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The record clearly and convincingly shows that Weaver agreed
to split his Hyatt commissions with Ballard and Lisle in exchange
for their influence in having the management contract awarded by
Prudential and its co-owners to Hyatt. The record also shows by
clear and convincing evidence that Lisle and Ballard agreed to
pay Kanter 10 percent of their share of the payments in exchange
for Kanter’s facilitating the concealment and distribution of the
funds. Additionally, the transfer of the stock to IRA allowed
petitioners to offset the income from the Hyatt payments with
tax-shelter losses claimed on IRA's consolidated returns. The
entire arrangement was implemented in order to conceal Ballard's
and Lisle's participation from Prudential and Kanter's
participation from Hyatt and to avoid Federal taxes.
When Weaver sent to IRA the 1983 payment from Hyatt for the
management fees earned in 1982, he wrote in the letter dated
March 29, 1983: "Will you please deposit and issue appropriate
checks to the participants." If there was no agreement to split
the fees with petitioners, we think it more likely that Weaver
would simply have directed IRA to remit to him his 30 percent.
KWJ Corp. had not been liquidated; Carlco, TMT, and BWK were not
"active" (no stock had been issued); and the KWJ Co. partnership
had not yet been formed. We are convinced that the reference to
the "participants" was to Ballard, Lisle, and Kanter, as well as
Weaver.
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