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In support of an averment that the business of good Shepherd was
to buy, fix-up, and sell distressed properties, petitioners offer
the testimony of Vebeliunas, president of Good Shepherd during
the years in issue. Vebeliunas testified that the purpose of
Good Shepherd was "to own and operate real estate properties and
services related to the real estate properties."
Vebeliunas' testimony on that point strikes us as
enlightened hindsight, and we give it no credence. First, the
articles of incorporation of Good Shepherd specifically provide
that it is formed for the purpose of carrying on the business of
nursing homes and health care facilities. Only generally may it
carry on other businesses. There is no evidence that the
directors of Good Shepherd ever authorized it to engage in the
business described on brief by petitioners. Second, Vebeliunas
was indicted in 1992 on more than 40 counts of violating Federal
statutes prohibiting conflicts of interest, fraud, witness
tampering, racketeering, interstate transportation of money and
securities obtained by fraud, and misapplication of funds.
Vebeliunas was found guilty on virtually all of those counts.
Although, in many respects, we found Vebeliunas' testimony
forthright and convincing, in other respects we found it lacking
in credibility. He played a role in each of Good Shepherd,
Litas, and Kasa, and his was the only information relied on by
the shareholders in deciding whether to invest in Good Shepherd.
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