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In August 1992, Jackie Anderson, C.P.A., telephoned Mr.
Rangel and advised him that she was representing petitioner.
Although she told Mr. Rangel that she would provide the documents
he had requested, Ms. Anderson did not.
On November 20, 1992, Mr. Rangel served a summons on Merrill
Lynch for petitioner’s records. Mr. Rangel sent a notice copy of
this summons to petitioner. Petitioner contacted Merrill Lynch,
spoke to Christopher Eng in the company’s compliance department,
and tried to dissuade him from complying with the IRS summons.
After speaking to petitioner, Mr. Eng contacted Mr. Rangel and
asked whether Merrill Lynch was required to comply with the
summons. Mr. Rangel advised Mr. Eng that the IRS would take
enforcement action against Merrill Lynch if it did not produce
the requested records. On or about December 22, 1992, Mr. Eng
forwarded petitioner’s Merrill Lynch statements to Mr. Rangel.
After receiving the Merrill Lynch statements, Mr. Rangel
discovered checks written to petitioner out of the client trust
account and deposited in her Merrill Lynch account. Mr. Rangel
asked petitioner or her representative about several deposits
made into her Merrill Lynch account during the years in issue,
including the $25,000 deposit made in 1988. Petitioner or her
representative told Mr. Rangel that the $25,000 deposit was an
inheritance from the estate of Mr. Ludlow’s mother, who died in
1984.
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