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paid the Prospect Street property mortgage and taxes from their
personal checking account. The Zhadanovs also paid numerous
Vortex expenses for facility upgrades out of their personal
checking account during the years at issue.
In 1990, the Zhadanovs sold their house in Metuchan, New
Jersey, and used the net proceeds of $180,000 to pay off the
balance of the mortgage on the Prospect Street property.
B. Plastic Vial Manufacturing
In 1990, Mr. Zhadanov was approached by Henry Belkin and
Leonard Edelson to create custom molds to manufacture plastic
vials. Belkin and Edelson were in the business of purchasing and
selling vials for crack cocaine, but they represented to Mr.
Zhadanov that the plastic vials were for perfume oil samples.
Belkin and Edelson used Tri-State General, a front company,
to conduct business with Vortex. Vortex and Tri-State General
signed an agreement to begin production of the plastic vials in
November 1990. Belkin and Edelson wanted to pay cash for the
plastic vials and molds and told Mr. Zhadanov that they did not
want Vortex to deposit the cash in the bank. Although Mr.
Zhadanov initially insisted that Vortex be paid by check, when
production began, Belkin and Edelson paid Vortex using a
combination of checks and cash.
Vortex conducted business directly with Tri-State until May
1991 when Mr. Zhadanov learned that the Government had seized a
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