-107-
In 1997 and again in 1998, SMP sold to TroMetro portions of
the $974 million in receivables that Generale Bank had
contributed. SMP reported a $147,486,000 loss on the sale of the
$150 million receivable in 1997 and a $80,190,418 loss on the
sale of the $81 million receivable in 1998.76 These losses
flowed through to Somerville S Trust under the partnership tax
rules. Also in 1997, Mr. Lerner negotiated a deal with Imperial,
wherein SMP contributed the $79 million receivable to a new
limited liability company, Corona, which also elected partnership
tax treatment, and SMP then sold 79.2- and 14.65-percent
membership interests in Corona to Imperial.77 The transactions
produced losses for SMP of $62,237,061, and $11,647,367,
respectively, which flowed through to Somerville S Trust. In
1997, Corona sold the $79 million receivable to TroMetro,
generating a $78,768,955 loss, $74,671,378 of which flowed
76 TroMetro paid $230,000 and gave a $2,284,000 note in
exchange for the $150 million receivable. TroMetro paid $150,000
and gave a $1.25 million note in exchange for the $81 million
receivable. TroMetro paid $397,166 principal and $159,880.35
interest on the $2,284,000 note. No additional amounts were paid
on these notes.
77 Imperial paid $212,000 cash and gave a $1.04 million note
for the 79.2-percent membership interest and paid $36,700 cash
and increased its note to $1,220,050 for the 14.65-percent
membership interest.
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