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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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