Paul L. Tregre, Jr. - Page 7

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               Sometime during or before 1984, the IRS initiated an                   
          investigation of ASI.  As part of that investigation, an IRS                
          special agent (Balash) examined petitioner's returns for the                
          taxable years at issue.  Balash met with Tubre on at least two              
          occasions during the course of her investigation.  On one                   
          occasion, Tubre informed Balash that petitioner "serviced"                  
          various accounts for Besco and that Besco’s payments to                     
          petitioner resulted from such service.4   This information was              
          false, and Tubre knew of its falsity at the time he told it to              
          Balash.                                                                     
               On December 20, 1984, Balash met with petitioner.  During              
          the course of that meeting, petitioner represented to Balash that           
          the income he received from Besco was in exchange for services he           
          had provided Besco in the form of soliciting business or                    
          providing leads.  In making such representations, petitioner                
          referred to several of Besco’s customers and indicated that he              
          had made contact with certain individuals within those                      
          organizations in his efforts to market Besco's products.                    
               As noted earlier, petitioner reported the income he received           
          from Besco on his tax return for each taxable year at issue.                


               4It is not clear from the record what activities were                  
          involved in the alleged "servicing" by petitioner.  The arguments           
          advanced by both parties, however, suggest that such activities             
          entailed providing leads to and soliciting business on behalf of            
          Besco.                                                                      





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