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cally, Mr. Kabeiseman advised petitioner at that time that
petitioner's deposits of K & H construction loan proceeds into
petitioners' account at Washington Federal was not a good ac-
counting practice, that Mr. Kabeiseman was unable to trace to any
particular construction loan account of K & H the direct payments
that petitioner had made to it during May or June 1989 of certain
of its construction loan proceeds, that petitioner should direct
Washington Federal to issue checks directly to K & H for the K &
H construction loan proceeds sought in the draw requests that pe-
titioner made, and that such checks should be deposited into K &
H's checking account. Petitioner nonetheless continued to de-
posit K & H construction loan proceeds into petitioners' account
at Washington Federal after May or June 1989 and through July
1990. Mr. Kabeiseman did not at any time during the years at
issue (1) authorize petitioner to deposit during those years the
K & H construction loan proceeds into petitioners' accounts or
(2) know the amounts of such proceeds that petitioner so depos-
ited.
During each of the years at issue, petitioner retained
certain of the K & H construction loan proceeds that he deposited
into petitioners' account at Washington Federal during each such
year and did not use all of those construction loan proceeds to
make payments to, or on behalf of, K & H. Mr. Kabeiseman did not
at any time during the years at issue (1) authorize petitioner to
retain any of the K & H construction loan proceeds that he had
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