Patricia G. McCulley - Page 11

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          as evidence of attempts to conceal.  The problem with                       
          respondent’s scenario is that--except for the failure to report             
          the embezzlement income--it is not supported by the facts.                  
               First, the evidence does not show that petitioner withheld             
          any information from respondent or refused to cooperate in any              
          way with respondent.                                                        
               During the 10 months Agent Johnson spent investigating                 
          petitioner, he never interviewed her in an effort to establish              
          her state of mind in failing to include the illegal income on her           
          returns.  In fact, Agent Johnson testified that on the only                 
          occasion when he met with petitioner she was pleasant,                      
          cooperative, and willing to review her tax and bank records with            
          him if her attorney were present.  This was perfectly reasonable,           
          since Agent Johnson was conducting a criminal investigation.                
          Durand, petitioner's attorney, did in fact speak with the agent             
          on several occasions about the ongoing investigation and promptly           
          provided a power of attorney when requested.  At trial, Agent               
          Johnson acknowledged that petitioner cooperated with the                    
          investigation, and that he did not intend in his report to                  
          indicate otherwise.  It was Agent Johnson who severed all contact           
          with petitioner after Durand allegedly gave Agent Johnson the               
          impression that he, Durand, was "looking for a letter from the              
          IRS forgiving someone for stealing money from the airlines."                
          From that point forward, Agent Johnson made no further effort to            

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Last modified: May 25, 2011