Joseph B. Leonard and Dorothy A. Cole Leonard - Page 5

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          of Mrs. Leonard’s joint accounts with Robert.  The money was used           
          by Robert to make investments in his own name.  He intended to              
          repay the principal to Mrs. Leonard and retain all investment               
          earnings for himself.                                                       
               Mrs. Leonard gave no thought as to how Robert was investing            
          the money she gave him.  Robert told Mrs. Leonard that he was using         
          the money from her accounts to complete the flower shop project in          
          Berkeley,  to  purchase  factoring  invoices,  and  to  purchase            
          properties in Danville, California.  Robert lost money on the               
          investments he made, including approximately $340,000 in the                
          factoring transactions.                                                     
               Mr. Leonard gave Robert $74,000 in May 1983 in order that he           
          could make a downpayment for the purchase of property located in            
          Danville, California (Willow Creek property).  Altogether Robert            
          obtained approximately $270,000 from family and friends to make the         
          downpayment on the $1.4 million purchase for the Willow Creek               
          property.  Mr. Leonard did not expect to receive an interest in the         
          property, and he did not require any documentation relating to the          
          transaction.  Robert intended to repay Mr. Leonard with proceeds            
          from the anticipated sale of the Willow Creek property.  The sale           
          fell through, and foreclosure proceedings were commenced in late            
               Petitioners ultimately learned in October 1983 that title to           
          both the Willow Creek property and Robert’s residence was held by           
          Katherine Gatto.                                                            

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