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turn were used to pay Mr. DeCastro's attorney's fees. The
refunds actually made were more than sufficient for this purpose;
the excess was received and retained by the Thompsons. Contrary
to McWade's testimony at the evidentiary hearing, the Thompson
settlement was not based upon or influenced by the Thompsons'
participation in the Bauspar program.
Although the contingent aspect of the secret settlement
agreements provided an ostensible incentive for Messrs. Thompson
and Cravens to defend vigorously the Kersting interest deductions
that they had reported on their tax returns, the record shows
that the secret settlements had the effect of diluting the
adversarial character of the Thompsons' and Cravenses'
presentations of their cases to the Court.
Mr. Thompson's testimony at the trial of the test cases
reveals that he strongly defended the position that he had
participated in the Kersting programs with the objective of
making a profit. However, Mr. Thompson was the only test case
petitioner to testify that Mr. Kersting had assured him that his
promissory notes would not be enforced. Although Mr. Thompson's
testimony on this point merely served to corroborate Mr.
Kersting's statements to other Kersting program participants in
the comfort letters, the circumstances indicate that Mr. Thompson
participated in the trial of the test cases in part to lay the
groundwork for a defense against Mr. Kersting's earlier threats
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