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The 1987 letter of credit allowed petitioners to pay any
amounts Voier drew on it. Thus, petitioners could have avoided
collection by Evergreen Bank by paying the bank the amount due.
Petitioners renewed the 1987 letter of credit annually.
They used the deeds of trust that secured the 1987 letter of
credit to secure later letters of credit.
Evergreen Bank required petitioners to manage and to
participate materially in the Seattle Pump business as a
condition for issuing the 1987 letter of credit. Evergreen Bank
knew petitioner had previously owned and successfully managed
other businesses.
3. Petitioners’ Operation of Seattle Pump
Petitioners became employees of and began operating Seattle
Pump when they bought Voier’s stock on December 19, 1986.
Petitioner was president, petitioner wife was vice president, and
both were employees of Seattle Pump during the years in issue.
Petitioner was responsible for business operations and hiring and
firing of employees. Petitioners ran Seattle Pump from December
19, 1986, through the date of trial.
Petitioners received wages for services they provided to
Seattle Pump during the years in issue as follows:
Year John Malone Brenda Malone
1989 $87,576.87 $4,324.00
1990 110,768.47 3,310.50
1991 9,153.84 4,420.00
Their combined wages from Seattle Pump were $35,063 in 1992.
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Last modified: May 25, 2011