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PI allegedly sublicensed the recyclers to entities that
would use them to recycle plastic scrap. The sublicense
agreements provided that the end-users would transfer to PI 100
percent of the recycled scrap in exchange for a payment from FMEC
Corp. based on the quality and amount of recycled scrap.
Bennett and Black each learned of the Empire transaction
from Edward Gallagher (Gallagher). Gallagher was an officer in
the personal financial planning department at Bankers Trust.
Ingersoll-Rand had retained Bankers Trust in the early 1970's to
provide financial counseling to its officers. Gallagher became
responsible for the Ingersoll-Rand account starting in the late
1970's and counseled executives on investment planning, estate
planning, income tax planning, and retirement planning.
Gallagher had been with Bankers Trust since 1964. Before then he
had earned a B.A. degree from Holy Cross College in 1962, spent a
year in medical school, and served in the U.S. Army.
Gallagher learned of the Empire transaction from Robert
Miller (Miller), a lawyer at the firm of Windels, Marx, Davies &
Ives (WMDI). Ingersoll-Rand was a client of WMDI. Miller
referred Gallagher to John Taggart (Taggart), the head of the tax
department at WMDI. Gallagher discussed the transaction with
Taggart and the general partner of Empire, Richard Roberts
(Roberts). Gallagher read the offering memorandum and used that
information to analyze the economics of the investment. Gus
Kreischer (Kreischer), who was in charge of the tax section of
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