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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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