K & M La Botica Pharmacy, Incorporated, et al. - Page 21

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               On May 5, 1998, Ahmed formed K & M Luxor (KML) as a                    
          California corporation.  A relative of Ahmed was identified as              
          the sole shareholder of KML.  Ahmed then caused Macca to transfer           
          to KML, without consideration, some of the real properties Macca            
          nominally owned.6                                                           
               Ahmed’s stated reason for incorporating KML and for                    
          transferring properties from Macca to KML was that Macca had                
          taken over from ARL some aspects of the ownership and operation             
          of the medical lab and that Ahmed did not want Macca’s properties           
          to be subject to any claims against Macca relating to the lab.              

          Additional Questionable Business                                            
          Practices and Diversion of Business Income                                  
               In the course of operating his controlled businesses and               
          nominee entities, Ahmed entered into additional questionable                
          business practices.                                                         
               Ahmed often would deposit proceeds of one of his controlled            
          entities or businesses into a bank account of another of his                
          controlled entities or businesses or into one of his personal               
          bank accounts.  For example, Medi-Cal checks received in                    
          connection with services rendered at Ahmed’s medical clinics                
          often were deposited into bank accounts of K & M.                           




               6For reasons not in the record, K & M Luxor has not been               
          treated by respondent as a nominee entity of Ahmed.                         





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