- 21 - 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 moneyPage: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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