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establish that Quotum either obtained the funds under false
pretenses, embezzled the funds, or otherwise stole the funds from
petitioners. Petitioners have failed to prove that Quotum
obtained petitioners’ funds by deception. Cf. Martin v.
Commissioner, T.C. Memo. 1988-369.
Petitioners have also failed to prove for what portion, if
any, of the funds advanced there was no reasonable prospect of
recovery. The record suggests that a deposit of $250,000 was
made toward the purchase of insurance for several Russian
airplanes under contract to Quotum. The sum was allegedly paid
to an insurance broker to activate insurance coverage. James
testified that he was informed that the insurance deposit was
refundable. Although James asserts that he attempted to obtain a
refund of the $250,000 paid and that the broker refused to deal
with him, there is no probative evidence that Quotum made a claim
for the return of the premium, or that the claim was rejected for
legally sufficient grounds.
The facts and circumstances surrounding the transfer of
$150,000 to James by Christopher also fail to establish theft.
Christopher voluntarily gave a check to James which was then
deposited in a Michigan bank. At trial, James was unable to
explain what he did with Christopher’s money, and there is no
proof elsewhere in the record that the money was ever transferred
overseas or used in the quest for Russian airplanes.
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