[Senate Hearing 108-473]
[From the U.S. Government Publishing Office]
S. Hrg. 108-473
U.S. TAX SHELTER INDUSTRY: THE ROLE OF ACCOUNTANTS, LAWYERS, AND
FINANCIAL PROFESSIONALS
=======================================================================
HEARINGS
before the
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
----------
NOVEMBER 18 AND 20, 2003
----------
VOLUME 3 OF 4
----------
Printed for the use of the Committee on Governmental Affairs
U.S. TAX SHELTER INDUSTRY: THE ROLE OF ACCOUNTANTS,
LAWYERS, AND FINANCIAL PROFESSIONALS
S. Hrg. 108-473
U.S. TAX SHELTER INDUSTRY: THE ROLE OF ACCOUNTANTS, LAWYERS, AND
FINANCIAL PROFESSIONALS
=======================================================================
HEARINGS
before the
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
NOVEMBER 18 AND 20, 2003
__________
VOLUME 3 OF 4
__________
Printed for the use of the Committee on Governmental Affairs
94-085 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Michael D. Bopp, Staff Director and Chief Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Amy B. Newhouse, Chief Clerk
------
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
NORM COLEMAN, Minnesota, Chairman
TED STEVENS, Alaska CARL LEVIN, Michigan
GEORGE V. VOINOVICH, Ohio DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Raymond V. Shepherd, III, Staff Director and Chief Counsel
Elise J. Bean, Minority Staff Director and Chief Counsel
Robert L. Roach, Minority Counsel and Chief Investigator
Mary D. Robertson, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Coleman.............................................. 1, 69
Senator Levin................................................ 4, 72
Senator Lautenberg........................................... 9
WITNESSES
Tuesday, November 18, 2003
Debra S. Petersen, Tax Counsel IV, California Franchise Tax
Board, Rancho Cordova, California.............................. 11
Mark T. Watson, former Partner, Washington National Tax, KPMG
LLP, Washington, DC............................................ 13
Calvin H. Johnson, Andrews & Kurth Centennial Professor, The
University of Texas at Austin School of Law, Austin, Texas..... 14
Philip Wiesner, Partner in Charge, Washington National Tax,
Client Services, KPMG LLP, Washington, DC...................... 32
Jeffrey Eischeid, Partner, Personal Financial Planning, KPMG LLP,
Atlanta, Georgia............................................... 32
Richard Lawrence DeLap, Retired National Partner in Charge,
Department of Professional Practice-Tax, KPMG LLP, Mountain
View, California............................................... 34
Larry Manth, former West Area Partner in Charge, Stratecon, KPMG
LLP, Los Angeles, California................................... 34
Richard J. Berry, Senior Tax Partner, Pricewaterhouse Coopers,
New York, New York............................................. 54
Mark A. Weinberger, Vice Chair, Tax Services, Ernst & Young LLP,
Washington, DC................................................. 55
Richard H. Smith, Jr., Vice Chair, Tax Services, KPMG LLP, New
York, New York................................................. 57
Thursday, November 20, 2003
Raymond J. Ruble, former Partner, Sidley Austin Brown and Wood,
LLP, New York, New York, represented by Jack Hoffinger......... 76
Thomas R. Smith, Jr., Partner, Sidley Austin Brown and Wood, New
York, New York................................................. 77
N. Jerold Cohen, Partner, Sutherland Asbill and Brennan, LLP,
Atlanta, Georgia, accompanied by J.D. Fleming.................. 79
William Boyle, former Vice President, Structured Finance Group,
Deutsche Bank AG, New York, New York........................... 95
Domenick DeGiorgio, former Vice President, Structured Finance,
HVB America, Inc., New York, New York, accompanied by Brian
Skarlatos...................................................... 97
John Larson, Managing Director, Presidio Advisory Services, San
Francisco, California.......................................... 114
Jeffrey Greenstein, Chief Executive Officer, Quellos Group, LLC,
formerly known as Quadra Advisors, LLC, Seattle, Washington.... 115
Mark Everson, Commissioner, Internal Revenue Service, Washington,
DC............................................................. 128
William J. McDonough, Chairman, Public Company Accounting
Oversight Board, Washington, DC................................ 130
Richard Spillenkothen, Director, Division of Banking Supervision
and Regulation, The Federal Reserve, Washington, DC............ 131
Alphabetical List of Witnesses
Berry, Richard J.:
Testimony.................................................... 54
Prepared statement........................................... 303
Boyle, William:
Testimony.................................................... 95
Prepared statement with an attachment........................ 317
Cohen, N. Jerold:
Testimony.................................................... 79
Letter dated November 18, 2003, submitted with answers to
questions.................................................. 315
DeGiorgio, Domenick:
Testimony.................................................... 97
Prepared statement........................................... 326
DeLap, Richard Lawrence:
Testimony.................................................... 34
Eischeid, Jeffrey:
Testimony.................................................... 32
Prepared statement........................................... 298
Everson, Mark:
Testimony.................................................... 128
Prepared statement with an attached chart.................... 338
Greenstein, Jeffrey:
Testimony.................................................... 115
Prepared statement........................................... 334
Johnson, Calvin H.:
Testimony.................................................... 14
Prepared statement........................................... 286
Manth, Larry:
Testimony.................................................... 34
Larson, John:
Testimony.................................................... 114
McDonough, William J.:
Testimony.................................................... 130
Prepared statement........................................... 349
Petersen, Debra S.:
Testimony.................................................... 11
Prepared statement........................................... 275
Ruble, Raymond J.:
Testimony.................................................... 76
Smith, Richard H., Jr.:
Testimony.................................................... 57
Smith, Thomas R., Jr.:
Testimony.................................................... 77
Prepared statement........................................... 312
Spillenkotchen, Richard:
Testimony.................................................... 131
Prepared statement........................................... 361
Watson, Mark T.:
Testimony.................................................... 13
Prepared statement........................................... 285
Weinberger, Mark A.:
Testimony.................................................... 55
Prepared statement........................................... 309
Wiesner, Philip:
Testimony.................................................... 32
APPENDIX
Minority Staff Report of the Permanent Subcommittee on
Investigations entitled, ``U.S. Tax Shelter Industry: The Role
of Accountants, Lawyers, and Financial Professionals, Four KPMG
Case Studies: FLIP, OPIS, BLIPS, and SC2,'' released in
conjunction with the Permanent Subcommittee on Investigations'
hearings on November 18 and 20, 2003, S. Prt. 108-34........... 145
I. INTRODUCTION.................................................. 145
II. FINDINGS..................................................... 147
III. EXECUTIVE SUMMARY........................................... 149
A. Developing New Tax Products............................. 151
B. Mass Marketing Tax Products............................. 152
C. Implementing Tax Products............................... 153
D. Avoiding Detection...................................... 157
E. Disregarding Professional Ethics........................ 159
IV. RECOMMENDATIONS.............................................. 160
V. OVERVIEW OF U.S. TAX SHELTER INDUSTRY......................... 162
A. Summary of Current Law on Tax Shelters.................. 162
B. U.S. Tax Shelter Industry and Professional Organizations 164
VI. FOUR KPMG CASE HISTORIES..................................... 166
A. KPMG In General......................................... 166
B. KPMG's Tax Shelter Activities........................... 168
(1) Developing New Tax Products.......................... 172
(2) Mass Marketing Tax Products.......................... 188
(3) Implementing Tax Products............................ 206
a. KPMG's Implementation Role......................... 206
b. Role of Third Parties in Implementing KPMG Tax
Products................................................... 215
(4) Avoiding Detection................................... 235
(5) Disregarding Professional Ethics..................... 245
APPENDIX A
CASE STUDY OF BOND LINKED ISSUE PREMIUM STRUCTURE (BLIPS).... 255
APPENDIX B
CASE STUDY OF S-CORPORATION CHARITABLE CONTRIBUTION STRATEGY
(SC2)...................................................... 266
APPENDIX C
OTHER KPMG INVESTIGATIONS OR ENFORCEMENT ACTIONS............. 270
EXHIBIT LIST
Volume 1
1. a. GBLIPS: Bond Linked Issue Premium Structure, PowerPoint
presentation with eight slides prepared by the Permanent
Subcommittee on Investigations................................. 371
b. GSC\2\, PowerPoint presentation with five slides
prepared by the Permanent Subcommittee on Investigations....... 379
c. GMass Marketing of Tax Shelters, chart prepared by the
Permanent Subcommittee on Investigations....................... 384
d. GKnowledge of Counter Parties, chart prepared by the
Permanent Subcommittee on Investigations....................... 385
2. GKPMG Memorandum, February 1998, re: Summary and
observations of OPIS........................................... 386
3. GKPMG Memorandum, May 1998, re: OPIS Tax Shelter
Registration................................................... 393
4. GGibson, Dunn & Crutcher LLP Memorandum to KPMG, March 2000,
re: BLIPS Tax Opinion.......................................... 400
5. GKPMG email, April 1999, re: BLIPS (``The original intent of
the parties was to participate in all three investment stages
of the Investment Program.'' It seems to me that this is a
critical element of the entire analysis and should not be
blithely assumed as a ``fact''. If it is true, I think it
should be one of the investor's representations. However, I
would caution that if there were, say, 50 separate investors
and all 50 bailed out of at the completion of Stage I, such a
representation would not seem credible.)....................... 408
6. GKPMG email, February 2000, re: Product champions needed for
S Corp strategy (I want to personally thank everyone for their
effort during the approval process of this strategy. It was
completed very quickly and everyone demonstrated true teamwork.
Thank you! Now lets SELL, SELL, SELL!!)........................ 412
7. GKPMG email, February 2000, re: BLIPS/OPIS (. . . the sooner
we get them out the door the better since the law--especially
the primary profit motive test--is evolving daily and not in a
taxpayer friendly manner. * * * As I understand the facts, all
66 closed out by year-end and triggered the tax loss.)......... 415
8. GKPMG email, February 2001, re: SC2 Solution--New
Development (Quick Snapshot--We are now offering a modified SC2
solution. S Corp shareholders can use the structure of direct
significant gift to 501(c)(3) tax exempts of their choice. Net
tax benefit is less than original SC2 . . . shareholder ``feel
good'' factor is higher. We need targets and ICV's. * * * Look
at the last partner scorecard. Unlike golf, a low number is not
a good thing. . . . A lot of us need to put more revenue on the
board before June 30. SC2 can do it for you. Think about
targets in your area and call me.)............................. 423
9. GKPMG email, June 2000, re: Revised SC2 Script, Rosenthal/
Stein approval of SC2 calling script........................... 426
10. GKPMG emails, September 1998, January 1999, and October 2000
re: Grantor Trust Issue and KPMG Memorandum of Telephone Call,
May 2000, re: Grantor Trust Issue (So our best intelligence is
that you are increasing your odds of being audited, not
decreasing your odds by filing that Grantor Trust return. So we
have discontinued doing that.)................................. 428
11. GKPMG email, March 1998, re: Simon Says (. . . and yet in
truth the option was really illusory and stood out more like a
sore thumb since no one in his right mind would pay such an
exorbitant price for such a warrant.).......................... 439
12. GEmail, May 1999, re: Who is the Borrower in the BLIPS
transaction (Based on your analysis below, do you conclude that
the tax results sought by the Investor are NOT ``more likely
than not'' to be realized? * * * Yes.)......................... 448
13. GEmail, August 1999, re: BLIPS (However, before engagement
letters are signed and revenue is collected, I feel it is
important to again note that I and several other WNT
[Washington National Tax] partners remain skeptical that the
tax results purportedly generated by a BLIPS transaction would
actually be sustained by a court if challenged by the IRS.).... 450
14. GKPMG email, May 1998, re: OPIS Tax Shelter Registration (If
for some reason the IRS decides to ``get tough'' with someone
vis-a-vis the old rules, I suspect it could easily pick on ANY
of the Big 6, or for that matter any number of law firms/
promoters--I don't think we want to create a competitive
DISADVANTAGE, nor do we want to lead with our chin.)........... 451
15. GKPMG email, December 1998, re: OPIS (After December 31,
1998, there will be no marketing of OPIS in any circumstances.) 452
16. GKPMG email, July 1999, re: National Accounts Database
(VALUE PROPOSITION: . . . The all-in cost of the program,
assuming a complete loss of investment principal, is 7% of the
targeted tax loss (pre-tax). The tax benefit of the investment
program, which ranges from 20% to 45% of the targeted tax loss,
will depend on the taxpayer's effective tax rates. FEE: BLIPS
is priced on a fixed fee basis which should approximate 1.25%
of the tax loss. Note that this fee is included in the 7%
described above.).............................................. 453
17. GKPMG email, August 1999, re: BLIPs (Depicting the approval
of BLIPS and views of some at KPMG about the strategy.)........ 455
18. GKPMG email, September 1999, re: BLIPS 2000 (A number of
people are looking at doing BLIPS transactions to generate Y2K
losses. We currently have bank capacity to have $1 billion of
loans outstanding at 12/31/99. This translates into
approximately $400 million of premium. This tranche will be
implemented on a first-come, first-served basis until we fill
capacity. Get your signed engagement letters in!!)............. 459
19. GKPMG email, February 2000, re: Hot Tax Products (5 Month
Mission) (Thanks for help in this critically important matter.
As Jeff [Stein] said, ``We are dealing with ruthless
execution--hand to hand combat--blocking and tackling.''
Whatever the mixed metaphor, let's just do it.)................ 460
20. GKPMG email, April 2000, re: SC2 (There have been several
successes--the West and South Florida with many ICV's in other
parts of the country. We are behind. This is THE STRATEGY that
they expect significant value added fees by June 30. The heat
is on. . . .).................................................. 463
21. GKPMG Document, SC\2\--Meeting Agenda June 19th, 2000....... 464
22. GKPMG email, July 2000, re: Attaching memorandum to Tax
Partners and Tax Management Group. re: Selling with Confidence:
Skills for Successful Selling--``Positioning.''................ 486
23. GKPMG email, August 2000, re: Solution Activity Reports--SC2
(Our team of telemarketers is particularly helpful in a number
of respects: --to further qualify prospects; --to set up phone
appointments for you and your deployment team.)................ 488
24. GKPMG email, November 2000, re: SW SC2 Channel Conflict
(Attached is a list of SC2 targets in the Southwest that we are
including in an upcoming telemarketing program.)............... 490
25. GKPMG email, December 2000, re: STRATECON WEST--KICK OFF
PLAN FOR '01 (. . . we must aggressively pursue these high-end
strategies.)................................................... 492
26. GKPMG email, March 2001, re: Friday's Stratecon Call (Due to
the significant push for year-end revenue, all West Regional
Federal tax partners have been invited to join us on this call
and we will discuss our ``Quick Hit'' strategies and targeting
criteria.)..................................................... 494
27. GKPMG email, April 2001, re: Friday's Stratecon Call (The
[tax] strategies have a quick revenue hit for us, . . .)....... 495
28. GKPMG email, May 1999, re: Marketing BLIPS (One does not
need to understand how the program is structured to determine
whether someone has sufficient gain and has the tax risk
appetite to do an OPIS/BLIPS type strategy.)................... 496
29. GKPMG email, September 1999, re: BLIPS--managing deal flow
(As you know, we have until 10/15 at the latest to close loans
and 10/22 to activate the FX trading etc. (the 60 day
countdown).)................................................... 499
30. GKPMG email, October 1999, re: BLIPS (18 OPIS ``slots'' were
reserved for the intended BLIPS participants noted in the third
paragraph below.).............................................. 500
31. GKPMG email, November 1999, re: BLIPS (It occurs to me that
it would be useful to know something about the investment
performance as we call these clients to discuss their go
forward strategy. . . . * * * As you may be aware, the 60-day
anniversary of your client's participation in the Strategic
Investment Fund is November 22nd. As a reminder for you and
your client, we have summarized certain procedures that may be
of interest.).................................................. 503
32. GGenerating Capital Losses, A Presentation for ------, KPMG
Peat Marwick LLP, ------, 1996................................. 505
33. GKPMG Memorandum, June 1998, re: June 11 OPIS Conference
Call (Use of Nondisclosure Agreements and Outside Advisors).... 517
34. GEmail, July 1999, re: BLIPS--Economic Substance Issue
(Gentlemen, we have completed our review of the BLIPS loan
documents. In general, these documents indicate that the loan
proceeds will be invested in very safe investments (e.g., money
market instruments). Thus it seems very unlikely that the rate
of return on the investments purchased with the loan proceeds
will equal or exceed the interest charged on the loan and the
fees incurred by the borrower to secure the loan. * * * Before
any fees are considered, the client would have to generate a
240% annual rate of return on the $2.5 million foreign
currencies investment in order to break even. If fees are
considered, the necessary rate of return to break even will be
even greater.)................................................. 521
35. GKPMG email, May 2000, re: Brown & Wood BLIPS Opinion
letters (As we discussed, the B&W opinion letters touch all the
necessary bases. The fact and representation sections are
almost identical to the ones in our Opinion and many analysis
sections are exact copies of our Opinion. Please let me know if
you want further details about the ``non-critical'' typos.).... 522
36. GKPMG email, July 1999, re: brown&wood (If you have a KPMG
opinion, you should also have a B&W opinion. We do ours and
they use it as a factual template for their opinion, usually
within 48 hours.).............................................. 524
37. GInternal Revenue Bulletin No. 2000-36, September 5, 2000,
Notice 2000-44, Tax avoidance using artificially high basis--
describing a BLIPS-type transaction............................ 525
38. GKPMG Document, PFP Practice Reorganization, Innovative
Strategies Business Plan--DRAFT (May 18, 2001)................. 528
39. GKPMG email, May 1999, re: BLIPS Update (Larry [DeLap], I
don't like this product and would prefer not to be associated
with it.)...................................................... 532
40. GKPMG email, December 2000, re: Weekly Tax Solutions Call
(Larry [DeLap]--Are you suggesting that we stop marketing the
solution, or that you just don't want a public discussion of
the solution in light of the IRS focus?)....................... 533
41. GKPMG's Personal Financial Planning Presentation, BLIPS AND
TRACT, Carol Warley, June 1999 (BLIPS Benefit: --Avoid All Of
The Capital Gains And Ordinary Income Tax; --Net Benefit To
Client --Effective Tax Rate Less After Tax Cost of Transaction
of Approximately 5%)........................................... 536
42. GKPMG email, April 1999, re: BLIPS (The underlying tax
planning is such that the investor is likely to bail out after
Stage 1; i.e., after about 60 days.)........................... 543
43. GKPMG email, March 2000, re: S-corp Product (No, we don't
disclose all risks in all engagement letters. * * * . . . I
definately (sic) agree on disclosing the risks upfront and
would prefer to have the separate memo that states the risks
involved. . . . is there a way to make the risk memo be covered
under 7525?)................................................... 545
44. GSutherland Asbill & Brennan LLP correspondence, July 2002,
re: Representations of BLIPS client............................ 555
45. GKPMG correspondence to Sutherland, Asbill & Brennan LLP,
September 2002, re: Contract with KPMG for tax assessment for
BLIPS client................................................... 557
46. GKPMG email, November 2002, re: Script (Attached is a list
of law firms that are handling FLIP/OPIS cases. * * * Attached
is the script . . . waiver language and list of attorneys to
follow.)....................................................... 560
47. GKPMG email, March 2002, re: SC2 (Given the current state of
affairs relative to the IRS and accounting firms, I think we
should not be discussing SC2 on the Monday night call at this
time.)......................................................... 563
48. GKPMG email, August 1999, re: BLIPS Engagement Letter
(Attached is the engagement letter approved by Larry [DeLap].). 566
49. GKPMG email, March 2000, re: S-corp Product (1. This appears
to be little more than a old give stock to charity and then
redeem it play . . . * * * Our preference is that the client
donate stock to a local 401(a), . . .)......................... 574
50. GKPMG email, April 2000, re: S-Corporation Charitable
Contribution Strategy (SC2) (This is a relatively high risk
strategy.)..................................................... 584
51. GKPMG email, August 2001, re: New Solutions-WNT [Washington
National Tax] (Beginning in December . . . The shareholders
will most likely want access to the cash (especially if we
could get it to them tax-free).)............................... 585
52. GKPMG email, October 2001, re: SC2 Client (His ownership is
so minute, he is concerned about it being reduced any further
by the charitable contribution. We know that this reduction is
only temporary, . . .)......................................... 587
53. GKPMG Document, Tax Innovation Center, Product Idea
Submission Form and KPMG Tax Solution Alert, April 24, 2000, S-
Corporation Charitable Contribution Strategy................... 589
54. GKPMG document, undated, Draft PDC Talk Points 6/19, S-
Corporation Charitable Contribution Strategy (Cold call
script.)....................................................... 595
55. GKPMG email, March 2001, re: Florida S corporation search
(Request to utilize database on tax return information to
identify potential SC2 clients.)............................... 597
56. GKPMG email, March 2001, re: South Florida SC2 Year End Push 599
57. GKPMG email, March 2001, re: SC2--Client Base Expansion..... 601
58. GKPMG email, December 2001, re: SC2 (. . . working on a
back-end solution to be approved by WNT [Washington National
Tax] that will provide S-corp shareholders additional basis in
their stock which will allow for the cash built-up inside of
the S-corporation to be distributed tax-free to the
shareholders.)................................................. 602
59. GKPMG email, January 2002, re: SC2 (Shelly Nance is in Fort
Wayne, which is ``cold call central''. How can she (or he) be
involved in sending out messages about SC2 if it is not being
mass marketed.)................................................ 604
60. GPermanent Subcommittee on Investigations correspondence to
KPMG, LLP, November 2003, re: November hearing testimony....... 609
61. GKPMG Presentation excerpts: Tax Innovation Center Solution
and Idea Development--Year-End Results, May 30, 2001; and Goal:
Deposit 150 New Ideas in Tax Service Idea Bank................. 612
62. GKPMG Presentation excerpts: Innovative Tax Solutions, July
19, 2001; Tax Practice Update; and Tax Practice Growth Gross
Revenue........................................................ 614
63. GKPMG Presentation, S-Corporation Charitable Contribution
Strategy (SC2 Update), June 18, 2001, showing SC\2\ Revenues... 617
64. GKPMG email, May 1999, re: BLIPS--More Likely Than Not? (. .
. while I am comfortable that WNT [Washington National Tax] did
its job reviewing and analyzing the technical issues associated
with BLIPS, based on the BLIPS meeting I attended on April 30
and May 1, I am not comfortable issuing a more-likely-than-not
opinion letter wrt (sic) this product . . .)................... 621
65. GKPMG email, May 1999, re: BLIPS (The real ``rubber meets
the road'' will happen when the transaction is sold to
investors, what the investors' actual motive for investing the
transaction is and how the transaction actually unfolds. * * *
My own recommendation is that we should be paid a lot of money
here for our opinion since the transaction is clearly one that
the IRS would review as falling squarely within the tax shelter
orbit.)........................................................ 623
66. GKPMG email, August 1999, re: BLIPS involvement in the NE--
BDMs (KPMG's fee is 1.25% (125 basis points) of the gain to be
mitigated. This fee is included as part of the 7% investment in
strategy.)..................................................... 628
67. GDeutsche Bank email, July 1999, re: Risk and Resources
Committee Paper (BLIPS Summary--The 7.7% will cover market
risks, transaction costs, and DBSI fees.)...................... 632
68. GEmail, September 1999, re: West (Larry [DeLap], just to
clarify, even if we have five or more investors in a single
BLIPS transaction, you don't think we need to register the
transaction as a tax shelter. Is this correct? * * * No, that
is not correct, Mark Ely has concluded there is a reasonable
basis not to register.)........................................ 641
69. GDeutsche Bank/Presidio Advisors, LLC Memorandum, April
1999, re: BLIPS friction costs (On day 60, Investor exits
partnership and unwinds all trades in partnership.)............ 644
70. GDeutsche Bank New Product Committee Overview Memo: BLIPS
Transaction (It is imperative that the transaction be wound up
after 45-60 days and the loan repaid due to the fact that the
HNW individual will not receive his/her capital loss (or tax
benefit) until the transaction is wound up and the loan
repaid.)....................................................... 646
71. GFirst Union (Wachovia) Capital Management Group Enhanced
Investment Strategy Release, February 2, 1999.................. 651
72. GKPMG Foreign Leveraged Investment Program, Issue and Hazard
Summary (Taxpayer not sufficiently ``at risk'' under section
465) (preliminary and final versions).......................... 652
73. GKPMG email, February 1999, re: BLIPS (. . . status of the
BLIPS as an OPIS replacement strategy. . . . I would think we
can reasonably anticipate ``approval'' in another month or so.
* * * Given the marketplace potential of BLIPS, I think a month
is far too long-- . . .)....................................... 654
74. GEmail, February 1999, re: BLIPS Progress Report (I don't
like this pressure . . .)...................................... 655
75. GKPMG MEETING SUMMARY, February 1999, re: Determine if BLIPS
is viable...................................................... 656
76. GEmail, April 1999, re: BLIPS (I would not characterize my
assessment of the economic substances of the ``premium
borrowing'' in the BLIPS transaction as ``positive.'')......... 660
77. GEmail, April 1999, re: BLIPS Analysis...................... 661
78. GEmail, May 1999, re: Who is the Borrower in the BLIPS
transaction.................................................... 662
79. GEmail, August 1999, re: BLIPS Documents--Acceptance of
Recommended Language........................................... 663
80. GEmail, May 1999, re: BLIPS (According to Presidio, the
probability of making a profit from this strategy is remove
(possible, but remote).)....................................... 664
81. GKPMG email, May 1999, re: BLIPS (. . . my change in heart
about BLIPS was based on information Presidio disclosed to me
at a meeting on May 1. This information raised serious concerns
in my mind about the viability of the transaction, and
indicated that WNT [Washington National Tax] had not been given
complete information about how the transaction would be
structured . . .).............................................. 665
82. GEmail, August 1999, re: BLIPS (. . . before engagement
letters are signed and revenue is collected, I feel it is
important to again note that I and several other WNT
[Washington National Tax] partners remain skeptical that the
tax results . . . would actually be sustained by a court if
challenged by the IRS.)........................................ 666
83. GEmail, January 2000, re: BLIPS 2000 (The PFP guys really
need your help on the BLIPS 2000 strategy. . . . so we can take
this to market.)............................................... 667
84. GEmail, March 2000, re: Blips I, Grandfathered Blips, and
Blips 2000 (. . . I do not believe KPMG can reasonably issue a
more-likely-than-not opinion on the economic substance issues
for the Blips . . .)........................................... 668
85. GKPMG Memoranda, February 1999, re: BLIPS................... 669
86. GKPMG Memoranda, March 2000, re: Talking points on
significant tax issues for BLIPS 2000.......................... 670
87. GKPMG Memoranda, S Corporation Charitable Contribution
Strategy, Summary of Certain Risks (The opinion also much be
based on all pertinent facts and the law as it relates to those
facts; must not be based upon inaccurate legal or factual
assumptions; and must not unreasonably rely upon the
representations, statements, findings, or agreements of the
taxpayer or any other person.)................................. 675
88. GEmail, May 1999, re: BLIPS (It was not until I heard
conflicting information that I questioned the original facts.
In the future, I will question everything Presidio and Randy
Bickham represent to me.]...................................... 677
89. GKPMG Tax Leadership, 2003; KPMG Tax Practice Organization,
2002, 2001 and 2000............................................ 680
90. a. GKPMG Tax Opinion Letter (Signed Final), December 1999.
[Redacted by the Permanent Subcommittee on Investigations]..... 684
b. GBrown & Wood Tax Opinion Letter (Signed Final), December
1999. [Redacted by the Permanent Subcommittee on
Investigations]................................................ 781
c. GSEALED EXHIBIT: Unredacted copies of Exhibit No. 90a.
and 90b (above)................................................ *
91. GKPMG Memoranda, August 1998, re: Tax Products Practice (I
was responsible for KPMG's position that we should not register
OPIS as a tax shelter and insisted that we make the business
case with DPP. This was of significant benefit in marketing the
OPIS product and will establish the direction with respect to
KPMG's position on future tax products.)....................... 857
92. GKPMG email, September 1998, re: OPIS (These fees relate to
approximately $1.2 billion in notional losses for approximately
25 clients.)................................................... 865
93. GEmail, June 1998, re: OPIS (Not only will this unduely
(sic) harm our ability to keep the product confidential, it
will DESTROY any chance the client may have to avoid the step
transaction doctrine.)......................................... 866
Volume 2
94. a.-ggg. GDocuments relating to FLIP/OPIS.................... 869
95. a.-BBB. GDocuments relating to BLIPS........................ 1240
96. a.-ll. GDocuments relating to SC2........................... 1692
Volume 3
97. a.-pp. GDocuments relating to development/marketing of tax
products....................................................... 1951
98. a.-ppp. GDocuments relating to registering, reporting and
filing with Internal Revenue Service........................... 2225
99. Documents relating to investment advisory firms:
a.-f. Quadra/Quellos........................................ 2473
g.-t. Presido............................................... 2485
100. Documents relating to law firms:
a.-u. Sidley Austin Brown & Wood............................ 2540
v.-gg. Sutherland Asbill & Brennan.......................... 2576
101. GQuadra Capital Management, LP. facsimile, August 1996,
attaching Memorandum on UBS' involvement in U.S. Capital Loss
Generation Scheme (the ``CLG Scheme'') (As I mentioned, KPMG
approached us as to whether we could affect the security trades
necessary to achieve the desired tax results.)................. 2607
102. GDeutsche Bank Memorandum, July 1999, re: GCI Risk and
Resources Committee--BLIPS Transaction......................... 2612
103. GDeutsche Bank email, July 1999, re: Risk & Resources
Committee Paper--BLIPS and Comments on Blips Collateral and
Credit Terms (I would have thought you could still ensure that
the issues are highlighted by ensuring that the papers are
prepared, and all discussion held, in a way which makes them
legally privileged.)........................................... 2615
104. GDeutsche Bank email, July 1999, re: Risk & Resources
Committee Paper--BLIPS (Our approach is as follows: STRUCTURE:
. . . Priviledge (sic): This is not easy to achieve and
therefore a more detailed description of the tax issues is not
advisable. REPUTATION RISK: . . . we have been asked by the Tax
Department not to create an audit trail in respect of the
Bank's tax affaires.).......................................... 2618
105. GDeutsche Bank email, February 2002, re: Updated Presidio/
KPMG trades (I understand that we based our limitations on
concerns regarding reputational risk which were heightened, in
part, on the proportion of deals we have executed relative to
the other banks. * * * . . . we would like to lend an amount of
money to Hypovereinsbank equal to the amount of money
Hypovereinsbank lends to the client.).......................... 2619
106. GDeutsche Bank email, April 2002, re: US GROUP 1 Pres,
attaching Structured Transactions Group North America
Presentation, November 15, 1999................................ 2622
107. GHVB Document, undated, re: Presidio (7% -> fee (equity)
paid by investor for tax sheltering)........................... 2646
108. GHVB email, September 1999, re: Presidio.................... 2647
109. GDeutsche Bank email, April 1999, re: presidio--w. revisions
(. . . The holding period/life of the LLC will typically be 45
to 60 days. At the end of this time period, the LLC will unwind
all transactions, repay the loan par amount and premium amount.
For tax and accounting purposes, repaying the premium amount
will ``count'' like a loss for tax and accounting purposes.)... 2649
110. GKPMG email, March 2000, re: Bank representation (The bank
has pushed back the loan again and said they simply will not
represent that the large premium loan is consistent with
industry standards.)........................................... 2657
111. GHVB credit request for BLIPS transaction by Presidio
personnel, September 1999. (HVB will earn a very attractive
return if the deal runs to term. If, however, the advances are
prepaid within 60 days (and there is a reasonable prospect that
they will be), HVB will earn a return of 2.84% p.a. on the
average balance of funds advanced.)............................ 2660
112. GKPMG Memoranda, March 1998, re: OPIS (The attached went to
the entire working group. . . . I believe that the OPIS product
(``Son of Flip'') is a stripped down version of the LLC
(partnership) structure.)...................................... 2678
113. GDeutsche Bank email, October 1999, re: BLIPS (PKS reports
that a meeting with John Ross was held on August 3, 1999 in
order to discuss the BLIPS product. PKS represented PB
Management's views on reputational risk and client suitability.
John Ross approved the product, however insisted that any
customer found to be in litigation be excluded from the
product, the product be limited to 25 customers and that a low
profile be kept on these transactions.)........................ 2679
114. GDeutsche Bank New Product Committee Overview Memo: BLIPS
Transaction (11-DB will have the right to approve/disapprove
all trading activity in the Company. This will allow DB to
effectively force the closure of the company and repayment of
its loan to DB.) [Note: An alternative version of this document
was previously entered into the Permanent Subcommittee on
Investigations' hearing record as Exhibit No. 70.]............. 2681
115. GKPMG Minutes of Assurance/Tax Professional Practice
Meeting, September 28, 1998.................................... 2686
116. GBrown & Wood email, December 1997, re: joint projects (This
morning my managing partner, Tom Smith, approved Brown & Wood
LLP working with the newly conformed tax products group at KPMG
on a joint basis in which we would jointly develop and market
tax products and jointly share in the fees, as you and I have
discussed.).................................................... 2691
117. GKPMG email, September 1997, re: Flip Tax Opinion (ALSO, OUR
DEAL WITH BROWN AND WOOD IS THAT IF THERE NAME IS USED IN
SELLING THE STRATEGY, THEY WILL GET A FEE.).................... 2692
118. GKPMG Memorandum, March 1998, re: B&W Meeting (What should
be the profit-split between KPMG, B&W and the tax products
group/implementor for jointly-developed products?)............. 2693
119. GKPMG Memorandum, December 1997, re: Business Model--Brown &
Wood Strategic Alliance........................................ 2696
120. GBrown & Wood email, December 1997, re: Confidential Matters
(On another point, as I have been mentioning with you, I do
work for a number of people who have potentially complementary
tax advantaged products. Let me state up front, I am not trying
to push any of these on KPMG, but it might be useful if you are
trying to get a repitoire of products jump started to talk to
some or all of them. In addition, each of them has a
relationship with one or more financial institutions who
provide credit, derivatives trades, etc. necessary to execute
the product.).................................................. 2699
121. GKPMG email, May 2000, re: BLIPS--7 percent (The breakout
for a typical deal is as follows: . . . Trading Loss 70 * * *
Attached is Kerry's breakout of the 7 percent. [Redacted] gets
30 bpts from the Mgt. Fee. Is this detailed enough?)........... 2701
122. GKPMG email, September 1999, re: BLIPS--managing deal flow
(As you know, we have until 10/15 at the latest to close loans
and 10/22 to activate the FX trading, etc. (the 60 day
countdown).)................................................... 2702
123. GHVB Memorandum, October 1999, re: Presidio Credit Request
Dated September 14, 1999 (To summarize the above, the increased
limits will now permit the full amount of our facility to be
invested in EUR deposits and do related forwards.)............. 2703
124. GHVB Document, Back-End Process............................. 2705
125. GHVB Document, Transaction Timeline (Exchange USD Amount to
EUR Amount * * * USD 181,300,000).............................. 2711
126. GPRESIDIO ADVISORY SERVICES, LLC Memorandum, April 2002, re:
Year 2000 Strategic Plan. (Over the past two years because of
delays in obtaining the requisite approvals to market the OPIS
and BLIPS products, we did not begin closing deals until
September of 1998 and 1999, respectively. * * * Both Deutsche
Bank and KPMG have requested that we replace our existing BLIPS
product with a new product in 2000.)........................... 2712
127. GKPMG/Presidio Advisors email, October 1999, re: Couple of
quick questions--Liquidating distributions (Upon distribution
(at the end of the 60 day period), can the client designate
where the funds go?)........................................... 2719
128. GHandwritten notes, March 1998, re: Brown & Wood (Confirm w/
Presidio that they will register.)............................. 2720
129. GPRESIDIO ADVISORY SERVICES, LLC Memorandum, September 1999,
re: BLIPS loan test case (Four special purpose, single member
Delaware LLC, owned by four trusts: D. Amir Makov revocable
trust (1/3), JL capital trust (1/3), RP capital trust (1/6),
pointe du Hoc irrevocable trust (1/6))......................... 2721
130. GKPMG/Presidio Advisors email, December 1998, re: BLIPS
meeting (Second, the tax analyses and opinion writing needs to
go into high gear.)............................................ 2722
131. GKPMG/Presidio Advisors/Brown & Wood email, December 1998,
re: BLIPS meeting (I spoke with R.J. this morning about a
``tax-focused'' meeting next week. As a first step before
scheduling a meeting, we thought that we should first draft the
base of an opinion letter in an outline format which will be
circulated for comment before getting everyone together for a
``all-hands'' meeting. We are currently working on the document
and expect to circulate it next week.)......................... 2723
132. GKPMG email, February 2000, re: Brown & Wood opinion
letter--BLIPS (Jeff Eischeid has promised the Brown & Wood
opinion template ready in two weeks and we need your analysis.) 2724
133. GKPMG email, January 2001, re: blips (We're still working
with Moore & Van Allen. They've declined to write a concurring
opinion--their firm doesn't write such opinions as a matter of
policy. They are considering, this week, whether they will
write [redacted] a MLTN [More Likely than Not] penalty
opinion.)...................................................... 2726
134. GIRS Form 8264, Application for Registration of a Tax
Shelter, QA Investments, LLC registration of FLIP.............. 2727
135. GKPMG/Quadra Fax and Memoranda, October 1997, re:
Registration of FLIP........................................... 2729
136. GDeutsche Bank email, July 1999, re: hi bill..presidio (i
informed him that you are point man on the deal and that all
comments should go through you)................................ 2734
137. GKPMG email and Memorandum, July 1997, re: Revised
Memorandum ((I) KPMG's Tax Advantaged Transaction Practice;
(II) Presidio's Relationship with KPMG; (III) Transition
Issues.)....................................................... 2735
138. GHVB Document, August 2000, Presidio--Plafond (Investors
have, so far, chosen to liquidate before the second (180 day)
phase. ie after 60 days.)...................................... 2745
139. a.-t. GDocuments relating to Ernst & Young.................. 2746
140. a.-o. GDocuments relating to PriceWaterhouseCoopers......... 2803
141. a.-k. GDocuments relating to First Union.................... 2848
142. a. GWNT Solutions by Primary Functional Group--FYI 2001-
2002, November 26, 2002, reprinting first three pages of
document (other pages sealed, see Exhibit 139b.)............... 2871
b. GSEALED EXHIBIT: WNT Solutions by Primary Functional
Group--FYI 2001-2002, dated November 26, 2002.................. *
143. GSEALED EXHIBIT: StrateconWest email, December 2001, re:
StrateconWest/FSG Solution (Please find attached the latest and
greatest list of strategies for StrateconWest and FSG)......... *
144. GSEALED EXHIBIT: Correspondence between Brown & Wood LLP and
Presidio Advisors LLC, dated October 1998 and February 1999,
regarding billing and document preparation for tax opinion..... *
145. GOrganizational Chart, KPMG Tax Practice Organization,
produced by KPMG LLP in response to request made by Senator
Levin at the November 18, 2003, hearing........................ 2874
146. GStatement for the Hearing Record of Reuven S. Avi-Yonah,
Irwin I. Cohn Professor of Law and Director of the
International Tax Master of Law Program at the University of
Michigan Law School............................................ 2875
147. a.-b. GSupplemental questions and answers for the record of
KPMG. [Note: Exhibit 147a has been redacted, full document has
been made a SEALED EXHIBIT.]................................... 2878
148. GSupplemental questions and answers for the record of
Deutsche Bank.................................................. 2939
149. GSupplemental questions and answers for the record of HVB
America, Inc................................................... 2949
150. GSupplemental questions and answers for the record of
Quellos Group, LLC............................................. 2982
151. GSupplemental questions and answers for the record of
Sutherland Asbill & Brennan LLP [Note: Submission has been
redacted, full document has been made a SEALED EXHIBIT.]....... 2984
152. GSupplemental questions and answers for the record of Sidley
Austin Brown & Wood............................................ 2999
153. GStatement for the Record and supplemental questions and
answers for the record of the Los Angeles Department of Fire &
Police Pensions System......................................... 3016
154. GSupplemental questions and answers for the record of the
Internal Revenue Service....................................... 3025
Volume 4
155. GDocuments relating to Footnotes found in U.S. Tax Shelter
Industry: The Role of Accountants, Lawyers, and Financial
Professionals--Four KPMG Case Studies: FLIP, OPIS, BLIPS, and
SC2, a Report prepared by the Minority Staff of the Permanent
Subcommittee on Investigations in conjunction with the
Subcommittee hearings held November 18 and 20, 2003: [Note:
Footnotes not listed are explanative, reference Subcommittee
interviews for which records are not available to the public,
or reference a widely available public document.]
Footnote No. 1, SEALED EXHIBIT............................. *
Footnote No. 3, See Hearing Exhibit No. 38 (above)......... 528
Footnote No. 4, See Hearing Exhibit No. 16 (above)......... 453
Footnote No. 10, See Attachments (2)...................3027, 3036
Footnote No. 11, See Attachment............................ 3045
Footnote Nos. 15-16, See Hearing Exhibit No. 106 (above)... 2622
Footnote No. 47, See Hearing Exhibit No. 62 (above)........ 614
Footnote No. 48, See Attachment............................ 3047
Footnote No. 49, See Hearing Exhibit No. 38 (above)........ 528
Footnote No. 50, See Attachment............................ 3053
Footnote No. 52, See Attachment............................ 3054
Footnote No. 55, See Footnote No. 52 (above)............... 587
Footnote No. 56, SEALED EXHIBIT............................ *
Footnote No. 57, See Attachment............................ 3244
Footnote Nos. 58-59, See Footnote No. 57 (above)........... 601
Footnote No. 65, See Attachment............................ 3245
Footnote No. 66, See Hearing Exhibit No. 14 (above)........ 451
Footnote No. 68, See Attachment............................ 3248
Footnote No. 69, See Attachment............................ 3351
Footnote No. 70, See Footnote 69 (above)................... 644
Footnote No. 71, See Hearing Exhibit No. 61 (above)........ 612
Footnote No. 72, See Footnote No. 52 (above)............... 587
Footnote Nos. 73-74, See Footnote No. 69 (above)........... 644
Footnote Nos. 76-77, 79-81, See Footnote No. 52 (above).... 587
Footnote No. 82, See Footnote No. 69 (above)............... 644
Footnote No. 83, See Footnote No. 52 (above)............... 587
Footnote No. 84, See Attachment, Footnote No. 52 and
Hearing Exhibit Nos. 96ff, 96hh, and 96kk (above3375, 587, 1692
Footnote No. 87, See Hearing Exhibit No. 73 (above)........ 654
Footnote No. 88, See Hearing Exhibit Nos. 73 and 85 (abov654, 669
Footnote No. 89, See Hearing Exhibit No. 74 (above)........ 655
Footnote No. 90, See Hearing Exhibit No. 75 (above)........ 656
Footnote Nos. 92-93, See Hearing Exhibit No. 64 (above).... 621
Footnote No. 94, See Hearing Exhibit Nos. 64, and 76-79
(above)............................................621, 660-663
Footnote Nos. 95-96, See Hearing Exhibit No. 65 (above).... 623
Footnote No. 97, See Hearing Exhibit No. 12 (above)........ 448
Footnote No. 98, See Attachment............................ 3468
Footnote No. 99, See Attachment and Hearing Exhibit No. 65
(above)...............................................3469, 623
Footnote No. 100, See Hearing Exhibit No. 65 (above)....... 623
Footnote No. 101, See Hearing Exhibit No. 81 (above)....... 665
Footnote No. 102, See Hearing Exhibit No. 39 (above)....... 532
Footnote No. 103, See Attachment........................... 3472
Footnote No. 107, See Attachment........................... 3474
Footnote Nos. 108-109, See Hearing Exhibit No. 13 (above).. 450
Footnote No. 110, See Hearing Exhibit No. 83 (above)....... 667
Footnote No. 111, See Hearing Exhibit Nos. 84 and 86
(above)................................................668, 670
Footnote No. 113, See Hearing Exhibit No. 41 (above)....... 538
Footnote No. 115, See Hearing Exhibit No. 38 (above)....... 528
Footnote No. 116, See Hearing Exhibit No. 2 (above)........ 386
Footnote No. 117, See Attachment........................... 3475
Footnote No. 121, See Attachment........................... 3482
Footnote No. 122, See Attachment........................... 3492
Footnote No. 123, See Hearing Exhibit No. 87 (above)....... 675
Footnote No. 124, See Hearing Exhibit No. 49 (above)....... 574
Footnote No. 125, See Attachments (2) and Hearing Exhibit
No. 49 (above)........................................3495, 574
Footnote No. 126, See Attachments (3) and Hearing Exhibit
No. 49 (above)........................................3506, 574
Footnote No. 127, See Hearing Exhibit No. 59 (above)....... 604
Footnote Nos. 128-129, See Footnote No. 52 (above)......... 587
Footnote No. 130, See Attachment and Hearing Exhibit No. 54
(above)...............................................3517, 595
Footnote No. 131, See Hearing Exhibit No. 23 (above)....... 488
Footnote No. 132, See Attachment........................... 3519
Footnote No. 133, See Hearing Exhibit No. 6 (above)........ 412
Footnote No. 134, See Hearing Exhibit No. 20 (above)....... 463
Footnote No. 135, See Attachment........................... 3520
Footnote No. 136, See Hearing Exhibit No. 25 (above)....... 492
Footnote No. 137, See Hearing Exhibit No. 8 (above)........ 423
Footnote No. 138, See Attachment........................... 3522
Footnote No. 139, See Hearing Exhibit No. 27 (above)....... 495
Footnote No. 140, See Hearing Exhibit No. 19 (above)....... 460
Footnote No. 141, See Attachment........................... 3523
Footnote Nos. 142-143, See Hearing Exhibit No. 55 (above).. 597
Footnote No. 144, See Attachment........................... 3530
Footnote Nos. 145-148, See Footnote No. 144 (above)........ 3530
Footnote No. 149, See Attachment (Partial document
reprinted, full document SEALED EXHIBIT)................. 3557
Footnote No. 150, See Attachment (Partial document
reprinted, full document SEALED EXHIBIT)................. 3568
Footnote No. 151, See Attachment........................... 3572
Footnote No. 152, See Attachment........................... 3573
Footnote No. 154, See Attachments (2)...................... 3575
Footnote No. 155, See Footnote No. 135 (above)............. 2729
Footnote No. 156, See Attachment........................... 3579
Footnote No. 157, See Attachments (3), Footnote No. 156 and
Hearing Exhibit No. 56 (above)..................3581, 3579, 599
Footnote No. 158, See Hearing Exhibit No. 55 (above)....... 597
Footnote No. 159, See Hearing Exhibit No. 24 (above)....... 490
Footnote No. 160, See Attachments (2)...................... 3591
Footnote Nos. 161-162, See Footnote No. 157 (above)........ 3581
Footnote No. 163, See Attachment........................... 3596
Footnote Nos. 166-167, See Hearing Exhibit No. 21 (above).. 464
Footnote No. 168, See Attachment, Footnote No. 156 and
Hearing Exhibit Nos. 21 and 139m (above)..3606, 3579, 464, 2746
Footnote Nos. 169 and 171, See Hearing Exhibit No. 21
(above).................................................. 464
Footnote No. 174, See Footnote No. 152 (above)............. 3573
Footnote No. 176, See Hearing Exhibit No. 63 (above)....... 617
Footnote No. 177, See Hearing Exhibit No. 62 (above)....... 614
Footnote No. 178, See Hearing Exhibit No. 23 (above)....... 488
Footnote No. 179, See Attachment........................... 3607
Footnote No. 180, See Footnote No. 57 (above).............. 3244
Footnote No. 181, See Footnote No. 151 (above)............. 3572
Footnote No. 183, See Attachment........................... 3620
Footnote Nos. 184-185, See Footnote No. 57 (above)......... 3244
Footnote No. 186, See Attachment (Partial document
reprinted, full document SEALED EXHIBIT)................. 3621
Footnote Nos. 187-188, See Footnote 186 (above)............ 3621
Footnote No. 189, See Footnote No. 56 (above) SEALED
EXHIBIT.................................................. *
Footnote Nos. 190-191, See Hearing Exhibit No. 38 (above).. 528
Footnote No. 192, See Attachment and Hearing Exhibit No. 38
(above)...............................................3623, 528
Footnote Nos. 193-194, See Hearing Exhibit No. 38 (above).. 528
Footnote No. 200, See Hearing Exhibit No. 137 (above)...... 2735
Footnote No. 201, See Attachment (Partial document
reprinted, full document SEALED EXHIBIT)................. 3929
Footnote No. 203, See Attachment and Hearing Exhibit No.3632, 623
Footnote No. 204, See Hearing Exhibit No. 21 (above)....... 464
Footnote No. 205, See Hearing Exhibit No. 8 (above)........ 423
Footnote No. 208, See Hearing Exhibit No. 21 (above)....... 464
Footnote No. 211, See Hearing Exhibit Nos. 51 and 58
(above)................................................585, 602
Footnote No. 213, See Footnote No. 84 (above).............. 3375
Footnote No. 214, See Hearing Exhibit No. 110 (above)...... 2657
Footnote No. 217, See Footnote No. 84 (above).............. 3375
Footnote No. 218, See Hearing Exhibit No. 64 (above)....... 621
Footnote No. 220, See Hearing Exhibit No. 5 (above)........ 408
Footnote No. 221, See Hearing Exhibit No. 7 (above)........ 415
Footnote No. 222, See Hearing Exhibit Nos. 38 and 64
(above)................................................528, 621
Footnote No. 223, See Attachments (2) and Hearing Exhibit
No. 15 (above)........................................3635, 452
Footnote No. 227, See Attachment........................... 3641
Footnote No. 228, See Footnote No. 223..................... 3635
Footnote No. 230, See Hearing Exhibit No. 105 (above)...... 2619
Footnote No. 231, See Footnote Nos. 157 and 163 (above)3581, 3596
Footnote No. 232, See Attachment........................... 3643
Footnote No. 234, See Hearing Exhibit No. 105 (above)...... 2619
Footnote No. 235, See Attachments (4)...................... 3644
Footnote No. 236, See Hearing Exhibit No. 105 (above)...... 2619
Footnote No. 238, See Footnote No. 117..................... 3475
Footnote No. 239, See Attachments (2) and Hearing Exhibit
Nos. 111 and 129 (above); two addition items for this
footnote are SEALED EXHIBITS...................3660, 2660, 2721
Footnote No. 240, See Attachment and Hearing Exhibit No. 70
(above)...............................................3665, 646
Footnote No. 241, See Footnote No. 235 and Hearing Exhibit
No. 138 (above)......................................3644, 2745
Footnote No. 242, See Hearing Exhibit Nos. 103 and 104
(above)..............................................2615, 2618
Footnote No. 243, See Hearing Exhibit No. 70 (above)....... 646
Footnote No. 244, See Attachment........................... 3668
Footnote Nos. 245-246, See Hearing Exhibit No. 113 (above). 2679
Footnote Nos. 248-250, See Hearing Exhibit No. 110 (above). 2657
Footnote No. 251, See Footnote No. 84...................... 3375
Footnote No. 252, See Hearing Exhibit No. 105 (above)...... 2619
Footnote Nos. 253-255, See Hearing Exhibit No. 106 (above). 2622
Footnote No. 256, See Attachment........................... 3670
Footnote No. 257, See Attachment and Hearing Exhibit No.
106 (above)..........................................3671, 2622
Footnote No. 258, See Hearing Exhibit No. 106 (above)...... 2622
Footnote No. 261, See Footnote No. 201 (above)............. 3929
Footnote No. 262, See Attachment........................... 3672
Footnote No. 263, See Attachment........................... 3678
Footnote No. 265, See Attachment, Footnote No. 244 and
Hearing Exhibit Nos. 70 and 108 (above)...3679, 3668, 646, 2647
Footnote No. 266, See Attachments (2) (One document
partially reprinted, full document is (SEALED EXHIBIT)... 3681
Footnote No. 267, See Footnote No. 266 (above)............. 3681
Footnote No. 268, See Attachment........................... 3687
Footnote No. 270, See Footnote No. 154 (above)............. 3575
Footnote No. 271, See Footnote No. 237 (above) (Found in
the files of the Subcommittee)........................... *
Footnote No. 272, See Attachment........................... 3690
Footnote No. 273, See Footnote No. 272 (above)............. 3690
Footnote No. 274, See Attachment........................... 3697
Footnote No. 275, See Attachments (5)...................... 3703
Footnote No. 276, See Footnote No. 275 (above)............. 3703
Footnote No. 278, See Hearing Exhibit No. 101 (above)...... 2607
Footnote No. 279, See Attachment........................... 3711
Footnote No. 280, See Attachment........................... 3712
Footnote No. 281, See Footnote No. 117 and Hearing Exhibit
No. 112 (above)......................................3475, 2678
Footnote No. 282, See Hearing Exhibit Nos. 64, 69 and 81
(above)...........................................621, 644, 665
Footnote No. 283, See Hearing Exhibit No. 81 (above)....... 665
Footnote No. 284. See Attachment........................... 3714
Footnote No. 285, See Attachment........................... 3717
Footnote No. 286, See Attachment (Four additional items for
this footnote are SEALED EXHIBITS)....................... 3718
Footnote No. 293, See Hearing Exhibit No. 120 (above)...... 2699
Footnote No. 294, See Hearing Exhibit No. 119 (above)...... 2696
Footnote No. 295, See Attachment........................... 3719
Footnote No. 296, See Footnote No. 117 and Hearing Exhibit
Nos. 42 and 112 (above).........................3475, 543, 2678
Footnote No. 299, See Footnote No. 156 (above)............. 3579
Footnote No. 301, See Attachment........................... 3722
Footnote No. 302, See Attachment........................... 3754
Footnote No. 303, See Hearing Exhibit No. 21 (above)....... 464
Footnote No. 306, See Attachment........................... 3756
Footnote No. 307, See Attachment........................... 3757
Footnote No. 308, See Footnote No. 307 (above)............. 3757
Footnote No. 310, See Hearing Exhibit No. 128 (above)...... 2720
Footnote No. 312, See Footnote No. 52 (above).............. 3054
Footnote No. 313, See Attachments (3)...................... 3767
Footnote No. 314, See Hearing Exhibit No. 38 (above)....... 528
Footnote No. 319, See Attachments (2)...................... 3775
Footnote No. 320, See Attachment........................... 3779
Footnote No. 321, See Attachments (2)...................... 3795
Footnote Nos. 322-323, See Footnote No. 320 (above)........ 3779
Footnote No. 324, See Attachment and Footnote No. 320..3801, 3779
Footnote No. 327, See Attachment........................... 3812
Footnote No. 328, See Attachment.......................... 3813
Footnote No. 329, See Attachments (2)..................... 3814
Footnote No. 330, See Footnote No. 329 (above)............ 3814
Footnote No. 331, See Attachments (3)..................... 3816
Footnote No. 332, See Attachments (3)..................... 3822
Footnote No. 333, See Hearing Exhibit No. 21 (above)...... 464
Footnote Nos. 335-336, See Hearing Exhibit No. 43 (above). 545
Footnote No. 337, See Hearing Exhibit No. 128 (above)..... 2720
Footnote No. 338, See Hearing Exhibit No. 103 (above)..... 2615
Footnote No. 339, See Hearing Exhibit No. 104 (above)..... 2618
Footnote No. 340, See Footnote No. 154 (above)............ 3575
Footnote No. 341, See Attachment.......................... 3830
Footnote No. 342, See Attachments (2)..................... 3831
Footnote No. 343, See Footnote No. 203 (above)............ 3632
Footnote Nos. 344 and 346, See Hearing Exhibit No. 28
(above).................................................. 496
Footnote No. 347, See Footnote No. 122 (above)............ 3492
Footnote No. 348, See Hearing Exhibit No. 28 (above)...... 496
Footnote Nos. 349-350, See Footnote No. 163 (above)....... 3596
Footnote No. 351, See Footnote No. 117 (above)............ 3475
Footnote No. 352, See Footnote No. 52 (above)............. 3054
Footnote No. 355, See Attachment.......................... 3835
Footnote No. 356, See Footnote No. 355 (above)............ 3835
Footnote No. 359, See Attachment and Footnote No. 203
(above).................................................. 3840
Footnote No. 360, See Hearing Exhibit No. 121 (above)..... 3482
Footnote No. 361, See Attachment and Hearing Exhibit No.
58 (above)............................................3842, 602
Footnote No. 362, See Footnote No. 361 (above)............ 3842
Footnote No. 363, See Attachment.......................... 3847
Footnote No. 364, See Attachment.......................... 3848
Footnote No. 367, See Footnote No. 154 (above)............ 3575
Footnote Nos. 368-369, See Footnote No. 52 (above)........ 3054
Footnote No. 370, See Hearing Exhibit No. 115 (above)..... 2686
Footnote No. 371, See Footnote No. 52 (above)............. 3054
Footnote No. 372, See Hearing Exhibit No. 114 (above)..... 2681
Footnote No. 373, See Attachments (2) and Footnote Nos.
154 and 203 (above)............................3850, 3575, 3632
Footnote No. 374, See Footnote No. 373 (above)............ 3850
Footnote No. 375, See Footnote No. 144 (above)............ 3530
Footnote No. 376, See Footnote No. 150 (above)............ 3568
Footnote No. 377, See Footnote No. 151 (above)............ 3572
Footnote No. 378, See Footnote No. 355 (above)............ 3835
Footnote Nos. 379-382, See Hearing Exhibit No. 115 (above) 2686
Footnote No. 383, See Attachment and Hearing Exhibit No.
46 (above)............................................3853, 560
Footnote No. 384, See Hearing Exhibit No. 44 (above)...... 555
Footnote No. 385, See Attachment.......................... 3854
Footnote No. 386, See Hearing Exhibit No. 38 (above)...... 528