Investment Research Associates - Page 524




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          secured by any collateral, nor was there any evidence of payments            
          on the loans.  Although these loans were listed on IRA's books               
          and records as "Notes Receivable" or "N/R", no notes or any other            
          written acknowledgment of the alleged loans was introduced into              
          evidence.  With the exception of Kanter, in his capacity as                  
          trustee of the HGA Cinema Trust, none of the alleged debtors                 
          testified as to the existence of any debt.  In our view, IRA's               
          lack of notes or other written acknowledgment of the existence of            
          these debts, lack of any collateral, and lack of repayments                  
          indicate that, like the payments to the Ballard and Lisle family             
          trusts, IRA never intended that the alleged debtors would be                 
          required to repay these funds.  Consequently, the alleged loans              
          did not exist.  In sum, we conclude that IRA failed to establish             
          that the claimed notes receivable represented valid debts                    
          stemming from debtor-creditor relationships and, therefore,                  
          failed to show that it had any basis from which any loss could be            
          determined on their purported sales.                                         
               Economically, the sales of the notes receivable of                      
          $1,760,682 for $12 make no sense.  If the notes were not                     
          worthless, IRA would not have sold them for $12.  If the notes               
          were worthless, an unrelated third party would not have had any              
          interest in purchasing them for $12.                                         
               Kanter testified that he and Freeman agreed that the notes              
          receivable in question were worthless.  Kanter explained that the            






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