Andantech L.L.C., Wells Fargo Equipment Finance, Inc. (f.k.a. Norwest Equipment Finance, Inc.), Tax Matters Partner, and Wells Fargo & Co., A Partner Other Than the Tax Matters Partner, et al. - Page 14




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          significantly lower residual values.  Ms. Grossman admitted that              
          she wanted the file to show that she had looked for as much                   
          information as she could.  In our opinion, the appraisals provided            
          by Comdisco were nothing more than an attempt to color the                    
          transaction with legitimacy.  Although NEFI had entered into many             
          other leveraged sale-leaseback transactions and had expertise in              
          this area, it failed to use any of its expertise in analyzing the             
          residual values.  In fact, the CAP places little value on the                 
          collateral (the value of the equipment).                                      
               Further, the testimony of Ms. Grossman at trial indicates that           
          NEFI officials knew that there was a high risk that the transaction           
          would result in a loss.  Ms. Grossman testified that the                      
          transaction was too large for NEFI, and that it was more                      
          appropriate for Norwest.  That claim is contradicted by the fact              
          that the transaction was conducted through RD Leasing, at the time            
          an inactive shell corporation without any other assets.  Ms.                  
          Grossman admitted that if anything went wrong with the deal, NEFI             
          officials would not receive bonuses.  RD Leasing was used because             
          the corporate officers did not want any losses from the transaction           
          to be attributed to NEFI.   Ms. Grossman’s admission leads us to              
          conclude that she was aware that it was unlikely that any pretax              
          profit would be made on the transaction.                                      
               We are satisfied that at the time Norwest/RD Leasing entered             
          into the sale-leaseback transaction involved herein, the                      
          Norwest/NEFI executives did not reasonably believe that an economic           





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