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Trial evidence suggests that the tenant farmers to whom
Garland Farms leased the farm properties represented high credit
risks and could not obtain financing from commercial banks to
finance their farm operations.
On April 3, 1992, Blackland was incorporated in Arkansas for
the purpose of making loans to the tenant farmers to whom Garland
Farms leased farm properties.
During 1994, 1995, and 1996, petitioner was secretary of
Blackland, and various employees of Garland Farms were the
nominal shareholders and other officers of Blackland and were
involved, along with petitioner, in the day-to-day operations of
Blackland. Blackland, however, did not treat any of its
officers, nor anyone else, as employees, and Blackland did not
pay any wages. Blackland’s balance sheets for December 31, 1992,
through December 31, 1996, reflect that its nominal shareholders
paid a total of $1,000 for their stock in Blackland.
The record does not reflect that petitioner owned any direct
stock interest in Blackland. As indicated, however, petitioner
appears to have been in control of Blackland, and petitioner
provided Blackland with most of the funds Blackland needed to
make loans to the tenant farmers.
In April of 1992, petitioner contends that he, as creditor,
entered into a financing arrangement with Blackland that
constituted a revolving line of credit with Blackland under which
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