Kenneth Siebert - Page 6

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               B.  Dallas Executive Couriers                                          
               In early 1989, petitioner decided to establish a courier               
          business.  To obtain the necessary financing, petitioner                    
          persuaded Mr. Franz on March 23, 1989, to sign a letter of                  
          credit.  A letter for ‹60,000 was issued by the Isle of Man Bank            
          and was secured by the Showwalter pension plan.  On April 19,               
          1989, petitioner incorporated under Texas law Dallas Executive              
          Couriers, Inc. (Executive Couriers).  Executive Couriers operated           
          out of petitioner's office at Hercules & Lavery.  Hercules &                
          Lavery used, and paid petitioner compensation for, Executive                
          Courier's services during 1989.  On October 17, 1990, Executive             
          Couriers forfeited its right to conduct business in Texas,                  
          because it failed to pay Texas franchise taxes.  Its corporate              
          charter was subsequently revoked on June 17, 1991.                          
          III.  Respondent's Investigation and Determinations                         
               After petitioner was convicted of misappropriating Ms.                 
          Boals' money, the Dallas district attorney's office notified the            
          IRS of petitioner's conviction and informed it that petitioner              
          may not have reported the misappropriated funds on his Federal              
          income tax returns.  The IRS assigned petitioner's case to                  
          Revenue Agent Jesse Luna.  Agent Luna obtained court records from           
          the Dallas district attorney's office.  Based on these records,             
          Agent Luna determined that petitioner had unreported income of              
          $74,000 and $110,000 in 1988 and 1989, respectively.                        

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