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that petitioners received from the borrowers were in the form of
checks. During 1985 through 1987, petitioners received payments
totaling at least:
Year Amount
1985 $ 624.10
1986 40,306.17
1987 152,480.13
$193,410.40
For some of the loans, documents were drawn up and
settlement conducted by an attorney or a title company.
Petitioners provided the borrowers with repayment schedules
indicating the amounts of principal and interest within each
payment.
In about early 1986, Mr. Gandy approached Cary Murray
(Murray), then president of the First State Bank of Van, and told
him that he had approximately $800,000 that he wanted to invest
in real estate loans. Murray and his partner Roy Carty received
a loan from petitioners in the amount of $30,000 on June 24,
1986. Closing was conducted by a title company. Murray received
a second loan in the amount of $25,000 on October 10, 1986.
Closing was conducted by the same title company. Each time,
Mrs. Gandy brought the funds in cash to the title company, which
in turn gave the borrowers cashier's checks. Murray made
payments on these loans by checks made out to "Dennis Gandy",
beginning approximately 1 month after receipt of the loan
proceeds. Petitioners gave Murray a form each year stating the
amount of interest he had paid.
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