Manuel and Margaret Karcho - Page 12

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          He pleaded guilty to each, in connection with which he admitted             
          the following:                                                              
               I provided my accountant with false information                        
               regarding my 1987 income which caused him to prepare a                 
               false return that substantially underreported my income                
               for that year.  I signed the return and then filed it                  
               with the IRS.  I also structured a transaction in which                
               I bought real estate * * * by purchasing 13 cashiers                   
               [sic] checks from various banks each less than                         
               $3,000.00 to avoid the reporting requirements under                    
               Federal law.                                                           
          Arcade Operations                                                           
               Banner would often rent out the arcade on weekend mornings             
          for children’s private parties in which participants were allowed           
          unlimited play on the games for 1 to 2 hours for a set fee.  To             
          supply the participants with tokens, Mr. Karcho would unlock the            
          token machines and trigger a switch that caused the release of              
          tokens.  Mr. Karcho would then hand out tokens to the                       
          participants on an as needed basis.  Mr. Karcho kept the keys to            
          the token machines; when he was not present for private parties,            
          he would provide an employee with cash for the purpose of                   
          obtaining tokens from the token machines to distribute.                     
               Mr. Karcho employed part-time help at the arcade whom he               
          paid with cash that was not reported on Banner's returns.                   
          Banner claimed deductions for “salaries and wages” on its returns           
          for the fiscal years ended February 28, 1987, and February 29,              
          1988, but not on its returns for the years ended February 28,               
          1989 and 1990.                                                              

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