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by AIG. The plane, formerly owned by the singer Paul Anka, had
suffered extensive damage after running off a runway and was no
longer certifiable for flight. PLG took possession of the
salvaged plane, planning to remove the plane’s undamaged engines
to sell to Lang, which owned a plane in need of engines before it
could be sold. Petitioner did not take the plane or any other
asset of PLG as collateral for the funds he advanced on PLG’s
behalf, failing to file a notice of lien or make a UCC filing in
order to secure his position as a creditor. Petitioner also
failed to keep any documentation on the alleged loan in his
personal records and was unable to produce documentation
evidencing a loan between petitioner and PLG for the funds
advanced, though he claimed the note was held by another PLG
shareholder, Craig Orrock. No shareholder loans were reported on
PLG’s 1992 tax return.
Lang purchased the engines in 1992 from PLG for $163,074.42,
which was sent directly to CCCU in partial repayment of
petitioner’s personal note. One hundred fifty-five thousand
dollars was applied to principal and $8,074.42 was applied to
interest on the CCCU note. Thereafter PLG made no payments to
petitioner or on the CCCU note. Petitioner never made any
attempt to collect those funds he claimed were still owed to him
by PLG. Subsequently, petitioner paid off the remaining $100,000
CCCU loan balance.
In the fall of 1992, petitioner entered into negotiations
with Yamagada Enterprises d.b.a. Eagle International Group (Eagle
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