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Respondent focuses in part on the operations of Randy Hall
to deduce that Mr. Feinsmith had the requisite fraudulent intent.
We do not do similarly. The fact that Randy Hall may have been
involved in a fraudulent scheme to attempt to evade its Federal
income tax obligation, or that Mr. Feinsmith may have
participated in such an attempt, does not necessarily mean that
Mr. Feinsmith was involved in a scheme to attempt to evade his
Federal income tax obligation as well. Nor does the fact that
Randy Hall may have understated its income for the subject years,
or kept inadequate records, impute to Mr. Feinsmith the requisite
fraudulent intent to avoid his Federal income tax obligation.
The fact that Randy Hall may have participated in an illegal
activity (the scheme) and that this activity involved cash also
does not establish fraud on the part of Mr. Feinsmith in his
individual capacity.
When we focus as we should on Mr. Feinsmith’s personal
income tax obligation, we are unconvinced by the record that he
filed his 1983 and/or 1984 Federal income return intending to
evade that obligation. We simply cannot find that Mr. Feinsmith
was actually involved with the scheme in his individual capacity
or that he converted any of the proceeds from the scheme to his
personal use. In fact, when Mr. Feinsmith first became
affiliated with Randy Hall, it had been participating in the
scheme for at least 2 years. We find no reliable evidence in the
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