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the business of leasing master computer video games from which
the lessee could reproduce copies and offer such copies for sale
to retail establishments either directly or through a
distributor. Century Concepts acquired low-quality master video
games manufactured by General Masters Corp. of Los Angeles
(General Masters) that were not designed for commercial use.
Using promissory notes, Century acquired the masters at highly
inflated values. Century then leased the masters to its
"investors" for the sole purpose of allowing these individuals
to, as its brochure explains, "benefit from large investment tax
credits with a one time lease payment." Century elected to have
the investment tax credit flow to its lessees. The investment
tax credit is based upon the value of the equipment leased.
Century assigned highly inflated values to the subject masters.
The lessees are required to make a one-time payment upon entering
into the lease transaction. The lessees then enter into an
agreement with a distributor provided to them by Century for the
alleged marketing of the video games.
Century's brochure, explaining the leasing of master video
games, specifically states that Century Concepts was founded for
the purpose of marketing tax-advantaged equipment leases to its
investors. The brochure totals three pages discussing only in
general terms the video game market. The brochure does not
specifically address the master video games that Century intends
to lease, their quality, nor any other facets of the program.
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Last modified: May 25, 2011