- 135 -
understanding if it would not weaken YOUR position with
the IRS."
(7) In another personalized comfort letter, this
time from 1978, Kersting again wrote broadly: "As to
the obligation under the promissory notes and
subscription agreements there is no ongoing obligation
as far as we are concerned. We will always repurchase
the stock issued at a price sufficient to allow a
borrower to discharge all of his debt."
(8) In a 1980 credit-reference letter to a third
party, Kersting wrote that the investor's "liabilities
at * * * [the time of his stock purchases] and from
there on would be equal to the assets acquired. His
debt can be canceled at any time of his choice by the
sale of the assets in his possession."
(9) Dixon received a 1985 form letter that told
him how to terminate his participation in his Charter
Financial stock purchase plan by returning an endorsed
stock certificate, after which his notes and stock
certificate would be canceled and notes marked "paid"
would be returned to him. The letter contained similar
unused "cancellation" lines for leasing corporation
stock certificates and acceptance corporation stock
certificates.
Dixon II, 62 T.C.M. (CCH) at 1499-1500, 1991 T.C.M. (RIA), at 91-
3043 to 3044-91.
G. Mr. Izen's Introduction of Evidence of Collection Litigation
During the trial of the test cases, Mr. Moseley testified
(on direct examination by Mr. Izen) that he had represented
several Kersting companies in collection litigation against
several Kersting program participants.59 When Mr. Izen attempted
59 Before the trial of the test cases, Mr. McWade became
aware of the Kersting collection cases through settlement
discussions with Kersting program participant Lou Galli.
Mr. McWade subsequently discovered that certain corporations
controlled by Mr. Kersting had obtained collection judgments
against no fewer that 10 Kersting program participants. In
addition, Mr. McWade issued a subpoena to Mr. Kersting requesting
(continued...)
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