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omitted. The Court of Appeals further described the Thompson
settlement as a “vehicle for paying Thompson’s attorney’s fees”,
notwithstanding McWade’s testimony that the settlement “was
attributable to a separate transaction.” Id. at 1045.45
The opinion of the Court of Appeals displays its
understanding that the Thompson settlement was a covert
transaction, a “secret settlement agreement” that “was a vehicle”
to provide the Thompsons with advantages--including payment of
attorney’s fees through a drastic reduction of deficiencies, and
elimination of Kersting and non-Kersting additions--over and
above those offered to other taxpayers. Thus, while our sanction
should put the other affected taxpayers in the position of having
received the benefits the Thompsons received, those benefits
should be fairly traceable to the sanctionable conduct of
respondent’s counsel, McWade and Sims. As we informed the
parties in an order dated February 28, 2005:
45The reference to a “separate transaction” is to the
Thompsons’ participation in the Bauspar program. In his brief to
the Court of Appeals, Izen explained that McWade and Sims had
misled this Court by “denying that the Thompsons [sic] settlement
was a vehicle for paying DeCastro’s legal fees for representing
the Thompsons at the trial of the test cases, [and] by testifying
that the Thompsons [sic] settlement was attributable to the
Thompsons’ participation in the Bauspar program.” Additionally,
as we observed in Dixon III, “Mr. McWade testified that the
Thompsons’ settlement was revised in the summer of 1989 in order
to dispose of the Bauspar issue. Mr. McWade denied that the
Thompsons’ settlement was revised to provide a means for the
Thompsons to pay Mr. DeCastro’s attorney’s fees.”
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