Ellis E. Neder, Jr. - Page 5

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          financing of the real estate development projects identified                
          above:  Bank, wire, and mail fraud; conspiracy to defraud a                 
          financial institution; submitting false statements (overvalued              
          land appraisals) to Federally insured financial institutions;               
          racketeering; and obtaining land acquisition and construction               
          loans under false pretenses.  Petitioner was also charged in                
          counts 86 and 87 with violating section 7206(1) (willfully filing           
          false tax returns) for 1985 and 1986.2  Count 86 of the                     
          indictment alleged in pertinent part:                                       
               the defendant * * * did knowingly and willfully make                   
               and subscribe a U.S. Individual Income Tax Return, Form                
               1040, for the calendar year 1985, * * * which return                   
               the defendant did not believe to be true and correct as                
               to every material matter, in that the said return                      
               reported a total income of $53,625 for said calendar                   
               year, whereas, as the defendant then well knew and                     
               believed, he had received additional income in the                     
               approximate amount of $1,361,361.79 and had not                        
               reported such income in his tax return.                                
                    In violation of Title 26, United States Code,                     
               Section 7206(1).                                                       
          Count 87 of the indictment was substantially like count 86.  It             
          charged that petitioner knowingly failed to report income of                
          $4,268,767.83 on his 1986 tax return.                                       
               At the criminal trial, the Government called an Internal               
          Revenue Service special agent (the special agent) as a witness.             

               2  Sec. 7206(1) makes it a felony for a person to willfully            
          make and subscribe any return, statement, or other document,                
          which contains or is verified by a written declaration that it is           
          made under the penalties of perjury, and which such person does             
          not believe to be true and correct as to every material matter.             





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