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in the bingo operation, petitioner had reported annual earnings
to respondent of about $5,000. Petitioner’s involvement in the
bingo business, however, was expected to generate $150,000 per
year for petitioner.
Petitioner and November jointly executed a $450,000
promissory note, dated January 5, 1989, in favor of the Lichtys
and a sublease for the Warwick property. The note was secured by
petitioner’s stock in November and all of the assets used in the
bingo business and called for $5,000 monthly payments to the
Lichtys. The transaction was, in part, structured to appear to
be a sale and also to permit the monthly note payments to be
reflected as rent so as to be deducted by November and/or
petitioner from the bingo-related income.
In substance, petitioner was acting as a shill for the
Lichtys and Morrison because of their probation requirements.
The note and “lease” were intended as a contrivance that
permitted the Lichtys and Morrison to remain financially involved
in the bingo business and to maintain some control over
petitioner’s involvement. In that regard, Gilbert assisted the
Lichtys and Morrison by overseeing petitioner’s involvement in
the bingo operation. The Lichtys’ lease on the Warwick property
expired January 31, 1991, and during 1990 they found a new bingo
location, owned by Lockwood Brothers, Inc., on Chestnut Avenue
(the Chestnut property).
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