Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 76

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               D.  Rockport Capital, Inc.                                             
               During the taxable years at issue and at all relevant times,           
          Mr. Ackerman conducted all his investment activities through a              
          wholly owned advisory company called Rockport Capital, Inc.                 
          (Rockport Capital).  Rockport Capital was a Delaware subchapter S           
          corporation.  Mr. Lerner was an officer in Rockport Capital.                
               E.  Rockport Advisors, Inc.                                            
               After Mr. Lerner retired from O’Melveny & Myers in 1996, Mr.           
          Ackerman asked Mr. Lerner to continue representing him.  Mr.                
          Ackerman was interested in various investment opportunities that            
          were coming his way, and he often asked Mr. Lerner’s legal advice           
          about them.  Initially, Mr. Lerner devoted about half his time to           
          Mr. Ackerman’s affairs.  As a product of this representation, Mr.           
          Lerner formed Rockport Advisors, Inc. (Rockport Advisors), which            
          he owned.  Rockport Capital and Rockport Advisors operated                  
          together with respect to Mr. Ackerman’s investment activities,              
          including the transaction involving the Credit Lyonnais group.              
               F.  Crown Capital Group                                                
               In early 1997, Mr. Lerner ceased using Rockport Advisors               
          with respect to Mr. Ackerman’s investments.  Instead, Mr. Lerner            
          created a new firm, Crown Capital Group, Inc. (Crown Capital),              
          located in New York, to investigate and manage Mr. Ackerman’s               
          investments.  Mr. Lerner owned 49 percent and Mr. Ackerman’s                
          nephew owned 51 percent of Crown Capital.                                   






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