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drafted by the U.S. Attorney’s Office.2 In part, Mr. Feinsmith
agreed in the cooperation agreement:
that Randy Hall, Inc. will pay to the Internal Revenue
Service all federal income taxes due and owing by Randy
Hall, Inc. for the fiscal years ending January 31, 1981
to the present; and that Harvey Feinsmith will pay all
personal income taxes due and owing for the period
February 1, 1980 to the present. Mr. Feinsmith
acknowledges that Randy Hall, Inc. claimed nonexistent
and fraudulent business deductions of approximately
$337,000 on its federal income tax returns for the
years 1980 to the present; and that Harvey Feinsmith
received approximately $48,000 of income which he did
not report on his federal income tax returns for the
years 1982 to the present. Mr. Feinsmith agrees that
he will set forth in a sworn affidavit the false
invoices (including date, amount and issuing company)
that created the fraudulent business deductions and the
unreported income and will admit in the affidavit that
Randy Hall, Inc. claimed nonexistent and fraudulent
business deductions of approximately $337,000 on its
federal income tax returns for the fiscal years ending
January 31, 1981 to the present, and that Harvey
Feinsmith received approximately $48,000 of income
which he did not report on his federal income tax
returns for the years 1982 to the present. Mr.
Feinsmith further agrees to provide this affidavit to
officials of the Internal Revenue Service at this
Office’s request. Mr. Feinsmith further agrees that
Randy Hall, Inc. will file amended federal income tax
returns with the affidavit attached as an exhibit for
the fiscal years ending January 31, 1981 to the present
no later than December 31, 1985; and Mr. Feinsmith
further agrees that he will file amended personal
2 The record does not indicate why Mr. Feinsmith agreed to
enter into the cooperation agreement. We surmise that he faced
the possibility of criminal prosecution, but whether that
prosecution would come in his capacity as Randy Hall’s president
or in his individual capacity we do not know. We do know,
however, that the assistant U.S. attorney who conducted the
investigation and drafted the cooperation agreement was unable in
this proceeding to acknowledge that Mr. Feinsmith knew at the
time of the agreement that Randy Hall’s 1982 and 1983 tax returns
contained false deductions.
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