Ernst L. Meier - Page 10




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          Blackland under the terms of the purported $2 and $2.5 million              
          lines of credit.  There is, however, no evidence in the record of           
          the filing of a financing statement by petitioner to perfect his            
          purported security interest in the property and assets of                   
          Blackland with respect to funds he transferred to Blackland.                
               Also on March 10, 1995, there was adopted on behalf of                 
          Blackland a resolution to allow petitioner and petitioner’s wife            
          (who was not an officer or employee of Blackland) access to “any            
          or all funds” from Blackland’s bank accounts.  The resolution               
          reflects no limit on the purpose or use for which petitioner and            
          his wife were authorized to make withdrawals from Blackland’s               
          bank accounts.                                                              
               Between 1992 and 1995, using the funds received from                   
          petitioner, Blackland loaned millions of dollars to the tenant              
          farmers to whom Garland Farms had leased farm properties.  The              
          funds loaned to the tenant farmers were used by the farmers to              
          pay farm operating expenses and living expenses.  On some                   
          occasions, Blackland would directly pay third-party vendors for             
          expenses of the tenant farmers, and Blackland would add to the              
          balance of the farmers’ outstanding loans the amounts it had paid           
          to the third parties on behalf of the farmers.                              
               Funds loaned by Blackland to the tenant farmers were secured           
          in favor of Blackland through security interests on the farmers’            
          crops and crop proceeds, and Blackland’s security interests                 






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