Ralf Zacky - Page 3

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          Pursuant to the plan, the trustee was required to provide the               
          plan with services which included (1) investing, managing, and              
          controlling plan assets, (2) maintaining records of plan receipts           
          and disbursements and preparing a written annual report,                    
          (3) borrowing and raising funds for the plan, and (4) making                
          loans from the plan to plan participants.  From the inception of            
          the plan through November 7, 2001, petitioner has had access to             
          the plan’s books, records, and assets.                                      
               As of March 28, 1990, neither Aspects nor petitioner had the           
          funds necessary to pay Aspects’s payroll liability of $40,000,              
          which was imminently coming due.  Petitioner on that date                   
          borrowed $40,000 from the plan (first loan) to pay that                     
          liability.  The first loan was supported by a promissory note               
          signed by petitioner and dated March 28, 1990.  The note stated             
          that interest of 12 percent per annum would accrue on the unpaid            
          principal and that repayment would be made over 5 years through             
          quarterly installments of $2,688.63 beginning on June 28, 1990.             
          The note stated that the first loan was secured by petitioner’s             
          vested interest in the plan.  The balance of that interest was              
          $112,000 on March 28, 1990, and $104,106.42 on April 1, 1994.               
               Inland Empire Properties, Inc. (Inland), was a licensed                
          California corporation from June 17, 1992, until March 1, 2000.             
          Its business during that time was the ownership and leasing to              
          Aspects and other tenants of a commercial building.  Inland’s               






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