- 10 -
cash should have been made available to Tanglewood to use in
connection with the management and the expenses relating to the
L&C Properties. This $300,000, however, was not so used. It was
transferred to a management company controlled by Kanter.
In 1985, Tanglewood again refinanced with Cal Fed for
$1,952,500 the underlying senior $1.8 million mortgages
outstanding and secured by the L&C Properties. As part of this
refinancing, Tanglewood represented to Cal Fed that Tanglewood
alone was the owner of the L&C Properties. No mention was made
of an interest of L&C Springs in the L&C Properties. The funds
from this second refinancing were used to retire the mortgage
with Cal Fed.
As a result of this refinancing, it appears that $140,000 in
excess cash should have been made available to Tanglewood to use
in connection with the management and the expenses relating to
the L&C Properties. This $140,000, however, was not so used. It
was sent directly to Kanter.
By January 31, 1987, L&C Springs had made each of the four
annual $50,000 payments due Tanglewood on L&C Springs' $2,450,000
debt obligation, representing total payments of $200,000.
On January 31, 1987, however, L&C Springs did not make the
$2,250,000 balloon payment of principal on the L&C Note that L&C
Springs owed to Tanglewood. After this default on January 31,
1987, L&C Springs made no further payments on the L&C Note to
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011