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transaction was rated “purely on the credit of Comdisco and not on
the risks inherent in this tax advantaged lease transaction”.
The CAP stated in relevant part: “All credit and tax risks
will be assumed by Norwest Tax Department”; NEFI’s role would be
“that of consultant”; and NEFI would be paid a fee for its
services. The CAP also contained a “Collateral” section,
reflecting that “Limited value is placed upon the collateral with
the transaction’s purpose being tax driven and subject to Norwest
Tax Department approval. However, there is upside potential for
the benefit of Norwest Corporation.” The CAP further stated that
“Credit risk is considered remote based upon Comdisco’s credit,
substantial underlying lessees and short 36 month term.”7
Because Mr. Vandermark was head of the Norwest tax department,
his signature was required on all CAPs involving sale-leaseback
transactions. Mr. Vandermark had to verify that Norwest had
taxable income sufficient to use the desired tax benefits.
Various Norwest and NEFI officers signed the CAP; the last
signature was dated September 21, 1993. The CAP approved
7 According to Mr. Vandermark and Mr. Renner, president
of NEFI, all sale-leaseback transactions have substantial tax
benefits; the “upside potential” (as referred to in the CAP) was
“in the residuals”. According to Ms. Grossman, the CAP’s
reference to “tax driven” meant that there were tax benefits
associated with the proposed sale-leaseback transaction and that
there was “residual upside”, meaning that the residual value of
the computers could produce a substantial economic profit.
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