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entitled to deduct a theft loss. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
The parties agree that Kentucky law applies here.
Petitioner points out that Minkow knowingly misrepresented the
value of the ZZZZ Best receivables and stock to petitioner and
argues that Minkow’s conduct was theft by deception under
Kentucky law.
2. Theft by Deception
Section 514.040 of the Kentucky Penal Code, Ky. Rev. Stat.
Ann. sec. 514.040 (Michie 1990), provides that
Theft by deception. -- (1) A person is guilty of theft
by deception when he obtains property or services of
another by deception with intent to deprive him
thereof. A person deceives when he intentionally:
(a) Creates or reinforces a false impression,
including false impressions as to law, value, intention
or other state of mind;
* * * * * * *
(c) Fails to correct a false impression which the
deceiver previously created or reinforced * * *
“Obtain” means “to bring about a transfer or purported
transfer from another person of a legal interest in the property,
whether to the obtainer or another”. Ky. Rev. Stat. Ann. sec.
514.010(4)(a) (Michie 1990).
For us to find that Minkow committed theft by deception,
petitioner must show that Minkow intentionally deprived
petitioner of property through deception or false representations
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