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made below-market loans to and from the corporations to suit his
own purposes.
Mrs. Cordes and Jean Ann Richard each served as officers or
directors of each of the Cordes corporations but did not
participate in any of the Cordes corporations’ day-to-day
operations or business decisions. Neither of them had any
knowledge of any financial transactions, stock-related or
otherwise. Jean Ann Richard treated the Cordes corporations as
belonging exclusively to Mr. Cordes, no matter the amount of
shares that may have been titled in her name.
John Cordes served as an officer of CFC, but his only
operational involvement with the Cordes corporations was the
occasional execution of vehicle repossessions in Texas. He
otherwise was unaware of any corporate transaction. Eddy Ben
Cordes served as an officer of CFC and as the full-time sales
manager of Eddie Cordes, Inc. He had no decision-making ability,
but he placed orders for acquisitions of new cars.
The Cordes family occasionally discussed the Cordes
corporations’ business and financial matters in informal
settings, including at the Cordeses’ kitchen table.
II. The Income Tax Cases
In the income tax cases, respondent contends that CFC
transferred funds to the Cordeses, or the Cordeses diverted funds
from CFC, or funds were otherwise appropriated from CFC for the
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