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stock purchase agreements establishing the Melniks’ right to
private annuity payments were executed.35
4. Negotiations and Preparation of Documents
Petitioners admit that Clend did not participate in the
negotiations with MMI. Only Moshe Melnik participated in the
negotiations. Petitioners argue that Moshe Melnik represented
the interests of all HouTex shareholders in the negotiations, but
that claim rings hollow in the absence of any credible evidence
in the record that representatives of Bermuda Trust authorized
the representation, participated in the negotiations, or made any
attempt to ascertain the value of the HouTex shares that Bermuda
Trust allegedly held as a fiduciary.36
The record confirms that Mr. Pennoni prepared the relevant
documents without any meaningful input from Bermuda Trust, and
35In fact, Moshe Melnik testified that the formation of the
foreign trust was delayed until he knew he had a deal with MMI.
36In a letter to Mr. Pennoni dated Nov. 22, 1996, Mr.
Maycock wrote as follows: “It was agreed in our telephone
conversation that you would provide details relating to the
planning purposes for the trust, information on the formation of
the underlying BVI company, Clend Investment Holdings Ltd, to be
put in place and the nature and value of the stock transaction to
be conducted by and through that company.” In a followup letter
to Mr. Pennoni dated Dec. 2, 1996, Mr. Maycock stated the
following: “Various details relating to the planning purposes of
the trusts and for the underlying company were requested in that
letter and I know (sic) look forward to receiving same together
with the additional items to complete our compliance
requirements.” Mr. Maycock inserted a postscript indicating that
“I have subsequently spoken to you concerning the planning tenets
of the trust.”
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