Charles R. Harp and April B. Harp - Page 9

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                    cally, Mr. Kabeiseman advised petitioner at that time that                                                                                             
                    petitioner's deposits of K & H construction loan proceeds into                                                                                         
                    petitioners' account at Washington Federal was not a good ac-                                                                                          
                    counting practice, that Mr. Kabeiseman was unable to trace to any                                                                                      
                    particular construction loan account of K & H the direct payments                                                                                      
                    that petitioner had made to it during May or June 1989 of certain                                                                                      
                    of its construction loan proceeds, that petitioner should direct                                                                                       
                    Washington Federal to issue checks directly to K & H for the K &                                                                                       
                    H construction loan proceeds sought in the draw requests that pe-                                                                                      
                    titioner made, and that such checks should be deposited into K &                                                                                       
                    H's checking account.  Petitioner nonetheless continued to de-                                                                                         
                    posit K & H construction loan proceeds into petitioners' account                                                                                       
                    at Washington Federal after May or June 1989 and through July                                                                                          
                    1990.  Mr. Kabeiseman did not at any time during the years at                                                                                          
                    issue (1) authorize petitioner to deposit during those years the                                                                                       
                    K & H construction loan proceeds into petitioners' accounts or                                                                                         
                    (2) know the amounts of such proceeds that petitioner so depos-                                                                                        
                    ited.                                                                                                                                                  
                              During each of the years at issue, petitioner retained                                                                                       
                    certain of the K & H construction loan proceeds that he deposited                                                                                      
                    into petitioners' account at Washington Federal during each such                                                                                       
                    year and did not use all of those construction loan proceeds to                                                                                        
                    make payments to, or on behalf of, K & H.  Mr. Kabeiseman did not                                                                                      
                    at any time during the years at issue (1) authorize petitioner to                                                                                      
                    retain any of the K & H construction loan proceeds that he had                                                                                         




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