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with a balloon payment due on January 31, 1987, of $2,250,000,
plus accrued interest.
Under a collateral agreement of December 15, 1981, that was
entered into between Tanglewood and L&C Springs, upon default on
L&C Springs' $2,450,000 debt obligation, Tanglewood had the right
to terminate L&C Springs' leasehold interest in the L&C
Properties, and upon any foreclosure of its leasehold interest,
L&C Springs waived any right under Illinois State law of
redemption of its leasehold interest in the L&C Properties.
L&C Springs hired Clinton, Boggio & Associates (CB&A) to
manage the L&C Properties. Boggio was president of CB&A and he
personally managed the L&C Properties and, with Weisgal and
Kanter, participated in all significant business decisions
regarding the L&C Properties.
The relationship between "Clinton" of CB&A and the Clinton
Family Trust (which owned the L&C Properties prior to the sale to
Tanglewood) is not explained in the record.
Generally, rental income collected from the L&C Properties
was used to cover CB&A's management service fees, operating
expense of the L&C Properties, real estate taxes, and liability
insurance coverage.
In November of 1983, Tanglewood refinanced with California
Federal Savings & Loan (Cal Fed) for $1.8 million the underlying
senior three mortgages outstanding and secured by the L&C
Properties. As a result of this refinancing, $300,000 in excess
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