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his income tax returns. Petitioner claimed in a 1988 loan
application to receive $8,000 per month in wages from PAC, while
reporting only $9,000 for the entire year on his 1988 Federal
income tax return. In a 1989 loan application, petitioner
claimed to receive $6,000 per month salary and $4,000 per month
in rental income, while reporting on his tax return only $9,000
in wages and $20,560 in rental income for the entire year.
Petitioner understood his legal obligation to report all
his income on his Federal income tax returns. Petitioner was
advised repeatedly by his and PAC’s accountants of the need to
report all his income. Petitioner knowingly and intentionally
structured transactions to avoid detection of his schemes to
underreport income.
On June 6, 1995, petitioner was indicted on eight counts of
Federal income tax evasion and filing false Federal income tax
returns for the years 1988 through 1991. As part of a plea
bargain, petitioner pled guilty to one count of tax evasion for
1988 in return for the dismissal of the remaining counts. In the
final judgment, petitioner was sentenced to 2 years of probation,
was fined $8,050, and was required to participate in home
detention with electronic monitoring for 6 months.
On December 12, 2000, respondent served on petitioner
requests for admission, a first request for production of
documents, and a first set of interrogatories. Petitioner did
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