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of North Dakota. In the bankruptcy petition, Mr. Kluzak listed
$1,280,000 in debts to secured creditors and $1,367,421 to
unsecured creditors. Petitioner was listed as an unsecured
creditor in the amount of $75,000. Mr. Kluzak listed total
assets of $8,500, and listed estimated monthly income over
estimated monthly expenses of $90 per month. An order for relief
was granted to the creditors on March 18, 1988.
Mr. Kluzak was discharged in the bankruptcy proceeding on
October 16, 1989. After a conversation with a clerk of the
bankruptcy court, petitioner determined that if he filed a claim
in the bankruptcy proceeding, his debt would not be paid and,
therefore, he did not file a claim in the bankruptcy proceeding.
Petitioner did not personally review the bankruptcy schedules.
Petitioner had lent money to Mr. Richard Kimble (Mr. Kimble)
in the amount of $144,500 on June 8, 1976, through his wholly
owned corporation, Ves Co. Mr. Kimble deeded real estate to Ves
Co. as collateral for the loan and agreed that all money handled
by his real estate business would be handled through petitioner's
law firm. Petitioner also served as Mr. Kimble's attorney.
Petitioner entered into at least four business transactions
with Mr. Kluzak to purchase real estate. Petitioner and Mr.
Kluzak, along with Mr. James Dickson, were partners in a North
Dakota partnership known as MDK for the purpose of land
investment. MDK dissolved sometime in 1986.
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