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based upon petitioner’s having received $15,000 from John K. in
1990 to invest on his behalf and having only repaid him $1,750.
John K. was a college friend of petitioner’s. Mr. K.
testified credibly that he turned over $10,000 to petitioner in
March 1990, based upon petitioner’s representation that she could
earn him a 25 percent return in 1 year. He believed that
petitioner was a savvy businesswoman and trusted her on the basis
of their friendship; he accordingly did not investigate her
claims or plans with any rigor, although he recalled that she
represented that the money would be invested in a real estate
project in the Midwest. Several months later, in August 1990,
petitioner advised Mr. K. that she had an investment opportunity
that would give him a profit in 30 days. Mr. K. gave petitioner
an additional $5,000 on her representation of a 30-day turnaround
for that investment. According to his testimony, when the $5,000
was not returned as promised, Mr. K. first suspected that
petitioner had taken advantage of their friendship and
“hoodwinked” him; he became convinced of that fact when neither
the $10,000 nor $5,000 was returned, and petitioner made excuses
that he did not believe.
Petitioner contends that these amounts are not income to her
because she genuinely tried and intended to repay Mr. K. These
amounts were not bona fide loans, however; the money was given on
the representation that it would be invested on Mr. K.’s behalf.
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