Jerry and Patricia A. Dixon, et al. - Page 5

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          periodic and/or lump sum contributions to a fund (hereafter, the            
          “Defense Fund” or “Fund”) created to share the cost of the test             
          case litigation.5                                                           
               Following a 3-week trial, the Court sustained virtually all            
          of respondent’s determinations in each of the test cases.  See              
          Dixon v. Commissioner, T.C. Memo. 1991-614 (Dixon II).6  Shortly            
          thereafter, on June 9, 1992, respondent notified the Court that,            
          prior to the trial of the test cases, respondent’s trial                    
          attorney, Kenneth W. McWade (McWade), and his supervisor,                   
          Honolulu District Counsel William A. Sims (Sims), had entered               
          into contingent settlement agreements with two of the test case             
          petitioners (the Thompsons and the Cravenses) and had failed to             
          disclose those agreements to their superiors, to the Court, or to           
          the other test case petitioners or their counsel.  Respondent               
          asked the Court to conduct an evidentiary hearing to determine              
          whether the undisclosed agreements had affected the trial of the            
          test cases or the opinion of the Court.  The Court denied                   
          respondent’s request for an evidentiary hearing, entered                    
          decisions giving effect to the Thompson and Cravens settlements,            
          and reentered or allowed to stand the decisions sustaining                  

          5 The Defense Fund was initially known as the Don Belton                    
          Legal Defense Fund and subsequently became known as the Atlas               
          Legal Defense Fund.                                                         
          6 Prior to the trial of the test cases, the Court had issued                
          an opinion rejecting the test case petitioners’ arguments that              
          certain evidence should be suppressed and that the burden of                
          proof should be shifted to respondent.  See Dixon v.                        
          Commissioner, 90 T.C. 237 (1988) (Dixon I).                                 

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