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In 1986, decedent suffered a “negative cashflow exclusive of
depreciation” exceeding $115,000 on the University property.
After 1986, decedent continued to incur a negative cashflow on
the property. In 1987, due to the financial problems associated
with the University property, Hillgren “facilitated” a loan of
$400,000 from Louis Puccio to decedent (Puccio loan). On
April 27, 1988, in his capacity as trustee of the original trust,
Hillgren signed a promissory note between Louis Puccio and Sea
Shell. The promissory note was secured by a deed of trust on the
North Main property. According to the BLA, by 1988, decedent
owed $285,000 to Hillgren and $400,000 on the Puccio loan. From
1988 through 1993, decedent continued to incur a negative
cashflow on the property, she did not pay the Puccio loan, and
she continued to be indebted to Hillgren.
The BLA recited that, as of 1994, decedent owed $1.3 million
on a first trust deed (Safeco loan) and $1.5 million on a second
trust deed (Huettner loan), both secured by the property, in
addition to the Puccio loan and her remaining debt of $150,000 to
Hillgren. In August 1994, the Huettner loan and the Puccio loan
were to become due and payable, but decedent was unable to pay
the loans because of her negative cashflow on the property. The
BLA provided that Hillgren assist decedent in obtaining an
extension of the Puccio loan and that Hillgren became a guarantor
of the loan. On May 11, 1994, Hillgren executed a Forbearance
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