- 48 -
similar notes totaling, in the aggregate, $265,000. Fred's and
Bruce's notes, however, were made out to Machise, and not to
Qulart, apparently because of an error. The total of the
investor notes was therefore $2,888,666, an amount equal to ten-
elevenths of MIT 83's capital.
On July 1, 1983, Qulart issued to Machise a 12-percent
promissory note in the amount of $2,888,666, whose provisions
tracked the provisions of the partners' notes to Qulart.
Machise then lent $2,888,666 to Qulart by means of a demand
note, providing for no interest. Qulart then lent $2,888,666 to
the 25 investors in MIT 83, including Fred and Bruce. Instead of
taking the proceeds from Qulart, however, the MIT 83 partners
purportedly directed Qulart to provide directly to MIT 83 the
$2,888,666 that the partners had borrowed from Qulart. Qulart
therefore endorsed to MIT 83 the $2,888,666 demand note that
Qulart had received from Machise.
In addition to their notes, the investors were required to
put up, in the aggregate, $288,866 in cash as the other one-
eleventh of their capital investment in MIT 83. Seventeen of the
25 investors in MIT 83 paid their share of the required cash in
full in 1983, in the amount of $118,868, plus $13,902 in
interest.
BBPA issued a note receivable to MIT 83 representing payment
in respect of the cash required of the other eight investors in
MIT 83, who issued short-term promissory notes to MIT 83. The
Page: Previous 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 NextLast modified: May 25, 2011