-64-
TACI filed for bankruptcy in February 1988.39 Lawrence
Korrub served as TACI’s bankruptcy attorney. Korrub, Transcr. at
1805. During TACI’s 1988 bankruptcy proceedings, the records
that TACI maintained for Kanter and Kanter-related entities were
not turned over to Korrub. Korrub, Transcr. at 1807-1808. The
only documents that Korrub received were copies of TACI’s tax
returns. Id. During TACI’s bankruptcy, Gallenberger sent TACI’s
books and records, including the bank statements and canceled
checks related to the TACI Special E and TACI Special Accounts,
to Kanter. Gallenberger, Transcr. at 1970-1973.
At the time of TACI’s bankruptcy, a new corporation,
Principal Services Accounting Corp. (PSAC), was organized. All
of PSAC’s outstanding shares of stock were initially owned by ARO
Trust, of which trust Kanter was the trustee. In 1989,
Gallenberger became the president of PSAC. Gallenberger,
Transcr. at 1978-1980. In 1990, Linda Gallenberger purchased
from ARO Trust all of PSAC’s shares for $100 and her assumption
of PSAC’s outstanding debts, which totaled over $100,000.
Prior to TACI’s filing for bankruptcy, PSAC took over a
number of TACI’s clients, including Kanter, IRA, and THC. PSAC
39 The STJ report, at 32 n.14, incorrectly stated that the
record was not clear as to why TACI went bankrupt. TACI filed
for bankruptcy after the Internal Revenue Service (IRS) assessed
a number of tax return preparer penalties against the firm for
various infractions. Gallenberger, Transcr. at 1973-1974.
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