Paul Bi-Yang Chen and Chiu-Mei Chen - Page 9

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                    arguing at one point that he kept the whole $287,000 to           
                    cover a gambling loan of only $7,000; and                         
               !    concealment of assets--when Mr. Chen received the                 
                    reimbursement check from Chubb, he directed his wife to           
                    open a fake account for Beam, into which he deposited             
                    the proceeds.                                                     
               The Chens’ counterargument is that despite these telltale              
          signs of fraud, they should be spared the penalty because they              
          cooperated with the IRS, kept company records, filed their tax              
          returns, etc.  However, these actions are not enough to overcome            
          the substantial evidence of fraudulent intent to evade tax on the           
          ill-gotten insurance proceeds.  Nor is the Court able to rely on            
          PCTI’s records in the face of credible evidence that those                  
          records were created to cover up the Chens’ fraud by making it              
          seem to be a payment on an account receivable.  We conclude that            
          the Commissioner has met his burden of proving fraud by clear and           
          convincing evidence.                                                        
               There is no statute-of-limitations problem in this case.               
          See sec. 6501(c)(3).                                                        
          II. Innocent Spouse Relief                                                  
               The Chens eloquently argued at trial that Mr. Chen was the             
          more guilty party--and the Court does find that he was the                  
          architect of the fraud at issue.  It was also his gambling                  
          compulsion that motivated Mrs. Chen to help him move the stolen             
          money in and out of her account.  The Chens argue from this                 
          lesser culpability that Mrs. Chen should be relieved from joint             






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