William J. Fleischaker and Donni L. Fleischaker - Page 13




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               On July 31, 1984, petitioner borrowed $206,040 from Phoenix             
          Federal and then lent the money to Adult Living Centers to help              
          meet the cash requirements.  The promissory note evidencing                  
          Phoenix Federal's loan to petitioner was secured by petitioner's             
          stock in Adult Living Centers.  The note was due on December 31,             
          1984.                                                                        
               On October 15, 1984, Phoenix Federal provided a $700,000                
          line of credit to Adult Living Centers to help cover cost                    
          overruns and operating deficits.  Petitioner executed a limited              
          guaranty of collection on a portion of the line of credit                    
          (Phoenix Federal line of credit guaranty) based on his                       
          proportionate stock ownership interest in Adult Living Centers.              
          Adult Living Centers used funds borrowed on the line of credit to            
          repay petitioner the $206,040 he had lent to the corporation.                
          Petitioner then repaid his $206,040 loan from Phoenix Federal.               
               In 1985, Phoenix Federal sold its controlling interest in               
          Adult Living Centers to William Ricketts, a Muskogee businessman.            
          Mr. Ricketts and the other principals in Adult Living Centers                
          determined they needed additional cash-flow in order to salvage              
          the Van Orden project.  Mr. Ricketts thought an additional                   
          nursing home facility would provide enough excess cash-flow to               
          service the Van Orden project debts and provide administrative               
          cost savings.                                                                







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