Steven J. Romer - Page 5

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          established another trust on behalf of Joseph Marion, the only              
          son of William and Lillian Marion.                                          
               Both trusts were funded with stock in the William Marion               
          Co., a closely held corporation controlled by the Marion family             
          (the family corporation).  The corporate stock to be held in the            
          two trusts was to be conveyed to the Marion children 10 years               
          after the death of William and Lillian Marion.  These trusts will           
          be referred to hereinafter collectively as the Marion Family                
               From the time of formation of the Marion Family Trusts until           
          early 1989, petitioner and the accountant for the Marion family             
          were co-trustees on each of the trusts.  In February of 1989,               
          petitioner became sole trustee of the Marion Family Trusts.                 
          Petitioner was not authorized to use any of the trust property              
          for his personal purposes.                                                  
               In early 1989, William and Joseph Marion and the other                 
          family members agreed to sell the stock in the family corporation           
          that was held by the Marion Family Trusts for $6.1 million in               
          cash.  Upon closing of the sale on or about March 7, 1989, and              
          after cash disbursements of $2,013,000 were made to William and             
          Lillian Marion, petitioner was to transfer the $4,087,000 balance           
          of the sales proceeds into checking accounts in the name of the             
          Marion Family Trusts.  William Marion instructed petitioner to              
          purchase for the trusts certificates of deposit having a 3-month            

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