George Georgiou and Judith Georgiou A.K.A. Judy Georgiou, et al. - Page 7

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                  The IRS began an audit of Kolonaki in November 1990.                                     
            Kolonaki's representative at the January 8, 1991, interview and                                
            throughout the audit was David Pryor (Pryor), a C.P.A. with                                    
            Crisafi, Sciabica and Woodward (Crisafi), Georgiou's regular                                   
            accounting firm.  On March 7, 1991, the IRS began an audit of the                              
            year ended September 30, 1989.  Early in the JAI audit, Pryor                                  
            informed the IRS agent that Georgiou was the owner of JAI.                                     
                  In April or May 1991, Georgiou met with Pryor and Robert                                 
            Woodward, two accountants from the Crisafi firm, to discuss                                    
            consolidated return treatment for JAI on Kolonaki's September 30,                              
            1990, tax return.  Pryor had discovered the beneficial ownership                               
            concept in a Bureau of National Affairs, Inc., tax portfolio and                               
            presented it to Georgiou.  Pryor suggested that a second meeting                               
            be held with Georgiou and Lucius P. Bernard (Bernard), Georgiou's                              
            attorney, to discuss whether Kolonaki had beneficial ownership of                              
            the JAI stock that was issued in Georgiou's name.                                              
                  Georgiou subsequently met with Pryor and Bernard to discuss                              
            consolidated return treatment for JAI on Kolonaki's return.                                    
            Bernard was not a tax specialist.  The meeting concluded with the                              
            understanding that JAI could file a consolidated return with                                   
            Kolonaki, if Kolonaki could establish that it was the beneficial                               
            owner of at least 80 percent of JAI stock.  It was agreed that a                               
            Holding Agreement between Kolonaki and Georgiou would be the best                              
            way to document the intention that Kolonaki was the beneficial                                 
            owner of Georgiou's JAI stock.                                                                 

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