- 5 -
boat. Mr. Schwartz was advised by these sailing professionals
that purchasing a 50-foot boat would be a good investment.
The Diane and Diane Racing
On February 13, 1991, Mr. Schwartz purchased a 50-foot
Nelson Marek racing sailboat (the Diane) from an unrelated third
party for $350,000. At the time of purchase, the Diane had a
market value of $680,000. Mr. Schwartz was able to purchase the
Diane for approximately half its value because repairs were
needed to the hull. Mr. Schwartz thought he could make a profit
from this venture because he bought the Diane at a “bargain”
price. Before purchasing the Diane, petitioners received oral
financial projections from experts, including the then president
of the Association, Wictor Forss.
In order to purchase the Diane and the necessary sails and
equipment, petitioners received a mortgage on the Diane for
$485,000. Diane Racing’s attorney, Ira Stechel, advised
petitioners that ownership of the Diane should be maintained
individually because the insurance policy would not allow Diane
Racing to have ownership and the mortgage contained an
acceleration clause if ownership changed.
The Diane was designed as a racing sailboat and did not
include any personal amenities (e.g., toilet, kitchen, or
sleeping quarters). At the time they purchased the Diane,
petitioners also owned two other boats (a 25-foot Black Fin and a
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011