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Mr. Norton signed checks payable to petitioner for his management
fees, which petitioner had already filled out.
2. Cross Street Property
On February 9, 1998, the Pago Trust purchased unimproved
land located at 102 Cross Street, San Luis Obispo, California
(Cross Street property), for $205,000. Petitioner arranged for
the Pago Trust to borrow $50,000 from Mrs. Gouveia’s father,
Edward Kazmierski, $50,000 from Maddalena Real Estate, and
$105,000 from a “foreign lender” in order to acquire the Cross
Street property.15 Petitioner did not consult with Mr. Norton
before the purchase of the Cross Street property or during its
later development.
On May 12, 1998, the Gouveias entered into a Construction
Project Manager Agreement (manager agreement) in which they
agreed to act as the Pago Trust’s agent and to manage and
coordinate the construction of a commercial building on the Cross
Street property. The trust paid the Gouveias management fees for
their services. Throughout 1998 and 1999, petitioner hired
contractors and located suppliers of raw materials in connection
with the development of the Cross Street property.16 Eventually,
15The record contains no documentary evidence identifying
the person or entity that provided the $105,000 to the Pago
Trust.
16According to the trust’s internal management records, the
Pago Trust financed the construction on the Cross Street property
(continued...)
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