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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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