Investment Research Associates - Page 523




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          artificially losses from IFI to IRA by mere bookkeeping entries.             
          As further discussed below, if the notes were worthless at the               
          time they were acquired by IRA, IRA could not have suffered a                
          loss by selling the notes because it did not part with anything              
          of value.                                                                    
               The CMB Cinema Trust and CMB Cinema Trust II were trusts for            
          the benefit of Ballard's family and the RWL Cinema Trust and RWL             
          Cinema Trust II were trusts for the benefit of Lisle's family.               
          IRA and/or IFI did not pay or transfer moneys to the CMB Cinema              
          Trust, CMB Cinema Trust II, RWL Cinema Trust and RWL Cinema Trust            
          II as loans but rather as part of the moneys earned by Ballard               
          and Lisle for their roles in the Prudential income scheme and,               
          therefore, the funds were not intended to be repaid.  The alleged            
          notes receivable or debts did not in fact exist, and IRA did not             
          establish its basis in the alleged notes receivable.                         
               With respect to the claimed losses on the sales of the other            
          alleged notes receivable, IRA presented no evidence that IRA, as             
          opposed to Administration Co., paid or advanced moneys as loans              
          to the alleged debtors.  IRA presented no evidence as to why the             
          funds were advanced to the alleged debtors.  Except for a                    
          notation as to the interest rate for some of the alleged loans               
          listed in its Loans Receivable ledger, IRA presented no evidence             
          regarding the terms of the alleged loans such as the due dates or            
          interest rates.  IRA presented no evidence that the loans were               






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