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OPINION
Diverted Corporate Funds Issue
In early 1988, petitioner transferred $1,294,058 from an
account of one of his corporations (Albank No. 1) into a personal
brokerage account, the FCIS account, to purchase stock held in
that account. Before the end of February 1988, all but two
blocks of the stock purchased (i.e., the Pan Am and Kodak stock)
had been sold, and the proceeds transferred from petitioner’s
FCIS account back to his corporation’s Albank No. 1 account. The
stock so liquidated was generally sold at a profit. As a result,
with respect to the $1,294,058 taken from the corporate account,
petitioner was able both to return $752,702 to the corporation
and to retain in his FCIS account stock purchased with $565,478
in corporate funds (i.e., $116,600 for the Pan Am stock plus
$448,878 for the Kodak stock).
On March 4, 1988, petitioner transferred the Kodak stock
from his FCIS account to another personal account, P-B No. 1. On
March 17, 1988, petitioner transferred the Kodak stock from P-B
No. 1 to the Sam Han account (which he controlled). He
transferred the Kodak stock back to P-B No. 1 on June 20, 1988.
On June 24, 1988, petitioner sold the Kodak stock for a net of
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