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cashier's check to Johnson McGee were deposited in the Johnson
McGee account at Petra, an account that petitioner admittedly
owned and controlled. He also admitted to using a portion of
those funds to repay the Cortez loan, a loan he admitted
illegally procuring in 1988.
There is no evidence of a consensual recognition by
petitioner and the City of Austin, express or implied, that
petitioner was obligated to repay the $94,343.16. See James v.
United States, supra at 219. In addition, petitioner possessed
unrestricted control over the disposition of those funds and
earned $698.23 in interest from the Johnson McGee account. See
Rutkin v. United States, 343 U.S. 130, 137 (1952) (stating that
holder has such control over it when he has the "freedom to
dispose of it at will"). He failed, however, to report on his
1989 Federal income tax return any amount related to Johnson
McGee. The underreporting of income resulted in an underpayment
of tax because there is no suggestion of offsetting deductions in
this case. The amounts repaid by petitioner have been conceded
by respondent as not includable in income. Cf. United States v.
Rosenthal, 470 F.2d 837, 842 (2d Cir. 1972) (repayments did not
negate fraud but were designed to keep scheme afloat).
Fraudulent intent may be inferred from various kinds of
circumstantial evidence or "badges of fraud", including an
understatement of income, inadequate records, implausible or
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