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involvement or knowledge, Mr. Martin and certain professionals
devised this complex and somewhat devious transaction consisting
of a series of steps and involving several entities. The
transaction was primarily intended to deceive State insurance
regulators into believing that the asset position or picture of
Mr. Martin’s insurance company was improved. The transaction was
further complicated because it was structured for tax purposes to
appear that the transfer of property to the corporation(s) was a
nontaxable event under section 351. Ultimately, the desired
results were not achieved, Mr. Martin was incarcerated due to his
fraudulent deceptions, and petitioner was left penniless and
bankrupt.
Petitioner knew that Mr. Martin intended to contribute
shares in Primera to another corporation, but she had no actual
knowledge of the myriad and complex steps or entities involved in
the transaction. Petitioner’s uncontroverted testimony revealed
that she was, at most, superficially aware of only a small
portion of the details in these complex transactions. Because
petitioner had only a superficial awareness of the transaction,
petitioner did not have actual knowledge of the amount of the
financial gain that was misreported, nor of the underlying facts
that gave rise to the gain. Based on the facts pertaining to the
transactions available to petitioner, she would not have known
that the stock transfer was not a section 351 transaction or that
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