T. C. Mem o. 2 01 6- 74

UNITED STAT ES TAX COURT

ANGELINA ALHADI, Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 17 69 6- 10
. Fi le d Ap ril 21 , 20 16
. Ang el in a Alh ad i, p ro se. Jo n D. Fel dh am

m er, Tho m as R. Tho m as , Patric iaDon ah ue , andTren t D. Usi ta lo , forres po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION HOLMES, Ju dg e: Arth urMars h wo rk edha rdan d l iv edsi m pl y forde cad es , bu t wh enhe be cam e o ldan d i nf irm he m etAng el in a Alh ad i. Inth e two las t years of hi s l ife , sh e so m eh ow ca m e to rece iv e m or e th ana m il li on do ll ars fro m hi m .- 2 -

[* 2] Sh e cl ai m s t ha t the se tra ns fers were n on ta xabl e lo an s o r gi fts . The Co m m is si on er s ay s t he y

were the pro ceed s o f un du e in flu en ce an d e ld er ab us e. He wan ts he r to pay

tax onit . Andhe want s a f rau d p en al ty too . FINDINGS OF FACT Arth urMars h Art M ars h was bo rnin Mo nt an a a ce ntury ag o, i n l at e Dece m

be r 19 15 . His pa ren ts weren ’t to o fa r rem ov edfro m th e fi rs t h om es te ad ers , andhe gre w up on th ei r farm in Ple nt ywoo d a s t he fif

th of s ev ench il dr en . His m othe r worke d a ll da y to do th e laun dry

an d p rep are m eal s fo r he r fam il y , whi le hi s fa th er t en de d t o t he la nd . Neithe r ha d m

uc h e du cat io n, an d t he ir l iv es were re co rd edon ly in the sh ort
an d s im pl e an na ls of t he po or . Man y de cad es lat er h e rec al le d tha t the re h adn’t be enm uc h ro om forten de rn es s. He n ev er o nc e h eardhi s fa th er t el l h is m othe r th athe lo ve d h er, an d h e n ev er o nc e sa w hi s p aren ts sh ow af fect io n t o e ach ot he r. Art’s educ at io n was cu t s ho rt b y th e Dep res si on , anditsee m edhe co ul d l oo k fo rwardto th e sa m e h ard sc rab bl e li fe. The n t he war cam e. Afte r Pea rl Ha rb or , Arth ur Mars h v ol un te eredan d be cam e anen li st edm an . He serv edth e co un try ho no rab ly in a s ta te si de po st in g, an d a fte r he was d is ch arg edhe us edhi s GI b en efi ts to ge t a h ig he r educ at io n.- 3 -

[* 3] Dr. Arth urMars h m ov edto Cal ifo rn ia . It was th e Gol de n S ta te ’s go ld en ag e. The C it y

of Gi lro y --the sm al l t own wher e h e se tt le d a fte r th e war-- bo om ed with i ts st at e, do ub li ng in si ze an d t he n d oubl in g a ga in an d d oubl in g o nc e m or e. Dr. Mars h o pe ne d a n o pt om etry pra ct ic e th ere; an d a s Gi lro y pro sp eredan d i ts
m id dl e cl as s g rew, h e sa w to th e v is io n o f th ree g en erat io ns of f am il ie s. Dr. Mars h a ls o s etdo wn d eep roo ts inhi s t own . He join edciv ic
as so ci at io ns li ke th e Ro ta ry Club, g rew thi ckco nn ect io ns inhi s p ro fes si on , and
was a fai th fu l m em

be r of hi s l oc al ch ur ch . He lo ve d t he ou td oo rs an d wo ul d o fte n ta ke va cat io ns th ro ug ho utth e West wi thhi s b ro th ers an d s is te rs an d n ie ces an d
ne ph ews . Buthe ne ve r m arri edor h adch il dr enof h is own , andwhen he returne d ho m e, itwas a lways to th e sa m e se co nd -fl oo r ap art m en t o n C arm el Str eet . It was
on ly abo ut80 0 s qu are f

eet , andDr. Mars h fu rn is he d i t m od es tl y --a s m al l t ab le with asi ng le ch ai r onth e ri gh t wh enon e wal ke d i n, a l iv in g ro om co nn ect edto a ki tc he ne tt e, an d asi ng le be dr oo m an d b ath. Dr. Ma rs h was by no m ean s a m is er, bu t the po ve rty of h is ch il dh oo d a ndy ou th ha d- -as itdi d t o s o m an y of h is ge ne rat io n- -m ark edhi m

forli fe an d m ad e h im

fru ga l. He ren te d h is li tt le ap art m en t fo r $1 75 a m on th an d g otby larg el y on So ci al Secu rity . ButDr. Mars h ha d b een a go odbu si ne ss m an , sav in g o ve r $1 m il li on be fo re h e ret ire d i n t he ‘ 80 s an d i nv es ti ng itpru de nt ly w el l i nt o re ti rem en t u nt il itreac he d n earl y $3 mil li on .- 4 -

[* 4] His fri en ds so m et im es jos he d h im ab ou t h is habi ts , bu t h e wou ldjus t t el l the m th athi s wea lt h was in su ran ce ag ai ns t h av in g t o l eav e h is ap art m en t o f 50 y ears to en d up i n anu rs in g h om e. Bu t the si le ntart il le ry

of t im e b eg anto bra ck ethi m --h is bro th ers an d s is te rs di edon e aft er the othe r. Then , at t he st artof the ne w cen tu ry , ithi t h im to o. In 20 00 he ha d aterrib le fal l an d b ro ke hi s h ip , whi ch sen t h im to th e h os pi ta l an d reh ab . He beg anto us e a wal ke r an d c ou ldno t l eav e h is sec on d- st ory ap art m en t witho uthe lp . In 2 00 7, wh enhe was 9 1, thi ng s g rew s ti ll wors e. He co ul dn ’t dri ve a car , he c ou ld n’t g o t o t he do ct or , andhe co ul d n o l on ge r ev enpre pa re h is own fo od . He su ffer edfro m

in co nt in en ce, at ria l fi br il la ti on , con ge st iv e h eartfai lu re, hypert en si on , chr on ic ba ckpa in , arthr it is , hea rin g l os s i n b ot h e ars , and de te rio rat in g v is io n; th enhe su ffer eda st ro ke inth e ri gh t fr on ta l l ob e o f hi s b rai n. 1 His ph y si ci an , Dr. Georg e Green , di ag no se d h im with d em en ti a an d
co gn it iv e d ecl in e. Thes e n eu ro lo gi cal pro bl em s s ho wedth em se lv es inDr. Mar sh ’s po orsh ort-t erm

m em ory , di m in is he d l on g- te rm m em ory , in ab il it y

to pe rfo rm si m pl e ari th m et ic , andpe rs is te ntde fic ie nc ie s i n v is uo sp at ia l an al y si s. The se pro bl em s al so m ad e h im vu ln erab le --i t h adbe co m e d iff ic ul t fo r hi m

to Acco rd in g t o Dr. J on athan M ue ll er, the ne ur op sychi atric sp eci al is t wh o 1 ex am in edDr. Mars h, thi s i s t he pa rt o f th e b rai n a ss oc ia te d wi threfl ect iv e se lfaware ne ss an d i ns ig ht
.- 5 -

[* 5] rem em

be r an y in fo rm at io n abo uthi s as se ts . Test s s ho wedth athe co ul dn ’t rep eatfiv e d ig it s i n s eque nc e--l etalo ne m an ag e, an al y ze, o r pr ot ecthi s s ev en fig ur e weal th . In J anua ry 20 07 Dr. Mars h was adm it te d t o S t. Lo ui se Reg io na l Hos pi ta l fo r de hydrat io n. Hi s d oc to r kn ew he li ve d a lo ne , kn ew he ha d n o imm ed ia te fam il y , andkn ew th athi s ro om was o n t he sec on d fl oo r. Even as h e reco ve reda bi t i n t he ho sp it al , Dr. Mars h was to ldhe co ul dn ’t go ba ckwitho ut fir starra ng in g fo r in -h om e car e. Ms . Ang el in a Alh ad i Ent er Ms . Ang el in a Alh ad i. Ms . Alh ad i i s a n at iv e o f th e Ph il ip pi ne s. Sh e ha d i m m ig rat edin th e ‘80 s an d t ol d Dr. M ars h t ha t s he was b orn i nt o apo or fam il y an d s pe ntm an y

y ears work in g i n ri ce p ad di es . She cla im edto ha ve a ba ch el or ’s deg ree i n m ed ic al tec hn ol og y inhe r na ti ve co un try. She fo un d wo rk he re as a nu rs e’s as si st an t, wh ic h i s wh atsh e d idfir stat S t. Lo ui se Hos pi ta l i n 19 98 an d t he n a t a n ur si ng ho m e cal le d C ov en an t Ca re i n 2 00 3. Whensh e was n’t
worki ng th es e two job s s he li ve d i n aho us e in Hol li st er, Cal ifo rn ia , th atsh e co own edwith h er es tra ng edhu sb an d a ndfel lo w imm ig ran t, Yah y a Has sa n Al ha di
. The y ha d thr ee ch il dr en . St . Lou is e kno ws the eld erl y canbe vu ln erab le , anditha s a wri tt enpo li cy th atba ns it s emplo y ees fro m so li ci ti ng workfro m

pa ti en ts . Butne ve r m in d- -Ms .- 6 -

[* 6] Alh ad i s li pp eda no te to Dr. Mars h wh ensh e h eardth athe wou ld n’t b e di sc ha rg edwitho utso m e in -h om e car e rea dy for h im
. Dr. Mars h a ccep te d h er o ffer , andsh e b ecame his pri m ary care gi ve r atth e be gi nn in g o f 20 07 . As pa rt o f he r em pl oym en t, Ms . Alh ad i was supp os edto pr ep are h is m eal s, b athe hi m , m ak e su re h e to okhi s dru gs , pro vi de ba si c nur si ng , sh op for gro ceri es , do hi s b an ki ng , dri ve hi m wher ev er h e n eed edto go , hel p h im to an d fr om

th e b athr oo m , wash hi s cl ot he s, cl ean hi s ap art m en t, an d p ro vi de so m e co m pa ni on sh ip forwhatha d b eco m e a l on el y ol d a ge . Dr. Mars h h ire d M s. Al ha di at a n h ou rly rate, a ndsh e d ep os it edhe r fi rs t pa y ch eckfro m

hi m in Jan ua ry

20 07 . She was p ai d a cco rd in g t o t he ir i ni ti al ho ur ly
arra ng em en t thr ou gh Marc h. Bu t the n h e ag reedto pa y he r $6 ,00 0 am on th forhe r se rv ic es --ev enth ou gh th e g oi ng rat e was $3 ,75 0. He al so ga ve he r $1 ,00 0 a
m on th forgro ceri es --ev enth ou gh he ne ed edon ly $40 0 am on thto feedhi m se lf,
an d h is m in ifr id ge co ul d h ol d o nl y ab ou t $ 50 wort h o f fo od
. Ms . Alh ad i b eg an m ak in g d ep os itaft er d ep os itof c as h i nt o h er b an k a cco un t. Dr. Mars h’s p aym en ts to Ms . Alh ad i b ecame irreg ul ar. On Ap ril 14 he wrot e a ch eckto he r fo r $1 1,1 00 ; two day s l at er h e wro te he r an ot he r fo r $1 00 ,00 0. He al so bo ug hthe r expe ns iv e el ect ro ni c equi pm en t.- 7 -

[* 7] Ms . Alh ad i’s l ife st y le be ga n t o i m pr ov e. InJune 20 07 sh e u se d m on ey fro m Dr. Mars h t o m ak e a d ownpa y m en t o n am il li on -d ol la r ho m e in Gil ro y . After t ha t, sh e b eg anto pre ss ur e Dr. Mar shto he lp he r wit h h er m ortg ag e p aym en ts . By th e en d o f Nov em

be r 20 07 , he h adwrit te n c he ck s t o h er tha t ad de d up t o ro ug hl y $4 00 ,00 0- -wh ic h s he us edto pa y off he r hu sb an d’s $ 80 ,00 0 i nt eres t i n t he ir o ld ho m e in Hol li st er an d t o re m od el he r ne w ho m e in Gil ro y . She sp en t $ 7,0 00 on fu rn itur e (p ur ch as edby D r. Mar sh forhe r); $8 ,00 0 o n ane w st on e fac ad e; $3 4,0 00
on lan ds cap in g wo rk ; an d $ 73 ,00 0 o n ane w po ol co m pl et e wit h asp a an d a

“ th erap eu ti c tu rtl e m os ai c.” Thi s n ew po ol alm os t b ecame a pro bl em forhe r. She to ldDr. Mars h abo ut he r pl an s fo r itbe fo re wo rkbe gan. He s ai d h e d id n’t s ee h ow i t m ad e se ns e fo r he r to bu il d apo ol un ti l s he ha d h er h ou se pa idoff . She ig no redhi m . Thenon e da y sh e p res en te d Dr. M ars h wi th th e $ 22 ,00 0 i nv oi ce fo r di gg in g t he ho le forth e po ol . He rou se d h im se lf t o a skhe r: “ Who th e h el l i s g oi ng to pa y forit ? ” Sh e ga ve hi m a lo okas i f to say: “ Lik e who th e h el l d o youth in k? I expe cty outo pay fo r it .” Dr. Mars h t he n re le nt edan d l at er s ai d t ha t h e fel t h e h adto pa y forth e po ol be cau se th e work was alr eady do ne an d h e h adto acco m m od at e h is care gi ve r. So m et im e th atsu m

m er Ms . Alh ad i t ol d Dr. M ars h t ha t s he ha d wo n acru is e an d t ha t s he want edhi m

to co m e wit h h er. Thi s was a pl oy--sh e h adn’t wo n- 8 -

[* 8] an yth in g, an d h e was afra idhe ’d be all alo ne at h om e wit ho utan y ass is ta nc e whe n s he went . Dr. Mars h p ai d $ 25 ,00 0 fo r th e who le th in g. Bu t tho ug h sh e to ok hi m alo ng , Ms . Alh ad i l efthi m si tt in g a lo ne inth e su n wh il e sh e wen t o ff wit h h er own ch il dr en . Later, h e co ul dn ’t rem em be r pa y in g fo r th e cru is e an d was
su rp ris edwhen he was s ho wn the ch eckhe ha d wri tt en . Dr. Mars h was n’t yet who ll y is ol at ed . He’ d a lways be enpa rti cu la rly clo se to on e n ie ce, Sh ei laPers on . ButMs . Pers on li ve d i n S eat tl e an d h adhe r own li fe th ere. As he r un cl e g rew o ld , ho wev er, s he m ad e ita habi t t o c al l h im ev ery Su nd ay ni gh t t o c he ckin . After M s. Al ha di en te redhi s l ife , hersu cces s i n reac hi ng hi m

be cam e sp or ad ic . By

20 08 Ms . Pers onfou nditev enm or e d iff ic ul t to ge t i n t ou ch . Ms. Al ha di wou ldan swe r th e p ho ne an d t el l h er tha t h er u nc le
was asl eep or e at in g, an d s om et im es th e p ho ne wou ldjus t ri ng an d ri ng with n o an swe r. By

th e en d o f th e su m

m er o f 20 08 , nei th er Ms . Pers on no r Dr. Mar sh ’s ot he r fam il y

m em be rs were ab le to ge t thr ou gh Ms . Alh ad i t o t al k t o Dr. M ars h a t al l. Ms . Alh ad i wedis ol at io n t o e xp res si on s o f affe ct io n. Sh e to ldDr. Mars h fo uror f iv e ti m es a da y

th atsh e lo ve d h im . She su gg es te d g et ti ng m arri edan d in vi te d h im

to co m e li ve with h er. Sh e wou ldsi t i n fr on t o f hi m an d c ry ab ou t- 9 -

[* 9] ho w sh e was fin an ci al ly stru gg li ng an d wo rri edab ou t h ow s he was g oi ng to
su rv iv e an d p ro vi de forhe r ch il dr en . W e can no t fi ndth es e te ars ge nu in e, fo r Ms . Alh ad i was at t he same tim e hi di ng he r ne wfo un d fo rtu ne . In J un e 2 00 7, as pa rt o f he r di vo rce a ct io n, s he si gn edan d fi le d apro pe rty decl arat io n u nd er p en al ty of pe rjury in t he Supe rio r Co urt o f Cal ifo rn ia . In tha t d ecl arat io n, s he di sc lo se d n on e o f th e m on ey Dr. Mar shha d p ai d h er, ev enth ou gh sh e h adrece iv edat l eas t $ 15 0,0 00 by tha t p oi nt . InFeb ru ary 20 08 , as M s. Al ha di ’s di vo rce a ct io n c on ti nu ed , sh e ag ai n fi le d wi th th e co urt u nd er p en al ty of pe rjury an i nc om e-an d- ex pe ns e d ecl arat io n, i n wh ic h sh e d is cl os edon ly the in co m e sh e earne d fr om St. Lo ui se an d C ov en an t Ca re. A m on th lat er s he wentto Marg ari taLop ez, a t ax pre pa rer, t o c om pl et e h er 20 07 return. Sh e h an de d M s. Lo pe z a h an dwr it te n l is t o f he r in co m e an d
ex pe ns es ; an d wh enask edif s he ha d a ny add it io na l i nc om e, Ms . Alh ad i s ai d n o. Sh e n ev er o nc e m en ti on edDr. Mars h o r th e m on ey th atsh e h adwhee dl edfro m hi m . W e d on ’t th in k t hi s was for ge tfu ln es s. Th e Co m m is si on er i nt ro du cedin to ev id en ce the m ortg ag e ap pl ic at io ns th atMs . Alh ad i fi ll edou t t o g ettwo m ortg ag es on he r ne w m il li on -d ol la r ho m e. On th es e form s, M s. Al ha di to ldth e b an k t ha t- 10 -

[* 10 ] sh e earne d $ 15 ,00 0 am on th --$ 7,5 00 fro m he r job s atSt. Lo ui se an d Co ve na ntCare an d $ 7,5 00 fro m he r “ se co ndjob ” wit h Dr. M ars h. Yet e ve n t hi s was on ly a fract io n o f wha t h e was actua ll y pa y in g h er. By th e fal l o f 20 08 Dr. Mars h h adwrit te n c he ck s t o M s. Al ha di th atto ta le d n earl y $8 00 ,00 0. Th enMs . Alh ad i p res se d d own ev enha rd er. InOcto be r sh e g otDr. Mar shto writ e h er fi ve ch eck s, ea ch for$1 00 ,00 0. An d t he n s he wrot e to he r m ortg ag e co m

pany tha t s he di dn ’t hav e en ou gh m on ey to m ak e h er m ortg ag e pa ym en ts an d wan te d h er p aym en ts reduc ed
. Here b eg in s t he en d o f th e st ory . One s om et im es he ars m oc ke ry of t he
m od ernm an trath at“ y ou r cal l m ay be m on it or edforqu al it y -co nt ro l p ur po se s,” b ut Dr. Mars h h adhi s wea lt h m os tl y inm utua l fu nd s wi th th e Van gu ardGroup. Van gu ardreco rd s al l o f it s p ho ne cal ls . The Co m m is si on er i nt ro du cedth es e reco rd in gs , andwe were ab le to he ar Dr. Ma rs h i n h is own vo ic e. On o ne reco rd in g t ha t Oct ob er, the Vang ua rdrep res en ta ti ve id en ti fie d h ers el f an d
ex pr es se d c on cern th ata fu ndown er h adwrit te n fi ve $1 00 ,00 0 c he ck s i n s uc h a sh ort t im e. Sh e b eg anto askDr. Mars h h ow h e h adco m e to writ e th em . W e he ardMs . Alh ad i’s v oi ce i n t he ba ck gr ou nd , andwe he ardhe r te ll Dr. Mars h t o rep eathi s So ci al Secu rity nu m be r an d we h eardhe r rea d t o t he Vang ua rd rep res en ta ti ve th e acc ou ntba la nc es inhi s m on ey -m ark etfun d. In on e cal l we- 11 -

[* 11 ] he ardhe r ex pl ai n t o Van gu ardon whatda y s an d e xa ct ly how m an y sh ares Dr. Mars h h adso ldfro m

hi s ac co un ts . In an ot he r cal l o nl y th irty m in ut es lat er, we he ardhe r inth e b ack gr ou ndas s he to ldDr. Mars h t ha t h e n eed edto tel l Van gu ard th athe want s t o s el l s to ck . Ms. Al ha di , ho wev er, t es ti fie d tha t s he kn ew no th in g ab ou t Dr. Mars h’s fi nanc es . W e d on ’t bel ie ve he r. The ne xtda y , Vang ua rd ’s frau d t eam cal le d Dr. M ars h t o v eri fy th athe ha d
au th or iz edth e fi ve $1 00 ,00 0 c he ck s t o M s. Al ha di . Duri ng th is cal l we h eardMs . Alh ad i yell i n t he ba ck gr ou ndat Dr. M ars h, “ rem in di ng ” h im th athe ha d wri tt en he r fi ve ch eck s fo r $1 00 ,00 0, an d Dr. M ars h re pl ie d: “ I di dn ’t th in k t he y were al l a h un dr edth ou sa nddo ll ars ”. Thro ug ho utth e res t o f th e p ho ne cal l, Dr. Ma rs h g ot co nf us edan d s ta te d: “ I wro te on e ch eck , ten gra nd ? ” At v ari ou s p oi nt s we h eard Ms . Alh ad i thr eat enth athe was g oi ng to ge t h er i n t ro ub le if h e d idn’t co nf irm th athe ha d wri tt enhe r th e ch eck s. Van gu arddi dn ’t ho no r th e ch eck s. Itsu sp en de d h is acce ss to hi s ac co un ts
an d s en t h im

a le tt er t o e xp la in th e st ep s h e n eed edto tak e to reg ai n c on tro l. Rem em be r, th ou gh , th atDr. Mars h was ho m eb ou nd . He dep en de d o n M s. Al ha di to ge t h is m ai l, an d s he m ad e su re h e d idn’t. On o ne oc cas io n, s he to ldth e Fed Ex de li ve rym anth atDr. Mars h n o l on ge r li ve d t he re. On a no th er, s he sai d t ha t h e- 12 -

[* 12 ] wasn ’t ho m e. Lies , all li es --Dr. Ma rs h c ou ld n’t l eav e h is ap art m en t wi th ou t he r he lp
. The pe op le at Van gu ardno w kn ew so m ethi ng was s eri ou sl y wron g, an d th ey sen t a r ep ort o f su sp ect edeld er ab us e to th e Cal ifo rn iaDepa rtment o f Heal th
an d Hu m anServ ic es inNov em be r 20 08 . The Dep art m en t as si gn edSu sa n F owl e to in ve st ig at e Van gu ard ’s rep ort. Sh e is pa rt o f th e Fi nanc ia l Ab us e Sp eci al is t Team th atin ve st ig at es eld er-abu se referral s fo r th e San taCla ra Co un ty Pub li c Gua rd ia n’s Offi ce. In ve st ig at orFo wle- -wh om we fin d t o b e anen ti rel y cred ib le witne ss --wen t t o v is itDr. Mars h wi th two othe r m em be rs of h er t eam

an d in te rv ie wedhi m

for two ho ur s. Whensh e as ke d h im ab ou t the m on ey

he was pa y in g t o M s. Al ha di , he was so ad am an t tha t h e h adn’t wri tt enfiv e $ 10 0,0 00 ch eck s t ha t In ve st ig at orFo wle h adto cal l Van gu ardag ai n a fte r th e in te rv ie w to
m ak e su re i t was tru e. Thatwas wh ensh e le arn edhe ha d wri tt ena lo t m or e th an jus t fi ve . Ms . Alh ad i m ad e a l as t l un ge forDr. Mars h’s m on ey . She to okhi m to see anest at e at to rn ey , Jam es Sim on i, i n No ve m be r 20 08 to have Dr. Mars h g ran t h er a po wer o f at to rn ey . Mr. Si m on i, wh om we als o fi nda cred ib le witne ss , tes ti fie d th athe lea rn edab ou t the bl oc ke d Van gu ardacco un ts an d s up po se d p ro m is e b y Dr. Mar shto Ms . Alh ad i t o p ay he r ap pr ox im at el y

$3 00 ,00 0 i n e xc hang e fo r ta ki ng- 13 -

[* 13 ] care of h im

forth e res t o f hi s l ife . W e fi ndth atth is tri p t o h is off ic e was a pl oy by Ms . Alh ad i t o g etth os e acc ou nt s unb lo ck edan d t o g ethe r ha nd s o n t he la stfew $ 10 0,0 00 ch eck s t ha t Dr. Ma rs h h adwrit te n. Dr. Mars h l at er t ol d M r. Si m on i tha t M s. Al ha di was p res su rin g h im to ge t n am edinhi s wi ll , andth athe
ne ed edto crea te a se parat e trus t fo r he r so th athi s fam il y m em be rs wou ldn’t b e ab le to in te rfer e. Mr. Si m on i re fu se d t o b e p artof thi s, an d e ve n t rie d t o c on vi nc e Ms . Alh ad i t o re tu rnth e m on ey sh e h adalr eady

rece iv ed . She to ldhi m : “ Why sh ou ldI, he ga ve itto m e.” Ms . Alh ad i’s s ch em e so on un rav el ed . The Sa nt a Cl ara P ub li c Gua rd ia n fil eda pe ti ti on in st at e co urt t o p utDr. Mars h u nd er a t em po rary con se rv at or sh ip
. The co urt g ran te d t he pe ti ti on in Jan ua ry 20 09 ontwo gro un ds . The fi rs t was th at Dr. Mars h’s as se ts were atris k- -h e h adwrit te n M s. Al ha di ne arl y $1 m il li on in ch eck s an d t he n wro te he r an ot he r fi ve $1 00 ,00 0 c he ck s i n Oct ob er 2 00 8. The sec on d, an d e ve n m or e d ev as ta ti ng gro un d, was th atMs . Alh ad i was n’t pr ov id in g e ve n aba re m in im um of c are. Ms . Fowl e--a ndwe no te ag ai n t ha t we fo un d h er t es ti m on y

en ti rel y cred ib le --l oo ke d i n Dr. M ars h’s k it ch en . The ap pl ia nc es were o ld , th e si nkwas o ld , th e cab in et s wer e o ld , bu t on to p o f be in g o ldth ey

were n otcle an . He hadtwo li tt le li ke do rm si ze re fri ge rat or s, an d o ne was o n t he flo or , anditwas afree zer, an d th e o th er-- I as su m e itwas afree zer b ecau se th ere was ice , itwas ov erfr os te d, an d t he re was ice co m in g o utof t he do or , anditco ul dn ’t- 14 -

[* 14 ] sh ut , andth ere was a tr ai l o f an ts , andth e fo odth atwas i n thi s free zer t ha t was on th e fl oo r was rot te n. Sh e sa w gre as y

po ts an d p an s, b ro ke n u te ns il s an d n othi ng bu t s ta le foo d “ an d ju st sp ars e th in gs .” Sh e lo ok edin to hi s b edro om an d: wha te ve r was in th e drawer s, ev erythi ng th atwas c lo se to th e fro ntwas st ai ne d wi th uri ne th athe ha d s pi ll eddo wn i t b ecau se he wou ldeit he r m ay be try to g etto th e b athr oo m an d n otm ak e itan d t he n u se th e u rin al th at he ha d re st in g o n h is dre ss er an d n ob ody ha d e ve r bo th eredto cle anth is
. Sh e lo ok edinth e b athr oo m an d fo un d i t: real ly filt hy .
. . . W e p ul le d up t he ba th m atbe cau se itwas o ld er an d I wan te d t o g eta ne w on e I tho ug ht , y oukn ow, jus t t o g etth e ba th ro om cle an edup . Und ern eat h i t, the re was ge ll edm ol d a ll un de r th is ba th m at , whi chto ldm e th atno bo dy was al so cle an in g t he ba th ro om . In ve st ig at or

Fo wle a ls o c am e acr os s s om e p ap ers . Ms. Al ha di ha d ha nd writ te n ado cum en t fo r Dr. Mar sh to si gn . The d oc um en t i s i n b ro ke n Eng li sh , writ te n e nt ire ly in M s. Al ha di ’s han dwr it in g, an d p ur po rts to m ak e “ an y am ou ntof m on ey

gi ve n t o h er as a gi ft o r lo anwil l b e v oi d andcan cel le d a fte r hi s de ath.” The d oc um en t g oe s o n t o s ay th at“ I, Arth urMars h m ad e th is de ci si on in 2

W e are co nv in cedth atth is awkwa rdph ras in g was n’t an effo rt t o u nd o a ny 2 of th e “ gi fts ” Dr. Mar sh ha d g iv enhe r bu t i ns te adanatt em ptto in su la te he r fro m an y effo rt t o re co up th e m on ey sh e h adrece iv ed
.- 15 -

[* 15 ] rep aym en t fo r Ang el in a Alh ad i h er ex cel le ntcare form e fo r ta ke go odcare of hi m ev ery da y .” On Fe brua ry

13 , 20 09 , Dr. Mars h d ie d a t the ag e o f 93 . His n ie ce, Ms . Pers on , des cri be d t he sce ne at h is fun eral m as s: Ms . Alh ad i, dres se d i n fu ll hi jab
an d c arrying a si ng le redros e, tr ie d “ to crawl inth e co ffi n o r ge t i ns id e th ere and sh e was scr eam in g.” Thi s was th e la stco nt actMs . Alh ad i h adwith Dr. M ars h. InAug us t 2 01 0 t he Arth urJ. Ma rs h Tru st(Mar sh Trus t), wh ic h Dr. M ars h ha d c reat edy ears be fo re as a subs ti tu te fora wil l, s et tl eda su ititbro ug htag ai ns t Ms . Alh ad i. The tru streco ve redass et s an d $ 31 0,0 00 incas h. Ms . Alh ad i’s
m il li on -d ol la r ho m e with i ts po ol th atDr. Mars h h adpa idfor was l os t t o fo recl os ur e. Ms . Alh ad i s pe ntalm os t al l the res t o f th e m on ey or g av e itaway

or ren de reditun tra ceab le
. On b eh al f of

th e Ma rs h Tru st , San taCla ra Co un ty file d F orm s 1 09 9 fo r Ms . Alh ad i co ve rin g 2 00 7 a nd20 08 . Ms. Al ha di di dn ’t bri ng th em to he r an nu al
m eet in g wi th Ms . Lop ez, an d t he pre pa rer d idn’t i nc lu de th e in co m e th atth ey rep orte d o n h er re tu rn s. Th e IRS no ti ced , andwrot e Ms . Alh ad i t o p oi ntou t h er fai lu re. Ms . Alh ad i t oo k thi s l et te r ba ckto Ms . Lop ez, wh o warne d M s. Al ha di th atsh e sh ou ldfil e anam en de d re turnto in cl ud e th is un rep orte d i nc om e. Ms .- 16 -

[* 16 ] Alh ad i re fu se d. Re ve nu e Age ntDan S ut he rla ndlat er s en t a l ette r to Ms . Alh ad i t o t ry

to sch edul e anap po in tm en t, b utsh e cal le d b ackan d s ai d s he ’d hi red
anatt orne y . She refu se d a t tha t t im e, ho wev er, t o p ro vi de an y in fo rm at io n abo ut th is lawyer--n otev enhi s n am e. Sh e n ev er d idpro vi de Agen t Su th erl an d wi th
an yth in g, an d s he fai le d t o c oo pe rat e wit h t he ex am in at io n. The Co m m is si on er m ai le d M s. Al ha di a no ti ce o f de fic ie nc y inwhi ch he
as se rte d d efi ci en ci es an d p en al ti es on whathe de te rm in edwas ato ta l u nr ep orte d in co m e o f m or e th an$1 m il li on . W e tr ie d the cas e in SanFran ci sc o, an d M s. 3 Alh ad i was a Cal ifo rn iares id en t wh ensh e fi le d h er p et it io n.

Rem em be r th atth is is jus t the un rep orte d i nc om e an d n otth e to ta l M s. 3 Alh ad i g otfro m

Dr. Mars h. Th e Co m

m is si on er h um an el y

de ci de d b efo re tria l n ot to in cl ud e in th es e to ta ls th e $ 31 0,0 00 th atwas i n M s. Al ha di ’s acco un t an d t hu s pr ob ab ly sub

ject t o h er d om in io n a ndco nt ro l. See Co m m is si on er v . Glen sh aw Glas s C o., 3 48 U.S. 42 6, 4 31 (19 55 ). The ef fectis th atth is rem ai ni ng m on ey fro m Dr. Mars h’s l ife ti m e o f hardworkan d t hr iftwil l p as s t o h is be ne fic ia rie s an d n ot be tak enby the IRS t o p ay Ms . Alh ad i’s s ub st an ti al tax bi ll . See Barb ara K. Mo rg an , “ Sh ou ldth e So ve rei gn be Pai d F irs t? A Com parat iv e In te rn at io na l Ana lysis of t he Pri or it y

forTax C la im s i n B an krup tc y ,” 74 Am . Ban kr . L.J. 46 1, 46 3 (2 00 0)
.- 17 -

[* 17 ] OPINION Wha t ar e th e ta x c on se qu en ces of t hi s b eh av io r? A. Fai lu re To Rep ort In co m e W e g en eral ly pres um e th atth e Co m m is si on er’s d et erm in at io ns ina no ti ce o f de fic ie nc y

are co rrec t, an d the tax pa y er b ears th e b ur de n o f pr ov in g o th erwi se . See Rul e 1 42 (a); W el ch v. Hel ve rin g, 2 90 U.S. 11 1, 1 15 (19 33 ). For cas es ap pe al ab le to th e Nin th Cir cu it , th ere i s anad di ti on al qu irkinun rep orte d- in co m e cas es : Th e p res um

pt io n o f co rrec tn es s d oe sn ’t att ach un le ss th e Co m m is si on er fir stest ab li sh es anev id en ti ary fo un da ti on th atli nk s t he tax pa y er t o t he all eg ed in co m e-p ro du ci ng act iv ity . See Weim ers ki rch v. Co m m is si on er, 5 96 F.2d35 8, 36 0- 62 (9t h C ir. 1 97 9) , rev ’g 67 T.C. 67 2 (1 97 7) . W e d on ’t nee d m uc h e vi de nc e, an d wh atev id en ce we h av e n eedn’t b e d ire ct . See Gran dy v. Co m m is si on er, T.C. Mem o. 2 01 2- 19 6; Ban is te r v. C omm is si on er, T.C. Mem o. 2 00 8- 20 1, af f’d, 41 8 F
. App ’x 63 7 (9 th Cir . 20 11 ). Bu t thi s s pe ci al rul e is a lo w hu rd le he re. The Co m m is si on er i ntro du cedbankan d c red it -car d re co rd s t ha t s ho w Ms . Alh ad i
rece iv edat l eas t $ 90 0,0 00 du rin g t he y ears 20 07 an d 2 00 8 t ha t s he fai le d t o re po rt on he r ta x re tu rn s. Ms . Alh ad i d oe sn ’t den y rece iv in g thi s m on ey

fro m Dr. Mars h. In st ead , sh e arg ue s we s ho ul d e xc lu de itfro m he r gr os s i nc om e b ecau se itwas a lo anor g iftfro m

Dr. Mars h. We fin d t ha t the Co m m is si on er h as m ethi s b ur de n- 18 -

[* 18 ] he re, an d t he bu rd enof p ro of is on Ms . Alh ad i t o s ho w sh e d idn’t h av e to in cl ud e th es e tr an sf

ers in he r ta xabl e in co m e fo r he r 20 07 an d 2 00 8 t ax y ears . B. Ch arac te r of

th e In co m e 1. A lo an ? Intax law, a l oa n i s “ anag reem en t, ei th er ex pr es s o r im pl ie d, wh ereb y

on e pe rs on adva nc es m on ey

to th e o th er an d t he ot he r ag rees to rep ay itup on su ch te rm s as to ti m e an d ra te of i nt eres t, o r wit ho utin te res t, as th e p art ie s m ay ag ree.” W el ch v. Co m

m is si on er, 2 04 F.3d12 28 , 12 30 (9t h C ir. 2 00 0) (qu ot in g Co m m is si on er v . Vall ey

Mo rri s Pl an , 30 5 F .2d61 0, 6 18 (9t h C ir. 1 96 2) ), aff’g T.C. Mem o. 1 99 8- 12 1. Abo na fi de lo anis crea te d wh enbo th pa rti es in te ndto es tabl is h ade bt or -cre di to r rel at io ns hi p a t the ti m e th e fu nd s ar e ad vanc ed . Fis he r v. Co m m is si on er, 5 4 T.C. 9 05 , 90 9- 10 (19 70 ). Andwe de ci de whet he r a d eb to rcred it orrel at io ns hi p e xi st s b as edon all th e fac ts an d c irc um st an ces inth e cas e. Id
. at90 9. We focu s o n t he ti m e th atth e fu nd s wer e tr an sf erre d a ndaskwhet he r th ere was “un co nd it io na l o bl ig at io n o n t he pa rt o f th e tr an sf eree to rep ay

th e m on ey , and
anun co nd it io na l i nt en ti on on th e p artof t he tra ns fero r to sec ur e rep aym en t.” Haag v. Co m

m is si on er, 8 8 T.C. 6 04 , 61 6 (1 98 7) , aff’d, 8 55 F.2d85 5 (8 th Cir
. 19 88 ).- 19 -

[* 19 ] W e co ns id er s ev eral fact or s. So ll be rg er v . Comm is si on er, 6 91 F.3d11 19 (9 th Cir . 20 12 ); I n re Lane , 74 2 F .2d13 11 (11 th Cir . 19 84 ); s ee Ca ll oway v. Co m m is si on er, 1 35 T.C. 26 , 37 (20 10 ), aff’d, 6 91 F.2d13 15 (11 th Cir . 20 12 ); aff’g T.C. Me m o. 2 01 1- 78
. W e n eedn’t ru n t hr ou gh all of t he m to fin d t ha t Dr. 4 Mar shlen t n o m on ey

to Ms . Alh ad i. He n ev er o nc e ref erre d t o t he m on ey

as an yth in g o th er than c om

pe ns at io n fo r ta ki ng care of h im . He recei ve d n o cert ifi cat es ev id en ci ng in de bt edne ss or s ch edul es forrep aym en t, an d M s. Al ha di sh ows no pro of

of a ny m atur it y

da te s, o r in te res t ra te s s et , or i nt eres t p ai d. Th e do cu m en t tha t s he pre pa redforhi m to si gn , andth atMs . Fowl e fo un d, p ur po rts to fo rg iv e al l “ lo an s” aft er h is de ath- -fu rth er d em on st rat in g t ha t s he ne ve r in te nd edto gi ve th e m on ey

ba ck . Andwhi le so m e ch eck s h ad“ lo an ” wri tt eninth e m em o They are: 4 (1 ) th e n am es gi ve n t o the cert ifi cat es ev id en ci ng th e in de bt edne ss ; (2 ) th e p res en ce o r ab se nc e o f a fi xe d m atur it y da te ; (3 ) th e so ur ce o f paym en ts ; (4 ) th e ri gh t t o e nf

or ce p aym en t o f pr in ci pa l an d i nt eres t; (5 ) pa rti ci pa ti on in m an ag em en t fl owi ng as ares ul t; (6 ) th e st atus of the co nt rib ut io n i n re la ti on to reg ul ar co rp or at e cre di to rs ; (7 ) th e in te ntof the parti es ; (8 ) ‘thi n’ or a de qu at e cap it al iz at io n; (9 ) id en ti ty of in te res t b etweencred it oran d s to ckho ld er; (1 0) so ur ce o f in te res t p aym en ts ; (1 1) th e ab il it y

of t he co rp or at io n t o o bt ai n l oa ns fro m ou ts id e le nd in g i ns ti tu ti on s; (1 2) th e ex te ntto whi ch th e ad va nc e was us edto acqui re capi ta l as se ts ; an d (1 3) th e fai lu re o f th e d eb to r to rep ay on th e due da te or t o s eeka po stpo ne m en t.- 20 -

[* 20 ] li ne , so m e ch eck s h adm em o l in es th atread“ gi ft” whi le ot he rs read

“pe rs on al .” W e th eref

or e fi ndth atDr. Mars h andMs . Alh ad i wer en ’t ina de bt or cred it orrel at io ns hi p. We als o s pe ci fic al ly findth atth e $ 31 0,0 00 th atth e Ma rs h Trus t m an ag edto reco ve r fro m Ms . Alh ad i was n’t a re paym en t. 2. A gi ft? Ms . Alh ad i ar gu es in th e al te rn at iv e th atth e m on ey sh e rec ei ve d fr om

Dr. Mar shwas agi ft a ndso no t i nc om e u nd er s ect io n 1 02
. To b e a g ift , th e tr an sf er 5
m us t p ro ceedfro m

a “ de ta ch edan d d is in te res te d g en ero si ty * * * ou t o f affe ct io n, res pe ct , adm ira ti on , cha rit y or l ik e im

pu ls es .” Co m

m is si on er v . Dub ers te in , 36 3 U.S. 27 8, 2 85 (19 60 ) (i nt ern al qu ot at io ns om it te d) . Whe re p aym en t i s fo r pa st se rv ic es or an i nduc em en t fo r se rv ic es inth e fu tu re, i t’s n ota gi ft, i d. at29 2, an d i t do es n’t m at te r th atth e d on orde riv edno eco no m ic be ne fitfro m it , Rob ert so n, 3 43 U.S. at 7 14 . A paym en t s te m m in g fr om

an y ob li ga ti on , whet he r m or al or l eg al , is al so no t a g ift . Bog ardus v. Co m m is si on er, 3 02 U.S. 34 , 41 (19 37 ). The m os t cri ti cal co ns id erat io n i s the tra ns fero r’s in te nt io n o r m ot iv e “ with wh ic h p aym en t, ho wev er v ol un ta ry , has be enm ad e.” Dub ers te in , 36 3 U.S. at28 6. We cangl ean in si gh t i nt o atra ns fero r’s in te ntby loo ki ng at t he fact s s urro un di ng th e tr an sf er All sec ti on refe ren ces are t o t he Int ern al Rev enue Co de ineffe ctforth e 5 y ears in is su e, an d a ll Ru le refe ren ce ar e to th e Tax Co urt Ru le s o f Prac ti ce an d Pro cedur e, un le ss ot he rwis e in di cat ed
.- 21 -

[* 21 ] an d the form

of a ss is ta nc e. Uni te d S ta te s v . Kais er, 3 63 U.S. 29 9, 3 04 (1 96 0) . The d on or ’s cha ract eri zat io n o f th e p aym en t i sn ’t di sp os it iv e, ho wev er-- th ere m us t b e “ anob

jecti ve in qu iry as t o wh ethe r wha t i s ca ll eda gi ft a m ou nt s t o i t in real ity .” Dub ers te in , 36 3 U.S. at28 6. The re i s a s tro ng pre su m

pt io n tha t p aym en ts m ad e b ey on d a n e m pl oyee’s
sa la ry are co m pe ns at io n fo r se rv ic es an d n otgi fts . See VanDus env. Co m m is si on er, 1 66 F.2d64 7 (9 th Cir . 19 48 ), aff’g, 8 T.C. 38 8 (1 94 7) ; Bo tc hf or d v. Co m m is si on er, 8 1 F .2d91 4, 9 16 (9t h C ir. 1 93 6) , aff’g 2 9 B .T.A 656 (19 33 ); Ja ck so n v . Comm is si on er, 2 5 T.C. 1 10 6, 1 11 1 (1 95 6) ; Walk er v . Comm is si on er, 25 T.C. 83 2 (1 95 6) ; Laurie v. Co m m is si on er, 1 2 T.C. 8 6 (1 94 9) . Ms. Al ha di al read y adm it te d t ha t s he earn ed$3 7,3 00 an d $ 72 ,00 0 fo r se rv ic es sh e p erfo rm ed fo r Dr. Mar sh in 20 07 an d 2 00 8. We canth eref or e p res um e th atth e res t o f th e pa ym en ts sh e rec ei ve d fr om Dr. Mars h wer en ’t gi fts , bu t ra th er co m pe ns at io n fo r se rv ic es . Non fam il y

tax pay ers inge ne ro us -el de r cas es who rel y so le ly on t he ir o wn te st im on y cansu ccee d i n p ro vi ng th ata tr an sf er was a gi ft a ndno t a
m is ap pr op ria ti on . See, e.g ., Lebar on v. Co m m is si on er, T.C. Mem o. 1 99 0- 59 2 (h ol di ng th atalt ho ug h t he tax pa y er fa il edto m eethe r bu rd en , itwas p os si bl e fo r a- 22 -

[* 22 ] tax pa y er t o p ro ve ). The i ss ue is on e o f fac t, h owe ve r, an d t he burd enof pr oo f res ts on Ms . Alh ad i. See Ru le 14 2( a). W e m us t d eci de whethe r wha t M s. Al ha di cal ls a gi ft wa s i nt en de d a s a g ift by Dr. Marsh . See Dube rs te in , 36 3 U.S. at28 6. Ms . Alh ad i’s en ti re ca se res ts on he r own un co rro bo rat edtes ti m on y an d t he word“ gi ft” writ te n o n the m em o l in es of so m e o f th e ch eck s. We lo okat t hi ng s o bjec ti ve ly, an d t he fir stth in g we s ee i s th atDr. Mars h c ou ld n’t ev enke ep tra ckof h ow m uc h m on ey

he ha d g iv ento Ms . Alh ad i. He t ol d t he ne ur op sychi atris t wh o e xa m in edhi m , Dr. Mue ll er: “ Inth e fir stpl ace, I d idn’t re al iz e I g av e h er tha t m uc h m on ey .” Mr. Si m on i, Dr. Ma rs h’s
es ta te att orne y , sp ecu la te d tha t the arran ge m en t b etweenDr. Mars h a ndMs . Alh ad i was pe rh ap s a s ort o f vi at ic al co nt ract --tha t $ 30 0,0 00 was g iv ento Ms . Alh ad i as pre pa idm ed ic al pa ym en ts forcare gi ve r se rv ic es forth e rem ai nd er o f hi s li fe. (We do no te th atwe be li ev e Mr. Si m on i’s t es ti m on y th atDr. Mars h n ev er on ce t ol d h im

th athe was g iv in g h is m on ey to Ms . Alh ad i as a gi ft) . Andwhi le Dr. Mars h re ferr edto th e p aym en ts as c om pe ns at io n, h e al so sai d h e was tak en adva nt ag e o f. W e h av e n o d iff

ic ul ty, th en , infin di ng th atth e tr an sf ers to Ms . Alh ad i
weren ’t gi fts . Butth ey

als o wer en ’t em

be zzl em en t. So whatwere the y ? On thi s qu es ti on , we agr ee wi th Dr. Mu el le r’s ex pe rt t es ti m on y . He con cl ud edth atth ere- 23 -

[* 23 ] was areal , if s ad , em ot io na l b on d b etweenDr. Mars h a ndMs . Alh ad i. He te st ifi edth atDr. Mars h wan te d t o re sc ue he r, wan te d t o b e a g oo d p ers on , and
wan te d t o fe el lo ve d “ fo r th e res t o f hi s d ay s o n e arth.” He ob se rv edth at“ th ere i s no way th aton e co ul d p uta pr ic e ta g o n t he de pt h o f th e p le as ur e an d s en se of
se cu rit y th athe fel t wi th th is wom an ,” as th ou gh he was t he “ lu ck ie stm aninth e wor ld .” Is th is th e “ affe ct io n, re sp ect , adm ira ti on , cha rit y or l ik e im

pu ls es ” th at Dub ers te in , 36 3 U.S. at28 5, t el ls us to lo okfor ? The Co m m is si on er ar gu es th atit is n’t-- th atan y

do na ti ve in te ntth ere m ay ha ve be enwas n eg at edby the pre se nc e o f
un du e in flu en ce. The re i s v ery li tt le fed eral tax law ab ou t wh ethe r an d h ow u ndue in flu en ce o n ado no r affe ct s t he va li di ty of a g iftforpu rp os es of s ect io n 1 02 . The
on ly casel aw on po in t i s re ad il y di st in gu is habl e: In J oh ns on v. Co m m is si on er, T.C. Mem o. 1 97 2- 18 0, 3 1 T.C.M . (CCH) 8 84 (19 72 ), th e ta xp ay er was th e in
ho m e nur se pra ct it io ne r ch arg edwith t ak in g c are o f aneld erl y wom anwho was reco ve rin g fr om

anop erat io n. Sh e qui t h er d ay job to workful l t im e fo r th e wom an , eve ntua ll y

bro ug hthe r to li ve with h er o wn fa m il y , andwas ade vo te d fri en d andco m

pa ni on . After afew y ears , andinth e twi li gh t o f he r own li fe, the el de rly wom ande ci de d t o g iv e th e nur se $7 5,0 00 . The el de rly wom an ’s nep he w th enbe ga n aser ie s o f pr ot ract edco m pe te nc y pro ceed in gs to res tra in hi s au ntfro m- 24 -

[* 24 ] gi vi ng an yth in g t o t he lo vi ng nu rs e. The e ld erl y wom anfou gh t b ackha rd
-- sh e p ro ve d s he was i n c on tro l an d kne w whatsh e was do in g. An d we f ou ndth at sh e was m en ta ll y

co m pe te ntan d c ap ab le of m an ag in g h er p ro pe rty. W e fo un d t ha t th e n ep he w was o utto ge t h is aunt ’s m on ey an d tha t the re was no qu es ti on th atth e tra ns fer t o t he nu rs e st emm edfro m a de si re t o “ ex pr es s h er l ov e, gr at itud e, adm ira ti on an d re sp ectforth e o ne pe rs on who care d fo r he r th e m os t.” We up he ld th e g iftbu t wer e car efu l t o p oi ntou t tha t the re was no ev id en ce o f un du e in flu en ce. If we s qu in t h arden ou gh , m ay be we canm ak e o utso m e si m il ari ti es --Dr. Mar shha d ani ece r athe r th ana ne ph ew lo ok in g i n o n h im . ButMs . Pers on is th e op po si te of t he “ gr eedy ” ch arac te r in Jo hn so n o utto ge t h is au nt ’s m on ey an d di dn ’t eve n kno w ho w m uc h m on ey

he r un cl e h ad . She di dn ’t see k t o p la ce h im
un de r a co ns erv at or sh ip ; the San taCla ra Publ ic Guar di an ’s Offic e d id , aft er i t in de pe nd en tl y

de te rm in edth atMs . Alh ad i was ab us in g h im . Thatoff ic e su ccee de d b ecau se , un li ke th e el de rly wom aninJo hn so n, Dr. Ma rs h c ou ldno t de m on st rat e th athe was c om pe te nt . His p hysic ia n d ia gn os edhi m with d em en ti a, an d a n i nd ep en de ntne ur op sychi atris t-- th e sa m e Dr. Mu el le r who se tes ti m on y we he ardat t ria l an d fo un d c red ib le --d et erm in edth atDr. Mars h was n’t co m pe te ntto ha nd le hi s fi na nc es an d was th e v ic ti m of f in an ci al ab us e.- 25 -

[* 25 ] AndMs . Alh ad i was n’t the ge nt le an d c on si de rat e car eg iv er tha t we s aw in Jo hn so n. We hea rdhe r onth e rec or di ng s fr om Vang ua rdy el li ng at Dr. M ars h, cajo li ng hi m , anddi rect in g h im to do as s he sai d wi th hi s m on ey . She was a ls o n ot as can di d a ndas tru th fu l a wi tn es s as th e car eg iv er i n J oh ns on . Ms. Al ha di te st ifi edsh e kne w no th in g o f Dr. Mar sh ’s fin an ces an d h adne ve r se enhi s br ok erag e st at em en ts , bu t the Vang ua rdau di ot ap e p ro ve d s he kn ew ab ou t s pe ci fic tra de s, wh ic h s he readfro m hi s b ro ke rag e st at em en t. An d M s. Pe rs on ’s andMr. Si m on i’s cr ed ib le tes ti m on y ba ckup th is ph y si cal reco rdof M s. Al ha di ’s tru e be ha vi or . W e b el ie ve th em an d n othe r. Tha t m ean s t ha t we n ow h av e to fig ur e o utth e que st io ns we lef t u na ns wered in Jo hn so n: Ju stwhatis un du e in flu en ce as a m at te r of fed eral tax law, an d h ow do es itaffe ctdo na ti ve in te nt ? There are p le nt y of c as es wher e we m ad e co m m on se ns e fi nd in gs th atth ere c anbe no de ta ch edan d d is in te res te d g en ero si ty in the pr es en ce o f co erci on or u ndue in flu en ce. Alt m anv. Co m m is si on er, 4 75 F.2d87 6 (2 d C ir. 1 97 3) (no gi ft i f tr an sf er i nduc edby thre at s) , aff’g T.C. Mem o. 1 97 2- 26 ; See P et ers v. Co m

m is si on er, 5 1 T.C. 2 26 , 23 1 (1 96 8) (m on ey ob ta in edby im pe rs on at in g c an cer p at ie ntno t g ift ); Th ro wer v . Comm is si on er, T.C. Mem o. 19 62 -2 91 , aff’d, 3 30 F.2d61 4 (5 th Cir . 19 64 ) (s ub tl e co erci on on do no r). Bu t we th in k t he re i s al so a ro le forst at e la w inth es e cas es . Stat e la w creat es pro pe rty- 26 -

[* 26 ] rig ht s an d i nt eres ts , andfed eral law m erel y de te rm in es th ei r ta x t reatm en t. Mo rg anv. Co m

m is si on er, 3 09 U.S. 78 , 80 (19 40 ); P ie rre v . Comm is si on er, 1 33 T.C. 24 , 29 (20 09 ). Whe th er Ms . Alh ad i o bt ai ne d m on ey fro m Dr. Mars h t hr ou gh
un du e in flu en ce af

fect s h er ri gh t t o t ha t m on ey an d i s t hu s a que st io n o f st at e la w. See Es ta te of S ha rp v. Co m m is si on er, T.C. Mem o. 1 99 4- 63 6 (s ta te law d et erm in es whe th er d eedpro cu redby undue in flu en ce). Cal ifo rn iaha s co di fie d i ts de fin it io n o f un du e in flu en ce as :

• th e u se of aco nf

id en ce o r (rea l o r ap pa ren t) aut ho rit y forth e p ur

po se of ob ta in in g an u nf

ai r adva nt ag e o ve r so m eo ne ;

• ta ki ng anun fai r adva nt ag e o f an ot he r’s weakne ss of m in d; or

• ta ki ng a gr os sl y

op pr es si ve an d unf

ai r adva nt ag e o f an ot he r’s ne ces si ti es or d is tre ss . Cal . Civ . Cod e se c. 15 75 (W es t 1 98 2) . For t he sp eci fic pu rp os e o f el de r ab us e, Cal ifo rn ialaw d efi ne s u ndue in flu en ce as th e “ ex ces si ve pe rs ua si on th atcau se s an ot he r pe rs onto actor r efra in fro m act in g b y ov erco m in g t ha t p ers on ’s free wi ll
an d re su lt s i n i ne qu it y .” Cal . W el f. & In st . Cod e se c. 15 61 0.7 0 (West20 14 ). The st atut e co ns id ers :

• th e v ul ne rab il it y

of t he vi ct im ;

• th e in flu en cer’s ap pa ren t au th or it y ;- 27 -

[* 27 ] • th e act io ns or t act ic s u se d b y th e in flu en cer; forex am

pl e th e us e o f affe ct io n;

• th e equi ty of th e res ul t. Id . Cali fo rn iatak es eld er ab us e se rio us ly, an d p ro vi de s s ta tu to ry rem ed ie s t o i ts vi ct im s. See , e.g., i d. s ec. 1 56 57 .5 (West20 12 ); i d. s ec. 1 56 10 .30 (W es t 2 01 4) ; i d.
se c. 32 94 (W es t 1 99 7) ; i d. s ec. 3 34 5. W e fi ndth atMs . Alh ad i ex ert edun du e in flu en ce o ve r Dr. Mar sh . She was in a co nf id en ti al rel at io ns hi p wi th Dr. Mars h a s h is so le care gi ve r. He rel ie d o n he r jus t t o g etdo wns ta irs , to go to th e d oc to r, to be fed , andev ento ba th e. Dr. Mar shwas a ls o i n e xt rem el y po orhe al th ; h e su ffer edfro m he artpro bl em s, h eari ng an d v is io n l os s, a b ro ke n h ip , andde m en ti a, am on g o th er h an di cap s. Ms . Alh ad i kn ew al l thi s. Sh e u se d h er re la ti on sh ip with Dr. M ars h t o i so la te hi m fro m hi s fam il y an d fi nanc ia l ad vi se rs an d t o wri ng m on ey ou t o f hi m . She rep eat ed ly pr ev en te d Van gu ardfro m co nt act in g h im

by m ai l an d wo ul d i nt erfe re wh enMs . Pers on tri edto tal k wi th hi m on th e p ho ne . The res ul ti ng is ol at io n a nd de pe nd en ce m ad e h im

ev enm or e v ul ne rab le to Ms . Alh ad i’s i nf lu en ce. His

6 In t he las t fe w m on th s o f hi s l ife , Dr. Mars h t ol d Dr. M ue ll er, the 6 ne ur op sychi atris t, tha t i t was “ im po ss ib le to im ag in e h ow i t fe el s b ei ng 90 y ears ol d a ndfeel in g l ov edforth e fi rs t t im e.” Dr. Mu el le r, ho wev er, t es te d Dr. M ars h fo r de pr es si on an d fo un d i t s ig ni fic an t tha t Dr. Ma rs h a gr eedwith s ta te m en ts su ch as “ I fee l s adm

uc h o f th e ti m e,” “ I fee l m or e d is co ur ag edab ou t my futur e th anI (co nt in ue d...)- 28 -

[* 28 ] m ul ti pl e co gn it iv e d efi ci ts als o a ffec te d h is ab il ity to withs ta ndth is in flu en ce. He was n’t ab le to do si m pl e co m pu ta ti on s, h e h adpo orsh ort-t erm an d di m in is he d l on g- te rm

m em ory , andhe co ul d n o l on ge r un de rs ta nd(le t al on e an al y ze) h is m il li on -d ol lar po rtf ol io
. Ms . Alh ad i was a tr ai ne d c areg iv er. Dr. Mar sh ’s pro bl em s wer e o bv io us to
an y on e, bu t the ir c on se qu en ces forhi s ab il it y to m ak e rat io na l d eci si on s wo ul d ha ve be enev enm or e o bv io us to he r. Dr. Mars h’s s pe nd in g o n M s. Al ha di was un ch arac te ris ti c o f a m anwho ha d s pe ntm os t o f hi s l ife fear in g t he po ve rty in whi chhe was b orn. In sp ect orFo wle c on cl ud edth atth is wil d s pe nd in g was so ab no rm al forDr. Mars h t ha t i t was st ro ng ev id en ce tha t M s. Al ha di ha d u ndul y in flu en cedhi m . AndMs . Alh ad i’s u ne nd in g d em an ds on Dr. Mars h- -th athe pa y fo r a s wimm in g p oo l, co ve r he r m ortg ag e, na m e h er i n h is wil l, cr eat e a s ep arat e tru stforhe r be ne fit , andtre athe r an d h er fam il y to a cru is e--a ll supp ort thi s fin di ng . W e al so can ’t clo se ou r ey es to Dr. Mars h’s em ot io na l l ife . Ms. Al ha di pr ey edon hi s l on el in es s. Sh e wou ldsi t an d c ry inhi s ap artm en t an d l am en t h ow sh e h adno m on ey

an d d id n’t kno w ho w sh e was go in g t o s urvi ve . She ex pl oi te d (...co nt inue d) 6 us edto ,” “ I do n’t co ns id er m y se lf a s wo rth whi le an d u se fu l as I us edto ,” an d “ I ha ve lo stm os t o f m

y in te res t i n o th er p eo pl e o r th in gs .”- 29 -

[* 29 ] hi s fo rg et fu ln es s. So m et im es Dr. Mars h t ho ug hthe was b eh in d o n p ay in g he r an d s he di dn ’t correcthi m , eve n t ho ug h h e h adactua ll y ne ve r fal le n b eh in d. Lik e Dr. Mu el le r, we to o wer e st ru ckat t he lac k o f an y an ge r in Dr. Mars h a s h e fli tt edin an d o utof r eal iz in g wh atMs . Alh ad i h addo ne . W e ag ree wi th hi m as well , ho wev er, tha t Dr. Ma rs h’s “ la ckof ani m us an d h is fai lure t o e xp eri en ce an y de ep ou tra ge or d is gu stat h er b eh av io r, do no t ex cu lp at e h er. The y m erel y in di cat e th atsh e ch os e h er v ic ti m well .” W e d on ’t ho ldth atall gi fts to care gi ve rs are m ad e fro m un du e in flu en ce; Jo hn so n s ho ws the y

aren ’t. Butth is cas e is di ffer en t: It was Ms . Alh ad i’s job to ke ep Dr. Mars h’s ap art m en t cl ean , to supp ly him with fr es h fo od , andto he lp
m ai nt ai n h is di gn it y . She di d n ot . W e return t o t he tes ti m on y of I ns pe ct orFo wle: Q: * * * [D]id y oum ak e a fi na l d et erm in at io n a s t o wh ethe r Dr. Mar sh was avi ct im

of f in an ci al eld er ab us e? A: Yes
. Q: An d wh atwas t ha t d et erm in at io n? A: Tha t the re was fin an ci al eld er ab us e . . . . Q: An d wh o was th e p erp etrat orof t he fin an ci al ab us e? A: An ge li naAlh ad i.- 30 -

[* 30 ] W e fi ndth atMs . Alh ad i ex erci se d u ndue in flu en ce o n Dr. M ars h a ndth at al l the m on ey

sh e rec ei ve d fr om

hi m is tax ab le to he r. C. Sel f-Em

pl oym en t Tax The Co m m is si on er al so de te rm in edth atMs . Alh ad i o wes sel f-em pl oym en t ta x o n t he m on ey

sh e o bt ai ne d t hr ou gh th is un du e in flu en ce. Sel f-em pl oym en t in co m e is in co m e ari si ng fro m th e p erfo rm an ce o f pe rs on al servi ces wher e an em pl oyer-em

pl oyee rel at io ns hi p d oe s n otex is t b etweenth e p ay oran d t he pay ee. Secs . 14 01 an d 1 40 2. Se ct io n 1 40 1 i m po se s a p erce nt ag e ta x o n s el f-em pl oym en t in co m e o f ev ery in di vi du al . Self -em pl oym en t i nc om e is de fin edas: “ th e n et earn in gs fro m

sel f-em pl oym en t d eri ve d b y

anin di vi du al * * * dur in g a ny tax ab le y ear.” Sec. 1 40 2( b) . “

Net e arn in gs fro m

sel f-em pl oym en t” is de fin edas t he gro ss in co m e d eri ve d fr om

an y tra de or b us in es s carri edon by suc h i nd iv idua l, l es s de du ct io ns . Sec. 1 40 2( a). The ob li ga ti on to pa y sel f-em pl oym en t t ax es is
m an da to ry

so lo ng as t he requi rem en ts of s ect io n 1 40 1 a re m et . Uni te d S ta te s v . Lee, 4 55 U.S. 25 2 (1 98 2) . The ag reem en t b etweenDr. Mars h a ndMs . Alh ad i in cl ud edm on th ly w ag es of $ 6,0 00 , to ta li ng an nu al in co m e o f $7 2,0 00 . At tri al Ms . Alh ad i ad m it te d t o m ak in g o nl y $3 7,3 00 rel at edto he r se rv ic es du rin g 2 00 7. The re i s n o re as onto be li ev e th atMs . Alh ad i re cei ve d l es s t ha n $ 72 ,00 0 o f in co m e rel at edto he r se rv ic es in 20 07 . Dr. Mars h wro te he r ch eck s t ot al in g $ 28 ,15 4- 31 -

[* 31 ] be twee n J anua ry

an d Ap ril 20 07 alo ne . Dr. Mars h c on si st en tl y refe rredto al l the m on ey

he ga ve Ms . Alh ad i as pa ym en t i n e xc ha ng e fo r he r se rv ic es . Even if we fin d t ha t the m on ey Dr. Mars h p ai d M s. Al ha di was m is ap pr op ria te d b y Ms . Alh ad i wh ensh e in flu en cedhi m to m ak e th os e p aym en ts , see in fr a , th e fu nd s wou ldst il l b e ta xabl e in co m e. See J am es v. Co m m is si on er, 3 66 U.S. 21 3 (1 96 1)
. The refo re, we h ol d t ha t s he is li ab le forsel f-em pl oym en t t ax . D. Frau du le ntReturn The Co m m is si on er al so arg ue s t ha t M s. Al ha di ’s 20 07 an d 2 00 8 re tu rn s- - returns on whi ch sh e fai le d t o re po rt t he m on ey sh e g otfro m

Dr. Mars h- -were frau du le nt , whi ch wou ldm ak e h er l iabl e fo r a s ect io n 6 66 3 p en al ty. The b ur de n of sh owi ng frau d i s o n t he Co m m is si on er, an d t he bu rd enis on e th athe m us t m eet with c le ar an d c on vi nc in g e vi de nc e. The C omm is si on er m us t es tabl is h t ha t M s. Alh ad i i nt en ti on al ly evad eda ta x t ha t s he be li ev edwas due . See Mc Gee v
. Co m m is si on er, 6 1 T.C. 2 49 , 25 6 (1 97 3) , aff’d, 5 19 F.2d11 21 (5t h C ir. 1 97 5) . He
can m eetth is bu rd enif h e sh ows th atth ere i s an un de rp aym en t, an d t ha t s om e p art of th e u nd erp aym en t was du e to frau d. Se cs . 66 63 (a), 7 45 4( a); Ru le 14 2( b)
. The fi rs t p artof t he tes t i s ea si ly m et , andwe’ve al read y di sc us se d i t. Ms . Alh ad i fa il edto rep ort an y in co m e fro m

Dr. Mars h. Th is in co m e was subs ta nt ia l
an d c au se d alar ge un de rp aym en t o f th e ta x t ha t M s. Al ha di owed
.- 32 -

[* 32 ] Bu t was th is un de rp aym en t due to frau d? Frau d i s t he in te nt io na l
wro ng do in g o n the part o f th e ta xp ay er wi thth e sp eci fic pu rp os e o f ev ad in g t ax be li ev edto be owi ng . Petz ol dtv. Co m m is si on er, 9 2 T.C. 6 61 , 69 8 (1 98 9) . Direc t ev id en ce o f frau d i s s el do m av ai labl e, St on e v . Comm is si on er, 5 6 T.C. 2 13 , 22 3- 24 (19 71 ), bu t we m ay

in fer i t fr om

co nduc t ca lc ul at edto mis le ador c on ceal , Bea ve r v. C omm is si on er, 5 5 T.C. 8 5, 9 3 (1 97 0) . Our ca se la w des cri be s a n um be r of fact or s tha t m ig htin di cat e fraudul en t i nt en t:

• un de rs ta ti ng in co m e;

• co nc eal in g i nc om e o r as se ts ;

• fil in g fa ls e d oc um en ts ;

• fai li ng to co op erat e wit h t ax au th or it ie s;

• gi vi ng im

pl au si bl e o r in co ns is te ntex pl an at io ns of b eh av io r;

• il le ga l ac ti vi ty; an d

• li vi ng a la vi sh li fes tyle. Sp ie s v . Uni te d S ta te s, 3 17 U.S. 49 2, 4 99 (19 43 ); B rad fo rdv. Co m m is si on er, 7 96 F.2 d 3 03 , 30 7- 30 8 (9 th Cir . 19 86 ), aff’g T.C. Me m o. 1 98 4- 60 1. Rel y in g o n t he se fact or s, the Co m m is si on er ea si ly sho wedth atMs . Alh ad i’s 20 07 an d 2 00 8 re tu rn s wer e fraudul en t.- 33 -

[* 33 ] Under

st at emen t . Ms. Al ha di kn ew th atth e in co m e sh e earne d fo r he r care gi vi ng servi ces was t ax ab le . Desp it e th is , sh e rep orte d n on e o f th e m on ey Dr. Mar shpa idhe r on he r in co m e ta x re tu rnforeit he r y ear. Sh e h adun di sc lo se d
care take r in co m e o f m or e th an$1 m il li on forhe r 20 07 an d 2 00 8 t ax y ears co m bi ne d. Co nc ea lmen t . Ms. Al ha di act iv el y work edto co nc eal th e in co m e. Sh e fai le d t o t el l h er t ax pre pa rer t ha t s he work edforDr. Mars h a ndth atsh e rec ei ve d
m on ey fro m hi m . After S an taCla ra Co un ty sen t Fo rm s 1 09 9 t o h er co ve rin g 2 00 7
an d 2 00 8, h er t ax pre pa rer a dv is edhe r to am en d h er re tu rn s t o re fle ctth e ad di ti on al in co m e, whi ch sh e ref us edto do
. Fil in g f al se do cu men ts . Whe n s he ap pl ie d fo r ho m e m ortg ag es to bu y he r ne w m il li on -d ol lar ho m e, Ms . Alh ad i d is cl os edall of h er re gu la r m on th ly inc om e fro m Dr. Mars h. Bu t M s. Al ha di fil edfal se rep orts of h er as se ts an d i nc om e wit h th e Supe rio r Co urt o f Cal ifo rn iaas p artof t he di vo rce p ro ceed in gs ag ai ns t h er. Sh e si gn edth es e d oc um en ts un de r pe na lt y of p erjury . Fai lu re to co op erat e . Ms. Al ha di act iv el y co nc eal edth e in co m e th ro ug h th e au di t. Sh e d id n’t turn o ve r an y do cu m en ts th e ex am in er re qu es te d, an d s he refu se d t o p ro vi de an y

in fo rm at io n t o t he ex am in er. Sh e ev enrefu se d a t fi rs t t o te ll th e au di to r th e n am e o f he r at to rn ey .- 34 -

[* 34 ] In co ns is te nt

exp la na ti on s . Ms. Al ha di ’s tes ti m on y tee m edwith p erjury . Sh e te st ifi edth atsh e rec ei ve d p aym en ts fro m Dr. Mars h o nl y

by check . After be in g c on fro nt edwith t he ev id en ce o f cas h d ep os it s attri al , andbe in g u nabl e to co m e up wi th an y

ex pl an at io n fo r it , sh e ch an ge d h er s to ry an d a ckno wled ge d t ha t th e cas h c am e fro m

Dr. Mars h. Sh e te st ifi edth atsh e d id n’t kno w anyth in g abo ut hi s fi na nc es , bu t the n t he Co m m is si on er’s l awy er p lay edth e Van gu ardau di o fi le s. Sh e te st ifi edth atDr. Mars h o ffer edto bu il d h er a p oo l, b utDr. Mars h i n h is vi de ot ap edin te rv ie w fro m co ns erv at or sh ip pro ceed in gs to ldho w Ms . Alh ad i de m an de d h e p ay

th e b il l fo r th e p oo l af

te r he ha d s pe ci fic al ly cou ns el edhe r ag ai ns t h av in g i t b ui lt . Fin al ly, whi le Ms . Alh ad i d id n’t t el l h er t ax pre pa rer tha t sh e worke d fo r Dr. Mar shat t he ti m e sh e p rep aredhe r returns , sh e d idtel l h er tha t sh e h adin cu rredcar- an d- tru ckex pe ns es tra ve li ng be twee n S t. Lo ui se Hos pi ta l an d Carm el Str eet , inGil ro y , Cal ifo rn ia --Dr. Ma rs h’s ap art m en t. Ms . Alh ad i d educ te d th es e ex pe ns es as S ch edul e A un rei m bu rs ed -em

pl oyee bu si ne ss ex pe ns es on he r 20 07 an d 2 00 8 re tu rn s. Ill egal ac ti vi ty . Ms. Al ha di ’s in du ci ng Dr. Mars h t o p ay he r la rg e su m s o f
m on ey th ro ug h t he us e o f un du e in flu en ce am ou nt edto “ ab us e o f aneld er,” wh ic h in cl ud es bo th fin an ci al ab us e an d i so la ti on of a n e ld er, i n v io la ti on of t he Cal ifo rn iaW el fare an d In st itut io ns Co de sec ti on 15 61 0.0 7 (West20 14 ). Fin an ci al- 35 -

[* 35 ] ab us e is de fin edun de r th e Cal ifo rn iaW el fare an d In st itut io ns Co de sec ti on 15 61 0.3 0 a s o ccurri ng when a pe rs on “ [t]ak es , sec ret es , app ro pr ia te s, o bt ai ns , or ret ai ns * * * re al or p ers on al pro pe rty of an eld er o r de pe nd en t adul t b y un du e in flu en ce.” We’ ve alr eady fou ndth atMs . Alh ad i d idth is . Iso la ti on of a n e ld er in cl ud es “ act s i nt en ti on al ly com m it te d fo r th e p ur

po se of p rev en ti ng , andth atdo
se rv e to pre ve nt , an e ld er o r de pe nd en t adul t fr om rece iv in g h is or h er m ai l o r te le ph on e cal ls .” Id . sec . 15 61 0.4 3( a)(1 ). Iso la ti on als o i nc lu de s “ te ll in g acal le r orpro sp ect iv e v is it or

th ataneld er o r de pe nd en t adul t i s n otpre se nt , or d oe s n ot wis h t o t al k wi th th e cal le r * * * wh ere t he st at em en t i s fa ls e * * * is co nt rary to th e ex pr es s wi sh es of t he eld er * * * an d i s m ad e fo r th e p ur po se of p rev en ti ng th e el de r orde pe nd en t adul t fr om ha vi ng co nt actwith fa m il y , frie nd s, o r co nc ern ed pe rs on s.” Id . par a. (2 ). Ms . Alh ad i b lo ck edph on e cal ls to Dr. Mars h fr om hi s ni ece, t ol d aFed Ex d el iv ery m anth athe no lo ng er l iv edat h is ad dr es s, an d bl oc ke d Van gu ard ’s m ai l t o h im
. La vish li fest yl e . Ms. Al ha di bo ug hta se co ndho m e fo r $1 m il li on in20 07 , pu tt in g up a$1 00 ,00 0 d ownpa ym en t. Sh e sp en t an othe r $1 15 ,00 0 o n re m od el in g, bo ug hthe r hu sb an d’s i nt eres t i n t he ir Ho ll is te r ho m e fo r $8 0,0 00 , wenton a fan cy cru is e, an d h adhe r ho m e equi pp edwith e xp en si ve furni tu re an d e le ctro ni cs . W e fi ndth atMs . Alh ad i’s 2 00 7 a nd20 08 returns were fraudul en t.- 36 -

[* 36 ] Con cl us io n It i s u nu su al forso lo ps id eda cas e to go to tri al . Ms. Al ha di cal le d n o witne ss es an d i nt ro du cedno ex hi bi ts . In the face of c red ib le tes ti m on y ag ai ns t he r, do cum en ts in he r own ha ndsh owi ng frau d, an d e ve n Dr. M ars h’s re co rd ed st at em en t an d c al ls in whi ch we he arddi rectev id en ce o f he r ab us e o f th is ol d m an , sh e d en ie d e ve ryth in g: [M]y he artis cle an , andI do n’t ex pe ctan y on e in th is co urt t o b el ie ve m e. Youkn ow, I d on ’t hav e n ob od y to he lp m e p ro te ctm e in m y cas e. I kn ow t he pe op le inth is co urt i s v ery st ro ng . ButI feel m y se lf th atI’m cle an . In the face of Go d, I’m cle an . W e are a co urt o f m erci fu ll y li m it edjuri sd ic ti on , andm us t m ak e n o pa rti cu la r jud gm en t ab ou t wh atis inhe r he art . Butwe wil l en te r a fi na l d eci si on ag ai ns t h er i n o urCo urt tha t ! ho ld s t ha t u ndue in flu en ce can b e fo un d b y ap pl y in g t he law o f th e st at e whe re i t was ex erci se d; ! fin ds th atth ro ug h u ndue in flu en ce as de fin edinCal ifo rn ialaw s he ob ta in ed$4 51 ,89 1.0 5 i n 2 00 7 a nd$4 74 ,98 3.2 2 i n 2 00 8 t ha t s he sh ou ldhave rep orte d a s i nc om e o n h er re tu rn s;- 37 -

[* 37 ] ! fin ds th athe r in co m e fro m Dr. Mars h was sel f-em

pl oym en t i nc om e; an d ! fin ds th athe r returns forth os e two y ears were fraudul en t. Deci si on wil l b e en te red
un de r Ru le 15 5.