Andrew and Margita Zards et al. - Page 15

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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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