- 3 - primarily operated by Charles N. Cugliari. CNC was held out to potential investors as a food broker and distributor. Mr. Cugliari and CNC employees sold "investments" in CNC "contracts". A contract cost an investor about $25,000 and a half-contract about $12,500. CNC supposedly used investors' money to purchase food products monthly for subsequent sale to food wholesalers and supermarket chains at a profit. CNC made distributions of a fixed amount of funds to investors each month that was represented to be half of the profits made by CNC on its sales of food products. Typically a full contract would return a monthly amount of about $1,250 to the investor. CNC was in reality a pyramid scheme. Instead of purchasing food products with investors' money, CNC used the money of new investors to make payments to earlier investors. Petitioner was an investor in CNC from 1989 through part of 1995. During the year 1991, petitioner and her late husband received distributions of $55,092 from CNC. None of the distributions was reported on their 1991 joint Federal income tax return. Although petitioner received part of her CNC payments in cash, typically, CNC distributions were made monthly by check. Included with the monthly checks petitioner received were "vouchers" indicating: (a) The amount of the investment; (b) a "realization" amount; (c) a "margin" (gain) amount; (d)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011