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Silbernagel regardless of the number of days worked, and the
agreement did not require Silbernagel to submit billing statements
or other summaries of his consulting activities.5
In determining the nature of FAMC's payments to Silbernagel,
we consider Silbernagel's testimony, which we found highly
credible. We are convinced that Silbernagel indeed performed
consulting services for FAMC, which included utilizing his contacts
in the mortgage lending industry in an attempt to generate business
for FAMC and regularly discussing his activities in that regard
with Moore. Further, Silbernagel testified that he reported the
payments received from FAMC as ordinary income because he
considered them to be compensation for consulting services rendered
and for his covenant not to compete.
Silbernagel was hired as a consultant to FAMC at a time when
the company's loan servicing business was declining. Leste and
Moore, whom we also regard as credible witnesses, indicated that
they expected Silbernagel's expertise and contacts in the mortgage
lending industry to add muscle to FAMC's marketing effort and
generate new loan servicing business, as well as smooth out FAMC's
somewhat precarious relationship with Imperial. It is reasonable
that Leste and Moore considered it worthwhile to pursue
Silbernagel's offer to provide consulting services to FAMC and in
5 As noted above, FAMC's prior consulting agreement with
Shirk was a per diem and expense reimbursement arrangement,
whereunder Shirk was required to submit monthly billing
statements in order to get paid.
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Last modified: May 25, 2011