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on the actions of John. Respondent also contends, however, that
Neal’s actions were likewise fraudulent, claiming on brief that
Neal “actively participated in the concealment of John’s scheme
to divert corporate funds”. Accordingly, we must consider
whether Neal’s actions were fraudulent and attributable to Simco.
Although respondent’s charges against Neal are somewhat
scattershot, as best we can assemble them the specifics of Neal’s
“active * * * [participation] in the concealment of John’s
scheme” are: first, Neal’s participation in the decision to
treat the diverted proceeds, after the fact, as compensation to
John and to file amended corporate returns on that basis; second,
Neal’s testimony at trial concerning an audit interview with
respondent’s agents relating to the transfer of materials between
Simco facilities, which is at a variance with the agents’
contemporaneous notes; and third, certain other improbable trial
testimony of Neal’s concerning who first raised the issue of
scrap metal sales at the August 1992 shareholders’ meeting.
We first note our finding that Neal was unaware of the
diversion of corporate funds until August 1992. The evidence in
the record strongly supports this conclusion, and it is entirely
plausible. John, who the parties agree had a problem with
alcohol abuse at the time, was effectively stealing from Neal
when he diverted the scrap metal proceeds, and it is not
surprising that he hid his activities from Neal and others at
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