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is Kirwan’s president and other part owner. Mr. Kirwan is not an
attorney or an accountant.
Kirwan represented to prospective investors during its
marketing of one or both of the subject VEBA’s that the VEBA’s
let an investor make unlimited tax-deductible contributions to
his or her separate plan and that each plan would give a covered
employee significant paid-up life insurance when he or she left
the plan.10 PES represented to prospective investors that each
of the subject VEBA’s gave investors
the ability to park funds for several years while the
funds continue to grow at interest in a tax free
environment. While most people would be happy to take
accumulated funds, pay the tax due at that time at
ordinary rates, [sic] we have created a plan which
provides for a permanent deferral of all the taxes due,
either during ones [sic] lifetime or to the heirs. In
summary, we create a tax deduction for the
contributions to the * * * [VEBA] going in and a
permanent tax deferral coming out.
* * * * * * *
Each individual employer establishes his own level of
benefits and has his own trust account with a third
party trustee * * *. The contribution goes into the
individual trust account for each employer and the
benefits provided under the plan are paid for out of
the individual accounts. Each employer receives
reports which apply only to his account.
The SC VEBA and the NJ VEBA were formed by the Southern
California Medical Profession Association and the New Jersey
10 We use the term “paid-up” in this context to mean that
the insured did not have to make any additional premium payments
on the underlying policy.
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