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Petitioner’s Indictment
Petitioner and his brother were indicted in 1989 in connection
with the acquisition of the Forum 303 note. The indictment
alleged, inter alia, that petitioner and his brother conspired to
defraud FSLIC by causing it to sell the Forum 303 note to AMI at a
price far below its actual net realizable value. On March 23,
1993, the indictment was dismissed for lack of sufficient evidence
after the Government admitted that its key witness, who petitioner
alleges was Mr. Rea, was untruthful. In defending himself from the
indictment, petitioner paid $197,234 in legal fees. It is the
classification of these fees that is the subject of the instant
dispute.
Petitioner’s Business Endeavors
a. Preaccident
In February 1988, petitioner began negotiations to buy a
portfolio of commercial loans from Killeen Savings & Loan, a
Cleveland, Texas, bank. The transaction was to be completed by
July 1988.
In addition, in April 1998, petitioner and an associate agreed
to make an offer to purchase a four-story house in London, England,
intending to convert the property into apartments. On April 20,
1988, petitioner sent a letter of intent to the property owner
enumerating the terms upon which he would purchase the property.
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