- 35 -
5. Testimony Regarding Business Purpose
Each of the three witnesses testified regarding the alleged
business purposes for the creation of the foreign entities and
the sale of HouTex stock to Clend. According to the witnesses,
the business purposes were to prevent Moshe’s ex-wife, Barbara,
from challenging the valuation of her HouTex stock in the divorce
proceeding, to address the long-held concerns of Moshe and Zalman
Melnik resulting from the fact that HouTex did not have a
retirement plan, and to protect the proceeds of the HouTex stock
sale from claims under warranties the Melniks would have to give
to MMI.
The testimony regarding business purposes was not convincing
or credible. The Melniks offered no evidence, other than their
own self-serving testimony, that they had had any concern
regarding their retirement before the MMI proposal was made. If
their testimony were true, we would have expected to see evidence
establishing that they had engaged in retirement planning in the
past or that HouTex had investigated the possibility of
establishing a retirement plan before the MMI proposal was made.
No such evidence was offered, leading us to conclude that the
Melniks’ concern about retirement arose only when the Melniks
were faced with the prospect of a substantial windfall resulting
from the MMI proposal.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011