Investment Research Associates - Page 506




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          and that, at some point, Funding Systems came out of bankruptcy              
          and the note was worthless.  On cross-examination, Kanter                    
          testified that the note was thought to have a value of $20,000 at            
          the time it was "sold" to Holding Co.  In fact, IRA received                 
          repayments on the Funding Systems note totaling $24,500 on June              
          24, 1986.  Kanter admitted that the sale price of the Funding                
          Systems note was not based on an appraisal, a legal opinion of               
          those involved in the proceedings, balance sheets of Funding                 
          Systems, or any type of bona fide analysis.  He stated that the              
          purpose of the "sale" was to establish a loss for tax purposes.              
          This testimony does not establish the value of the note at the               
          time of "sale".                                                              
               With respect to the Tanglewood note, Kanter testified that,             
          by the time IRA wrote off the Tanglewood loan, "it was clear that            
          there would be no assets available to pay this particular                    
          obligation," yet he purportedly paid $10,000 for the note.  If,              
          in 1985, it appeared that there would be no assets from which to             
          collect the note, it was not explained why Kanter was willing to             
          pay $10,000 for the note.  Moreover, Kanter's testimony that                 
          there were no assets to repay this obligation is contradicted by             
          Tanglewood's repayment of $6,000 to IRA in February 1986.  This              
          evidence indicates that the $10,000 sale price was an arbitrary              
          figure determined by Kanter that had no relationship to the fair             
          market value of the note in 1985.  We also note that this is the             






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