Yung and Anita F. Chong - Page 3

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          opened his shop next to the U.S. embassy, and at first the store            
          did well.  But then, in 1999, Lok discovered that several of his            
          employees were importing yogurt from France in direct competition           
          with Gourmet Down Under.  Even worse, they were using company               
          facilities, storage, delivery trucks, and business contacts to do           
          so.  Lok fired five employees.  Unfortunately, he fired them                
          during Chinese New Year--which, as he credibly testified, is a              
          big taboo in Chinese culture.                                               
               Retribution was swift:  the storefront was torched, the                
          office was ransacked, and the bank account was drained.                     
          Everything was destroyed, including the business records.  Lok              
          filed a police report with the Beijing Public Security Bureau,              
          but made no effort to reconstruct the store’s daily business                
          records from prior years.  The only documentation from the 1998             
          tax year was a general profit and loss statement and a balance              
          sheet, both of which Lok sent to Yung in early 1999.  There were            
          no records to support the revenue and expenses that Yung and his            
          wife reported on their 1998 return, or to prove Yung’s percentage           
          ownership of the business during the year.  The only thing that             
          can be determined about Yung’s interest, and even that by                   
          testimony alone, is that he owned one-third of the business by              
          the end of 1998.                                                            









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