Ernesto H. Monroy - Page 22

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          provide credible substantiation.  Petitioner denied that he had             
          instructed anyone to fabricate loan documents, but he testified             
          that the promissory notes for $7.5 million were created and                 
          delivered to the Texas Department of Banking as part of his plan            
          to acquire the bank and that his family did not owe him money at            
          that time.                                                                  
               Additionally, Esquivel testified that she never submitted              
          false information about petitioner's finances to anyone or any              
          entity.  She admitted to sending information relating to                    
          petitioner's purchase of the shopping center that stated that               
          petitioner's income was $150,000 annually.  She then testified              
          that petitioner had no income.  Petitioner's and Esquivel's                 
          testimony are inconsistent, improbable, and unworthy of belief.             
               Respondent has proven by clear and convincing evidence an              
          underpayment of tax due to fraud for each year.  Petitioner has             
          not proven that any part of the underpayment is not attributable            
          to fraud.  See sec. 6663(b).                                                
                                                  Decision will be entered            
                                             for respondent.                          














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