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activities into his floor safe along with his other funds,
essentially all of which he converted into cash.
In 1978, petitioner pled guilty to conspiracy to possess 100
pounds of marijuana, relating to a transaction in which he leased
an airplane to persons smuggling marijuana.
Petitioner did not file Federal income tax returns for years
prior to 1977.
Cayman Islands Bank Account
By December 1977, petitioner had accumulated approximately
$2.5 million in cash, which was stored in the floor safe in his
house. At this time, petitioner decided to relocate his cash
from the floor safe in his house to a bank account in the Cayman
Islands.
On February 27, 1978, petitioner opened a personal bank
account at the Bank of Nova Scotia in the Cayman Islands, making
an initial cash deposit of $247,500. The Bank of Nova Scotia
charged petitioner 1 percent of the deposit because it was cash.
From February 27 until July 4, 1978, petitioner deposited a total
of approximately $2 million in cash from his floor safe into his
Cayman Islands account. Thus, petitioner retained approximately
$500,000 in cash in the floor safe to use for business and
personal expenses.
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