[Lauren Ritchie]

snok,

the developer and the district are legally separate entities. the developer will not take a hit on this, unless he decides for reasons of his own that he wishes to become involved. he was simply the seller in a series of transactions, and he has two appraisals showing that the price is reasonable. (the IRS disagrees with the appraisal methods, but that only goes to the issue of whether this was an 'arm's length' transaction. the IRS doesn't care whether the district overpaid.)

the IRS is NOT investigating gary morse. as i've said in other posts, he paid taxes on his gains. he is not liable for any taxes on the bonds because he didn't issue the bonds -- your district did.

think of it as selling a car....if you sell a car to someone who gets a loan, you get paid, right? if later, the bank realizes that the person paid too much for the car and maybe didn't fill out the loan forms right, the car doesn't come back to you, does it? well, it's the same here.

these sales were structured so that morse is simply a willing seller and the district a willing buyer.

any "liability" that morse might have would have to come from a judgment in court...if someone takes him there. but it won't be the IRS.

hope that helps.
lauren