John Franklin Foust - Page 7

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               On March 28, 1989, a Discharge Order was issued with respect           
          to petitioner’s chapter 7 bankruptcy proceeding.  Petitioner’s              
          bankruptcy schedules listed unsecured creditor’s claims totaling            
          $216,820, more than $100,000 of which were discharged in                    
               The SBA filed with the bankruptcy court a creditor’s claim             
          against petitioner and James in the amount of $49,646, arising              
          from its emergency disaster loan to Foust Bros. Farms.  The FMHA            
          filed creditor’s claims with the bankruptcy court arising from a            
          disaster loan to Foust Brother’s Farms against petitioner and               
          James in the amounts of $56,505 and $48,700, respectively.  In              
          response to a complaint filed on behalf of the SBA and FMHA by              
          the U.S. Attorney’s Office for the Southern District of Iowa, the           
          bankruptcy court held, following a trial, that petitioner and               
          James were personally liable for the debts of Foust Bros. Farms             
          and that their debts to the SBA and the FMHA were not                       
          dischargeable in bankruptcy.  The bankruptcy court entered                  
          judgments against petitioner, in favor of the SBA in the amount             
          of $49,646, and in favor of the FMHA in the amount of $56,505.              
          The findings and order of the bankruptcy court were upheld as to            
          petitioner by the District Court of the Southern District of Iowa           
          and the Court of Appeals for the Eighth Circuit.                            

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