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could use the funds. Towers Development reported the loans in
its corporate books as loans from AMI to Towers Development.
AMI looked primarily to Towers Development for repayment of
the loans in question. Towers Development put up valuable
collateral, in the form of a security interest in the Gulf
Highlands project. As far as the record reveals, it was this
collateral that AMI primarily relied upon in extending the line
of credit to Towers Development. Although Briggs also pledged
significant collateral, including the $138,666.66 certificate of
deposit and his interest in the 40 acres that cross-
collateralized AMI’s loans to Towers Development and to Briggs
and Daniell, the record does not establish that Towers
Development would have primarily relied upon this collateral as
security for the line of credit.20 Guerino testified that AMI did
not require more collateral from individuals in part because of
the sufficiency of the collateral that Towers Development had put
up in the form of the Gulf Highlands property: “if they build on
there and were to rent units, * * * any of the collateral that
20 James Guerino (Guerino) testified that “We took, I
believe, some life insurance policies –- paid-up life insurance
policies on the principals.” Such collateral is not described in
any of the loan documents in the record, however, and Guerino’s
own testimony is too indefinite on this point to convince us that
petitioners provided any such collateral, or if they did, what
the value of such policies might have been.
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