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2. Grand Jury Transcripts
Petitioners allege that respondent relied on grand jury
transcripts to determine petitioner's civil tax liability in
this case. Petitioner points out that O'Byrne mentioned the
transcripts in his criminal referral letter. However, O'Byrne
testified and we believe that he did not rely on grand jury
testimony to develop petitioners' civil tax liability. Revenue
Agents Cronin and Dorgeval did not read the grand jury
transcripts; they used Resyn's business records and third party
records, all of which existed independently of the grand jury.
Thus, we are convinced that respondent did not use grand jury
transcripts to develop the civil tax case.
B. Whether Petitioner Is Collaterally Estopped From Denying
Factual Findings of the Bankruptcy Court
1. Background
Petitioners contend that collateral estoppel does not
prevent petitioner from contesting factual findings made by the
bankruptcy court in In re Resyn Corp., 81-2 USTC par. 9808
(Bankr. D.N.J. 1981) We disagree.
If collateral estoppel applies, issues which were litigated
and decided in an earlier case on a different cause of action
cannot be relitigated by the parties or their privies. Montana
v. United States, 440 U.S. 147, 153 (1979); Parklane Hosiery Co.
v. Shore, 439 U.S. 322, 326 n.5 (1979); Commissioner v. Sunnen,
333 U.S. 591, 597 (1948). Collateral estoppel protects
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