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Saliterman was not aware of, and McGraw and Butler did not inform
Saliterman about, the diversion schemes. During the years in
issue, McGraw supervised the preparation of Metro’s Forms W-2,
Wage and Tax Statement, and Forms 1099-MISC, Miscellaneous
Income, which he knew did not reflect the funds diverted to
Butler, and signed Metro’s tax returns, which he knew did not
accurately reflect Metro’s income and deductions. McGraw did not
know the total amount of cash Butler kept for himself or, with
the exception of Butler’s payments to Miller, how the diverted
cash was spent.
In 1990, respondent audited Metro’s 1988 and 1989 tax years.
McGraw failed to disclose to the auditor that there were income
omissions and fictitious subcontract expenses. McGraw
subsequently consulted with Attorney Peter Thompson (Thompson),
who insisted that Metro properly classify all its income and
expense items and not file another false tax return.
On September 14, 1990, Saliterman sent McGraw Metro’s 1990
Federal and State income tax returns. Shortly before Metro filed
its 1990 returns on March 19, 1991, McGraw, acting pursuant to
the advice of Thompson, called Saliterman and instructed them to
reduce the expense for subcontract services by $400,873 and
report that amount as officer’s compensation. Despite Thompson’s
advice, McGraw did not instruct Saliterman to include on the 1990
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