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through a network of corporations and bank accounts that he
controlled.7 Gause and others, including Rowe, represented to
the investors that the proceeds from the sales of securities
would provide high-interest consumer loans. Contrary to those
representations, most of the proceeds were used to pay interest
and principal to earlier investors, as well as commissions and
fees to the promoters. Rather than making a profit on the
investments, petitioners lost most of the money they invested.
D. Petitioners’ and the OMK Trusts’ 1998 Returns
Larry Dickson (Dickson) of Isler & Co. in Medford, Oregon,
prepared the 1998 income tax returns for petitioners and the OMK
trusts. Someone associated with NTS had recommended Dickson as
an accountant knowledgeable in taxation of complex trusts, as
well as a “church member”. Dickson prepared petitioners’ 1998
Form 1040, U.S. Individual Income Tax Return, as well as separate
1998 Forms 1041, U.S. Income Tax Return for Estates and Trusts,
for the OMK Family Trust and the OMK Company Trust.
On their return, petitioners reported total income of
$5,245, including $245 of dividends and $5,000 of trustee fees
7Gause pleaded guilty to conspiracy, securities fraud, and
international money laundering in connection with the Ponzi
scheme. United States v. Gause, Criminal Action No. 99 Cr. 1100
(S.D.N.Y., Oct. 24, 1999). The Government of the Cayman Islands
charged Rowe and Patrick Tibbetts with money laundering in
connection with Gause’s “Cash 4 Titles” scheme. See In re United
States, No. 04-MC-9 (N.D.W.Va. Apr. 15, 2004)(order granting
motion for writ of habeas corpus ad testificandum).
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