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in Atascadero, California. Atascadero is approximately 4 hours
south of Hercules. Stephanie lived in Hercules while working as
an accountant for a construction company and would travel to
Atascadero on weekends to see David.
Stephanie and David had become interested in purchasing a
particular residential property in Atascadero, but neither had
the financial ability to do so. They wanted to live in the
house, refurbish it, and eventually resell it. In addition to
his plumbing skills, David had experience framing houses.
Stephanie and David felt that with David’s craft skills and
experience they could make most of the desired improvements to
the house themselves. Stephanie asked petitioner if he would
lend her and David the funds they needed to purchase and improve
the property.
Petitioner, as the fiduciary of his profit-sharing plan, was
willing to lend funds from his plan to Stephanie and David.
Petitioner viewed the loan as an appropriate investment for his
profit-sharing plan and was diligent in reviewing the feasibility
of Stephanie and David’s proposal. Petitioner inquired about the
location and condition of the property, and the nature and extent
of the proposed improvements. Petitioner consulted real estate
agents to confirm the adequacy of the security of a potential
loan. He believed that Stephanie had real estate talent, and
that David’s craft skills provided an opportunity to enhance the
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Last modified: May 25, 2011