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Between 1995 and 1999, petitioners, Phillips, and Nina
Spratt, an employee of petitioner’s dental office, cashed checks
and withdrew cash totaling $7,676,000 in $9,500 increments both
from petitioners’ personal account and from that of T.J.
Construction. The $9,500 amount was just below the $10,000
threshold at which banks are required to report large
transactions to the Federal Government, which resulted in these
cash transactions’ avoiding at least immediate scrutiny. In
1997, the year in issue, petitioner cashed or caused to be cashed
checks totaling $1,976,000. In 1996 and 1998, petitioner cashed
or caused to be cashed checks totaling $1,957,000 and $2,527,000,
respectively.
Mrs. Kosinski regularly withdrew cash in $9,500 increments
from petitioners’ checking accounts at her husband’s direction.
Between 1995 and 1999, she cashed nearly 300 checks for her
husband totaling approximately $2.85 million. In 1997 alone,
Mrs. Kosinski cashed 87 checks, each for $9,500. On one
occasion, she wrote a check to cash for $10,000 and left the
check in an envelope under a doormat for Phillips to pick up.
Petitioner wrote 36 checks totaling $2,919,974 in 1997 to
Phillips or Phillips Contracting that were endorsed back to
petitioner and deposited into the personal bank account of
petitioners. In 1996 and 1998, petitioner wrote checks totaling
$2,079,253 and $3,144,398, respectively, that were endorsed back
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