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reflecting different levels of risk, had presented them to the
Melniks, and apparently had permitted the Melniks to choose which
proposal they preferred.
The $900,000 Loan From Clend to the Melniks
The Melniks investigated other potential real estate
investments in Houston during 1999 and 2000. In 2000, they
became involved with a Mr. Jacobs and with Mr. Jennings in an
attempt to purchase a downtown Houston property for approximately
$2.3 million. When Mr. Jacobs and Mr. Jennings were unable to
secure financing for the transaction, they dropped out. Moshe
Melnik attempted to obtain a loan from Whitney Bank in Houston,
but Whitney Bank was only willing to lend him $750,000. Moshe
Melnik then found two other partners and approached the Bank of
Bermuda about purchasing the property. Instead of the Bank of
Bermuda investing directly in the property, Bermuda Trust
apparently agreed to have Clend make a loan. In approximately
October 2000, Clend made two short-term loans to the Melniks
totaling $900,00029 bearing an interest rate of 8.22 percent in
29A “Summary of Financial Position (unaudited) As at
December 31, 2001”, and Clend’s account records reflect that
Clend made two loans of $450,000 each to Sol and Moshe Melnik on
Oct. 27, 2000. According to the summary, the loans bore an
interest rate of 10 percent per annum and were for a term of 5
years. However, the summary conflicts with the promissory notes
in the record. The promissory notes are dated as of Oct. 27,
2000, and reflect 1-year term loans of $378,000 to Sol Melnik and
of $522,000 to Moshe Melnik bearing an interest rate of 8.22
percent compounded annually. The promissory notes do not
(continued...)
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