Kenneth R. and Carol L. Bauer - Page 3

                                        - 3 -3                                           

          to the Dubatos.2  Within the time promised (i.e., 30 or 60 days),           
          the Dubatos repaid petitioners the full amount of each loan.                
          Petitioners made the loans because they wanted to help their                
          friends and because Mrs. Bauer wanted a nice restaurant close by            
          to which she could take her real estate clients.  Petitioners,              
          however, were not in the business of lending money.                         
               During 1992, the Dubatos continued having financial                    
          problems.  Through a series of nine payments, petitioners                   
          advanced a total of $10,901.39 to, or on behalf of, the Dubatos             
          between the months of March and August 1992.3  These advances               
          were not supported by written loan documents.  Petitioners                  
          expected to be repaid within 30 to 60 days and to receive an                
          annual interest rate of 15 percent.                                         




          2  The first of these loans was for $500, to be repaid                      
          within 30 days.                                                             
          3  Petitioners made the following advances during 1992:                     
          Date             Amount         Form and Purpose of Payment                 
          March 16       $2,000.00      Cash to cover payroll                         
          March 28       2,800.00       Rent check to Hesling Fam. Trust              
          April 22          866.62      Cashier’s check for insurance                 
          May 22         2,000.00       Cashier’s check for supplies                  
          May 22          2,000.00      Cashier’s check for supplies                  
          April/May         462.00      Check to publications for adver.              
          May/June       115.67         Check to florist for decorations              
          June/July         477.10      Check to publications for adver.              
          August         180.00         Check to publications for adver.              
          Total     10,901.39                                                         




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