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Thompsons' tax liabilities for 1979, 1980, and 1981 for
the purpose of generating refunds of tax and interest
that were used to pay Mr. DeCastro's attorney's fees.
The refunds actually made were more than sufficient for
this purpose; the excess was received and retained by
the Thompsons. The Thompson settlement was not based
upon or influenced by the Thompsons' participation in
the Bauspar program.
Messrs. Sims and McWade negotiated a contingent
settlement agreement with Mr. Cravens in respect of the
Cravenses' tax liabilities for 1979 and 1980 in advance
of the trial of the test cases. Messrs. Sims and
McWade misled Mr. Cravens as to the nature and legal
effect of his settlement and the need for counsel at
the trial of the test cases. In so doing, they
foreclosed the possibility that the Cravenses would
become clients of Chicoine and Hallett, and later, of
Mr. Izen. They thereby reduced the effectiveness of
Mr. Cravens' presentations to the Court from the point
of view of all petitioners; the likelihood that Mr.
Cravens would have informed counsel for test case
petitioners that his cases had been settled was also
reduced.
Messrs. Sims and McWade were the only persons in
the Honolulu District Counsel Office with knowledge of
the Thompson and Cravens settlements before and during
the trial of the test cases. Other than Mr. Stevens
[Chief of Special Procedures in the Collection Division
of the Honolulu District Director's Office], no one
else within the Internal Revenue Service was aware of
the Thompson and Cravens settlements before or during
the trial of the test cases through the times that the
Court issued its Dixon II opinion and entered the
initial decisions in the test cases.
Before the trial of the test cases, Mr. McWade
intentionally misled the Court, with the complicity of
Mr. DeCastro, by not disclosing the settlement of the
Thompson cases when he moved to set aside the Thompson
piggyback agreements. At the trial of the test cases,
Messrs. Sims, McWade, and DeCastro intentionally misled
the Court regarding the status of the Thompson cases by
not disclosing the settlement of the Thompson cases.
At the trial of the test cases, Messrs. Sims and McWade
intentionally misled the Court in similar fashion
regarding the settlement of the Cravens cases.
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