Alfred E. Gallade - Page 7

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          5310, Application for Determination Upon Termination; Notice of             
          Merger, Consolidation or Transfer of Plan Assets or Liabilities;            
          Notice of Intent to Terminate, with the PBGC.  See sec. 2616.3,             
          PBGC Regs.  With the Form 5310, GCI sought a favorable                      
          determination letter from respondent, and it applied for a Notice           
          of Sufficiency from the PBGC upon the Plan’s termination.                   
               On or about December 30, 1985, GCI opened an interest-                 
          bearing account at Republic Bank (the Republic Bank account).               
          Petitioner and J. Ray Haynes (Mr. Haynes) of First American were            
          the designated signatories on the Republic Bank account, and all            
          withdrawals or disbursements required both individuals to sign.             
          On the same day, First American deposited $771,000 of funds from            
          the Plan into the Republic Bank account.4                                   
               On January 8, 1986, the PBGC issued a Notice of Sufficiency            
          to GCI in accordance with GCI’s first application.  On or about             
          January 15, 1986, the funds were withdrawn, including accrued               
          interest (total of $772,996.44).  GCI filed a second Form 5310 on           
          or about March 5, 1986, to notify respondent and the PBGC of                
          GCI’s plans to transfer the remaining assets from the Plan to the           
          GCI profit-sharing plan.  On July 17, 1986, First American had              
          transferred all those assets from the Plan trust, payable to all            

          4 Approximately $400,000 of petitioner’s balance in the Plan                
          went towards paying suppliers, which we find was distributed to             
          petitioner in 1986.  The remainder, $771,000, was deposited into            
          the Republic Bank account, which petitioner claims was to be used           
          at some point for GCI’s expansion into the Inland Empire.  The              
          record is unclear whether such a property was ever purchased.               

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