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fraud, are, to the extent substantiated, deductible as ordinary
and necessary business expenses under section 162(a).1 This case
was submitted on the basis of a stipulation of facts.
Petitioner, John DiFronzo, resided in River Grove, Illinois,
when the petition in this case was filed. On January 9, 1992,
petitioner was indicted by the Grand Jury in the United States
District Court for the Southern District of California, Criminal
Case No. 92-0026 E. He was charged with a variety of federal
offenses, including mail and wire fraud, and conspiracy to commit
mail and wire fraud.
The indictment generally alleged that petitioner and other
members of the Chicago organized crime family planned to contract
with the Rincon Band of Mission Indians to control gambling
operations on the Rincon Indian Reservation. The defendants
meant to conceal that the money they invested came from the
Chicago organized crime family. The defendants intended to
structure the operation so as to maximize their profits. They
intended to skim profits from the operation without the knowledge
of the Rincon Indians. They also intended to use the operation
to launder the proceeds from other illegal enterprises of the
Chicago organized crime family.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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