- 38 -- 38 -
years at issue or to retain a portion of such proceeds during
each of those years. The record establishes, and we have found
as facts, that it was only in May or June 1989, after petitioner
had made the first few deposits of those loan proceeds, that Mr.
Kabeiseman became aware that petitioner had made those deposits.
As soon as he became aware that petitioner was depositing K & H's
construction loan proceeds into petitioners' account at Washing-
ton Federal, Mr. Kabeiseman disapproved of what petitioner had
done. Specifically, Mr. Kabeiseman advised petitioner at that
time that petitioner's deposits of K & H's construction loan
proceeds into petitioners' account at Washington Federal was not
a good accounting 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 peti-
tioner should direct Washington Federal to issue checks directly
to K & H for the K & H construction loan proceeds sought in the
draw requests that petitioner made, and that such checks should
be deposited into K & H's checking account. Petitioner
nonetheless continued to deposit K & H's construction loan
proceeds into petitioners' account at Washington Federal after
May or June 1989 and through July 1990, even after he ceased in
the spring of 1990 being actively involved in the operations of K
& H. Moreover, although petitioner testified that he obtained
those loan proceeds from Washington Federal in order to pay the
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