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processing, recycling, and marketing of scrap metal. Moshe and
Barbara Melnik each received 5,000 shares of stock in HouTex and
were the sole shareholders.
In 1980, Zalman Melnik, who had worked in the construction
business in Israel, moved to the United States to help his
brother set up the scrap metal business. Zalman Melnik was
responsible for the internal operations at HouTex, while Moshe
Melnik was involved in the sales operation and customer
solicitation. In January 1981, Zalman Melnik received 7,000
shares of HouTex stock, and Moshe Melnik received an additional
3,000 shares.
In April 1996, Moshe and Barbara Melnik divorced.4 After a
contentious battle over the valuation of their HouTex stock,
Moshe and Barbara Melnik ultimately agreed that the fair market
value of their 65-percent interest was $1,970,000.5 Moshe Melnik
received Barbara Melnik’s HouTex stock pursuant to their property
settlement agreement.
After the divorce was final, Moshe Melnik sold some of his
HouTex shares to Zalman Melnik. Following the sale, Moshe Melnik
4During the divorce proceedings, Moshe Melnik’s insurance
agent advised him to set up a trust, but he did not do so at that
time.
5The appraised value included a 20-percent discount for lack
of marketability.
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Last modified: May 25, 2011