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Mr. Alexander's testimony regarding the transaction differed from
Mr. Kersting's testimony in one material respect. Specifically,
contrary to Mr. Kersting's testimony, Mr. Alexander testified
that the Federal Home Loan Bank Board denied Mr. Kersting's
application for Investors Financial to serve as a holding company
for First Savings.57 Mr. Alexander further testified that
Mr. Kersting "watered down" the First Savings shares by issuing
additional Investors Financial shares to individuals other than
the original acquiring group. Mr. Alexander testified that when
he questioned Mr. Kersting about the matter, Mr. Kersting stated
that there was no problem with issuing additional Investors
Financial shares because Mr. Kersting could have the shares
returned at any time.
Mr. Alexander testified that in February 1980, Federal
banking authorities forced First Savings to merge with First
Federal Savings of Honolulu. Mr. Alexander testified that,
following the forced merger, Mr. Kersting returned the initial
investments of some members of the original acquiring group but
that Mr. Kersting did not return Mr. Alexander's investment of
approximately $125,000.
Under direct examination by Mr. McWade, Mr. Alexander
admitted that he had filed a lawsuit against Mr. Kersting, which
resulted in the arbitration proceeding in July 1987, and that he
57 In Dixon II, the Court found that Investors Financial
was not approved as a holding company for First Savings and that
Investors Financial had no other assets. See Dixon II, 62 T.C.M.
(CCH) at 1447, 1991 T.C.M. (RIA), at 91-2987.
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