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Respondent's proof of Mrs. London's fraud is principally
based on the contention that she "was deeply involved in
the couple's business and financial affairs." We agree
that Mrs. London owned stock in London Cafe, Inc., wrote
checks on various accounts maintained by petitioners,
and purchased assets such as real estate and automobiles.
However, there is no evidence of her involvement in
Mr. London's illegal activities, the source of the
unreported income. For example, during the surveillance
of Heller's Cafe, Mrs. London was never observed in the
bar. She was not a target of the Government's
investigation. As to the unreported income, Mr. London
insulated his wife from the reporting of that income by
supplying information for preparation of the Schedules
C, Profit or (Loss) From Business or Profession, to
Mr. Trugman. The Schedules C were then given to
Mr. Silverstein for preparation of petitioners' joint
individual income tax returns. There is no evidence that
Mrs. London was involved in the accounting for or reporting
of, income from Mr. London's illegal activities. Upon
consideration of the entire record, we find no clear and
convincing evidence that Mrs. London took any action
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