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the policies used to fund petitioner's obligations under its
Management Security Program, the individual 1993 COLI policies
were not tailored to fund benefits due the insured employees
under Winn-Flex. Indeed, the policies were to remain in effect
after the individual employees left petitioner's employ. In
planning for and setting up the COLI plan, petitioner's financial
vice president and principal financial officer, Mr. McCook, never
told the individuals at WJ/Coventry, who were planing the COLI
transactions, about any purpose or objective to use the COLI plan
to fund benefits under Winn-Flex.
On brief, petitioner argues that death benefits and policy
loans and withdrawals from the net cash value of COLI policies
could be used to help fund Winn-Flex. However, the projections,
which embody petitioner's broad-based COLI plan, show that
anticipated death benefits and net cash values were going to be
exhausted in order to satisfy petitioner's premiums and policy
loan interest obligations. According to petitioner's COLI plan,
there would be no death benefits and cash value left over to
provide the necessary funding for Winn-Flex. Indeed, the COLI
plan anticipated that after using available death benefits,
policy loan proceeds, and withdrawals, petitioner would still be
required to make annual cash payments in order to satisfy its
annual premium and policy loan interest obligations. We do not
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