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willing to part with a large share of the company at a bargain
price. Against this backdrop, Schnitzer conferred with Ballard
before agreeing to sell a large stake in PMS to IRA. Ballard and
Lisle, of course, were in a position to increase PMS’s portfolio
of Prudential management contracts. Considering that the PMS
installment payments eventually were divided among Carlco, TMT,
and BWK (as discussed in the flow-of-funds analysis below), we
infer that Kanter, Ballard, and Lisle recognized they could earn
easy profits by acquiring stock in PMS, and they agreed to share
those profits before IRA acquired the PMS stock.
Kanter, Ballard, and Lisle used IRA as a conduit to obtain a
47.5-stock interest in PMS and to conceal Ballard’s and Lisle’s
involvement in the matter. The substantial appreciation that IRA
realized between the $150,000 purchase price for the PMS stock in
November 1977 and the $3.1 million sale price in August
1979-–the latter amount being paid in installments over 10
years--represented income that was earned by Kanter, Ballard, and
Lisle. Kanter, Ballard, and Lisle improperly attempted to assign
income from the PMS transaction to IRA. As discussed in the
flow-of-funds analysis below, Kanter shared the income derived
from the PMS stock sale with Ballard and Lisle through
distributions to TMT, Carlco, and BWK.
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