Mr. Kluener made loans to APECO instead of using the funds
held in the name of APECO Equine in order to, inter alia, keep
the existence of those funds a secret from APECO personnel. Mr.
Kluener made loans to APECO during the time the sales proceeds
were held in the name of APECO Equine as follows:
Approximate Date Amount
Nov. 3, 1989 $700,000
Jan. 29, 1990 300,000
The foregoing loans were funded in whole or part by
distributions from Mr. Kluener's agency account. During December
1989, APECO collected approximately $1,600,000 with respect to a
disputed account receivable. On or about December 29, 1989,
APECO made a distribution to Mr. Kluener in the amount of
$1,437,488.90 that (1) repaid the $1,400,000 in loans that he had
made on or about June 12, and November 3, 1989, and (2) paid
interest to him in the amount of $37,488.90. The payment was
deposited in Mr. Kluener's agency account.
On or about June 4, 1990, Mr. Kluener's personal debts to
Fifth Third became due. Fifth Third refused to renew its loans
to Mr. Kluener that totaled $12,200,000 and its loans to APECO
that totaled $4,785,0003 because Mr. Kluener had submitted to it
a financial statement showing that his liabilities exceeded his
assets by $3,856,608 as of September 30, 1989. The loans were
renegotiated shortly thereafter. As part of the renegotiation,
3 APECO reduced its debt to Fifth Third from $5,385,000 to
$4,785,000 by making principal payments of $400,000 and $200,000
on or about Apr. 10 and July 9, 1990, respectively.
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