Harbor Bancorp & Subsidiaries - Page 19

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          from Crown Life Insurance Co.  (This was the Whitewater                     
          Guaranteed Investment Contract, or Whitewater GIC.)  Thus, the              
          source of the funds from which the Whitewater bonds would be paid           
          was now Crown Life Insurance Co.                                            
               Similar transactions also took place on February 20, 1986,             
          with the $12,190,843.34 proceeds of the Ironwood bonds.  These              
          proceeds were deposited in an Ironwood, Ltd., account at                    
          Heritage.  Ironwood, Ltd., gave a reimbursement note, secured by            
          a similar mortgage on the Ironwood property, to MCFC No. 30 in              
          exchange for a letter of credit securing payment of the Ironwood            
          bonds.  But again, without the knowledge of the Housing                     
          Authority, Ironwood, Ltd., deposited the $12,190,843.34 proceeds            
          with Unified.  Using these proceeds, Unified purchased the                  
          Ironwood reimbursement note from MCFC No. 30 for $11,047.408.05.            
          MCFC No. 30 used this latter amount to purchase a "Settlement               
          Annuity Contract" from Crown Life Insurance Co.  (This was the              
          Ironwood Guaranteed Investment Contract, or Ironwood GIC.)                  
               Although most of the Bond proceeds went into the GIC's,                
          substantial sums were used to pay fees, including fees to                   
          Stubbeman, Unified, and MCFC Nos. 30 and 47.  The Housing                   
          Authority, however, only received reimbursement of administrative           
          fees of $16,250 in connection with the issuance of the Ironwood             
          bonds, and $21,375 with respect to the Whitewater bonds.                    
               Once the money went into the GIC's, it was there                       
          irrevocably. Although the proceeds available to buy the GIC's               




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