Carmelo Montalbano - Page 3

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         a downward departure from the sentencing guidelines was therefore            
              On July 19, 2000, petitioner appeared before the U.S.                   
         District Court for the District of New Jersey and pleaded guilty             
         to violating section 7201 with respect to his 1994 return.  In               
         sworn testimony, petitioner gave the following factual basis for             
         his guilty plea.  During 1994 and 1995, petitioner was president             
         and owner of an S corporation known as BHN Corp. (BHN), which was            
         engaged in providing computer software-related products to the               
         Dreyfus Corporation.  In 1994, petitioner traveled to the Cayman             
         Islands and opened a bank account at the Guardian Bank and Trust             
         (Cayman) in the name of the Cooper Corp. (Cooper).  During 1994,             
         he diverted about $651,000 of taxable income from BHN by causing             
         the funds to be deposited into the Cooper account and his                    
         personal bank account in New Jersey.  Petitioner caused BHN to               
         file a Federal tax return that omitted the $651,000 of income.               
         Petitioner also intentionally failed to include the $651,000 of              
         income on his 1994 personal Federal income tax return, in a                  
         knowing and willful attempt to evade and defeat a substantial                
         part of the income tax due and owing to the United States for                
              The District Court accepted petitioner’s guilty plea and                
         entered judgment finding him guilty of willfully attempting to               
         evade or defeat tax in violation of section 7201 and 18 U.S.C.               

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