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countries. The people involved with the Association were also
involved with the America’s Cup race. The America’s Cup occurred
every 4 years, whereas the Association would have ongoing races.
The incorporation papers signed in 1989 stated that the
Association was formed as a “Social Club”. By 1991, however,
owners were allowed to display advertising material from
sponsors, and the Association reported sponsorship income in its
financial reports. Mr. Schwartz joined the Association during
this period when sponsorships were being sought.
Mr. Schwartz viewed the Association as “an opportunity to
potentially make a lot of money.” By 1990, the Association
obtained sponsorship of $3.5 million for a trip to Japan and
already conducted meetings with Volkswagen for other sponsorship.
Petitioners’ understanding of the Association was that any
sponsorship money that came to the Association would be handed
down to the members equally.
Mr. Schwartz respected the advice from the Association’s
members because “that’s where all the best minds were” in the 50-
foot sailing industry. Mr. Schwartz consulted with professional
racers regarding the business implications of owning a 50-foot
boat. Mr. Schwartz also consulted other professionals, including
Stephen Benjamin, a sail manufacturer and sailing consultant,
regarding expenses that would be incurred, e.g., sails for the
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Last modified: May 25, 2011