nominally an employee of APECO both before and after the
transfer, Mr. Kluener personally had reimbursed APECO for the
cost of her compensation and continued to do so after the
transfer.
Horses of the quality of those transferred by Mr. Kluener
are generally sold at open auction, at which the animals offered
for sale are displayed and bid upon. It is very unusual for
sales to be effected privately. Auctions occur at certain times
of the year, including the fall; to be sold at auction, a horse
must be registered by a cutoff date so that it may be placed on
the auction list. Between August and December 1989, 37 of the
horses transferred were sold at auction, realizing net proceeds
after deduction of expenses in the amount of $2,177,685,
resulting in gain realized in the amount of $1,235,595. Of the
remaining horses, two were sold for nominal amounts during early
1990, one died, and one was given away because it was infertile.
The sales proceeds were paid to APECO Equine beginning in
October 1989. The bulk of the proceeds was paid in two checks,
each in the amount of $949,400, that were received on December
21, 1989, and January 11, 1990, respectively, with the remainder
being paid over several following months. The proceeds initially
were deposited in a checking account in the name of APECO Equine
that was maintained at Fifth Third. Only Mr. Kluener and his
assistant had signature authority with respect to that account.
The sales proceeds were thereafter deposited in a brokerage
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