AMW Investments, Inc. - Page 8

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               In 1984, Federal agents, investigating a pattern of arsons             
          at adult theaters, searched MBS’ premises and seized books and              
          records which included those of petitioner.  In connection with             
          this search, a grand jury, on September 9, 1988, handed down a              
          seven-count indictment against Mr. Mohney, Ms. Scribner,                    
          Mr. Tompkins, and Mr. Klein (collectively referred to as the                
          Defendants) for various criminal tax violations.  The indictment            
          generally charged that Mr. Mohney, through separate corporate tax           
          returns, concealed his ownership of several adult-oriented                  
          businesses and filed false personal tax returns.  The other                 
          defendants, who were all employees of MBS, were charged only in             
          count I of the indictment.  Count I charged the Defendants with             
          conspiracy to defraud the Government through the concealment of             
          ownership of the adult-oriented businesses on the tax returns, in           
          violation of 18 U.S.C. sec. 371.  The remaining counts charged              
          Mr. Mohney with filing false individual income tax returns for              
          the 1981, 1982, and 1983 taxable years (see sec. 7206(1)), and              
          with aiding and assisting in the filing of false corporate income           
          tax returns on behalf of Otis Mohney, Inc./International                    
          Amusements, Ltd. (see sec. 7206(2)).  The remaining counts                  
          stemmed from the failure of International Amusements, Ltd., to              
          report income it earned and diverted to Mr. Mohney for his                  
          personal benefit.  All of the Defendants except Mr. Klein pleaded           







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