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Petitioner herein was the defendant in the criminal case of
United States v. Frey, docket No. 95CR00035-J, which was tried in
the U.S. District Court for the Western District of Kentucky.
Petitioner was indicted on April 5, 1995, with respect to
the criminal matter. The indictment charged that petitioner, who
was employed as the Director of Corrections for the Jefferson
County Department of Corrections, received bribes in exchange for
assisting a corporation in obtaining certain contracts. In
addition, the indictment charged that petitioner knowingly and
willfully attempted to evade Federal income tax for 1990, 1991,
1992, and 1993 by filing false and fraudulent joint returns in
violation of section 7201. Petitioner was charged with
underreporting income, on behalf of himself and his spouse, in
the amounts of $44,000, $48,000, $44,000, and $52,989 for tax
years 1990, 1991, 1992, and 1993, respectively. It was
petitioner's position that these amounts were received by him
during the years in issue as nontaxable loans. Petitioner was
found guilty of conspiracy to commit extortion, mail fraud, money
laundering, and tax evasion.
Respondent asserts that petitioner's conviction of tax
evasion under section 7201 collaterally estops him from rebutting
the determination that he is liable for civil fraud penalties
under section 6663 for the same years. Respondent further
maintains that the deficiencies in income tax and the penalties
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