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The Appeals officer proposed a settlement in which the gross
estate would be reduced by 25 percent ($232,587) of the $930,350
adjustment. After the Appeals office closed the estate’s cases
as being “unagreed”, respondent’s counsel, Jack Klinghoffer, and
Mr. Harkavy conferred regarding the cases. Mr. Klinghoffer,
during December 1999, sent tax computations which reflected the
settlement offer made by the Appeals officer, with an additional
$16,000 allowance for administrative expenses. Mr. Harkavy
conveyed the offer to the Petersons and during January 2000, Mr.
Harkavy wrote to Mr. Klinghoffer and rejected the December offer
to settle.
Thereafter, the estate began preparation for trial and
during a July 2000 meeting with Mrs. Peterson, Mr. Harkavy
informed her that he was “doing some work with the IRS”. Mr.
Harkavy did not disclose the specifics of his work with the
Internal Revenue Service (IRS). Mrs. Peterson, based on the
above explanation, did not understand that Mr. Harkavy was
employed by respondent as a consultant or expert witness in
another case. If Mrs. Peterson had known that Mr. Harkavy was
employed by respondent at the same time that he was representing
the estate, she would have terminated his representation of the
estate.
These consolidated cases were scheduled for the October 16,
2000, Los Angeles trial session. After the Court received the
parties’ trial memoranda, a conference call was initiated with
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