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For 1985, after obtaining the appropriate extensions,
petitioner and Maxine signed and filed a Form 1040 that they
styled a "tentative return". The Form 1040 contained no detail
concerning income and deductions, although it did list $20,329 on
line 56 as the "total tax". The Form 1040 also displayed the
following legend at the bottom of page one: "Ongoing Grand Jury
Investigation May Materially Affect Tax Liability". Max Forman
(Forman), an accountant who performed services for Ben's
enterprises, signed the form as tax preparer. Petitioner was
aware of his obligation to file Federal income tax returns for
1986 and 1987, but he did not do so for either year.
1. Background
When respondent issued the notices of deficiency, petitioner
was serving a prison sentence stemming from his criminal
convictions on racketeering and associated charges of conspiracy
to commit racketeering and travel and use of facilities to
distribute the proceeds of unlawful activity. Petitioner had
participated in a series of schemes to launder the profits from
Ben's illegal marijuana smuggling operations.
Petitioner became involved in Ben's criminal enterprises as
early as 1977, after Ben was first arrested and convicted for
marijuana smuggling. Petitioner carried $80,000 in cash of Ben's
marijuana smuggling profits to Bel Air, California, to "invest"
in an enterprise controlled by Sam Gilbert. Ben received his
$80,000 back from an entity called Commercial Factors when he was
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Last modified: May 25, 2011