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Partnership. The record reflects that personnel associated with
MHM in effect provided all the financial and accounting services
that GHM required to fulfill its hotel management contracts. For
the most part, Connolly simply continued to serve as the onsite
manager of the Gateway Hilton.
In late 1983, Prudential awarded to MHM the hotel management
contract for the Twin Sixties Hotel. Shortly thereafter, MHM and
Essex Partnership modified their representation and marketing
agreement to provide that MHM would pay 70 percent of its
management fees from the Madison Hotel and 57 percent of its
management fees from the Allentown Hilton and the newly acquired
Twin Sixties Hotel management contract. On January 1, 1986,
Connolly executed a new representation and marketing agreement on
behalf of GHM which provided that GHM would pay to Essex
Partnership 40 percent of the fees earned on the Gateway Hilton
and Midland Hilton management contracts.
Over time, the total fees that MHM paid to Essex Partnership
generally equaled the total fees that GHM paid to the
partnership, and the total fees MHM paid to the partnership
roughly approximated MHM’s distributive share of partnership
income as a 47.5-percent partner in Essex Partnership. However,
as indicated previously, MHM was not paid directly for the
substantial services its employees rendered to GHM. Rather, as a
partner in Essex Partnership, MHM received 47.5 percent of the
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