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E. UB $1,830,000 Loan
In August 1984, Union Bank funded a $1,830,000 loan to BOT
(original UB $1,830,000 loan) that was due on July 15, 1985.
Pursuant to instructions of petitioner on behalf of BOT, the
proceeds of that loan were used to acquire from Union Bank a
$1,830,000 certificate of deposit that was issued in the name of
Pempire (original Pempire $1,830,000 CD). To document the origi-
nal UB $1,830,000 loan, petitioner signed on behalf of BOT a
promissory note that was made payable to Union Bank and that was
in the same amount as that loan.
Pursuant to a decision on July 18, 1984, of the board of
directors of Pempire, of which petitioner was chairman and presi-
dent, the original Pempire $1,830,000 CD and the renewals thereof
were pledged as security for the original UB $1,830,000 loan and
the renewals of that loan. That certificate of deposit was
issued on August 13, 1984, and matured on July 15, 1985, the same
date on which the original UB $1,830,000 loan was due. Through-
out the period August 1984 until July 10, 1986, during which the
original Pempire $1,830,000 CD and the renewals thereof served as
security for the original UB $1,830,000 loan and the renewals of
that loan, Union Bank maintained a lien on the deposit represent-
ed thereby.
The interest rate on the original UB $1,830,000 loan was set
at 1.15 percent above the interest rate on the original Pempire
$1,830,000 CD. The interest rate on the original UB $1,830,000
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