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OPINION
The gravamen of respondent’s argument is that due to a
bitter family feud over the control and ownership of ERG, Burton
“formed a fraudulent scheme to divert the earnings and profits of
ERG to himself (either through NPI or directly) and to thereby
lower the reportable profits of ERG.” Respondent alleges that
Burton labored to reduce ERG’s profits because the unbundling
agreement required him to pay his brother a multiple of ERG’s
profits. The alleged scheme, respondent argues, was perpetrated
in three ways: (1) Various transactions to divert cash from ERG
to NPI; (2) ERG’s payment for 143 Alice Lane for the Bensons’
benefit; and (3) ERG’s direct payment of the Benson family
personal expenses. Respondent alleges Burton’s scheme was also
intended to defraud the Government of income tax due and owing.
The Bensons seek solace in the circumstances surrounding the
preparation and filing of their income tax returns. The Bensons
allege that the uncertainties associated with the brothers’ legal
and personal struggle to control the closely held entities, the
pressures of running successful and profitable businesses, and
the death of their longtime accountant and tax preparer caused
their failure to prepare timely and accurate tax returns, not
intentional malfeasance.
As discussed in detail below, the voluminous record in this
case does not sustain respondent’s burden of proving by clear and
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