Leonard Rabinowitz and M. Carole Rabinowitz - Page 9

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               Petitioners explored the idea of purchasing a larger, longer            
          range aircraft that they could charter for a higher fee per hour.            
          In 1989, petitioners purchased a Dassault Falcon 200 jet (the                
          Falcon) for $5.2 million.  Petitioners paid part of the purchase             
          price of the Falcon by trading in the Mitsubishi.  Mr. Rabinowitz            
          thought they were getting a good deal on the Falcon because the              
          seller, US West Communications, was anxious to purchase a                    
          different aircraft.                                                          
          Initial Management of the Jet Charter Activity                               
               Petitioners initially engaged an outside management firm,               
          Raleigh Enterprises, to manage the jet charter activity for the              
          first 6 to 8 months.  To maximize the charter business,                      
          petitioners obtained an operating certificate for aircraft                   
          chartered to the general public (a rule 135 certificate) pursuant            
          to the requirements of the Federal Aviation Administration (FAA).            
          Raleigh Enterprises assisted with the process of obtaining the               
          rule 135 certificate and also maintained the jet, solicited                  
          charter business, and generally managed the aircraft.  Mr.                   
          Rabinowitz decided to handle these matters himself within a year             
          of purchasing the Mitsubishi.                                                
          Compliance With FAA Rules                                                    
               Petitioners maintained a rule 135 certificate for their jet             
          because they wanted to make it available for third-party                     
          charters.  See 14 C.F.R. secs. 119.33, 135.1-135.443 (2005).  The            
          FAA requires a rule 135 certificate for an enterprise to charter             
          an aircraft for profit.  An enterprise that cannot charter its               





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