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$71,525. For 1991, Great Western reported on its income tax
return the receipt of rent in the amount of $83,446 from the
nonhospital properties.
Between March and July 1991, Ms. Hanna, on behalf of Great
Western, attempted to sell the nonhospital properties. During
May 1991, Vista, through Alpha Hospital, offered to purchase the
nonhospital properties. During 1991, Great Western sold the
nonhospital properties to Vista. Vista financed the purchase of
the nonhospital properties through tax-exempt Certificates of
Participation issued by the Cities of Arroyo Grande and Corona,
California, (1991 certificates) to Great Western. The 1991
certificates were nonrecourse obligations secured only by the
property acquired. The 1991 certificates were zero coupon
obligations and no principal or interest payments were to be made
until specified dates in the future. On receipt of the 1991
certificates, Great Western agreed that it would not attempt to
transfer or otherwise dispose of the 1991 certificates without
receiving from a rating agency a rating of A or better for the
1991 certificates.
During November 1991, Ms. Hanna, on behalf of Great Western,
attempted to obtain a rating for the 1991 certificates so that
the certificates could be marketed. To assist in that effort,
Great Western retained the underwriting firm of Peacock, Hislop,
Staley, and Given, Inc. (Peacock). The efforts of Peacock
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