-36-
Using this approach, petitioner deeded the Virgil and
Harrington properties to Fountain, which, in turn, deeded the
properties to the actual buyers. Petitioner then located a
replacement property, and during March 1989 Fountain was
instructed by petitioner to transfer the $258,351.54 proceeds
from the sale of Virgil and Harrington to Star Global to purchase
the "up-leg" property, a 25-percent interest in property known as
"Protective Community Land and Oil Corp. Tract, Lot no. 2160"
(lot 2160). In some manner the title to the interest in lot 2160
went through a person named Bob Welch (Mr. Welch) to Fountain,
which appeared to have exchanged the lot 2160 with petitioner for
the Virgil and Harrington properties.
Mr. Welch, a licensed general contractor, had a business
relationship with petitioner and acted as his agent for
investment purposes. Mr. Welch ran the day-to-day affairs of and
owned Star Global, which was involved in imports and exports.
Late in 1987, petitioner began investing capital in Star Global,
and he continued for a short time, concluding when no profitable
deals occurred. After the Star Global import activity was
concluded, Mr. Welch and petitioner continued to use the Star
Global bank account on which only Mr. Welch was a signatory.
Beginning in 1981, Mr. Welch and Robert Jose Hernandez (Mr.
Hernandez) were engaged in a joint real property investment
relationship. Initially, Mr. Hernandez had purchased lot 2160
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