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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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