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petitioner's extensive use of funds to make personal investments
exceeded his authority.
Petitioner offered into evidence a copy of a fax purportedly
from Aeberhard to petitioner dated 3 days before the trial in
this case. We did not admit the fax into evidence because it was
hearsay, and it was not exchanged at least 15 days before the
first day of the trial session as required by our standing
pretrial order. Materials not provided in compliance with our
standing pretrial order may be excluded from evidence. Rules
104(c)(2), 132(b); Moretti v. Commissioner, 77 F.3d 637, 644 (2d
Cir. 1996).
Even if we had admitted the Aeberhard fax, it would not have
convinced us that petitioner had authority to use $200,000 of the
investors' funds for personal purposes. The fax states that it
responds to Elwood's letter sent about 4 years earlier, and that
Aeberhard gave petitioner permission to use his funds.
Aeberhard's fax says that petitioner was supposed to pay office
expenses and overhead as his contribution to the projects in
return for a percentage of the profits. The fax also says that
petitioner told Aeberhard that he sometimes took funds from the
projects to use for personal purposes, but that most of the time
he had other funds available for this, and that Aeberhard did not
object if petitioner repaid the funds and the projects did not
suffer. The fax does not show that Aeberhard knew and approved
of petitioner's use of $200,000 for his own investments.
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