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Dapy and Roundabout acted as guarantors on the commercial
paper transactions and received fees for the service. Although
the fees were paid to Dapy and Roundabout, the fees were
ultimately distributed to the group of Spanish investors.
Neither Dapy nor Roundabout was actually required to make a
payment as a guarantor.
Subsequent tranches of commercial paper were issued on dates
including September 17, 1988; December 14, 1988; March 15, 1989;
June 11, 1989; September 10, 1989; March 6, 1990; August 30,
1990; November 26, 1990; and later. These transfers used the
same type of circular funding. The only differences were the
dates, bank accounts, amount of money, and which entities were
used.
The companies that participated in the commercial paper
transactions and the companies that acted as guarantors of the
paper were controlled by the Spanish investors. Primarily,
Santandreu directed and A. Gelabert and Onate carried out various
aspects of the commercial paper transactions. Santandreu owned
an interest in a finance company and had been represented by the
other Spanish investors to be an expert in international finance.
XII. Royalty Transactions Relied Upon in Federal Tax Returns
The positions taken by the Medieval Times entities on their
Federal tax returns with regard to royalty payments were based on
the following series of purported transactions: Gatetown’s
purchase of the Medieval Times concept from TM on March 1, 1986,
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