Stephen Martin Beddow - Page 3




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          transactions in cash and did not maintain books and records                 
          memorializing the transactions.  Petitioner received $38,528 and            
          $34,976 in cash from cocaine sales during 1986 and 1987,                    
          respectively, but he failed to file Federal income tax returns              
          for those years.                                                            
               Douglas Louzon (Louzon)2 was petitioner's longtime                     
          acquaintance and confidante.  Louzon agreed to cooperate with               
          Federal law enforcement officers in their investigation of                  
          petitioner's drug activities, including their investigation that            
          centered around petitioner's conduct in 1986 and 1987.  Louzon              
          wore a secret wire and engaged petitioner in several                        
          conversations wherein petitioner openly discussed his drug sales,           
          boasted about his income from the sales and about extravagant               
          purchases, and expressed his dislike for the Internal Revenue               
          Service and taxes.  On October 10, 1990, petitioner was convicted           
          of the following offenses in the United States District Court for           
          the Western District of Michigan:  (1) Conspiracy to possess with           
          intent to distribute controlled substances; (2) monetary                    
          transaction in property derived from illegal activity; (3)                  
          laundering of monetary instruments; and (4) income tax evasion.             
          Among the issues of fact determined in the criminal case were               


               2By 1987, Douglas Louzon had been convicted of several                 
          felonies including malicious destruction of property, carrying a            
          concealed weapon, bank robbery, and possession of stolen                    
          property.                                                                   




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