Richard A. and Carol B. Little - Page 31

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          (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             





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