- 36 - $2,355,319 which Northwest’s audit could not trace, and only $8,639,511 could be attributable to losses in the stock market. Northwest’s auditors never were able to determine what petitioner had done with the $2,355,319 cash withdrawn from the contested accounts. Shortly after conclusion of the audit, on or about September 2, 1988, Northwest reiterated to petitioner that he and his corporations could no longer sell Northwest’s tickets. Disbursements From ANB Accounts During Northwest Litigation During the pendency of the Northwest litigation (June 20, 1988, through its settlement on December 31, 1990), Northwest did not receive any amount from the ANB accounts. Northwest asked petitioner and Belofsky to release the funds in the ANB accounts to it during 1988, but petitioner refused because he wanted to keep control over the funds for purposes of negotiating a settlement. In August 1989, with Northwest’s permission, Belofsky used $7,313 of the funds in ANB No. 3 to redeem petitioner’s personal residence from sale for back taxes. Petitioner did not report the $7,313 as income on his 1989 return. Settlement of the Northwest Litigation Petitioner and Northwest agreed to settle the Northwest litigation and executed an agreement to that effect (settlement agreement) on December 31, 1990. In the settlement agreement,Page: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Next
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