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During the period after 1980, EPIC's management
also experimented with resyndicating properties from older
partnerships and with expandable partnerships. EPIC's
management also formed EPIC Residential Network, Inc.
(ERNI), to act as a real estate broker to be in position
to sell properties when interest rates declined and the
real estate market recovered.
Thus, beginning in 1981 or 1982, EPIC expanded its
business by entering into agreements to purchase properties
that it intended to rent to the public, rather than to the
developer. After this change, EPIC did not limit itself
to models in a particular project but contracted to buy
production houses. This meant that, in some cases, EPIC
acquired a substantial inventory of unsold houses in a
single project and facilitated the developer's completion
of the project.
Under this business plan, EPIC intended to syndicate
the properties to limited partnerships which would rent
the properties for 4 years before selling them. EPIC
calculated the capital contributions of the limited
partners to equal one-half of the anticipated tax losses,
resulting in a "two-to-one tax write-off."
For cash management purposes, EPIC "swept" all funds
from all of the partnerships' accounts daily and deposited
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