Csaba L. Magassy and Frances H. Magassy - Page 13

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          During both charters involving PSA, petitioner and Mrs. Magassy             
          were on board the Feadship, and during one of those charters,               
          petitioners’ two sons were on board.                                        
               For the 1996 charter boat season, petitioner’s Feadship was            
          not listed in the Charter Databank International Listings, an               
          important multiple listing service for a successful charter boat            
          operation.                                                                  
               From the time of purchase in 1990 and through 1995, the                
          first year of chartering the Feadship, petitioner kept invoices             
          and copies of checks relating to payment of the restoration costs           
          of the Feadship.  During this period, however, petitioner’s books           
          and records relating to the Feadship were not complete.                     
               Between 1990 and 1994, petitioner incurred more than                   
          $334,000 in interest expenses relating to the $1 million and the            
          $300,000 loans petitioner obtained to purchase the Feadship.                
               Before 1996, incomplete books and records were maintained              
          relating to petitioner’s and SMSM’s costs and expenses for the              
          restoration work on the Feadship and for the charter of the                 
          Feadship.                                                                   
               In 1996, Midge McKee Hopkins (Hopkins), the longtime                   
          bookkeeper for PSA, began maintaining computerized books and                
          records relating to the Feadship and to write the checks to pay             
          the bills relating to the Feadship.  Each month, Hopkins received           
          an envelope of bills, bank registers, and bank statements from              






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