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advanced $3,075,000 to Machise. Fred explained that the parties
had orally agreed to increase the amount that the partners could
invest. Other than journal entries, however, there are no
documents showing that this amount was ever paid.
Illustration No. 2, infra p. 42, depicts the purported
transactions and flows of funds of MIT 82.
Operation of MIT 82
The employees and independent contractors were the same
employees and independent contractors who provided their services
to Machise before the employee leasing agreement was made. The
employees and independent contractors were not consulted about
the employee leasing agreement. They did not submit formal
employment applications to MIT 82, nor did they explicitly
consent to the execution of the employee leasing agreement. MIT
82 provided no work space or tools or equipment to the workers
after the execution of the leasing agreement.
In contrast to the situation of MIT 80, MIT 82,
Intercoastal, and Machise entered into a management contract
dated January 1, 1982. This agreement, prepared by Fred,
provided that Intercoastal would manage Machise on behalf of
MIT 82 for the period January 1 to December 31, 1982. The
compensation to be paid by MIT 82 was to be the amount of
Intercoastal's costs, plus a "supplemental management fee" to be
determined by Machise's board of directors. Following the
execution of this agreement, Bucci and Ingemi still directed and
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