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Organization and Management of MIT 82
As the program was structured, the investors were required
to execute notes to Machise representing ten-elevenths of their
investment in MIT 82. Pursuant thereto, the Bealors executed a
note to Machise on October 1, 1982, for $100,000; Cameron
executed a note to Machise on September 9, 1982, for $100,000;
and Pettisani executed a note to Machise on July 1, 1982, in
the amount of $200,000. These notes bore interest at a rate of
10 percent per annum and were payable in level installments. The
other partners executed similar notes; taken together, the
partners' notes to Machise totaled $3,075,000. The first
installments on these notes were not due until July 1, 1983.
In 1982, in exchange for their notes to Machise, Machise
lent $3,075,000 to the investors in MIT 82. This amount was
equal to ten-elevenths of MIT 82's capital. Machise’s loans
lacked physical form; they did not exist as checks, notes, or
cash. They were recorded only by journal entries on Machise’s
books. These amounts were then deemed to be contributed to the
MIT 82 partnership with no supporting documentation other than
journal entries on the books of MIT 82 maintained by BBPA.
In addition to executing the notes, the investors were
required to pay, in the aggregate, $307,500 in cash to MIT 82 as
the other one-eleventh of their capital investment in MIT 82.
Some of the investors in MIT 82 paid their share of the required
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