- 66 -
and Michael Provan35) and that he knew the Kersting programs and
how to locate Mr. Kersting's assets.36 On June 2, 1987,
Mr. Huestis agreed to send a copy of the Thompson file to
Mr. Kozak. On the same date, Mr. Huestis notified Mr. Yamada
that the Thompsons did not plan to retain the Chanin firm to
bring suit against Mr. Kersting.
Messrs. Bigelow, Provan, and Thompson all asked Mr. Kozak to
investigate the filing of a lawsuit against Mr. Kersting. On
August 6, 1987, Mr. Kozak wrote to Mr. Thompson and suggested
that there was a good chance of obtaining a large judgment
against Mr. Kersting through a class action lawsuit, but that
collection of any such judgment would be uncertain. In addition,
Mr. Kozak's letter states in pertinent part:
As you know, Kersting is now embroiled with the
IRS on behalf of his clients. I recently had a
conference with Ken McWade, local counsel for the IRS.
He tells me the trial of these cases will be no sooner
than late Spring 1988. I suspect 12-18 months is a
more realistic date. Also McWade stated he is 100%
sure Kersting will be unable to show any "purposive"
function of his corporations other than to avoid taxes.
Several witnesses including yourself are available to
McWade to prove Kersting never had any intention of
enforcing the notes he had his clients execute. Also,
I am suspicious that Kersting's representation that his
35 Mr. Kozak had represented Mr. Provan when he had been
sued as a director of First Savings. The representation ended
with a settlement with the company that provided First Savings'
officers and directors liability insurance. Mr. Kozak did not
represent Mr. Provan in any tax controversies with the Internal
Revenue Service related to the Kersting programs.
36 As discussed in greater detail, infra pp. 115-116,
Mr. Kozak and his wife, Susan K. Kozak, had participated in one
or more of the Kersting programs that were the subject of this
Court's opinion in Pike v. Commissioner, 78 T.C. 822 (1982).
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