V.R. DeAngelis M.D.P.C. & R.T. Domingo M.D.P.C., V. R. DeAngelis M.D.P.C., Tax Matters Partner, et al. - Page 15




                                       - 15 -                                         
          determined by STEP’s Independent Fiduciary”.8  The STEP plan                
          marketing documents advised participating employers that                    
          deductions for contributions to the STEP plan could be ultimately           
          disallowed but that only taxes and interest, and no additional              
          amounts such as penalties, would then be due because STEP had               
          received an “opinion letter” from Mr. Mamorsky stating that it              
          was “more likely than not” that the deductions would be allowed.            
               E.  Independent Fiduciary                                              
               The STEP plan administrator had the sole authority to make             
          determinations relating to “dismissal”, “Total Disability”, or              
          “death”, conditions that were prerequisites to the receipt of               
          benefits from the STEP plan as written.  In making those                    
          determinations, the plan administrator was required to rely on              
          rules and regulations established by the STEP plan “Independent             
          Fiduciary”.  Jules Pagano (Mr. Pagano) was the independent                  
          fiduciary of the STEP plan from its inception through February              
          2002; the STEP plan did not have any independent fiduciary                  
          thereafter.  While serving as independent fiduciary, Mr. Pagano             
          was authorized to and routinely did provide individuals seeking             
          to obtain benefits under the plan with personal guidance on how             
          to frame their requests so that they would receive their                    
          anticipated benefits under the plan as written.  Upon receiving             

               8 In operation, however, forfeitures could occur only when             
          projected plan assets equaled or exceeded projected plan                    
          liabilities on an employer by employer basis.                               






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