-332-
As of January 1, 1987, the Bea Ritch Trusts possessed
substantial assets and financial net worth. Since their
inception, each of the 25 trusts filed Federal income tax returns
for the fiscal year ending September 30. On their returns
covering the period 1969 to 1986, the trusts, collectively,
reported substantial income, deductions, and losses from numerous
investments. These investments included the trusts’ ownership of
all of IRA’s outstanding stock, their ownership of substantial
stock interests in THC, and their acquisition in 1973 of a
collective 18-percent interest in the Oyster Bay Associates
Partnership that invested in a cable television venture.
B. Oyster Bay Associates Partnership
Prior to the 1970s, Kanter initiated a practice at his law
firm, Levenfeld and Kanter (Levenfeld/Kanter), under which the
law firm’s partners, their family members, and/or their family
entities were offered the opportunity to participate in various
investment opportunities that came to the attention of Kanter and
other members of the firm. Participation in these investments
was on a voluntary and individual basis. A partner (or that
partner’s family members or family entities) was allowed to
subscribe to, and obtain a maximum percentage ownership interest
in, the investment equal to that partner’s law firm partnership
percentage interest. In the event any partner decided either (1)
not to participate, or (2) not to invest up to the initial
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