Rolf E. Polentarutti - Page 6

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          documentary evidence of a loan from Aeberhard.  Petitioner                  
          contends that he has no documentary evidence because his European           
          investors did not require more than a handshake for transactions            
          with him.  Petitioner's claim is inconsistent with other evidence           
          in the record.  Petitioner gave Aeberhard a promissory note for             
          the $200,000 loan in 1990 and secured it with a mortgage.  This             
          casts doubt on petitioner's claim that Aeberhard would have                 
          required nothing more than a handshake for a loan in 1989.  We              
          find that Aeberhard did not lend $200,000 to petitioner in 1989.            
               2.   Whether Petitioner's Investors Authorized Him To Use              
                    Their Funds for Personal Purposes                                 
               Petitioner's investors made numerous deposits in his                   
          accounts in 1989.  Petitioner stated that he borrowed surplus               
          money from investors' funds to invest in a "good deal" on several           
          occasions when he was short of cash.                                        
               Petitioner contends that his foreign investors knew and did            
          not mind that he used some of their funds to invest for his own             
          purposes.  He contends that he could use those funds for personal           
          investments, in part because he was not paid for his work and had           
          overhead costs.  However, he concedes that he had no written                
          authority to do so.  He contends that he repaid those funds as              
          soon as the project for which they were intended needed them.               
               We disagree.  Markmann stated that petitioner could use                
          "small amounts" to pay for office expenses.  We believe that                







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