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which she partially owned in the United States. The withdrawals
occurring from 1986 through 1989 fall into three general
categories:
* $491,752--transferred directly to Ms. Ng's personal bank
account in the United States or to American Express to pay her
personal American Express bills;
* $535,012--paid for the direct benefit of U.S. restaurants in
which Ms. Ng had an ownership interest; and
* $1,920,158--no information provided.
In February 1991, Ms. Ng resigned from her position at Ocean
City HK and transferred a portion of her stock ownership to her
son. This was apparently done as a result of a controversy
concerning her use of the tip account. The managing director of
the restaurant, Jack Lee, also resigned and transferred ownership
of all of his stock to Ms. Ng's son in February 1991. Ms. Ng and
Mr. Lee had been business partners since 1965.
Sometime in 1990 or early 1991, Ocean City HK was reorganized
and new owners were brought into the business. In May 1991, a
newly constituted board of directors decided to close the tip
account.
The accounting firm of KPMG Peat Marwick (Peat Marwick) was
employed to conduct a financial audit of Ocean City HK for the year
ending March 31, 1991. James Arkoosh, Peat Marwick's Hong Kong
resident partner, testified that the tip account was included as an
asset of Ocean City HK on its balance sheet for the year ended
March 31, 1991. He did not know whether the tip account had been
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