- 24 -
held all 100 authorized units of Mercury Solar PTO. Inasmuch as
there is no evidence that Sparkman made any separate contribution
to Mercury Solar PTO or gave HEH any consideration for its
purported 100 units of Mercury Solar PTO, this paper shuffling of
Mercury Solar PTO units to HEH and then to Sparkman further
evidences the lack of economic reality of these arrangements.
According to the purported certificate, in “4/98” William
Montgomery and William Bright were each “Assigned” one unit of
Mercury Solar PTO, and these units were also “Released” on “4/98”.
Porter and Sparkman acknowledged in their testimony that these
entries were erroneous and that Montgomery and Bright never
received any Mercury Solar PTO units.
The only other entry on the purported certificate record
shows that on December 31, 1999, Thompson was “Assigned” one unit
of Mercury Solar PTO, which was “Released” on January 20, 2000.
Porter, the nominal “trustee” of Mercury Solar PTO, was unable to
explain this entry.25 The Mercury Solar PTO minutes indicate that
it was not until January 20, 2000, that Porter communicated with
24(...continued)
the theory that “the signing a release doesn’t mean they are
gotten rid of, they are just handed out to the particular party”.
Sparkman’s theory is incompatible with the terms of the Mercury
Solar PTO formation document, which authorized the issuance of
only 100 units in total.
25 With regard to this matter, Porter testified: “I can’t
explain that * * * It’s the first time I’ve seen the document.”
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