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Prudential.2 The Prudential clients would write a check made
payable to petitioner, and in return the clients would receive an
installment note. The installment note stated that it was for an
investment known as Neo Genesis Paradigm, Inc.3 Petitioner would
then convert the proceeds from this transaction to his own use.
Such transactions occurred on three different occasions from 1991
through 1992. Each time, petitioner targeted an elderly client.
On May 6, 1992, petitioner was charged in Denver County
Court, Denver, Colorado, with theft from the elderly, fraud, and
selling securities without a license. Petitioner pleaded guilty
to attempted fraud and deceit in offering securities, was placed
on probation for 16 years, and was ordered to pay restitution to
Prudential in the amount of $107,000.
In the notice of deficiency, respondent determined that
petitioner did not file returns for the taxable years 1990, 1991,
and 1992. Respondent also determined that petitioner realized
gross income for those years in the amounts of $20,436, $107,301,
and $27,381, respectively.4 The gross income determined by
respondent resulted in deficiencies of $2,269, $27,458, and
2In fact, Prudential does not have any connection with
Project Input, Inc., nor does the Colorado Secretary of State
have a record of it.
3Respondent's first and second requests for admission refer
to Neo Genesis Paradigm, Inc. and Neo Genesis. These are
references to the same entity.
4Petitioner also did not file individual Federal income tax
returns for the tax years 1986-89.
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