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paid $4,380,000 for Granot Loma and took title to the property as
tenants by the entireties.4
Around the time of Granot Loma’s purchase, petitioner
discussed with Eugene Portman, an attorney who specialized in
real estate law, the creation of several corporate entities to
house several new businesses and investments petitioner was
acquiring in an attempt to diversify his assets. Mr. Portman
handled Granot Loma’s closing and associated preclosing matters
for petitioner.
On April 14, 1988, Mr. Portman filed articles of
incorporation with the Illinois secretary of state for a company
that was later renamed Loma Farms, Inc. (LFI). The articles
stated that the company was formed for the purpose of “engaging
in the business of * * * property manager and convention, hotel
and resort manager.” Petitioner was LFI’s sole shareholder.
Petitioner’s Restoration of Granot Loma
Petitioner engaged Mr. Matre as his general contractor for
the restoration of Granot Loma. In exchange for Mr. Matre’s
services, petitioner promised him 10 percent of any profit upon
the sale of Granot Loma and free use of the property when space
was available.
4This amount includes $125,000 paid to George and Carmen
Johnson to purchase the depot property.
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