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director of GSC. These funds were referred to in the relevant
written materials as “managed accounts”. Funds received from
investors as managed accounts (managed account funds) were to be
invested in various securities to be selected by and at the
discretion of GSC, of petitioner, and of Gomez, and apparently
were not limited to Government-backed securities.
Managed account funds had the characteristics of loans from
the investors to GSC. Receipt of managed account funds was
documented by written agreements that were signed by the
individual investors, and, on behalf of GSC, by petitioner and
Gomez. The written agreements reflected total funds invested, a
fixed term for repayment to individual investors of the funds
invested, and a stated interest rate. Interest was due monthly.
Under each managed account investment agreement, at the end
of a stated fixed term, the term of each managed account
investment would be automatically renewed unless the investor
gave 30 days’ notice of cancellation. Upon cancellation, the
principal amount of the investor’s managed account funds was to
be repaid with any interest due.
Investors expected to be repaid the total principal amount
invested in managed accounts. Repayments of principal on some
occasions were made, and payments of interest on many occasions
were made.
Most of the principal repayments and much of the interest
payments that were due managed account investors, however, were
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