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year totaled $10,449.48. Through the Schwabs, she also purchased
a Columbus life insurance policy. Her policy provided death
benefits in the amount of $125,000. The first-year premium for
her policy was $2,535. For selling the policy to her, Vance
Schwab received a commission of $4,538.54 from Columbus.
Petitioners were offered "premium financing" arrangements
through the Schwabs in connection with the life insurance
policies they obtained from Columbus in 1992. In this regard
Cheryl Sutter was given a check in the amount of the first-year
premium, drawn on an account of Rocky Mountain Revenue (RMR), a
corporation controlled by Lee Schwab. In turn, she issued a
check in the same amount from petitioners' personal checking
account payable to Columbus. She signed a "Promisary [sic] Note
(Interest)" payable to RMR. Except for the date, maker, holder,
amount, and insurance company involved, the note Cheryl Sutter
signed in connection with her Columbus policy is substantially
identical to the note Charles Sutter signed in connection with
the Royal policy. Cheryl Sutter allowed her Columbus policy to
lapse after the initial period of coverage, as was her option.
She never paid any other premium on the policy. She made no
repayments on the note, and repayment was never demanded by RMR.
In connection with his Columbus policy, Charles Sutter
received a check from one of the Schwabs in the amount of the
first-year premium drawn on an account of Double Diamond
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