Manuel and Margaret Karcho - Page 29

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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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