- 6 -
a promissory note in favor of David and Harvey (the Kotler Note).
The Kotler Note provided for payment on April 1, 1992, of
$305,000 plus 10 percent interest compounded annually.
II. The USM Investment
In 1988, a representative of USM Funding, Inc. (USM),
approached Bonnie about an investment in USM. The representative
informed Bonnie that USM was a factoring business that purchased
accounts receivable from small businesses. At Bonnie's request,
David investigated USM's operations. Upon completing his
investigation, David informed Bonnie that an investment in USM
would be profitable. Bonnie then discussed the investment with a
USM representative and on December 18, 1988, executed a document
entitled "SUBSCRIPTION AGREEMENT". The agreement provided that,
after January 1, 1989, Bonnie would invest $300,000. On
January 6, 1989, USM sent Bonnie a letter demanding receipt of
the $300,000 on or before January 20, 1989.
On January 17, 1989, Bonnie's will was executed. Her will
provided that all property would pass to a spendthrift trust for
the benefit of Rory. It further provided that David would serve
as the executor and trustee.
On January 28, 1989, Bonnie died. On March 17, 1989, David
assumed his duties as executor of Bonnie's estate. In his role
as executor, he responded to USM's demand letter. Because
petitioner did not have sufficient liquid assets to make the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011