Group Administration Premium Services, Inc., et al. - Page 4

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          sole proprietor under the name of J.J. Mancuso & Associates.                
          Petitioner’s business was divided into two lines:  Group employee           
          benefit plans and individual life and disability contracts.                 
               In late 1985, petitioner purchased a corporation named Rapid           
          Dictation Service, Inc. (Rapid Dictation), from an attorney for             
          less than $500.  Petitioner believed, based on the seller's                 
          representations, that the name of Rapid Dictation was changed to            
          Group Administration Premium Services, Inc., sometime in early              
          1986 and that it was a corporation in good standing under                   
          Illinois law.                                                               
               Early in 1986, petitioner began to conduct a portion of his            
          business under the name GAPS.  Petitioner intended to use GAPS to           
          sell and administer all group employee benefit plans of his                 
          clients.  From 1986 to March 1, 1989, petitioner continued to               
          operate Rapid Dictation, under the name GAPS, on the basis of his           
          belief that it was a valid corporation.                                     
               In February 1989, petitioner’s then attorney advised him               
          that Rapid Dictation was an invalid corporation and that a new              
          corporation should be organized.  On March 1, 1989, GAPS filed              
          articles of incorporation with the Illinois secretary of state.             
               On March 7, 1989, petitioner, acting as sole director,                 
          transferred to the newly organized corporation GAPS all of the              
          assets and liabilities of the business that he had been                     
          conducting under the name of GAPS.  These assets consisted of two           
          bank accounts containing $154,000 and furniture and equipment               



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