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prospectuses or formal offering memoranda or terms sheets for MIT
86. Some of the prospective investors in MIT 86, however,
received a four-page document prepared by BBPA. The document
described the provisions for investing in MIT 86 and made taxable
income and cash-flow projections to the end of the partnership
term.
The arrangements for MIT 86 followed the familiar pattern.
MIT 86, Machise, and MPC entered into an employee leasing
agreement, dated January 1, 1986, under which MIT 86 would
provide all the individual employees and independent contractors
required by Machise to carry on business for the period January 1
through December 31, 1986. The employees and independent
contractors were the same employees and independent contractors
who had earlier provided their services to Machise before the
employee leasing agreement was made. After this agreement, Bucci
still directed and controlled the employees.
The nine partners executed notes to Qulart in amounts
aggregating $3,080,000. This amount was equal to 80 percent of
the capital of MIT 86. The notes bore interest at a rate of 15
percent per annum and were to be repaid in annual level
installments. Qulart issued a similar note to Machise, which
issued a $3,080,000 demand note dated July 1, 1986. Backed by a
series of reciprocal obligations, this note circled from Qulart
back to the nine investors, who allegedly directed Qulart to
endorse the note directly to MIT 86.
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