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established another trust on behalf of Joseph Marion, the only
son of William and Lillian Marion.
Both trusts were funded with stock in the William Marion
Co., a closely held corporation controlled by the Marion family
(the family corporation). The corporate stock to be held in the
two trusts was to be conveyed to the Marion children 10 years
after the death of William and Lillian Marion. These trusts will
be referred to hereinafter collectively as the Marion Family
Trusts.
From the time of formation of the Marion Family Trusts until
early 1989, petitioner and the accountant for the Marion family
were co-trustees on each of the trusts. In February of 1989,
petitioner became sole trustee of the Marion Family Trusts.
Petitioner was not authorized to use any of the trust property
for his personal purposes.
In early 1989, William and Joseph Marion and the other
family members agreed to sell the stock in the family corporation
that was held by the Marion Family Trusts for $6.1 million in
cash. Upon closing of the sale on or about March 7, 1989, and
after cash disbursements of $2,013,000 were made to William and
Lillian Marion, petitioner was to transfer the $4,087,000 balance
of the sales proceeds into checking accounts in the name of the
Marion Family Trusts. William Marion instructed petitioner to
purchase for the trusts certificates of deposit having a 3-month
maturity.
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