Edward A. Wagner - Page 3

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          deception, two sets of books were maintained, one to be shown to            
          the Government and the other accounting for what had really                 
          happened.  The set of books employed to prepare partnership                 
          returns of income and reports of the partners' distributive                 
          shares of deductions and credits was knowingly inflated.  For               
          some of the partnerships, not including Caldwell, checks drawn in           
          amounts representing the inflated prices were provided to sellers           
          of the films, who endorsed these checks and returned them to the            
          conspirators.  Thereafter, cash in lesser amounts than the face             
          amounts of the checks was paid to the sellers in place of the               
          checks, resulting in “skim money” to the conspirators.  For other           
          partnerships, including Caldwell, the conspirators interposed a             
          third party, which they controlled, between the seller and the              
          purchaser of the film and used this controlled third party to               
          achieve a similar inflation of these partnerships’ purchase                 
          prices for movies and concurrent diversion of skim money to the             
          conspirators.  For Caldwell, the interposed controlled third                
          party was Cinepix Establishment, and the movie that was the                 
          subject of the transaction in issue was "Adios Amigos".  In                 
          addition, contracts were backdated so as to allow some of the               
          purchases to avoid the operation of a change in law providing,              
          with effect on contracts not finalized prior to September 11,               
          1975, that nonrecourse notes could no longer be included in the             

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