Estate of Robert G. Kluener, Deceased, Donald E. Hathaway, Co-executor and Charlotte J. Kluener - Page 28

            secret from APECO's other personnel, dismissing all of APECO's                                
            directors besides himself before authorizing the distribution.                                
            Petitioners have suggested no reason for the dismissal of APECO's                             
            other directors, and it seems that Mr. Kluener felt it necessary                              
            to do this in order to preserve his "charade" as to the                                       
            availability of funds to APECO.  That Mr. Kluener did not reveal                              
            to APECO's personnel the existence of the funds held in APECO                                 
            Equine's name, even when the funds were not to be used for any                                
            APECO project and the purported reason for secrecy had passed,                                
            indicates that APECO's possession of the funds was kept secret                                
            because the funds in reality were Mr. Kluener's.                                              
                  Petitioners attempt to blunt the significance of the                                    
            distribution of the sales proceeds to Mr. Kluener by contending                               
            that, at the time when title to the horses was transferred to                                 
            APECO, there was no intention to distribute the proceeds of their                             
            sale to Mr. Kluener and that the subsequent distribution of the                               
            proceeds was prompted by circumstances unforeseen at the time                                 
            that the transfer occurred; namely, the refusal in June 1990 of                               
            Fifth Third to renew APECO's loans and the need to make principal                             
            payments with respect to Mr. Kluener's personal debts to the                                  
            bank.                                                                                         
                  We, however, are not persuaded that the distribution of the                             
            sales proceeds should be treated as unrelated to the other steps                              
            of the transaction in issue or that those steps were "old and                                 
            cold" at the time the distribution was made.  The circumstances                               
            noted above strongly suggest to us that the distribution of the                               




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