Carmelo Montalbano - Page 4

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         section 2 (1994).  The District Court fined petitioner $30,000               
         and sentenced him to 3 years’ probation.  In its judgment, the               
         District Court imposed the maximum fine indicated under the                  
         applicable sentencing guideline range ($3,000 to $30,000) but                
         departed from the guideline imprisonment range (12 to 18 months)             
         “based on diminished capacity due to the defendant’s bipolar                 
              Subsequently, petitioner consented to respondent’s                      
         assessment of $224,455 underlying tax liability for 1994 but                 
         disputed respondent’s proposed imposition of a section 6663 civil            
         fraud penalty.  By notice of deficiency, respondent determined               
         that pursuant to section 6663, petitioner is liable for a fraud              
         penalty of $167,918 for 1994.                                                
              Respondent has moved for summary judgment on the ground that            
         petitioner’s criminal conviction under section 7201 collaterally             
         estops him from contesting his liability for the fraud penalty               
         under section 6663(a).  Petitioner contends that a finding of                
         fraud under section 6663 is negated because in his criminal                  
         proceeding the sentencing court found and the Government                     
         stipulated that petitioner committed the offense while suffering             
         from a diminished mental capacity.  On this ground, petitioner               
         opposes respondent’s motion for summary judgment and has cross               
         moved for summary judgment.                                                  

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