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Petitioner and Logan agreed to meet at a restaurant in
Emoryville, California, to further discuss the transaction.
Logan brought an undercover DEA agent who was posing as a drug
distributor with him to the meeting. Petitioner met with Logan;
however, he did not agree to purchase the marijuana, because he
recognized immediately that Logan's confederate was a Government
agent.
Petitioner argues that the fact that he did not purchase the
marijuana is proof he was not involved in the business of buying
and selling illegal drugs. We disagree. In the recordings,
petitioner's response to Logan's initial offer to sell him the
marijuana was, "I've got people bugging me about that exact
material right now and I ain't got a line on it." Petitioner's
statement indicates that he had an existing customer base that
depended on him as a source for marijuana. Thus, the evidence
supports a finding that although petitioner was in the business
of buying and selling marijuana, he was not interested in buying
it from a DEA agent posing as a drug distributor.
We have stated that we doubt petitioner's credibility and
that we find his story of the source of the unreported income
implausible. Furthermore, we find that the evidence supports
respondent's contentions that the likely source of petitioner's
unreported income was the sale of illegal drugs. Accordingly, we
find that respondent has met his burden of proving an
underpayment by clear and convincing evidence.
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