Steven K. Han - Page 45





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          $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          had done with the $2,355,319 cash withdrawn from the contested              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,              






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