Jerry and Patricia A. Dixon, et al - Page 272




                                       - 64 -                                         

          deceived him.  In his letter, Mr. Thompson said that he had gone            
          to Mr. Kersting to reduce his tax liabilities but that he now               
          believed the cost to him would be great because the Internal                
          Revenue Service was challenging Mr. Kersting's programs.                    
          Mr. Thompson suggested that the biggest worry for Kersting                  
          program participants was Mr. Kersting's "ultimate weapon", the              
          promissory notes.  Mr. Thompson enclosed a copy of a letter that            
          he had received from Mr. Kersting as an example of what the                 
          others might face.33  Mr. Thompson informed the other                       
          participants that, although Mr. Kersting had promised to cancel             
          all promissory notes in exchange for the surrender of the                   
          Kersting company stock that was purchased with the proceeds of              
          the primary loan, Mr. Thompson had tried to surrender his                   
          Kersting company stock but Mr. Kersting had refused to cancel               
          Mr. Thompson's promissory notes.  Mr. Thompson indicated that               
          he no longer trusted Mr. Kersting, and that he had retained                 
          Mr. DeCastro.                                                               
               By letter dated May 5, 1987, Mr. Yamada advised Mr. Thompson           
          that a lawsuit against Mr. Kersting would have merit, and that a            
          class action lawsuit should be considered.  Around this time,               
          Mr. DeCastro had proposed to file suit on behalf of the Thompsons           
          against Mr. Kersting in Federal District Court.                             



          33  Although the Court's copy of Mr. Thompson's Apr. 10,                    
          1987, letter does not include a copy of a letter from                       
          Mr. Kersting, we assume that Mr. Thompson circulated                        
          Mr. Kersting's letter of Aug. 23, 1986.                                     

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