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collateral that Towers Development pledge a certificate of
deposit in the amount of $208,000, the pledge to remain in effect
until the sale of 70 town house units. At some unspecified date,
Briggs assigned to AMI a certificate of deposit in the amount of
$138,666.66 issued by First American Bank and Trust.15
Towers Development’s Use and Repayment of AMI Loan Proceeds
On all its financing agreements with Towers Development, AMI
specified that Towers Development was to use the loan proceeds
for purposes that included purchasing land and funding the
development and construction of phases I and II of the Gulf
Highlands project. With respect to the loans to Towers
Development, AMI paid the loan proceeds directly to Towers
Development. On its corporate books, Towers Development reported
the loans as being from AMI and not from shareholders.
Towers Development made all loan repayments, including
principal and interest, not only on its own loans, but also on
AMI’s loans to Briggs and Daniell. Towers Development made
payments to AMI as it sold town house units at Gulf Highlands.
Neither petitioners nor Daniell made any payments on the AMI
loans. AMI never required Briggs or Daniell to honor his
personal guaranty or to surrender assets used as collateral for
the loans to Towers Development.
15 The record does not explain the apparent discrepancy
between the amount of the certificate of deposit as required in
the commitment letter and the amount actually assigned by Briggs.
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