Problem:
Lonnie Magnuson is the only shareholder, and the president, of Grainex, Inc. ("Grainex"), a corporation that sells grain at a feed store in the Duluth area. Annual corporate revenues are approximately $1,200,000. Within the past two years, Lonnie has written checks out of the corporate account several times to pay the orthodontics bill for his daughter, and on one occasion he wrote a $45,000 check as a loan to his brother, a down-on-his luck investment banker. A few other times.