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Crown Capital provided the due diligence and management
services for Mr. Ackerman’s investments, including SMP, a theater
exhibition company (Resort Theaters), a textile company, a small
insurance company, a business involved in manufacturing Pokemon
game cards, a company that manufactured sample wallpaper and
carpet boards, a newspaper stuffing business, a grocery business,
and a number of private equity investments. Oftentimes, Crown
Capital would make an investment in its own name and then
transfer it into some new entity established for Mr. Ackerman.
In some cases, Crown Capital also acted on behalf of SMP or SMHC,
although there was no written agency agreement between these
companies.
II. The Credit Lyonnais Group
A. Credit Lyonnais
During the early 1990s and the taxable years at issue,
Credit Lyonnais, S.A. (Credit Lyonnais), was a large European
banking and financial institution organized under the laws of
France. Credit Lyonnais was the direct or indirect parent of
other banking and financial institutions, including Credit
Lyonnais Bank Nederland, N.V. (CLBN), a bank organized under the
laws of the Netherlands, and Credit Lyonnais International
Services (CLIS). Credit Lyonnais acquired CLBN in the mid-1980s.
CLBN developed a large business of financing media entertainment
(e.g., film, television, etc.); it was partly responsible for
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