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On June 16, 1987, petitioner bought 20,000 shares of ZZZZ
Best stock for $146,650.2 He paid a total of $678,811.40 for the
70,000 shares he bought in June. He bought all of his ZZZZ Best
stock through stockbrokers; i.e., Merrill Lynch and Drexel,
Burnham. He did not buy any ZZZZ Best stock from ZZZZ Best,
Minkow, or any other officer or director of ZZZZ Best. Minkow did
not try to sell ZZZZ Best stock to petitioner and did not
encourage him to buy it.
Minkow telefaxed various documents to petitioner corporation
on June 16, 1987.3 These included a Form 10-Q, undated ZZZZ Best
financial statements, the May 28, 1987, press release concerning
ZZZZ Best’s future operations, a security agreement, Minkow’s
personal guarantee of the receivables, Minkow’s personal
financial statement (as of January 31, 1987), an irrevocable
stock/bond power in which Minkow assigned to MTS 200,000 shares
of restricted stock in ZZZZ Best, and documents from Interstate
purporting to show that the accounts receivable were legitimate.
Minkow also telefaxed a June 16, 1987, agreement to buy accounts
receivable that included a blank signature line for petitioner
2 The trade date of petitioner’s purchase of the 20,000
shares of ZZZZ Best stock was June 16, 1987; the settlement date
was June 23, 1987.
3 Minkow telefaxed these documents to petitioner at 5 p.m.
on June 16, 1987. Petitioner did not try to show that he
received these documents before he bought 20,000 shares of ZZZZ
Best stock described above.
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