- 31 -
(N.D. Tex. 1990). About 46 percent of the amount of Vernon loans
was non-Texas loans; i.e., out-of-State loans made in Florida,
California, Louisiana, and Oklahoma.
Palmer recognized that Vernon failed gradually. He said:
Vernon Savings & Loan died by degrees. The first
was the notice in '81, as I recall, to see if the
Vernon Savings & Loan people could correct their own
problems.
The second * * * was [in 1986] when the federal
government went in there and put their people in, to
see if the supervision would help.
The third was * * * [also in 1986] when the
federal government actually took over the running of
it, to see whether or not it could be sold.
* * * The final take over, [in 1987] is after
you've determined that none of those others will work.
The patient is dead and it's time for a funeral. * * *
On March 20, 1987, the FHLBB seized Vernon, appointed the
FSLIC as receiver, and reconstituted Vernon as VFSA. Dondi
Financial filed its bankruptcy petition on May 9, 1987. We hold
that this was when Dondi Financial stock became worthless.
d. Petitioner's Testimony About Dondi Financial
Assets and Liabilities
Dondi Financial received a $6 million tax refund check in
December 1986. Petitioner testified that as of January 1987,
Dondi Financial had liabilities of about $1.5 to $2 million.
Respondent did not introduce evidence to rebut petitioner's
testimony. Petitioner was knowledgeable about Vernon's and Dondi
Financial's finances and was Dondi Financial's president from
1983 to 1984 and president of Vernon's California operations from
1984 to 1986. Petitioner estimated that Vernon had between $30
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011