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A. The Thompsons
1. The Bauspar Program
On August 13, 1979, the Thompsons purchased a condominium
unit in Wahiawa, Hawaii (the Wahiawa property), from Pacific
Universal Corp. (not a Kersting company). On April 24, 1981, the
Thompsons entered a Kersting program known as Bauspar--not one of
the Kersting programs in dispute at the trial of the test cases--
to effect the payoff of seller-provided financing on the Wahiawa
property. The Thompsons executed a first mortgage and promissory
note reflecting a loan from Bauspar, Inc. (Bauspar), in the
principal amount of $80,000. The Thompsons agreed to repay the
$80,000 Bauspar loan, with interest at 7 percent per year,
through monthly payments of principal and interest of $532.24 for
a 10-year period, followed by a balloon payment of $69,182.47.31
In conjunction with the Bauspar loan, the Thompsons agreed to
purchase $80,000 worth of Bauspar stock. The Thompsons borrowed
$80,000 to purchase the Bauspar stock from another Kersting
company, Paragon Investments, Inc. (Paragon), at an annual
interest rate of 18 percent. The Thompsons further agreed to
participate in a "savings program" by depositing $1,200 per month
into an account with Citizen's Financial, Inc. (Citizen's
Financial), another Kersting company.
On August 12, 1982, the Thompsons agreed to sell the Wahiawa
property to Kevin and Ada Shea for $122,500 by an "Agreement of
31 It appears that the Thompsons actually made monthly
payments of $535 to Bauspar.
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