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explanations of her behavior are implausible or
inconsistent.
We agree with respondent that several indicia of fraud
are present with respect to Mr. London. In these cases,
Mr. London failed to report income in the amounts of
$311,974.34 for 1983 and $213,120.25 for 1985. These
understatements represented approximately a 20-percent
omission of income for 1983 and a 45-percent omission for
1985. Substantial understatements of income in successive
years, when coupled with other circumstances showing an
intent to conceal or misstate income, justify an inference
of fraud. Holland v. United States, 348 U.S. at 137-139;
Patton v. Commissioner, 799 F.2d 166, 171 (5th Cir. 1986),
affg. T.C. Memo. 1985-148. Moreover, the fact that
Mr. London engaged in illegal activities, and was con-
victed of RICO offenses, money laundering, extortion, and
failure to file CTR's, is a badge of fraud. Bradford v.
Commissioner, supra at 307-308. Mr. London has not shown
that he maintained adequate books and records for M.L.
Associates, his check-cashing business. Special Agent
Rooks testified that he found no formal books and records
for M.L. Associates. Mr. London's failure to maintain
adequate records is indicative of fraud. Truesdell v.
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