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of Mrs. Leonard’s joint accounts with Robert. The money was used
by Robert to make investments in his own name. He intended to
repay the principal to Mrs. Leonard and retain all investment
earnings for himself.
Mrs. Leonard gave no thought as to how Robert was investing
the money she gave him. Robert told Mrs. Leonard that he was using
the money from her accounts to complete the flower shop project in
Berkeley, to purchase factoring invoices, and to purchase
properties in Danville, California. Robert lost money on the
investments he made, including approximately $340,000 in the
factoring transactions.
Mr. Leonard gave Robert $74,000 in May 1983 in order that he
could make a downpayment for the purchase of property located in
Danville, California (Willow Creek property). Altogether Robert
obtained approximately $270,000 from family and friends to make the
downpayment on the $1.4 million purchase for the Willow Creek
property. Mr. Leonard did not expect to receive an interest in the
property, and he did not require any documentation relating to the
transaction. Robert intended to repay Mr. Leonard with proceeds
from the anticipated sale of the Willow Creek property. The sale
fell through, and foreclosure proceedings were commenced in late
1983.
Petitioners ultimately learned in October 1983 that title to
both the Willow Creek property and Robert’s residence was held by
Katherine Gatto.
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