Investment Research Associates - Page 156




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              Petitioners would have us end our examination of the                     
         transaction at this point and hold that the sale was a valid                  
         arm's-length sale of the stock to IRA.  The Court declines to do              
         so because it would ignore the true substance of the transaction              
         and give new meaning to the expression "blind justice".  We think             
         the true substance of the transaction is clearly disclosed when               
         one follows the flow of the money.                                            
              The only activity conducted by KWJ Corp. and later the KWJ               
         Co. partnership, was receiving the Hyatt payments.  IRA was to                
         pay $10,000 of the purchase price in November 1979 and the                    
         balance by August 1980.  Hyatt paid over $170,000 to KWJ Corp. in             
         1979.  Thus, IRA simply paid the purchase price from the Hyatt                
         payments.                                                                     
              After paying 30 percent of each of the Hyatt payments to                 
         Weaver, the remaining funds were (1) distributed as "consulting               
         fees" to Ballard's and Lisle's children, (2) filtered along with              
         other payments from the Five through IRA, Int'l Films, and HELO               
         as loans to Ballard, Lisle, and Kanter, and (3) distributed to                
         Carlco, TMT, and BWK, Inc.  Lisle's control over the Carlco                   
         assets, Ballard's control over the TMT assets, and Kanter's                   
         control over the BWK, Inc. assets went unfettered.  Petitioners               
         had unrestricted power to use the funds for their personal                    
         benefit and in fact did so.                                                   








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