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of the limited partnership interests in the K-Mart investment (2-
1/2 units).
MFA Corp. (MFA) is the ministerial agent for EI. Efron owns
50 percent of the stock of MFA and REFC owns the remaining 50
percent. The revised offering memorandum provides that Efron, as
general partner of EI, and MFA, as the ministerial agent for EI,
will receive substantial fees, compensation, and profits from EI.
The contemplated payments to MFA include: (1) $100,000 for
supervisory management of the office building and ministerial
fees; (2) $100,000-$125,000 as loan commitment fees; (3) $25,000
for note collection guarantees; and (4) a maximum of $100,750 in
investment advisory fees. In addition, MFA was also the
ministerial agent for the office building limited partnership
and, according to the revised offering memorandum, received
substantial payments in that capacity.
Efron obtained financing for the EI investments through
local banks. Like a number of limited partners in EI,
petitioner made a cash downpayment to EI and then signed an
installment promissory note for the remainder of the purchase
price. Thereafter, Efron pledged any promissory notes received
from limited partners as security for loans to EI. In addition
to lending funds directly to EI, the banks also offered loans to
individual limited partners for the downpayments needed with
respect to the EI investments.
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Last modified: May 25, 2011