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of litigation on a primary note. The Court concluded that the
evidence of the Hane litigation was inconsequential because of
the lack of any testimony about the matter and the fact that
Atlas Funding dismissed the action voluntarily after obtaining a
default judgment.
2. Carl Mott, George Vermef, and Robert Peterson
In Dixon II, the Court found that Kersting corporations
pursued collection lawsuits in 1985-86 on leverage loans against
Kersting program participants Carl Mott, George Vermef, and
Robert Peterson. The Court noted that while Carl Mott had been
sued only for interest on leverage loans, Messrs. Vermef and
Peterson had been sued for both interest and principal on
leverage loans. The Court found that there was no explanation in
the record how Messrs. Vermef and Peterson could have owed
principal on leverage loans that would be consistent with the way
the Kersting programs were intended to operate nor with the way
that they apparently actually operated. Further, the Court found
that the judgments entered against Mr. Vermef were vacated after
the parties agreed to settle the cases and that a default
judgment entered against Mr. Peterson later was set aside on
Mr. Peterson's motion. The Court summarized its conclusions
regarding collection activities and litigation as follows:
Five Kersting corporations commenced actions
against Carl Mott based upon a year of unpaid interest
on 15 leverage notes, but the principal amounts of the
notes were not in issue. The record is replete with
copies of checks, drawn on personal bank accounts other
than Liberty Bank or Hawaii National Bank, that
petitioners used to pay interest on leverage notes.
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