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In a Memorandum of Decision and Order entered December 10,
1993, the District Court also entered an order of criminal
forfeiture against petitioner in the amount of $395,670. In
reaching its decision on the forfeiture count, the District Court
ruled that the Government bears the burden of proof with respect
to criminal forfeiture, that the degree of proof is beyond a
reasonable doubt, and that the amount subject to criminal
forfeiture is limited to the profits as opposed to the gross
proceeds from the criminal enterprise.3
Petitioner appealed his various convictions and the
Government filed a cross-appeal with respect to the District
Court's holding limiting the amount of the criminal forfeiture to
petitioner's profits from the enterprise. In United States v.
McHan, 101 F.3d 1027 (4th Cir. 1996), the U.S. Court of Appeals
for the Fourth Circuit affirmed petitioner's convictions but
reversed the District Court on the ground that the amount subject
to criminal forfeiture extends to the proceeds from a criminal
enterprise.
Previously, on November 15, 1991, respondent issued a notice
of deficiency to petitioners determining deficiencies in and
additions to their taxes for 1985 and 1986 as follows:
3 The District Court found that the proceeds from
petitioner's criminal activities totaled $1,252,700, but that
petitioner's gross profits were only $395,670 after accounting
for the cost of goods sold and the share of the proceeds
distributed to petitioner's partner.
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