Inverworld, Inc., et al. - Page 193

                                                 - 48 -                                                   
            role was to arrange for transfer of the client funds to Merrill                               
            Lynch in Luxembourg and to include a monthly statement of the                                 
            client's allocated share of the fund value.  Such valuation was                               
            performed by the fund's managers at Merrill Lynch.  By June 30,                               
            1988, LTD had stopped sending funds overseas.  In one of its                                  
            brochures describing the FEIM Fund, LTD listed the San Antonio                                
            office as its return address.                                                                 
                  LTD charged its clients an initial placement cost based on a                            
            sliding scale of 4.00 percent to 0.25 percent, depending upon the                             
            amount of funds placed in the FEIM Fund.  After the first year                                
            LTD also charged an annual management fee of 1.00 percent of the                              
            value of the assets under management.  The gross receipts and                                 
            direct costs relating to LTD’s "Commissions - FEIM Fund" for each                             
            taxable year are as follows:                                                                  
                        TYE June 30        Gross Receipts    Direct Costs                                 
                        1986               $148,354           $44,500                                     
                  1987                     71,716                   11,587                                
                        1988               (3,000)                  116                                   
                        1989                     4,951        - 0 -                                       
                        c.     Matric Fund                                                                
                  The Matric Fund (Matric) was an investment fund financing a                             
            time-share resort in Puerto Vallarta, Mexico.  Matric Corp.,                                  
            organized in the Cayman Islands, borrowed $10 million from LTD,                               
            with Vallarta Internacional S.A., a Mexican corporation, as its                               
            guarantor.  LTD raised the $10 million by seeking commitments                                 
            from its clients to invest in Matric.                                                         





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