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the joint venture from its sale of villas and land to the
club in 1986 amounted to $1,328,400.
During 1986, petitioner, along with his wife, was
active in attempting to organize a corporation called First
Equity Mortgage.
On June 24, 1987, the club's board of directors
adopted a resolution that the club should either
voluntarily file for bankruptcy under chapter 11 of the
U.S. Bankruptcy Code, consent to entry of an involuntary
chapter 11 petition, or request the bankruptcy court to
convert any involuntary chapter 7 petition filed to a
chapter 11 proceeding. On July 6, 1987, the club informed
its members that on June 25, 1987, it had filed for
protection under chapter 11 of the U.S. Bankruptcy Code.
On or about December 4, 1987, the Superior Court of
California, County of San Diego, entered a default judgment
against petitioner for $1,132,239.38 in favor of Sandia.
Sandia caused the default judgment to be filed in the
District Court for Dallas County, Texas.
Prior to April of 1986, petitioner was under investi-
gation for criminal bank fraud and conspiracy with respect
to his activities at Vernon. Petitioner was convicted and
sentenced to serve two consecutive 5-year terms in prison.
Petitioner's sentence was subsequently reduced to 5 years
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