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on which they built their personal residence and the homes of
their two sons. Substantial expenses related to the improvement
of the 80-acre tract and the construction of the three residences
on site were charged to business accounts. Petitioner testified
at trial that he paid all the costs of his home and related
improvements out of Flair Enterprises’ account. Additional
personal expenses deducted from business accounts include dry
cleaning bills, lease payments for personal vehicles, insurance
premiums on a personal water craft and on a Winnebago, utilities
and taxes at petitioners’ lake house, and several personal family
vacations.
Additional evidence of fraud in this case consists of
inconsistent and implausible explanations of behavior by
petitioners and members of their family that were involved with
their business. For instance, Trent stated during the audit, as
informed by petitioner, that no checks were being cashed during
the years in issue and all income was deposited into the
company’s account. Mrs. Haney stated during the audit that no
checks were cashed after Steelman was fired in November 2000.
These statements are contradicted by bank records. The evidence
establishes and petitioners admit that Mrs. Haney regularly
cashed certain checks payable to Flair Enterprises through
September 2001, and handwritten records regarding such
transactions were maintained substantially by Gina Haney.
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Last modified: November 10, 2007