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3. Suspicious Timing
The timing of certain actions raises questions regarding the
accuracy of testimony given by the three witnesses in this case.
Although each of the three witnesses claimed that the creation of
the foreign entities and the sale of 75 percent of HouTex’s stock
to Clend was motivated by nontax business reasons, the timing of
the creation of the foreign trusts, the acquisition of Clend, and
the deposit of Mr. Taub’s checks to fund the foreign trusts in
relationship to the sale of HouTex stock to MMI casts doubt on
that testimony. On October 8, 1996, Mr. Taub’s bank in Israel
issued two checks for $10,000 each to fund the foreign trusts.
The two checks were mailed to Bermuda Trust on October 14, 1996,
but were not credited to (or presumably deposited into) trust
accounts until January 23, 1997. The deal with MMI apparently
closed on or about January 7, 1997, because MMI transferred
approximately $9 million in cash, warrants, and notes to or for
the benefit of the Melniks and Clend at that time.33 These facts
permit an inference that Mr. Taub’s checks intentionally were not
deposited by Bermuda Trust until after the MMI deal had closed.
That inference is not consistent with petitioners’ argument that
the formation of the foreign entities was separate from, and
33The MMI stock and warrants were placed in escrow at
closing.
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