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petitioners at least for calendar quarters ended March 31, 1975
and 1977, and for calendar year 1983.
An investment account in the name of Ms. Walters was
maintained at Prudential-Bache. The funds in that account came
directly or indirectly from FIP. Ms. Walters executed a power of
attorney by which she authorized Mr. Gherman to manage her
Prudential-Bache account. She knew that Mr. Gherman used the
Prudential-Bache account to make investments on her behalf. Mr.
Gherman made all decisions relating to the investment account.
Mr. Gherman funded and controlled brokerage accounts and
banks accounts in the names of other members of his family. The
funds in those accounts came directly or indirectly from FIP.
At the time of trial in the instant case, Ms. Walters lived
in a townhouse condominium owned by Shari. Shari paid the
mortgage on the condominium and Ms. Walters paid Shari what rent
she could, but some months she paid nothing.
Prior Income Tax Returns
During the late 1970's or early 1980's, Mr. Gherman was the
subject of a criminal tax investigation by a Federal grand jury.
Ms. Walters knew about the investigation and presented testimony
before the grand jury. The grand jury investigation never led to
an indictment. As early as 1980, Ms. Walters became aware that
the IRS's Criminal Investigation Division had discontinued its
investigation of Mr. Gherman.
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