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returns. The investigation took years and involved the efforts
of dozens of IRS agents and several Government attorneys.
Petitioners created profitable business deals between the
Five and Prudential and Travelers. The large sums of money they
received as kickbacks were diverted at Kanter's direction to
their controlled conduit entities. To effectuate the part of the
scheme involving the Prudential transactions, Kanter through his
related entities (IRA and its subsidiaries), retained the moneys
for a period of time until they were distributed directly or
indirectly to Ballard, Lisle, and himself in a 45-45-10 percent
split. To effectuate the remaining part of the scheme involving
the payments for Kanter's services, including payments from the
Schaffel/Travelers transactions, Kanter caused the moneys to be
paid to Holding Co., which he controlled.
As a result of the overall scheme, over $13 million of
kickback and other income was omitted by petitioners
collectively. The evidence is clear and convincing that they
intended to evade the payment of their taxes on such omitted
income. Accordingly, after considering all the facts and
circumstances contained in the massive record of these cases, we
hold that Kanter, Ballard, and Lisle are liable for the fraud
additions to tax and penalties for each of the years at issue.
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