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cash. We are not convinced that such control, without some
evidence that the Zhadanovs intended to appropriate the cash for
personal use or actually used it for personal purposes, is enough
to counter the evidence in the record supporting the Zhadanovs’
argument that they held the cash on behalf of Vortex.
Obviously, the Zhadanovs did not use any of the diverted
cash for personal purposes because all of the diverted cash at
issue in this case was in the safe when it was seized by the
Government agents. The record contains no evidence that the
Zhadanovs lived a lavish lifestyle inconsistent with their
reported income. In fact, although respondent used indirect
methods to reconstruct the Zhadanovs’ income before he issued the
notices of deficiency in this case, respondent did not rely on
those analyses, opting instead to treat the seized cash, to the
extent recorded in the cash receipts journal, as the unreported
income. Although there is evidence in the record that the
Zhadanovs used cash from time to time to pay expenses, the
expenses in question appear to have been Vortex’s expenses, not
personal expenses of the Zhadanovs.
Respondent attempts to bolster his argument by pointing to
evidence that the Zhadanovs opened a Swiss bank account into
which they deposited $300,000 over the course of a year and that
the Zhadanovs cashed $12,000 of money orders given in payment of
plastic vials and used a portion of the funds to pay travel
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