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that she understood that many of the checks deposited into the
Lloyds/Sanwa account represented bad checks is not credible.
Bank statements for the Lloyds/Sanwa account were mailed to
petitioners’ residence, and Barbara Schachter was the recipient
of significant funds paid out of that account.
The evidence is persuasive, and we so find, that petitioners
each fraudulently intended to evade reporting and paying their
correct Federal income tax liabilities for 1985, 1986, 1987, and
1988 relating to unreported sales of Cal Ben. Petitioners
underreported their distributive share of Cal Ben’s income with
knowledge of the understatements and with intent to commit fraud.
Further evidence of petitioners’ fraud includes: (1) The
large discrepancies between the income reported on petitioners’
income tax returns and petitioners' corrected income; (2) the
failure to maintain accurate and complete books and records;
(3) the fact that petitioners provided incorrect and incomplete
information to their tax return preparer; and (4) the fact that
petitioners did not disclose the Lloyds/Sanwa account to
respondent’s representative.
Lastly, with regard to fraud, petitioners argue that
imposition of the civil fraud addition to tax on top of
petitioner's prison sentence and fine relating to his criminal
conviction would constitute double jeopardy and would violate the
U.S. Constitution.
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