. the service contract refers to and incorporates the agency contracts, wherein Multiut refers to itself as Gore's 'exclusive natural gas purchasing agent'. See Exh. A, third introductory paragraph and 16-17; Exh. B 1, (2) Exh. 8 one of the series, is dated 1998, Exh. C is Gore’s §2-806 affidavit as to the others. Gore has stated he does not have a copy of each, they are inaccessible to him i.e. no longer in his possession, whether missplaced or otherwise, and cannot be located or returned. 2nd Amd.. Compl. {4; Exh, C, in the 1st Amd. Complaint, Count 4 for breach of oral contract was voluntarily dismissed without prejudice after Gore's deposition of May 8,- 2002, when the service contract and the 1998 agency contract were produced by Multiut and adequately established, Exhs, A-B are the same Exhs. 1-2 attached to the Gore transcript, excerpts of which are attached herein as Exh. D, Similarly the missing agency agreements are likely in Multiut’s possession and will be produced in discovery. The contract was drafted by Multiut, it unequivocally defines Multiut's role in the transactions, and shows that this case is not governed by the UCC. What is at issue here is not the "good" that Multiut obtained for Gore, but the service Multiut provided as his purchasing agent. Gore is suing upon the service and agency contract – not the natural gas - and has alleged that Multiut breached its duties in two respects; {1} By falsely and intentionally charging and retaining for its own use funds that were to be applied to a City of Chicago 8% gross receipts tax (“Tax”), which it had promised would be placed in escrow and forwarded to the City. Between December 1990 and January 1995 (after the City of Chicago changed the Tax), Multiut collected approximately $14,000 from Gore and at least $1 million to $1.5 million from the Class, for this Tax that was not actually imposed upon Multiut. 2nd Amd. Compl. 7-9, '3! Multiut not only failed to inform Plaintiff and the Class that the money collected was not so applied or escrowed, but also failed to escrow, account for, and refund the funds with interest. (2) By overcharging for the service of providing natural gas. Multiut was to charge for natural gas actually supplied to Gore and the Class on a set per therm cost basis, plus an amount equal to 1/2 of their respective per therm cost savings per month, instead, Multiut overcharged and billed Gore at least $100.000 and the class millions of dollars and refuses to provide an accounting and refund with interest. Id. 10-11. Gore has further alleged that Multiut prevented him from discovering the wrongs by intentionally concealing them until at least December 2000, when he discovered the truth and could not reasonably have done so earlier. (Gore testified at his deposition on May 8, 2002 that he first discovered the discrepancies in his bills, the overcharges, the taxes, and failure to escrow the taxes, in December 2000. See Exh, D, pp. 25-28,) Thereafter he was unable to obtain any refund and based thereon, terminated Multiut’s services on or about June 2001, However, the wrongful acts are continuing to date, in that Multiut continues to 'refuse to provide an accounting and refund with interest to Gore and the Class, all to their detriment and damage. They seek imposition of constructive trust (id. 22), an accounting and damages in not less than the foregoing amounts plus interest (id, 9-13, 23). Gore filed the original Class Action Complaint on Nov. 20, 2001, and in lieu of responding to a motion to dismiss, filed the 1st Amended Class Action Complaint Feb. 14, 2002, setting forth 4 counts for (1) breach of 3-: The City did not and will not collect the 8% Tax, presumably because of U.S. constitutional restrictions as to the interstate commerce clause and exceptions for interstate pipelines and out-of-state suppliers. As a result in 1994 the City changed the tax from an 8% gross receipts tax to a flat rate tax of 1.4 to 1.5 cents per therm. 2nd Amd. Comp. P 8. in Multiut’s response to First Request to Admit {attached hereto as Exh. F), it has admitted the following statements about this Tax; (8) that Multiut collected approximately $14,000 in Tax from Gore between 1991-1994; and (9) that Multiut spent its customers Tax payments on business expenses.. Yehuda Draiman testified to the same effect in his deposition 1-10-02 See transcript excerpts attached hereto as Exh. E, at pp, 36-37,40, 68, and Exh, 6 thereto. Activity Date: 8/15/2007 Participant: GORE JACK CASE SET ON STATUS CALL Court Date: 8/29/2007 Court Time: 0930 Court Room: 2402 Judge: BRONSTEIN, PHILIP L.

August 30th, 2007 at 2:25 pm RE: MULTIUT CORP. FORMER CUSTOMERS! Multiut owner is Nachshon Draiman of Cook County, Illinois PLEASE BE ADVISED THAT YOU ARE PROBABLY DUE A REFUND PLUS INTEREST FOR SALES TAX ON NATURAL GAS WHICH WAS COLLECTED FROM YOU AND WITHHELD BY MULTIUT CORP. TEL # 847-982-0030 at 7514 N. Skokie Bl. Skokie, Illinois. MULTIUT IS HOLDING APPROXIMATELY OVER ONE MILLION DOLLARS THAT MAY BELONG TO CUSTOMERS. MULTIUT HAS OVERBILLED CUSTOMERS ON SHARED SAVINGS FOR THE PAST 14 YEARS. THERE IS CURRENTLY A CLASS ACTION SUIT AGAINST MULTIUT. I STRONGLY SUGGEST THAT YOU HAVE ALL YOUR BILLS THAT WERE ISSUED BY MULTIUT CORP. AUDITED THOROUGHLY THERE MAY BE STORAGE CREDITS DUE YOU AND ERRORS IN BILLING WHICH CREDITS MAY BE DUE YOU. Multiut has admitted in Court that they are holding the money. Gore vs Multiut 01 CH 19688 Circuit Court of Cook County, Illinois A concerned citizen For honesty in billing

Dynegy Mkg & Trade v. Multiut Corp, Nachshon Draiman et al On August 16th, 2007: Dynegy Mkg & Trade v. Multiut Corp, Nachshon Draiman et al 1:02-cv-07446. Multiut Corp and Nachshon Draiman dba Future Associate of Skokie, IL. are withholding evidence of fraudulent activities in the Energy industry and inflated Medicaid billing to the government for Nursing Home patients. Also Bank fraud against their bank by presenting fraudulent and inflated receivable reports in order to get and keep a credit line, Nachshon Draiman was a large stock holder of the bank. Draiman Nachshon • SC 13G • Success Bancshares Inc • On 2/17/98 Filed On 2/17/98 • SEC File 5-53545 • Accession Number 950137-98-586 Court: United States District Court Northern District of Illinois - Case Title: Dynegy Mkg & Trade v. Multiut Corp, Nachshon Draiman Future Associates et al Case Number: 1:02-cv-07446 Judge: Hon. John A. Nordberg Filed On: 10/16/2002 SUMMARY Case Number: 1:02-cv-07446 Referred To: Honorable Michael T. Mason Jury Demand: Defendant Demand: $9999000 Nature of Suit: Contract: Other (190) Jurisdiction: Diversity Cause: 28:1332 Diversity-Breach of Contract Case Updated: 01/20/2005 NAMES Party Name: Multiut Corporation an Illinois Corporation, Party Type: Defendant Attorney(s): Paul Thaddeus Fox (312) 456-8400 Firm Name: Greenberg Traurig, LLP. Firm Address: 77 West Wacker Drive Suite 2500 Chicago, IL 60601 Alan Jay Mandel 847-329-8450 Firm Name: Alan J Mandel Ltd Firm Address: 7520 North Skokie Blvd Skokie, IL 60077 03/30/2007 225 NOTICE of Motion by Ira P. Gould for presentment of motion to withdraw as attorney224 before Honorable John A. Nordberg on 4/19/2007 at 02:30 PM. (Gould, Ira) (Entered: 03/30/2007) 04/18/2007 226 MINUTE entry before Judge John A. Nordberg: Motion of Ira Gould to withdraw his appearance on behalf of Multiut Corporation 224 is granted. The motion will not be heard on 4/19/07 as noticed. Mailed (vmj, ) (Entered: 04/19/2007). See: www.antidefamationusa.com or www.antidefamation.us