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attorney served as custodian for the accounts overlooks the fact
that Belofsky at all times served as counsel for both petitioner
and his corporations. The one disbursement for petitioner’s
personal expenses from an ANB account–-to pay delinquent taxes on
petitioner’s residence–-was made with Northwest’s permission.42
Respondent’s contention that funds in the ANB accounts
served as security for petitioner’s attorney’s fees finds little
support in the record. Pursuant to the settlement of the
Northwest litigation, petitioner and his corporations in 1991
received all amounts remaining in the ANB accounts after payment
to Northwest of $865,000. The payment to Northwest was satisfied
with funds from ANB Nos. 2 and 5 (a successor to ANB No. 1), with
the remaining balance of $5,674 in those accounts going to
petitioner and his corporations. Petitioner accordingly received
the entire contents of ANB Nos. 3 and 4, totaling $137,869.
Belofsky was subsequently paid a total of $14,800 from ANB No. 3
and $31,400 from ANB No. 4.43 Moreover, as noted, Belofsky
served as counsel to both petitioner and his corporations; thus
payment of his fees to some extent served a corporate purpose.
42 Moreover, this expenditure arguably served Northwest’s
interests as a creditor, by preserving assets available to
satisfy a judgment.
43 The funds in ANB No. 4 are not at issue in this case.
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