Bernhard F. and Cynthia G. Manko - Page 14

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          settlement was inadmissible under rule 408 of the Federal Rules of          
          Evidence.                                                                   
               Following argument on the relevance and admissibility of               
          evidence of the alleged settlement, the District Court, relying on          
          Ecklund v. United States, 159 F.2d 81 (6th Cir. 1947), held that            
          even if the evidence showed that the Government had settled its             
          civil  claims  with  petitioner,  proof  of  the  settlement  was           
          inadmissible under rule 408 of the Federal Rules of Evidence.               
          Nevertheless, the District Court held a hearing on December 20,             
          1990, in the absence of the jury for the purpose of determining             
          whether the civil tax case of petitioner had been settled with              
          respondent. Mr. Nolan and Ms. Kaplan testified at the criminal              
          hearing on behalf of petitioner, and Mr. Kletnick testified on              
          behalf of the Government, offering contradicting testimony.  The            
          record in the criminal hearing included Mr. Nolan's letters of              
          December 29, 1987, and January 7, 1988, Ms. Kaplan's letter of              
          January 15, 1988, and a transcript of the Tax Court pretrial                
          conference of February 25, 1988.  At the conclusion of the hearing,         
          the District Court, crediting Mr. Kletnick's testimony, found that          
          no settlement had occurred between respondent and petitioner for            
          1982 or 1983.  In sum, the District Court precluded petitioner from         
          presenting to the jury evidence that respondent had agreed that             
          petitioner could deduct 20 percent of his partnership losses both           







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