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Ross) and Donald S. Murphy (Mr. Murphy).9 PES devised the idea
of using a speciously designed life insurance product in the
setting of deviously designed VEBA’s to prosper financially from
the enactment of the Tax Reform Act of 1986 (TRA), Pub. L. 99-
514, 100 Stat. 2085. PES believed that the TRA restricted the
ability of closely held businesses to reduce their tax
liabilities through contributions to retirement and employee
benefit plans. PES believed that the TRA gave PES the
opportunity to market aggressively to owners of such businesses a
novel tax avoidance scheme. PES anticipated that few of the
prospective investors in the scheme would be interested in
purchasing life insurance, the subject matter of the scheme, but
that these persons would purchase the life insurance (C-group
term) product described below in order to get the advertised
benefits.
PES united with Barry Cohen (Mr. Cohen), a longtime
insurance salesman, to market the subject VEBA’s to medical
professionals primarily through the Kirwan Cos. (Kirwan). Mr.
Cohen is an officer, director, and part owner of Kirwan. He is
not an attorney or an accountant. Michael J. Kirwan (Mr. Kirwan)
9 PES dissolved on or about Nov. 11, 1992, and Messrs. Ross
and Murphy each formed a sole proprietorship under the respective
names of Sea Nine Associates and DSM inc. Sea Nine Associates
and DSM inc. divided up the participants in the VEBA’s. For
simplicity, subsequent references to PES may include Sea Nine
Associates and DSM inc.
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Last modified: May 25, 2011