Ray W. and Marilyn S. Sowards - Page 6

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               Mr. Sowards purportedly assigned certificates of beneficial            
          interest in WPA to his wife, Ms. Sowards, and their six                     
          children.8  Mr. Sowards did not inform his wife or children of              
          their purported beneficial interests in WPA.                                
               Mr. Sowards opened and maintained a bank account under the             
          WPA name at the Bank of Milipitas, account No. 1109898 (WPA’s               
          bank account).  He had sole signatory authority over WPA’s bank             
          account.  During the relevant years, Mr. Sowards controlled and             
          made all day-to-day decisions regarding WPA.  Ms. Vera Morris               
          (Ms. Morris) was named sole trustee of WPA.  Ms. Morris was an              
          employee of STL and the mother-in-law of Mr. Strong.  WPA did not           
          file Federal income tax returns for 1995, 1996, or 1997.                    
               For the tax years at issue, STL issued checks to WPA                   
          approximately every week.  On an approximately weekly basis, Mr.            
          Sowards submitted statements to STL for the WPA payments he                 
          received.  The dated statements read “To: System Two Limited,”              
          “From: WPA,” “For: Legal Compliance” and list an amount “Due”.              
          The statements for 1996 and 1997 list total amounts due to WPA              
          from STL of $131,700 and $46,853.52, respectively.                          




               8Mr. Sowards purportedly assigned the following percentages            
          of beneficial interest in WPA to the following members of his               
          family, 25 percent to his wife and 12.5 percent to each of his              
          six children: Jared V. Sowards, Benjamin J. Sowards, Rachel H.              
          Sowards, Emily M. Sowards, Nicolas L. Sowards, and Julie A.                 
          Sowards.                                                                    




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