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Background
In 1976, petitioner and his brother, James Fedewa, and
cousin, Bernard Fedewa, formed a partnership known as BBJ
Investments (BBJ). BBJ is a Michigan partnership in the business
of acquiring and operating residential real estate. Initially,
the partnership was owned equally by the three partners. On July
6, 1987, James Fedewa relinquished his one-third interest in BBJ
to petitioner. Since 1987, petitioner has held a two-thirds
interest in BBJ. Petitioner was also either a shareholder or
partner in Fedewa Enterprises, Fedewa Builders, Fedewa Realty
World, and Construction Redi-Mix (collectively the related
entities). The related entities were involved in the development
and construction of residential and commercial properties through
the 1980s.
In 1975, BBJ purchased land to build a 50-unit apartment
complex known as North Scott Villa. In order to complete the
North Scott Villa project, Bernard E. Fedewa, James R. and Mary
Ann Fedewa, and Robert E. and Julia I. Fedewa, as the “borrower”
secured a $712,500 loan bearing 8.5-percent interest (FmHA loan),
from the Department of Agriculture Farmers Home Administration
(FmHA) in 1975. Pursuant to the loan agreement, the borrower was
required to provide annual budgets, annual operating plans, and
maintain books and records relating to the housing project’s
financial affairs, causing such books and records to be audited
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Last modified: May 25, 2011