- 31 -
settlement offer. At the same time, Mr. Kersting had written a
form letter to Kersting program participants denouncing Chicoine
and Hallett and the 20-percent settlement offer. Mr. Kersting
subsequently fired Chicoine and Hallett for recommending the 20-
percent settlement. The 20–percent settlement offer eventually
was withdrawn prior to the trial of the test cases in January
1989.
We see no compelling causal link between the Government
misconduct and the Rinaldis' failure to accept the 20-percent
settlement offer. As discussed above, Chicoine and Hallett
strongly recommended in early 1988 that all Kersting program
participants accept the 20-percent settlement offer.
Unfortunately for the Rinaldis, it appears that they (and many
other Kersting program participants) were victims of Mr.
Kersting's spurious and self-serving advice that they reject the
20-percent settlement offer and refrain from paying any amounts
to the Internal Revenue Service.18 In any event, there is no
indication that Messrs. Sims and McWade took any affirmative
18 Contrary to Mr. Kersting's advice, some program
participants agreed to settle their cases in full and/or made
payments in late 1986 in respect of the deficiencies and interest
accrued to that time in order take advantage of the full
deductibility of personal interest, which was about to be phased
out for 1987 and later years. For those petitioners who paid
their deficiencies in full, our decision to award attorney's fees
and costs will produce refunds. On the other hand, those
petitioners who imprudently followed Mr. Kersting's advice now
face enormous liabilities as a result of the inexorable force of
compound interest.
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