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its expenses that Dr. Cole sent him. Dr. Cole's summary showed
that petitioner had gross receipts of $899,156 and interest of
$343. He later told Mr. Lindblad that petitioner's gross
receipts were $894,314. Mr. Lindblad prepared petitioner's 1987
return, and sent it to Dr. Cole to sign and file. Petitioner
reported on its 1987 return that it had gross receipts of
$894,314, interest of $343, and a net operating loss of $2,341.
In February 1990, Dr. Cole sent Mr. Lindblad a summary of
petitioner's gross receipts and deductions for fiscal year 1988.
Dr. Cole's summary showed that petitioner had gross receipts of
$1,135,781. On the basis of that information, Mr. Lindblad
prepared petitioner's 1988 tax return and sent it to Dr. Cole to
sign and file. Petitioner reported on its 1988 return that it
had gross receipts of $1,135,281, zero interest, and a net
operating loss carryforward of $2,341.
Dr. Cole reviewed, signed, and filed petitioner's 1987 and
1988 corporate income tax returns (Forms 1120) after he received
them from Mr. Lindblad. Mr. Lindblad prepared the returns on the
cash basis method of accounting.
C. Petitioner's Indictment and Plea Agreement
In November 1991, petitioner and Dr. Cole were indicted by a
grand jury on 561 counts, including distributing methamphetamine,
a controlled substance; committing mail fraud by causing false
and fraudulent claims to be processed by patients' insurance
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