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computer components into the enclosures it painted, occasionally,
K&H installed electric wiring or cable into the enclosures.
By the early 1990's, K&H’s contracts were becoming larger,
but the industry was also becoming more competitive, and the type
of computer enclosure was changing to molded materials that did
not require painting, thus reducing the need for K&H’s services.
As of 1990, K&H operated in a 65,000-square-foot facility, with
150 employees, and petitioner, as president, earned an annual
salary ranging from $276,040 to $1,318,813 during the years 1990
through 1993. Due to the changes in the industry, K&H sought
labor-intensive work and advertised that it did material
handling, scheduling, and quality control for different
materials, including sheet metal fabrication and plastic forming
and injection molding.
Other ways in which K&H was able to secure a larger portion
of the market were to perform complete or “turn-key” projects and
to assist its customers financially by purchasing the parts and
providing financial float for customers while petitioner was
performing its services. On occasion, K&H advanced cash and
acted as a guarantor for third parties. In some of those
instances, petitioner had an equity interest in the borrowing
entity. K&H also “invested” time and expended capital in a
project with a company known as PolyTracker, which was attempting
to develop a locking shopping cart wheel. If successful, K&H
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Last modified: May 25, 2011