William Whelpley, Jr. - Page 21

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             Mr. Whelpley was a director and key employee of both WAI                  
             and CPI, and although the two companies shared office                     
             space, CPI was separately incorporated, maintained a                      
             separate bank account, and established a distinct and                     
             independent board of directors.  Moreover, Mr. Whelpley                   
             acknowledged during his testimony at trial that CPI was a                 
             "functioning entity".  Thus, we find that CPI was not a                   
             "division" of WAI and we reject petitioners' argument                     
             that Weeden's intent to make an equity investment in CPI                  
             somehow how constituted an equity investment in WAI.  In                  
             this connection, we note that in their post-trial briefs,                 
             petitioners abandoned the argument advanced at trial that                 
             CPI was "a wholly owned subsidiary of Wai."                               
                  We note that Mr. Flaherty's letter of September 18,                  
             1991, states as follows:                                                  

                  The amounts that were advanced, as loans,                            
                  to Whelpley Associates, Inc. and yourself                            
                  [Mr. Whelpley] were to be recovered either;                          
                  (1) in the form of loan repayments, or (2)                           
                  convertible into equity in the projects that                         
                  CPI and WAI were pursuing.  Weeden considers                         
                  amounts advanced to be returnable as equity                          
                  in any business entity that results from the                         
                  activity funded in 1987.                                             

             During his testimony, Mr. Flaherty stated that he did not                 
             recall writing the letter of September 18, 1991, but he                   
             reiterated the fact that Weeden intended to advance money                 






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