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offered a credible explanation of the source of the very large
amounts of cash at Mr. Karcho’s disposal during this period.
As for fraudulent intent for each of the years in issue, we
believe petitioners’ maintenance of two sets of books, and their
providing the erroneous version to their accountant for tax
reporting purposes in each year, is virtually conclusive on the
question of fraudulent intent in each year. In any event, there
are additional indicia of fraud, including the extended period in
which income was understated, the extensive dealings in cash and
cashier’s checks that were obviously designed to circumvent
currency-reporting requirements, and Mr. Karcho’s admitted
misrepresentations to local authorities in an effort to reduce
his licensing fees. Finally, Mr. Karcho’s section 7201
conviction with respect to 1987 estops him from denying
fraudulent intent in that year.
We also conclude that respondent has established that some
portion of the underpayment is attributable to the fraud of each
petitioner. Although petitioners argue that Mrs. Karcho did not
commit fraud, we believe the evidence shows that Mrs. Karcho was
intimately involved in the fraudulent record keeping in each
year. It was Mrs. Karcho, who was employed as a billing system
analyst, who prepared the false records given to the accountant,
which records were designed to deceive because they purported to
break down the bank deposit amounts into fictitious subtotals
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