Robert and Lisa Morganstein - Page 4




                                        - 3 -                                         
          required to remit a downpayment at the time the contract was                
          entered into.  The amount of the required payment, labeled a                
          “deposit”, varied from contract to contract but was always listed           
          as a portion of the total fee being charged for the services to             
          be rendered.  The standard terms provided that the entire payment           
          would be retained by BMP upon cancellation by the customer,                 
          unless one of two circumstances occurred.  Upon the occurrence of           
          either of these circumstances, BMP would refund all of the                  
          payment, less a $150 nonrefundable “administrative fee”.2  A                
          partial refund was available when:  (1) The customer canceled an            
          event due to death or life-threatening illness or injury of an              
          immediate family member, or (2) the customer canceled with 6                
          months’ advance written notice, provided BMP was able to find a             
          comparable engagement for the same date and time.  In order to              
          promote his professional reputation, petitioner usually would               
          make full refunds to canceling parties, despite the contractual             
          terms.                                                                      
               In 1996, BMP received $87,660 in downpayments for services             
          to be performed in subsequent years.  In 1997, BMP received                 
          $22,865 in payments for such services.  The payments were put               
          into the same bank account as other business income, and the                
          funds were not physically segregated in any manner.  BMP was not            



          2In some cases, the amount of the downpayment was less than                 
          $150.                                                                       




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next

Last modified: May 25, 2011