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Administration Co. maintained books and records for each of
its clients and, in many instances, prepared clients' tax
returns. Administration Co. prepared Kanter's income tax returns
for all or some of the years at issue. Administration Co.
charged a fee for its services.
Administration Co. filed for bankruptcy in February 1988,
and Principal Services was organized. All of Principal Services'
outstanding shares of stock were initially owned by ARO Trust, of
which trust Kanter was the trustee.
Principal Services took over a number of Administration
Co.'s clients, including Kanter, IRA, and Holding Co. Principal
Services performed services for clients similar to those provided
by Administration Co. Principal Services also established two
accounts similar to the Special E Account and the Special
Account. During the years at issue, Principal Services made
loans to Holding Co. and BWK, Inc.
In 1990, Gallenberger purchased from ARO Trust all of
Principal Services's shares for $100. In October of 1993,
Principal Services moved (along with all of its clients files) to
Wisconsin.
E. The Other Lending Corporations
During the years at issue Kanter often used two additional
entities, HELO and Int'l Films to distribute funds including
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