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personally earned that he directed be paid to IRA or other
entities he controlled and, as to which, Kanter failed to report
on his individual income tax returns.
Respondent maintains that the failure of Kanter, Ballard,
and Lisle to report the Prudential scheme, Travelers transaction,
and Kanter transaction income constituted fraud under section
6653(b), for 1978 through 1989. The entities that make up The
Five and a brief description of each follows:
(1) Hyatt Hotels Corp., a subsidiary of Hyatt Corp. (Hyatt).
Hyatt manages hotels in the United States, Canada, and the
Caribbean. As indicated previously, members of the Pritzker
family control the ownership of Hyatt. Kanter represented the
Pritzkers for years as their attorney. In 1979, IRA acquired KWJ
Corp., a corporation that had been receiving certain “commission”
payments from Hyatt on the management fees Hyatt earned in
operating the Hyatt Embarcadero Hotel at San Francisco,
California. The Hyatt Embarcadero Hotel had been developed and
was owned by a joint venture in which Prudential was a
participant. The commission payments, respondent contends,
constituted part of the kickback scheme.
(2) Bruce J. Frey, D.M. Interstate, the B.J.F. Development
Co. Partnership, and BJF, Inc. Bruce J. Frey was the principal
in each of these latter entities. Mr. Frey, through these
entities, managed apartments, office buildings, and commercial
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