- 22 -
In 1988, Mr. Newman pleaded guilty to criminal charges in
connection with the issuance of other purported tax-exempt bonds
that supposedly closed on December 31, 1985. Mr. McCown resigned
from DLJ and, in 1990, pleaded guilty to aiding and abetting the
filing of false tax returns in connection with the Matthews &
Wright tax-exempt bond transactions. Mr. Goldberg was indicted,
with others, in connection with certain bond transactions in the
Territory of Guam and negotiated a plea arrangement.
Petitioners' Bond Purchases
On July 25, 1986, Harbor Bancorp acquired Whitewater bonds
with a face amount of $250,000. In the same month, the Keiths
acquired Ironwood bonds with a $400,000 face amount and
Whitewater bonds with a face amount of $300,000. Harbor Bancorp
received $19,375 of interest on the Whitewater bonds in each of
the years 1988, 1989, and 1990. The Keiths received $54,250 of
interest on the Whitewater and Ironwood bonds in each of the
years 1989, 1990, and 1991. Neither Harbor Bancorp nor the
Keiths included the interest received on the Bonds in the gross
income that they reported on their Federal income tax returns for
the years in issue.
On February 20, 1991, the Commissioner notified the Housing
Authority that the interest paid on the Bonds would be treated as
taxable income to the bondholders unless the Housing Authority
paid, to the United States, the amount required by section
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011