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The six W & A investors signed General Partnership
Subscription Agreements in which they agreed to invest $4 million
in cash before January 1, 1987. The initial capitalization of
W & A was accomplished by BBPA lending the entire $4 million in
capital to the six W & A investors. The six investors in W & A
did not execute promissory notes for their subscription amounts
to BBPA. BBPA did not issue a promissory note to W & A for the
initial capitalization, but it did create an account payable to
W & A for $4 million.
The employee leasing agreement required W & A to deposit $3
million with BBPA, "the escrow agent", on January 1, 1987, so
that BBPA could fulfill its obligations under the employee
leasing agreement (the $3 million figure was incorrect and
inconsistent with the partnership's and partners' subscription
agreements; it should have been $4 million as the entire
capitalization of W & A). W & A purportedly deposited $4 million
in BBPA. No checks or notes were exchanged in these
transactions; however, the transactions involving the shift of $4
million between BBPA, the investors in W & A, and W & A itself
were all recorded in journal entries.
Machise was required to pay to MPC, and MPC was required to
pay to W & A, 105 percent of the payroll costs of the employees
and independent contractors. This payment was the compensation
fee. It was due and payable weekly as payroll costs were
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