- 7 -
5/84 20,538 $16,086
6/84 21,580 20,538
7/84 24,560 21,580
8/84 --- 24,560
Total 82,764 82,764
Any payment of interest to the trusts by the estate resulted in a
wash transaction, whereby for each dollar that the trusts owed in
margin interest to E.F. Hutton they received exactly $1 from the
estate.
The estate transferred these funds to corporations
controlled by the estate. The corporations used the funds
borrowed from the trusts to develop condominiums. After the
corporations developed the condominiums, the corporations sold
them and held their first mortgages. The estate formed Berkley
Mortgage Corp. (Berkley) as a nominee corporation to hold title
in the mortgages and service the mortgage payments on these
instruments. At all times, the estate owned all interests in
Berkley. Berkley serviced mortgages, accepted payments for
mortgages, and accounted for the money to the beneficiaries of
the trusts. Berkley segregated mortgages on its books indicating
ownership of particular mortgages by the estate or the trusts.
The trusts owned mortgages in La Playa and Blue Grass
developments during the trusts' fiscal year ended February 28,
1985. All mortgages on condominiums in the La Playa and Blue
Grass developments were taken in the name of Berkley as
mortgagee. Berkley transferred mortgages on the properties to
the trusts. The trusts' journal entries, for the fiscal year
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Last modified: May 25, 2011