William D. Zack - Page 4




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               They formed four other entities in the mid-1980's named Colt           
          Tool & Die, Inc. (Colt), Synchronized Design & Development, Inc.            
          (Synchronized), Sovack Partnership (Sovack), and Jaclyn Leasing,            
          Inc. (Jaclyn) (we sometimes use the term “Zachova entities” to              
          refer to two or more of the six entities formed by petitioner and           
          Sova).  Colt is a tool and die business, and its stock is owned             
          equally by petitioner, Sova, and Sova’s brother.  Synchronized              
          designs the dies used by the Zachova entities, and its stock is             
          owned equally by petitioner, Sova, and Mark Bartolomucci.  Sovack           
          owns the machinery and equipment used by Tool & Die and                     
          Industries and the building in which those two companies operate;           
          Sovack is owned equally by petitioner and Sova.  Jaclyn rents a             
          building to the Zachova entities; Jaclyn is owned equally by                
          petitioner and Sova.                                                        
               Petitioner and Sova devised a scheme in or around 1983 to              
          obtain cash surreptitiously from Industries and Tool & Die.                 
          Under this scheme (the false invoice scheme), third parties                 
          issued false invoices to Tool & Die and Industries for work not             
          actually performed, Tool & Die and Industries paid the third                
          parties the amounts shown on the invoices, the third parties                
          returned the payments to petitioner and Sova net of a 25-percent            
          “commission”, and petitioner and Sova split the net payments                
          equally.  Petitioner and Sova each received $217,162 from the               
          false invoice scheme in 1985, and they each received $94,439 from           






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