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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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