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cases. Unless petitioners took some action, they faced possible
dismissal of their cases and entry of decisions against them, as
stated in the Court’s December 18, 2002, notices setting the cases
for trial.
That potential outcome obviously would have been less
attractive to petitioners than respondent’s settlement offer,
which offered substantial concessions; specifically, a reduction
in the Gazis’ tax liability of about $800,000, including
substitution of negligence penalties for the fraud penalty. Mr.
Gazi had received this settlement offer on May 2, 2003. He had
discussed it with Ms. Miller, Mr. Kauffman, and Mr. Kell. Both
Mr. Kell and Mr. Kauffman had advised him of the benefits of
accepting the settlement offer and later pursuing options to avoid
paying the resulting tax liability. Especially in light of these
various considerations, we find credible Mr. Kauffman’s testimony
that on May 15, 2003, Mr. Gazi authorized him to pursue settlement
with Ms. Miller and a short time later authorized him to accept
respondent’s settlement offer.
Petitioners seem to suggest that someone, ostensibly Mr.
Kauffman, misled Mr. Gazi into believing that the Court had
granted a last-minute continuance of these cases, and that Mr.
Kauffman and Ms. Miller then proceeded in bad faith to enter into
a settlement agreement that they knew petitioners had not
authorized and that was never disclosed to petitioners. We find
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