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effect was that 75 percent of the management fees Prudential paid
to Gateway Corp. was distributed through Essex to Holding Co. and
IRA, and finally to Kanter, Ballard, and Lisle. The
"Representation and Marketing" agreements thus merely served to
disguise payments from the operation of the Gateway and Midland
hotels to Kanter, Ballard, and Lisle.
The income to IRA was offset with losses reported on its
consolidated return. The entire convoluted arrangement served to
conceal Kanter, Ballard, and Lisle's interest in the operations
of the hotels from Prudential and to avoid tax.
As with payments made by other members of the Five to IRA,
the payments were accumulated in IRA until the formation of
Carlco, TMT, and BWK Inc. The funds accumulated in IRA were
distributed in the 45-45-10 ratio to Carlco, TMT, and BWK, Inc.,
and thus, distributed to Lisle, Ballard, and Kanter. The record
does not show that the payments made to Holding Co. were
distributed to anyone other than Kanter. On the basis of the
evidence clearly established in the record, we conclude that
Kanter, Ballard, and Lisle agreed that Kanter would receive for
his services 100 percent of the Essex payments made to Holding
Co. and 10 percent of the Essex payments made to IRA and that
Ballard and Lisle each would receive for their services 45
percent of the Essex payments made to IRA.
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