Pan American Foods, Inc. - Page 6

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                                             Funds Transferred                        
                    Taxable Year             to Rubbik                                
                       1988                   $1,135,745                             
                       1989                 1,061,050                                
                       1990                 763,790                                  
                       1991                    87,050                                
                              Total             $3,047,635                            
               Petitioner transferred the above funds to Rubbik pursuant to           
          five written “consulting” agreements between petitioner and                 
          Rubbik under which Rubbik agreed to provide consulting services             
          to petitioner relating to the modifications to be made to                   
          Gamesa's products to make them suitable for sale in the United              
          States.  These agreements were signed by officers of petitioner             
          at the direction of de la Garza, and the agreements were not                
          negotiated at arm’s length.                                                 
               The services mentioned in the above consulting agreements              
          were to be performed primarily by Gamesa employees in Mexico, not           
          by employees of Rubbik.                                                     
               The funds transferred by petitioner to Rubbik were deposited           
          by de la Garza into Rubbik’s bank account with Citibank in                  
          Houston, Texas.  For the years in issue, de la Garza was Rubbik’s           
          only employee, and he held sole signature authority over Rubbik’s           
          bank account.                                                               
               Most funds withdrawn from Rubbik’s bank account during the             
          years in issue were transferred to Koala Corp., Ltd. (Koala                 
          Corp), a trust that was indirectly wholly owned by Santos de                





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Last modified: May 25, 2011