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(2) Petitioner diverted substantial amounts of money from
his related corporations, Alviso and GMT. To hide the character
of these funds petitioner gave a portion of these diverted funds
back to his corporations, labeling those funds as loans. To that
end, petitioner purposely misled his accountants as to the true
nature of these funds. For example, on one of GMT’s bank
statements for the account into which a $50,000 check was
deposited, there is a handwritten notation that the corporation’s
bookkeeper made which reads “Art [the accountant]- George put
this money out of pocket - don’t credit as income. We’re going
to pay our line of credit monthly out of this account, Yvonne.”
(3) Petitioner garnered significant funds over a 3-year
period from his solely owned, unincorporated business Newark T&B,
and he failed to report any income earned therefrom. Petitioner
characterized this endeavor on his income tax returns Schedules E
as a “lot”. Furthermore, petitioner failed to maintain proper
books and records for this business.
(4) Petitioner maintained an automobile racing business,
which also earned him substantial sums of income. Again,
53(...continued)
very least vague and ill-informing. This statement speaks only
to petitioner’s inability “TO REPORT HIS SHARE OF THE
PARTNERSHIP’S ACTIVITY FOR THE 1990 TAX YEAR.” The statement
does not communicate that in 1990 petitioner received at least
$300,000 of value in exchange for his interest, a transaction
which is clearly not a “partnership activity”. Furthermore, the
statement refers only to Tri-City and not to Newark Wreckers.
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