I remember also hearing about this. For awhile he wasn't in Stevie's band and Carlos was lead guitar. I thought it was earlier than 1998 though. I do remember in an interview with Stevie during the other side of the mirror tour, she was asked why Waddy wasn't on the tour and Stevie said because he had just gotten married and needed time for himself. I always thought it was because of the allegations, but according to the timeline, maybe not.
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I have changed, but you remain ageless 
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