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Petitioner's Receipt of Property and Stock of 2618 Inc
By the end of 1987, as a result of the outstanding legal fees in
excess of $500,000 owed to him by 2618 Inc and by Helmle, petitioner
began exercising increasing control over the finances and operations
of 2618 Inc and of the Club.
On February 15, 1988, ownership interests in certain intangible
and tangible personal property relating to the Club (namely, 2618
Inc's leasehold interest in the building in which the Club operated,
the equipment, leasehold improvements, furniture and fixtures located
in the building, and the right to use the Caligula XXI name) were
transferred to petitioner in satisfaction of a portion (namely,
$35,000) of the legal fees owed to petitioner. Petitioner then
leased the above property back to 2618 Inc.
In 1988, ownership of all of the outstanding stock of 2618 Inc
was transferred from Helmle to petitioner in further payment of legal
fees that 2618 Inc and Helmle owed to petitioner.
As indicated above, largely on account of the criminal charges
pending against Helmle, TABC had denied the Club the mixed beverage
permits required to sell alcoholic beverages to patrons. During
1988, petitioner had actively sought a buyer for Helmle's interest in
2618 Inc, but he was unsuccessful. Transfer of the stock of 2618 Inc
to petitioner therefore served the additional purpose of eliminating
Helmle as one of the stockholders of 2618 Inc.
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