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interested in pursuing the STAMPS investment strategy and inquired
whether ABN would be interested in forming a partnership for use in
connection with that strategy. Mr. Ackert informed Mr. Van Burg
that the partnership would be most marketable to his client if the
partnership held a $350 million short position in Treasury bills.
Mr. Van Burg obtained approval for ABN to participate in the
transaction as outlined by Mr. Ackert.
III. Salina Partnership
On July 16, 1992, and October 22, 1992, ABN formed two limited
liability companies, Caraville Corporation, N.V. (Caraville), and
Pallico Corporation, N.V. (Pallico). Caraville and Pallico
initially were each capitalized with $6,001. ABN controlled
Caraville and Pallico through ABN Trust and N.V. Fides, as managing
directors, respectively (both of which were in turn owned by ABN).
As foreign entities, ABN, Caraville, and Pallico were not subject
to U.S. income tax.
Caraville owned the stock of Aldershot Corp. On August 17,
1992, Aldershot Corp. paid a dividend of $1,928,669 to Caraville.
A. Formation of the Partnership
On December 16, 1992, Caraville and Pallico formed Salina as
a limited partnership under the laws of the State of Delaware. The
Salina partnership agreement stated in pertinent part that the
partnership was organized to invest in “Permitted Investments”, a
term defined as obligations of the United States and obligations of
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