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treasurer since 1982. Unrelated parties have also served on
CBR’s board of directors.
In 1987, CBR purchased from Ben Larralde (Larralde) an
1,800-acre ranch property in Corning, California. Three hundred
acres of the ranch consisted of an almond orchard. During the
years in issue, the orchard was not irrigated, and most of the
almond trees were either dead or stunted from lack of
maintenance. During the years in issue, petitioners maintained
their residence on the ranch property.
On May 1, 1990, Omega and CBR entered into a 5-year
agreement under which Omega leased from CBR approximately 1,400
acres of ranchland that included the 300-acre almond orchard.
Petitioners signed the agreement as officers of both CBR and
Omega. In turn, Larralde then leased the 1,400 acres from Omega
for use as grazing land for cattle. Larralde’s rent was based on
the number of head of livestock grazing on the property. To
accommodate Larralde, Omega built fences, graded roads, and
enlarged ponds. From 1990 through 1995, Omega paid rent to CBR as
follows:
Year Rent
1990 $9,000
1991 11,515
1992 21,951
1993 31,865
1994 31,020
1995 43,000
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