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Petitioner has argued that the LECC agreement with the
guaranteed students required that the guaranteed tuition be
placed into a set-aside escrow account. However, there is no
credible evidence that the agreement between petitioner and the
guaranteed students required petitioner to create an escrow or
trust arrangement. There was no written escrow agreement between
petitioner and the guaranteed students. The only reliable
evidence of the terms of the guaranteed review course is the LECC
brochure. The LECC brochure contains the statement that
petitioner will refund tuition to students enrolled on the
guaranteed basis if they fail the bar examination. There is
nothing in the brochure that indicates in any way that petitioner
intended to place the tuition into an escrow or trust account or
would not use the tuition before the students passed the bar
examination. We hold that petitioner was not required by his
agreement with the guaranteed students to establish an escrow or
trust account to hold the tuition payments. There was no
contractual restriction on petitioner’s use of the $30,000
tuition during 1991, and any restriction on petitioner’s use of
the tuition was imposed by petitioner himself.
Petitioner contends that he created an oral trust to hold
the guaranteed tuition until the students took the bar
examination. Under California law, an express trust in personal
property may be made by an oral declaration of trust. Cal. Prob.
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