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Contracts and Straddle Positions; and Statement 6, Regulated
Futures Contract Marked to Market, which were all attached to the
1983 joint Federal income tax return.
Petitioner signed the 1983 joint income tax return.
Petitioner did not review the 1983 income tax return before
signing it. Further, petitioner did not have any discussions
with, or make any inquiries of, Mr. Campbell or Mr. Esses about
the 1983 tax return before or at the time of signing it.
Audit of 1983 Return
In 1986, the Campbells’ joint Federal 1983 joint tax return
was chosen for audit. The audit of the 1983 joint tax return was
the result of a criminal complaint filed by the U.S. District
Attorney for the Central District of California against the
individuals who organized the London straddle. The complaint
alleged that the six individuals prearranged commodity
transactions using the Van Lessen brokerage firm. The Federal
Bureau of Investigation uncovered evidence of a prearranged
commodity transaction by Mr. Campbell that resulted in a loss of
$2,684,000 and a corresponding gain of $2,645,000 for Refco
Foods, Ltd. The $2.684 million loss generated the net loss of
$2,591,028 from the Van Lessen account claimed on the 1983 income
tax return.
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