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until they were rated by a rating agency and made available to
the investing public. Mr. Wetherbee was aware of a sense of
urgency in issuing the Bonds before the end of 1985 because of a
pending change in the tax laws. These differences, however, did
not operate as a "flag" to indicate that anything was improper
with the issuance. Had Mr. Wetherbee been informed of the
details concerning the alleged closing and the subsequent
remarketing of the Bonds, he would not have recommended that the
Housing Authority proceed, and, in his opinion, the Housing
Authority would not in fact have proceeded with the financing.
After December 31, 1985, as a result of the change in the
underwriter, bond counsel urged the Housing Authority to pass a
resolution ratifying assignment of the underwriting agreement to
Matthews & Wright. The Housing Authority did so.
Events of February 20, 1986
A number of carefully orchestrated events occurred on
February 20, 1986, most of them taking place by wire transfers.
First, Matthews & Wright borrowed $58,475,287.37 from Security
Pacific National Bank (Security Pacific) pursuant to an existing
credit arrangement. The money was then wire transferred to Chase
Manhattan Bank for the account of the New American Federal Credit
Union, and for further credit to the Commercial Bank of the
Americas in order to purchase, inter alia, the Bonds. Matthews &
Wright pledged the Bonds, among other things, as collateral for
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