-93-
Frey and Kanter discussed Frey’s pressing need to raise capital
for future condominium conversion projects. At that time, a
condominium conversion craze was occurring in a number of major
metropolitan areas throughout the country, and Frey was faced
with having to raise large amounts of capital to acquire and
convert apartment building properties in which he and other
competing condominium converters were interested. Although Frey
generally could obtain financing from a bank for most of a
condominium conversion project’s cost, the bank typically would
require Frey and other investors to have a substantial investment
in the project. Kanter indicated that he could help raise large
portions of the capital that Frey needed for such condominium
conversion projects.50 However, Kanter stated, in return for
such assistance, he would have to receive a share of any
development and management fees that Frey earned from such
projects.
Kanter made it clear to Frey that he would bring additional
investors and capital to Frey’s projects only if Frey agreed to
50 The STJ report included statements in this sentence and
the next that “Kanter and/or entities associated with him” could
provide assistance to Frey in raising capital. As discussed in
the text that follows, Frey was relying solely on Kanter to raise
capital for his condominium conversion projects. Frey, Transcr.
at 666-674. Aside from limited partner investments discussed
below, there is no evidence that anyone acting on behalf of a
Kanter-related entity, such as IRA or THC, provided any
assistance or services to Frey.
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