Patricia G. McCulley - Page 5

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          week later.  On August 10, Agent Johnson contacted Durand to set            
          up an appointment.  During their conversation, Durand made                  
          certain statements that Agent Johnson took as seeking a complete            
          concession; thereafter the agent decided "to proceed on with                
          [his] investigation" without ever meeting face to face with                 
          either Durand or petitioner.  The agent’s final report (the                 
          report), in which he recommended prosecuting petitioner for tax             
          evasion under section 7201, was based primarily on statements               
          made by petitioner's hostile and estranged husband, as well as              
          information supplied by people other than petitioner, to                    
          establish her intent in failing to report the embezzled funds.              
               Despite the report, petitioner was not prosecuted under                
          section 7201 for tax evasion.  On March 12, 1991, she was                   
          indicted, instead, for the lesser offense of willfully filing a             
          false tax return for 1984 (count one) and 1985 (count two) in               
          violation of section 7206(1).  Petitioner entered into a                    
          negotiated plea (plea) in the United States District Court for              
          the Northern District of Georgia, wherein she pleaded guilty to             
          count one of the indictment.  Count two was dismissed.                      
               Petitioner was sentenced to 5 years’ probation, 200 hours of           
          community service, and was ordered to pay $16,552, plus interest            
          and penalties, in restitution.  This amount appears to represent            
          the 1984 deficiency plus then-accrued interest.4  Petitioner has            

          4    Although the parties stipulated (without any explanation)              
          that the restitution was based on the deficiencies for the two              
          years in issue, we do not see how this is mathematically                    
                                                             (continued...)           



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