<DOC> [108 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:94085.wais] 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) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 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 <NO TEXT AVAILABLE> <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT