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response to the HODC in response to Mr. Moseley's complaint.
Mr. Kozak alleged that he had been offered inducements by the
Internal Revenue Service in exchange for his cooperation in an
Internal Revenue Service investigation of Mr. Kersting,
suggested that HODC should contact Mr. McWade, denied that he
used the threat of Internal Revenue Service litigation against
Mr. Kersting, and denied any conflict of interest. On April 12,
1988, Mr. Kozak wrote another letter to HODC stating that the
Internal Revenue Service had agreed to pay Mr. Kozak and
Mr. Alexander for their cooperation in an Internal Revenue
Service investigation of Mr. Kersting. At the evidentiary
hearing in this proceeding, Mr. Kozak testified that his
statements to HODC that the Internal Revenue Service had agreed
to pay him for cooperation in an investigation of Mr. Kersting
were false.
On July 12, 1988, the arbitrator released his Arbitration
Decision and Award denying all claims and counterclaims between
Messrs. Alexander and Kersting.37 The arbitrator's decision
37 Following the issuance of the arbitration decision, the
Alexanders claimed a net operating loss (NOL) on their 1988 tax
return in the amount of $321,000 identified as amounts "expended
for the purpose of starting new businesses deemed to be
unretrievable by the American Arbitration Association". The
Alexanders later claimed an NOL in the amount of $360,260 on
their 1990 tax return and an NOL carryforward of $201,955 and a
loss "due to fraud" in the amount of $129,000 on their 1991 tax
return. The Alexanders' 1991 tax return included the following
statement:
The loss was $450,000. $321,000 was claimed on the
1988 returns. $129,000 was not claimed because
(continued...)
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