-156-
IFI’s liability to IRA, Lawrence Freeman (IRA’s president) and
Linda Gallenberger (a TACI employee and an officer of convenience
for IRA) had IFI (of whom IRA was now sole shareholder) transfer
all of its assets to IRA in satisfaction of IFI’s liability to
IRA. Substantially all of the assets IFI transferred consisted
of promissory notes that had been issued by various third
parties, including the above promissory notes of Ballard’s and
Lisle’s grantor trusts, as well as other notes that Ballard and
Lisle had issued individually.81 On its books, IRA reduced IFI’s
1iability to it by an amount equal to the full face amount of the
notes IFI transferred.
As reflected by a memorandum dated July 17, 1987, Lawrence
Freeman (IRA’s president) and Linda Gallenberger agreed that the
loans that IRA was holding that had been made to Ballard and
Lisle, individually, and to their respective grantor trusts would
be “forgiven”, in view of the difficulty of collection.
In 1987, IRA sold for a stated price of $1 each to MAF, Inc.
(MAF), a wholly owned subsidiary of Computer Placement Services,
Inc., the promissory notes of Ballard’s and Lisle’s grantor
trusts that IRA obtained from IFI. MAF had a relatively
insubstantial amount of assets and operated out of the accounting
81 The STJ report lacks detailed findings of fact regarding
loans that IRA and other Kanter-related entities made to Ballard
and Lisle individually. These matters are discussed in detail in
additional findings of fact. See infra pp. 194-205.
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