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Mallin negotiated, promoted, and brokered computer leasing
transactions during the years at issue. His duties in
negotiating, promoting, and brokering leasing transactions did
not include making specific determinations of the values of the
underlying equipment but were limited to personal beliefs of
general values for the purpose of his desire to "comfortably
represent" transactions. These personal beliefs were based
primarily on his review of some industry publications.
Mallin was not an expert on the value of computer equipment,
and did not testify as such at the trial of these cases. In
general, Mallin used and relied upon third party appraisals which
indicated that computer equipment would have no residual value
after 96 months. He did not make any specific valuations of the
underlying equipment represented in any deals he negotiated,
promoted, and brokered. Mallin's commission for brokering an
equipment leasing transaction principally depended on the amount
of cash (including short-term notes) that was involved in the
transaction. The selling price in a sale/leaseback transaction
was set by Mallin as a broker, and generally included the sale
price of the equipment, plus 3 percent, which represented
commissions earned by him on the transaction. With respect to
the computer equipment leasing deals Mallin brokered on behalf of
IRA, inflation played no factor in the economic analysis as to
whether or not a profit could be made.
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