Philip T. and Mary Ellen Chaplin - Page 3

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          profit-sharing plan.  In 1986, petitioner became a director and             
          shareholder of RHB and purchased stock representing a 5-percent             
          share of RHB.  In February 1987, petitioner was elected to RHB’s            
          board of directors.                                                         
               RHB was formed to provide administrative, management, and              
          investment services for fiduciaries and others, to the extent               
          permitted by law.  RHB did not have trustee powers, was not a               
          trust company or bank, and was not registered under the                     
          Investment Advisers Act of 1940.  RHB could not be appointed to             
          serve as a corporate trustee.  Instead, individual fiduciaries              
          associated with RHB were named and served as trustees in their              
          individual capacities.  As the named trustees, the fiduciaries              
          were the legal owners of trust assets and had sole custody and              
          authority over the trust assets under their care.                           
          Typically, only RHB’s shareholders and directors served as                  
          named trustees.  Before being retained by a client, the                     
          fiduciaries provided the prospective client with a fee schedule,            
          a fiduciary services statement, and a copy of the RHB trustees’             
          investment philosophy.  If a new client did not like a particular           
          fiduciary, the client could chose from other fiduciaries at RHB.            
          There was an attempt amongst the fiduciaries to equalize their              
          workloads.                                                                  
               The fiduciaries released all trustee’s fees paid to them to            
          RHB.  RHB decided how to allocate those fees for paying expenses            






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