United States' Motion to Exclude Expert Testimony of Plaintiffs'

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How could Dubinsky make such an obvious mistake? Theanswer is that he is confused about the facts. In his reportDubinsky proceeds as though there are only two possibilities.For instance, at page 8 and note 15 of his report Dubinskyindicates that there will be a later discussion of theremoteness of outcome 3 (the $10 million payoff) occurring. Butthe only later discussion centers on the remoteness of outcome 2($2.21 billion payoff) . (Dubinsky at 19-21.) In effect,Dubinsky misattributes the remote likelihood of the $2.21billion payoff to the $10 million payoff. There is nodiscussion or analysis in his report regarding the likelihood ofthe $10 million payoff, which would be necessary for one toconclude that the swaps (if viewed by themselves) lacked profitpotential.To summarize, the profit potential of the swaps bythemsel ves is not important, since the principals viewed theswaps as an integral part of a larger transaction. By focusingon the swaps by themselves Dubinsky has analyzed only a subsetof the relevant transaction.Furthermore, assuming arguendothat the profit potential of the swaps by themselves isimportant, Dubinsky's analysis is flawed. Dubinsky focusesmyopically on the chances for a $2.21 billion payout (which theprincipals concede is remote), but does assess the likelihood ofa $10 million payout.- 11 -
WAS BEMONT FORMD FOR TAX REASONS? WAS THERE ANY NON-TAX PUROSEFOR MONTGOMERY'S PARTNRSHIP INTEREST IN BEMONT?Dubinsky asserts that Bemont need not have been created andthat the only effect of its creation was a tax benefit.(Dubinsky at 21-22.) Dubinsky further asserts that Montgomery'sinvolvement in Bemont had no economic substance.(Dubinsky at23-24.) There are two problems with these assertions: the factsDubinsky cites do not support them, and Dubinsky does notevaluate or even discuss other facts that point to the oppositeconclusion.The first fact relied on by Dubinsky is that Montgomery wasonly a partner in Bemont for a short time. Beal and Montgomeryboth stated in deposition testimony that the partnership betweenBeal (through BPB) and Montgomery was formed to pursue aninvestment in Solution 6, including a possible tender offer forthe company.(Beal Deposition at 247: 15-248: 5; MontgomeryDeposition at 286:11-289:1.) Both testified that thepartnership began after the determination was made not to pursuethis investment through Beal Financial Corporation.(BealDeposition at 125:15-128:2, 136:11-24; Montgomery Deposition at272:20-274:5.) It ended when Beal decided not to pursue thetender offer.Typically, a partnership j oint venture for a specificpurpose, such as the investment in Solution 6, lasts as long as- 12 -
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UNITED STATES DISTRICT COURTEASTERN
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of the transactions in order to com
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Expert ReportOfDavid A. WeisbachUni
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c.v. is attached as Exhibit A. I am
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The background for the rules allowi
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which provide a general defense aga
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2000-44 transaction. Without expres
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for the potential tender offer of S
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In particular, it is my understandi
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taxpayer wil prevail on the merits
Page 23 and 24: APPENDIX - DOCUMENTS REVIEWEDDescri
Page 25 and 26: DAVID A. WEISBACHUniversity of Chic
Page 27 and 28: 143-151.Paretian Intergenerational
Page 29 and 30: APPENDIXList of Prior Expert Testim
Page 31 and 32: QUALIFICATIONSI am an Associate Pro
Page 33 and 34: dollar-US dollar exchange rate duri
Page 35 and 36: facili tate the pursuit of a tender
Page 37 and 38: Beal's and Montgomery's formation o
Page 39 and 40: "-"~-_._.~-,----_..__.._._.__._--_.
Page 41 and 42: LOAN PREMIUM VARIATIONThe loan prem
Page 43 and 44: premium variation, but the second a
Page 45 and 46: Beal and Thomas Montgomery stated t
Page 47 and 48: was planning to acquire. Sanding al
Page 49 and 50: irelationship cannot be eva~uated i
Page 51 and 52: To summarize, Notice 2000-44 descri
Page 53 and 54: IRS and Treasury sometimes refer to
Page 55 and 56: swaps in BPB (as opposed to within
Page 57 and 58: APPENDIX AETHAN YALECurriculum Vita
Page 59 and 60: ETHAN YALEVitae, Page 3PUBLICATIONS
Page 61 and 62: APPENDIX BDescriptionBa tes NumerMa
Page 63 and 64: IRS Information Release IR 2004-64,
Page 65 and 66: PURPOSE OF REPORTThis rebuttal repo
Page 67 and 68: (BM Investments LLC, was subsequent
Page 69 and 70: espect to a potential tender offer
Page 71 and 72: premises if the "transaction" refer
Page 73: e a payoff of at least $552.5 milli
Page 77 and 78: (Montgomery Deposition at 516:25-51
Page 79 and 80: his case (by showing that admitting
Page 81 and 82: case. Another set of e-mail message
Page 83 and 84: made in Australian dollars, for the
Page 85 and 86: 3. failure to treat the short finan
Page 87 and 88: CONCLUSION OF REPORTThere are signi
Page 89 and 90: DescriptionDeposition of Margaret M
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United States' Motion to Exclude Expert Testimony of Plaintiffs'

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