-67-
or controlled by Kanter. In turn, Kanter and/or entities under
Kanter's control transferred some or all of those payments to one
or more entities, and, through a succession of transfers, the
moneys ultimately filtered down to Ballard, Lisle, and Kanter,
either as corporate capital contributions or in the form of
loans, which were never repaid and later written off as
uncollectible. Respondent variously characterized the operation
as “schemes” by which payments by The Five went figuratively into
a “black box” from which there was a “drop down” to and through
various entities until the moneys reached Ballard, Lisle, and
Kanter. In actuality, respondent argues, the payments under the
Prudential scheme constituted kickback income to Kanter, Ballard,
and Lisle, which Kanter, Ballard, and Lisle fraudulently failed
to report on their respective income tax returns.
As the Court understands the case, respondent’s claim of
fraud is not based, per se, on the payments by The Five to Kanter
or any of the other entities to which such payments were
directed. The record is clear, and respondent does not challenge
the fact, that all payments made by The Five were reported as
income on the Federal income tax returns of the entities
receiving such payments. Respondent’s claim of fraud essentially
is based upon (1) the failure of Ballard, Lisle, and Kanter to
report, as income, amounts that were “dropped down” to them as
loans that were never repaid, and (2) as to Kanter, for moneys he
Page: Previous 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 NextLast modified: May 25, 2011