- 134 -
in the case of MIT 80 and MIT 82, it would also owe accumulated
but unpaid interest. Machise's burden would continue year after
year, as its obligations to make multimillion-dollar payments to
MIT 80, then to MIT 81, MIT 82, MIT 83, MIT 84, MIT 85, and MIT
86 became due, one after another. It is difficult to believe
that Machise could survive such economic burdens--indeed, Machise
appears to have collapsed even before its repayment obligations
arose. If Machise did not survive, the parties would never
recover their money, and as we have noted, matters could get even
worse. If Machise failed, its creditors might attempt to collect
on the partners’ notes to Machise. Fred would then need the
termination agreements, or something like them, to cancel the
partners' notes to Machise before its creditors could try to
collect. Otherwise, as Fred feared, the investors might well be
seriously displeased. We therefore believe that Fred planned for
the termination agreements, or their equivalent, at the outset of
his employee leasing programs.
We recognize that Fred and Bruce provided the prospective
investors with projected figures showing that, ideally, the
partners stood to profit upon their investments in the
partnerships. These profits would come in the form of accrued
compensation fees and late charges. Fred has not provided any
factual basis for assuming that these figures were realistic.
The projections existed only in the abstract; they appear to be
based only upon the hopeful notion that Machise would earn enough
Page: Previous 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 NextLast modified: May 25, 2011