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that a lawyer in Mr. Pennoni’s firm calculated the value of the
annuities under Mr. Pennoni’s direction. And, although
petitioners did not testify to this fact, the record supports a
conclusion that the valuation of the HouTex stock and the amount
of the annuity reflected in the stock purchase agreements
prepared by Mr. Pennoni were based on the acquisition price to be
paid by MMI for the HouTex stock.37 In fact, the record supports
a conclusion that the stock purchase agreements and related
documents were prepared at a time when the approximate
acquisition price of the HouTex stock that MMI would eventually
pay was already known to Mr. Pennoni and to petitioners.
37Mr. Pennoni testified that he negotiated with Mr.
Richardson regarding the amount that Clend agreed to pay under
the annuity contracts in exchange for the HouTex stock and that
Mr. Richardson was Clend’s initial director. Mr. Pennoni also
testified that the valuation of the HouTex stock was based on the
two appraisals that were prepared in the divorce case. We do not
accept this testimony as credible. The correspondence in the
record establishes that Bermuda Trust had little involvement in
structuring the annuity transactions, including the amount of
the private annuities to be paid by Clend, and did not even
receive any detailed explanation of the purpose of the foreign
entities until approximately December 1996, after Clend had
entered into the stock purchase agreements. The relevant
documents do not contain any indication that Mr. Richardson
negotiated any aspect of the annuity transactions or the MMI
transaction. The relevant documents also do not support Mr.
Pennoni’s testimony that Mr. Richardson was Clend’s initial
director. The valuation of the HouTex stock for purposes of the
annuity transactions appears to have been based on the
acquisition price for HouTex proposed by MMI rather than the
appraisals prepared for the divorce case.
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