In Uncategorized on 07/08/2019 at 16:42

Samuel Wegbreit and Elizabeth J. Wegbreit, 2019 T. C. Memo. 82, filed 7/8/19, have unerring noses for fraud. And among other frauds, they meet up with “…Sugarloaf Investment Fund (Sugarloaf).  Sugarloaf contributed Brazilian receivables to the [Wegbreit phony trust] as part of a distressed asset trust transaction (DAT transaction).  Petitioners Wegbreit claimed losses generated by the DAT transaction on their return….  Their deductions of losses in the DAT transaction were not allowable, and the parties have stipulated that they would be bound by this Court’s final judgment in Kenna Trading, LLC v. Commissioner, 143 T.C. 322 (2014), aff’d, 911 F.3d 854 (7th Cir. 2018).” 2019 T. C. Memo. 82, at pp. 39-40.

Readers of this my blog will recall Mr. Rogers and his dicey neighborhood; if not, see my blog “To Build a Record,” 10/16/14.

But there’s a lot more. Backdated documents, dubious notarial acknowledgements, trusts that are alter egos, and offshore insurance policies from insurers whose existence is, let us say, problematic. And trial  testimony that is, shall we say, unhelpful.

Judge Mary Ann (“S.E.C. = She Eschews Cognomens”) Cohen trudges through the morass and nails the Wegbreits on all counts.

But she seems to have gotten little help from counsel on both sides. “The number of documents in the record that are on their face unreliable has made this case considerably more difficult.  Our chore is compounded because the parties included numerous duplicate copies of key documents without explanation or analysis.  Notwithstanding the Court’s comments and directions at the conclusion of the trial, the briefs of the parties failed to focus on the material facts.  Respondent’s proposed findings of fact merely summarize testimony and documents and generally fail to analyze the transactions and entities involved.  See Rule 151(e).  Respondent continues to use the shotgun approach to theories of the case rather than selecting the strongest arguments and focusing on them.  Petitioners Wegbreit’s briefs misstate the record and are unreliable.  After dealing directly with the record with little aid from the parties’ briefs, we conclude that the reliable evidence is clear and convincing as to unreported income and fraudulent intent.” 2019 T. C. Memo. 82, at pp. 48-49.

Takeaway- Make the judge’s job easy, and she might make yours easy, too.

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