Investment Research Associates - Page 138




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         The purpose for the interview was to ask Ballard questions about              
         Kanter's transactions involving Ballard.                                      
              Sometime after the interview, Ballard's and Lisle's returns              
         also were audited.  The group of examining agents auditing the                
         returns of Kanter, Ballard, and Lisle encountered difficulties                
         because of the numerous entities related to Kanter involving                  
         transactions with him.                                                        
              The investigation expanded.  The IRS began interviewing more             
         and more witnesses.  By November of 1989, the Criminal                        
         Investigation Division (CID) was conducting an investigation.                 
              In February 1990, Kanter sent letters to Ballard's and                   
         Lisle's children terminating the payments they had been                       
         receiving.  In Kanter's letter, he stated that the Ballard and                
         the Lisle children had not done anything for a number of years                
         and blamed Freeman for continuing to have paid them.  On November             
         20, 1990, Lisle wrote a letter to Kanter explaining to Kanter the             
         reasons why he managed Carlco for no compensation.  Lisle stated              
         that there could have been a conflict of interest with Travelers,             
         and it was "a learning experience managing a municipal bond                   
         fund."  He told Kanter that he was going to begin charging a fee              
         because what he was doing took more of his time.  Likewise, after             
         Ballard was interviewed by the IRS in 1990, Ballard began taking              
         a salary from TMT.                                                            








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