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Neither party has addressed this apparent inconsistency, and we
proceed as though Exhibit 3-C was not, in fact, a copy of a
return that was actually filed with respondent.
With respect to the preparation of their individual Federal
income tax returns, the Gilmores and Wilson accumulated and
forwarded the necessary documentation to Stewart. Stewart
received the Hogards' tax information from Hogard's secretary.
Before the returns were signed and filed, the Gilmores and Wilson
reviewed their respective returns. It is unknown whether the
Hogards did the same.
In early 1982, Stewart learned about the Clearwater group
partnership (Clearwater), Southeast Recovery Associates
(Southeast), and Esplanade Associates (Esplanade) through Bill
Storey (Storey), who was the accountant of a friend of one of
Stewart's clients. Clearwater, Southeast, and Esplanade are
limited partnerships which purportedly engaged in licensing
Sentinel expanded polyethylene (EPE) recyclers manufactured by
Packaging Industries, Inc. (PI), of Hyannis, Massachusetts.
At some point, Stewart reviewed the Clearwater offering
memorandum. Stewart later received the offering memoranda for
Esplanade and Southeast and was advised that they were similar to
the Clearwater offering memorandum. The respective offering
memoranda for Southeast and Esplanade allocate 10 percent of the
proceeds from each offering to the payment of sales commissions
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