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better assurance that they would receive interest and principal
payments, as originally scheduled, through the security of the
GIC's. Even if such had been the case, the security so created
must be at the price of the loss of the tax exemption for the
interest on the bonds.
III.
Although I accept the stipulations of the parties and the
findings of the trier of fact, as adopted by the majority in the
case at hand, I'm impelled to raise a question that may be
germane to other pending cases. If the failures in other cases
of the purported government issuers to supervise the receipt and
disposition of bond proceeds were as egregious as they were in
the case at hand, the question that may arise in such other cases
is whether the bonds were ever issued or validly issued by the
local governments or authorities.
In the case at hand, it might well have been concluded that
the Riverside Housing Authority was so out of the loop that,
under step transaction principles, the bond holders were the
recipients of nothing more than the obligations of Crown Life
Insurance Co. or of undivided interests in the GIC's--taxable
obligations of a private issuer--that were purchased with the
bond proceeds for their benefit. The Housing Authority was so
lax in failing to see to it that the proceeds were used for the
intended purpose as to raise the question whether the Housing
Authority actually had any such purpose, thereby calling into
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