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beneficiary designation. Unexplained, the designation of Mr.
Taub as a beneficiary of the foreign trusts raises the
possibility that the money paid by Mr. Taub to establish the
trusts could be repaid to Mr. Taub at a future date out of trust
principal or income.
8. Missing Documents
Relevant documents that might have helped to answer some of
the questions left open by the record in this case were not
introduced into evidence by petitioners. Those documents
included the three investment proposals regarding the Clend
investment strategy, parts of Clend’s account records including
documentation of the “credit facility” provided by Bermuda Trust
to Clend, and documents (including correspondence) relating to
the negotiation and consummation of Tapuz’s real estate
transaction.
9. Lack of Arm’s-Length Dealings
In this case, the Melniks transferred 75 percent of HouTex’s
stock, worth millions of dollars, to an unknown and unfunded
foreign entity without obtaining any security interest or
guaranty whatsoever. We must ask why. The answer that we glean
from the record is not favorable to petitioners.
Although the record in this case is not clear, it appears
that the Melniks agreed to transfer their HouTex stock to a
foreign corporation owned by foreign trusts without investigating
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