                       T.C. Memo. 2005-190



                     UNITED STATES TAX COURT



          ALL COMMUNITY WALK IN CLINIC, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

    MOHAMMED A. GAZI AND ESTATE OF RAEES I. GAZI, DECEASED,
    MOHAMMED A. GAZI, PERSONAL REPRESENTATIVE, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 7949-98, 7950-98.       Filed July 28, 2005.



     Caroline D. Ciraolo, for petitioners.1

     Monica J. Miller, for respondent.




     1
       Petitioners were represented by Jay E. Kauffman when they
filed their petitions. On Mar. 12, 2004, Caroline D. Ciraolo
entered these cases. On Dec. 15, 2004, the Court granted
petitioners’ motions to withdraw Mr. Kauffman as counsel in these
cases.
                                 -2-

             MEMORANDUM FINDINGS OF FACT AND OPINION

     THORNTON, Judge:    This matter is before the Court on

petitioners’ motions for leave to file motions to vacate the

final decisions of this Court, which were entered July 8, 2003

(the motions).2   Petitioners contend that the decisions resulted

from perpetration of fraud on the Court by their former counsel,

Jay E. Kauffman (Mr. Kauffman), and respondent’s counsel, Monica

J. Miller (Ms. Miller), in entering into allegedly unauthorized

settlement agreements.    Respondent disagrees and objects to the

motions.

                        Procedural Background

     On January 30, 1998, respondent issued a notice of deficiency

with respect to Mohammed A. and Raees I. Gazi (the Gazis), and a

separate notice of deficiency with respect to Mrs. Gazi’s wholly

owned corporation, All Community Walk In Clinic.3   With respect to

the Gazis, respondent determined increases in tax liabilities for

tax years 1983 to 1989 totaling $787,982; respondent also asserted

civil fraud penalties totaling about $500,000.    With respect to

All Community Walk In Clinic, respondent determined increases in

tax liabilities for tax years 1983 to 1989 totaling $341,043, plus



     2
       Due to an identity of issues presented by the motions
before the Court, the cases at docket Nos. 7949-98 and 7950-98
have been consolidated herewith for the purpose of this opinion.
     3
       Raees I. Gazi died on July 23, 2003, after the decisions
had been entered in these cases.
                                 -3-

additions to tax for negligence and delinquency.   The adjustments

in the notices of deficiency reflected primarily respondent’s

determinations that petitioners had understated income and

overstated deductions.    Many of the issues in the two cases are

intrinsically related.

     On April 29, 1998, the Gazis and All Community Walk In

Clinic filed petitions in this Court, challenging respondent’s

determinations in the notices of deficiency.   The petitions were

signed by Mr. Kauffman, who is an attorney authorized to practice

before this Court.   On June 30 and July 2, 1998, respondent filed

answers in these cases.   The cases were set for trial at the

session of the Court beginning April 26, 1999, in Tampa, Florida.

     On February 11, 1999, pursuant to Rule 90, respondent filed

requests for admission in the Gazis’ case (docket No. 7950-98).4

In the 133 numbered items in respondent’s requests for admission,

respondent requested the Gazis to admit the various elements of

the adjustments to taxable income reflected in the Gazis’ notice

of deficiency.   No response to respondent’s request for

admissions was filed by or on behalf of the Gazis.    Consequently,

pursuant to Rule 90(c), each matter set forth in respondent’s

requested admissions was deemed admitted.




     4
       Unless otherwise indicated, Rule references are to the Tax
Court Rules of Practice and Procedure and section references are
to the Internal Revenue Code, as amended.
                                -4-

     On March 15, 1999, respondent filed motions to compel

responses to interrogatories and document production requests

that respondent had served on petitioners in each of these cases

on February 10, 1999.   By Orders dated March 18, 1999, this Court

granted respondent’s motions in that petitioners were required,

on or before April 1, 1999, to respond to the interrogatories and

document production requests.   Petitioners were further ordered

to show cause in writing on or before April 5, 1999, why the

Court should not impose sanctions, or else to advise the Court in

writing by that date that they were in full compliance with the

Court’s Order.   Petitioners filed no response to the Court’s

Orders to Show Cause.

     On March 22, 1999, the trials in these cases were continued,

and the parties were ordered to file periodic status reports.     On

behalf of respondent, Ms. Miller filed status reports in May,

August, and September 1999; in each report, she advised the Court

that petitioners and respondent’s revenue agent were meeting

regularly to discuss settlement.   Petitioners filed no status

reports.

     By notices dated August 3, 2000, for the second time, the

Court set these cases for trial, at the session of the Court

beginning January 8, 2001, in Tampa, Florida.    Subsequently,

because no courtroom was available in Tampa, the Court changed

the place of trial to Jacksonville, Florida.    On December 13,
                                -5-

2000, petitioners filed motions for continuance on the ground

that moving the trials to Jacksonville would work a hardship on

them.   The Court granted petitioners’ motions for continuance.

     On May 10, 2001, for the third time, the Court issued

notices setting the cases for trial, at the session of the Court

beginning October 15, 2001, in Tampa, Florida.    Pursuant to the

parties’ joint requests, on September 25, 2001, the trials were

continued again.

     On May 23, 2002, for the fourth time, the Court issued

notices setting the cases for trial, at the session of the Court

beginning October 28, 2002, in Tampa, Florida.    On October 16,

2002, petitioners filed motions for continuance, on the grounds

that the Gazis had moved to Baltimore, Maryland, and wished to

transfer the place of trial there.    The Court granted

petitioners’ motions.

     On December 18, 2002, for the fifth time, the Court issued

notices setting the cases for trial, at the session of the Court

beginning May 19, 2003, in Baltimore, Maryland.    On January 23,

2003, the Court ordered the parties to file a joint status report

on or before March 19, 2003, advising the Court of the progress

that had been made in preparing for trial.    On March 19, 2003,

respondent filed a status report, signed by Ms. Miller,

indicating that on the basis of representations by petitioners

and their counsel, she believed that a forthcoming revenue
                                 -6-

agent’s final report should form the basis for a probable

settlement.   Petitioners filed no status report.

     On May 7, 2003, the Court received respondent’s trial

memoranda, as required by the Court’s Standing Pre-Trial Order.

The Court received no trial memorandum from petitioners.

     On May 8, 2003, the Court made absolute its March 18, 1999,

Orders to Show Cause why the Court should not impose sanctions on

petitioners pursuant to Rule 104; as a sanction, the Court

ordered that petitioners were prohibited from introducing into

evidence any testimony or documents that would have been

responsive to respondent’s discovery requests served on

petitioners February 10, 1999.

     On May 13, 2003, respondent filed a supplemental status

report, dated May 12, 2003, in which Ms. Miller stated, among

other things, that in a telephone conversation on May 5, 2003,

Mr. Gazi had informed Ms. Miller that he was attempting to work

out the details of retaining a Baltimore attorney, Mark Edward

Kell (Mr. Kell) to represent petitioners; and that in a telephone

conversation on May 7, 2003, Mr. Kell had told Ms. Miller that he

“believed he would be entering his appearance, and that he would

be requesting a continuance”, and that he would send Ms. Miller a

facsimile of his entry of appearance when it was ready for filing

so that they could have a meaningful discussion of these cases.

The supplemental status report states:
                                -7-

          It is now Monday, May 12th, 2003. Respondent’s
     counsel has heard nothing further from petitioners,
     petitioners’ former counsel, or petitioners’
     prospective counsel. Moreover, petitioners’ former
     counsel is no longer authorized to act on behalf of
     petitioners; petitioners’ prospective counsel has not
     provided an entry of appearance or power of attorney so
     is not authorized to act on behalf of petitioners; and
     respondent is prohibited from contacting petitioners
     directly because petitioners are represented by
     counsel. Therefore, respondent has no one with whom to
     complete trial preparation or the stipulation
     process.[5]

     On May 14, 2003, these matters were discussed in a

telephonic conference among the Court, Mr. Kauffman, and Ms.

Miller.   Mr. Kauffman informally requested the Court to continue

these cases and to allow him to withdraw as counsel.    The Court

advised that any motion to continue or to withdraw as counsel

should be filed with the Court in writing and that the parties

should be prepared to argue any such motions on the record at the

May 19, 2003, calendar call.   Petitioners filed no motion to

continue these cases or to withdraw Mr. Kauffman as counsel.    No

other representative filed any entry of appearance on

petitioners’ behalf.

     On May 16, 2003, in a telephonic conference with the Court,

Mr. Kauffman and Ms. Miller reported that the parties had agreed

to bases for settling these cases.    They requested permission for


     5
       Also on May 13, 2003, respondent filed motions to request
a date and time certain in these cases, and a motion to
consolidate these cases for trial, briefing, and opinion, wherein
Ms. Miller made similar statements. These motions were
ultimately denied as moot.
                                  -8-

respondent’s local Baltimore counsel to lodge facsimile decision

documents with the Court at the May 19, 2003, calendar call, so

that Mr. Kauffman and Ms. Miller would not have to travel from

Florida to Baltimore for that purpose.     To allow time for

reviewing the tax computations in the decision documents, they

requested to have until June 30, 2003, to submit stipulated

decisions.

     At the May 19, 2003, calendar call in Baltimore, Maryland,

counsel for respondent, Clare Brooks, appeared and lodged with

the Court facsimile decision documents, signed by Mr. Kauffman

and Ms. Miller, in each of these cases.     There was no appearance

by or on behalf of petitioners.    On June 3, 2003, a stipulated

decision in docket No. 7949-98, executed by Mr. Kauffman and Ms.

Miller, was submitted to the Court.     The stipulated decision

reflected a full concession by petitioner All Community Walk In

Clinic.   On June 5, 2003, the Court entered its decision in

docket No. 7949-98 pursuant to the stipulation.     No notice of

appeal or timely motion to vacate or revise the decision having

been filed in this case, the decision in docket No. 7949-98

became final on September 1, 2003.      See sec. 7481(a)(1); Fed. R.

App. P. 13(a).

     On June 30, 2003, the parties submitted to the Court a

stipulated decision in docket No. 7950-98, executed by Mr.

Kauffman and Ms. Miller.   The stipulated decision reflected
                                -9-

certain concessions by both parties:    Total deficiencies for the

7 years at issue were reduced by $568,259 ($219,723 in the

stipulated decision versus $787,982 in the notice of deficiency),

and additions to tax for negligence were substituted for the

civil fraud penalty, resulting in a further reduction of over

$300,000 in petitioners’ tax liability as determined in the

Gazis’ notice of deficiency.   On July 8, 2003, the Court entered

its decision in docket No. 7950-98 pursuant to the stipulation.

No notice of appeal or timely motion to vacate or revise the

decision having been filed in this case, the decision in docket

No. 7950-98 became final on October 6, 2003.    See sec.

7481(a)(1); Fed. R. App. P. 13(a).

     On March 12, 2004, petitioners filed motions for leave to

file motions to vacate final decisions in these cases, lodging

therewith their motions to vacate.    The motions were signed by

Caroline D. Ciraolo, who on the same date filed entries of

appearance in these cases.   Also on the same date, petitioners

filed motions to withdraw Mr. Kauffman as counsel in these cases.

     On December 15, 2004, the Court held an evidentiary hearing

in Washington, D.C., with respect to the motions.6   At the

commencement of the hearing, the Court granted petitioners’

motions to withdraw Mr. Kauffman as counsel.    At the conclusion



     6
       The hearing was delayed in part at the request of
petitioners’ new counsel because of her pregnancy.
                                 -10-

of the hearing, the Court directed the parties to file legal

briefs.

                         FINDINGS OF FACT

     The parties have stipulated some facts, which we incorporate

herein by this reference.

     After the petitions were filed in these cases, petitioners,

directly and indirectly through Mr. Kauffman, attempted to work

with respondent’s revenue agent toward settlement.    After four

continuances of these cases, Ms. Miller sent Mr. Kauffman a

letter dated April 10, 2003, enclosing a revenue agent’s report

and corresponding computations, along with a settlement proposal

for both cases.   Ms. Miller’s letter stated that trial was

scheduled for May 19, 2003, that petitioners had repeatedly

delayed this matter, and that it was her belief that the Court

would allow no further delays.    The letter stated that, in

preparing the report upon which the settlement offers were based,

the revenue agent had considered and, for the most part, accepted

the latest information provided by petitioners.    With respect to

the Gazis’ case, the letter stated that for settlement purposes

only, respondent would agree to substitute negligence penalties

for the civil fraud penalty, and that the settlement offer would

result in a reduction of about $500,000 in taxes and of about

$300,000 in penalties.   With respect to the All Community Walk In

Clinic case, the letter stated that “because the petitioners have
                                 -11-

effectively conceded the corporate case”, the settlement proposal

would require a full concession by petitioner in that case.     The

letter stated that the settlement proposals were final and would

be withdrawn unless accepted on or before May 2, 2003.

     On April 30, 2003, Mr. Kauffman contacted Ms. Miller,

advising her that he was unable to reach petitioners, having lost

contact with them.    He requested an extension of the settlement

offer deadline.   Ms. Miller offered to help locate the Gazis’

address and agreed to extend the settlement offer deadline on the

condition that Mr. Kauffman express mail to the Gazis the

settlement proposal and the notice setting the case for trial.

     On May 2, 2003, Mr. Gazi received from Mr. Kauffman the

April 10, 2003, settlement proposal and notice of the May 19,

2003, trial session.    Mr. Gazi immediately called Ms. Miller,

explaining that he had just received the package and that Mrs.

Gazi was very ill.7    Ms. Miller told him that he should call his

attorney and that the settlement offer had been extended to

May 5, 2003.

     Mr. Gazi then contacted Mr. Kauffman.    He told Mr. Kauffman

about his wife’s medical condition and said that they did not

want to settle; they wanted to go to trial.    Mr. Kauffman advised




     7
       Sometime in February or March 2003, Mrs. Gazi had been
hospitalized and diagnosed with carcinoid syndrome.
                                 -12-

Mr. Gazi to find local counsel in Baltimore, where the cases were

set for trial.

     Mr. Gazi contacted Mark E. Kell, a Baltimore tax attorney.

In a meeting with Mr. Gazi on May 6, 2003, Mr. Kell laid down

three conditions that needed to be satisfied before he would

agree to represent petitioners in these cases:      First, he would

not represent petitioners unless continuances were granted in

these cases because “I’m not taking a case that’s been around for

seven years 10 days before trial.”      Second, he required

petitioners to pay him, in advance, a $20,000 fee.      Third, he

required an opportunity to review the files to see if petitioners

“have a case”.   Mr. Gazi telephoned Ms. Miller from Mr. Kell’s

office and left a voice message requesting Ms. Miller to contact

Mr. Kell.   Mr. Gazi also told Mr. Kauffman that he was meeting

with and retaining Mr. Kell.   Subsequently, Ms. Miller and Mr.

Kauffman learned that Mr. Kell did not intend to enter these

cases unless they were continued.

     Shortly after the initial meeting with Mr. Kell, Mr. Gazi

paid him $500.   Mr. Kell told him that he could not accept the

$500 to start working on petitioners’ cases but agreed to accept

it as partial payment for time he had already spent on their

cases.   Petitioners never paid Mr. Kell the remainder of the

requested advance $20,000 fee.    Mr. Kell never entered an

appearance in these cases.   Nevertheless, sometime before May 7,
                                 -13-

2003, Mr. Gazi spoke to Ms. Miller and told her that Mr. Kell was

representing petitioners and “that since we are here in

Baltimore, Mr. Kauffman will not be representing us”.8

     On the morning of May 14, 2003, Mr. Gazi faxed to Mr.

Kauffman and Ms. Miller copies of physicians’ letters regarding

Mrs. Gazi’s medical condition.    Later that day, Mr. Kauffman

advised Mr. Gazi of the telephonic conference with Ms. Miller and

the Court, in which the Court had declined to entertain Mr.

Kauffman’s informal motions for continuance.    Mr. Gazi relayed

this information to Mr. Kell.    According to Mr. Kell’s

contemporaneous notes of this conversation, which are in

evidence:   “The issue of Jay Kauffman withdrawing and my entering

my appearance will be resolved after the continuance is granted,

not before.”   In another conversation that day, Mr. Kell advised

Mr. Gazi that depending on how much he owed the IRS, the

approximately $800,000 reduction reflected in respondent’s

settlement offer might be “too good to pass up.”    He also

indicated to Mr. Gazi that because of the deemed admissions

relating to the income items in the Gazis’ case, “he may not have

a case at all”.




     8
       Apparently on the basis of these representations, in
various documents filed with the Court on May 12, 2003, (as
previously described) Ms. Miller stated that “petitioners’ former
counsel [Mr. Kauffman] is no longer authorized to act on behalf
of petitioners”.
                                -14-

     The morning of May 15, 2003, Mr. Gazi faxed a letter to Mr.

Kell and Mr. Kauffman, addressed “Dear Mark and Jay”, in which he

complained that respondent’s revenue agent had made “repeated

mistakes” in her report.   Mr. Gazi’s letter stated:   “We have to

restart the whole case”.

     The afternoon of May 15, 2003, Mr. Kauffman faxed to Ms.

Miller written motions to continue these cases, attaching the

physicians’ letters he and Ms. Miller had received from Mr. Gazi.

The motions to continue were never filed with the Court.    The

facsimile transmission to Ms. Miller also included written

motions by Mr. Kauffman to withdraw as counsel in these cases.

The motions to withdraw as counsel, which were never filed with

the Court, state that petitioners owed Mr. Kauffman over $20,000,

that on May 5, 2003, Mr. Kell had informed Mr. Kauffman that

petitioners were retaining him as counsel, and that on May 14,

2003, Mr. Kauffman spoke with Mr. Gazi “who confirmed that Mr.

Kell had been retained.    During the conversation irreconcilable

differences arose between the petitioner and Kauffman making it

impossible for Kauffman to continue his representation.”    The

motion quotes respondent’s supplemental status report, dated May

12, wherein Ms. Miller had stated:     “petitioners’ former counsel

is no longer authorized to act on behalf of petitioners”.

     Shortly after faxing these documents to Ms. Miller, Mr.

Kauffman had a telephonic conference with Mr. Gazi and Ms.
                               -15-

Miller.   In this telephonic conference, Mr. Gazi confirmed Mr.

Kauffman’s authority to represent petitioners.     In a separate

conversation with Mr. Gazi on the evening of May 15, 2003,

Mr. Kauffman went over respondent’s settlement offer and urged

that petitioners should accept it; he opined that because of

petitioners’ financial situation, they should be able either to

work out an offer in compromise or else eventually pursue

bankruptcy.   According to Mr. Kauffman’s testimony, Mr. Gazi

authorized Mr. Kauffman to settle the cases.

     The next morning, May 16, 2003, Mr. Kauffman telephoned Ms.

Miller and advised her that “we’ve got permission to settle and

we’ve got an agreement”, pending his review of some documentation

and a review of the calculations.     Later that day, after the

parties had reported the settlement agreement to the Court in a

telephonic conference, Mr. Gazi telephoned Mr. Kell.     According

to Mr. Kell’s notes, Mr. Gazi had “called J.K. [Jay Kauffman] and

was told continuance granted to 6/30/03.     J.K. and M.M. [Monica

Miller] were also told to settle.”     Mr. Kell pointed out to Mr.

Gazi “the advantages of settling and then doing a Chapter 7 in

three years and a day from the assessment date.”     Mr. Kell and

Mr. Gazi had no further communications until November, as

described below.

     On June 15, 2003 (after the decision documents had been

lodged with the Court and shortly before the stipulated decisions
                                -16-

were due to be submitted to the Court), Mr. Kauffman met with Mr.

Gazi and his son in Baltimore, after driving from Florida for

that purpose.    At this meeting, which lasted for several hours,

Mr. Kauffman reviewed the settlement offer in the Gazis’ case

with Mr. Gazi and his son for computational errors or omitted

adjustments.    Mr. Kauffman then explained to Mr. Gazi and his son

that he would contact Ms. Miller and request further review of

certain items.   He gave Mr. Gazi an “approximate number” of the

“fairly large” tax liability that would result from the

settlement agreement and reiterated that petitioners could pursue

previously discussed options in seeking an offer in compromise or

uncollectible status.   Mr. Kauffman then went out to dinner with

Mr. Gazi and his son.

     Mr. Kauffman subsequently spoke with Ms. Miller and

requested several computational adjustments.   Certain

computational adjustments were made, as reflected in the

stipulated decision that was filed with the Court on June 30,

2003.

     In November 2003, Mr. Gazi received IRS collection notices

for the liabilities reflected in the stipulated decisions.     Mr.

Gazi called Mr. Kell to seek his legal assistance.    In a letter

to Mr. Kell dated November 18, 2003, Mr. Gazi wrote:     “I have

fired Mr. Kauffman.”    Mr. Kell declined to take the case, and Mr.
                                 -17-

Gazi asked Mr. Kell to return the $500 he had paid him in the

spring.

                                OPINION

     A decision of this Court becomes final 90 days after it is

entered, if no party files a notice of appeal.    Secs. 7481(a)(1),

7483.     A motion to vacate or revise a decision generally must be

filed within 30 days after entry of the decision, unless the

Court permits otherwise.     Rule 162.

     The finality of a decision is generally absolute, and the

Tax Court’s authority to vacate a final decision is limited.

Cinema ‘84 v. Commissioner, 122 T.C. 264, 270 (2004), affd. 2005

WL 1459573, 2005 U.S. App. LEXIS 11956 (2d Cir., June 22, 2005).

This Court has jurisdiction to set aside an otherwise final

decision if there is fraud on the Court.     Id.; see Davenport

Recycling Associates v. Commissioner, 220 F.3d 1255, 1259 (11th

Cir. 2000), affg. T.C. Memo. 1998-347; Taub v. Commissioner, 64

T.C. 741, 751 (1975), affd. without published opinion 538 F.2d

314 (2d Cir. 1976).    In the context of a motion to vacate a final

Tax Court decision, fraud on the court is narrowly construed to

require “‘an unconscionable plan or scheme which is designed to

improperly influence the court in its decision,’ preventing the

opposing party ‘from fully and fairly presenting his case.’”

Davenport Recycling Associates v. Commissioner, supra at 1262

(quoting Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir.
                              -18-

1988), affg. 86 T.C. 1319 (1986)); see Toscano v. Commissioner,

441 F.2d 930, 934 (9th Cir. 1971), vacating 52 T.C. 295 (1969).

To prove fraud on the court, petitioners bear the heavy burden of

presenting specific facts establishing that “an intentional plan

of deception designed to improperly influence the Court in its

decision has had such an effect on the Court.”   Abatti v.

Commissioner, 86 T.C. at 1325; see Drobny v. Commissioner, 113

F.3d 670, 677-678 (7th Cir. 1997), affg. T.C. Memo. 1995-209;

Kenner v. Commissioner, 387 F.2d 689, 691 (7th Cir. 1968).

     In their memoranda in support of their motions for leave to

file motions to vacate, petitioners state:   “Petitioners’ former

counsel, Jay Kaufman [sic], and Respondent’s counsel, Monica

Miller, perpetrated a fraud against the Tax Court, even if done

unintentionally, by executing settlement agreements and Decision

documents without Petitioners’ knowledge or authorization, and

with the full knowledge that Mr. Kaufman [sic] did not represent

Petitioners at the time the documents were executed.”

     At the outset, we observe that petitioners’ notion of

persons “unintentionally” perpetrating fraud on the court runs

contrary to the basic legal precepts just discussed.    Moreover,

the mere fact that counsel might settle a suit without the

client’s authorization does not establish fraud on the court so

as to support vacating a final decision.   See Senate Realty Corp.

v. Commissioner, 511 F.2d 929 (2d Cir. 1975); Flood v.
                                 -19-

Commissioner, 468 F.2d 904 (9th Cir. 1972), affg. T.C. Memo.

1969-249.

     More fundamentally, petitioners have not convinced us that

Mr. Kauffman lacked authority to settle petitioners’ cases.    As

the May 19, 2003, trial session approached, Mr. Gazi explored

having Mr. Kell replace Mr. Kauffman as petitioners’ counsel.

The evidence clearly shows, however, that Mr. Kell declined to

take petitioners’ cases for a variety of reasons:   Because no

continuance had been granted (no written motion for a continuance

having been filed), because Mr. Gazi had not paid him the

requested $20,000 advance fee, and because Mr. Kell had lacked an

opportunity to adequately assess the merits of petitioners’

cases.

     Moreover, on the basis of all the evidence, we do not

believe that Mr. Gazi fired Mr. Kauffman until after the entry of

the decisions in these cases.9   The evidence shows that on May 15,

2003, Mr. Gazi faxed materials to Mr. Kauffman and Ms. Miller in

support of a continuance; that at least through May 16, 2003, Mr.

Gazi continued to have telephone conversations with Mr. Kauffman

regarding petitioners’ cases; and that in June 2003 (having

ceased communications with Mr. Kell) Mr. Gazi met with Mr.

Kauffman to discuss the cases.


     9
       In fact, the record does not establish that Mr. Gazi would
have had any authority to fire Mr. Kauffman as counsel of record
for All Community Walk In Clinic.
                               -20-

     Petitioners put great weight on various documents that Ms.

Miller filed with the Court on May 13, 2003, which stated that

Mr. Kauffman was no longer authorized to represent petitioners.

We believe that Ms. Miller made these representations in good

faith, advising the Court of the situation as she then understood

it, on the basis of information that she had recently received

(i.e., that the Gazis had retained Mr. Kell and fired Mr.

Kauffman) but that would shortly prove to be incorrect.   Far from

supporting petitioners’ allegations that Ms. Miller sought to

perpetrate a fraud on the Court, these statements reinforce our

perception that Ms. Miller’s actions in these cases have been

consistent with her responsibilities as an officer of this Court.

Especially after the telephonic conference with the Court on May

14 and subsequent telephonic conferences between Mr. Kauffman and

Mr. Gazi, one of which included Ms. Miller, it became apparent to

all concerned that Mr. Kell had entered no appearance in these

cases, that he was unlikely to do so before the May 19 trial

session, and that Mr. Gazi continued to deal with Mr. Kauffman as

petitioners’ counsel.   Thereafter, Ms. Miller acted reasonably,

in good faith, and in accordance with Mr. Kauffman’s presumptive

authority as petitioners’ counsel of record, in dealing with Mr.

Kauffman as petitioners’ authorized representative.

     Indeed, on brief, petitioners seem to acknowledge that, at

least throughout the period immediately before the May 19, 2003,
                                  -21-

calendar call, Mr. Kauffman continued to represent petitioners.

They contend, however, that his authority was limited to seeking a

continuance on petitioners’ behalf.      But if that is so, the

question arises:     Exactly how did petitioners intend to proceed

when their eleventh-hour requests for continuances, made

informally in a telephonic conference on Wednesday, May 14, 2003,

were not entertained by the Court?       The cases were set for trial

in Baltimore the next Monday.    Insofar as the record reveals,

petitioners had done little or nothing to ready these cases for

trial.    No trial memoranda had been filed on petitioners’ behalf.10

Deemed admissions appear to have resolved most of the income items

against the Gazis.    Pursuant to the Court’s May 8, 2003, Order

sanctioning petitioners for failing to respond to the Court’s

March 18, 1999, Order to Show Cause, petitioners were prohibited

from introducing into evidence any testimony or documents that

would have been responsive to respondent’s discovery requests

served on petitioners February 10, 1999.      The local Baltimore

counsel that Mr. Gazi had sought to retain refused to enter these


     10
       Pursuant to the Court’s Standing Pre-Trial Orders, dated
Dec. 18, 2002, unless a basis of settlement had been reached,
each party was required to submit a trial memorandum to the Court
no later than 15 days before the first day of the May 19, 2003,
trial session. In their trial memoranda, the parties were
required, among other things, to identify trial witnesses and
provide a brief summary of their testimony. The Court’s Standing
Pre-Trial Order states: “Witnesses who are not identified will
not be permitted to testify at the trial without leave of the
Court upon sufficient showing of cause.”
                                 -22-

cases.   Unless petitioners took some action, they faced possible

dismissal of their cases and entry of decisions against them, as

stated in the Court’s December 18, 2002, notices setting the cases

for trial.

     That potential outcome obviously would have been less

attractive to petitioners than respondent’s settlement offer,

which offered substantial concessions; specifically, a reduction

in the Gazis’ tax liability of about $800,000, including

substitution of negligence penalties for the fraud penalty.    Mr.

Gazi had received this settlement offer on May 2, 2003.    He had

discussed it with Ms. Miller, Mr. Kauffman, and Mr. Kell.    Both

Mr. Kell and Mr. Kauffman had advised him of the benefits of

accepting the settlement offer and later pursuing options to avoid

paying the resulting tax liability.     Especially in light of these

various considerations, we find credible Mr. Kauffman’s testimony

that on May 15, 2003, Mr. Gazi authorized him to pursue settlement

with Ms. Miller and a short time later authorized him to accept

respondent’s settlement offer.

     Petitioners seem to suggest that someone, ostensibly Mr.

Kauffman, misled Mr. Gazi into believing that the Court had

granted a last-minute continuance of these cases, and that Mr.

Kauffman and Ms. Miller then proceeded in bad faith to enter into

a settlement agreement that they knew petitioners had not

authorized and that was never disclosed to petitioners.    We find
                                -23-

petitioners’ theory implausible in light of the evidence.    It is

true that Mr. Kell’s contemporaneous notes indicate that on

May 16, 2003, Mr. Gazi told Mr. Kell that there was a “continuance

granted to 6/30/03”.11   According to these same notes, however, Mr.

Kauffman and Ms. Miller “were also told to settle.”   Although it

is unclear from these notes exactly who “told” Mr. Kauffman and

Ms. Miller to settle, on the basis of all the evidence we believe

it most likely was Mr. Gazi.   The evidence clearly shows, contrary

to petitioners’ allegations, that Mr. Gazi expected Mr. Kauffman

and Ms. Miller to settle the cases--a conclusion that is

reinforced by the immediate cessation of communications between

Mr. Gazi and Mr. Kell and the absence of any evidence that

petitioners were doing anything to prepare for the new trial date

that Mr. Gazi supposedly believed was only a month away.

     Petitioners do not now dispute that Mr. Kauffman traveled

from Florida to Baltimore to visit Mr. Gazi and his son on June

15, 2003.12   We find credible Mr. Kauffman’s testimony that the



     11
       June 30, 2003, was the deadline requested by the parties
for submitting stipulated decisions in these cases. We surmise
that the “continuance” referred to in Mr. Kell’s notes relates to
this deadline beyond the scheduled trial session.
     12
       In an affidavit attached to petitioners’ memoranda in
support of the motions for leave to file motions to vacate, Mr.
Gazi averred that the meeting with Mr. Kauffman occurred in April
2003, before petitioners had received respondent’s settlement
offers. Petitioners appear to have abandoned this version of the
facts. Petitioners’ inconstancy with regard to this and other
significant factual allegations undermines their credibility.
                                  -24-

purpose of this meeting, which lasted several hours, was to

identify any computational issues with respondent’s settlement

offers and that, in fact, Mr. Kauffman subsequently relayed to Ms.

Miller several computational problems that had been identified at

this meeting.   We do not find credible petitioners’ suggestion

that Mr. Gazi thought the purpose of this meeting was simply to

discuss petitioners’ case with Mr. Kauffman.   It is hard to square

petitioners’ suggestion with their allegation that Mr. Kauffman

was no longer authorized to represent them during this time.

Moreover, if, as petitioners suggest, on June 15, 2003, Mr. Gazi

was operating under the impression that the cases had been

continued until June 30, 2003 (as Mr. Kell’s notes indicate Mr.

Gazi told him), it is telling that Mr. Gazi had not renewed his

efforts to have Mr. Kell enter these cases (a continuance having

been one of Mr. Kell’s major preconditions) and, insofar as the

record reveals, was doing nothing else to prepare these cases for

the trials that he supposedly believed were upcoming in 2 weeks.

On the basis of all the evidence, we are led to the conclusion

that Mr. Gazi was doing nothing to prepare the cases for trial

because he understood the cases were to be settled in accordance

with the settlement offer that Mr. Kauffman had traveled to

Baltimore to review with him.13


     13
       We are not insensitive to the fact that Mrs. Gazi was
gravely ill during this time. Undoubtedly, Mr. Gazi was
                                                    (continued...)
                                -25-

Conclusion

     Petitioners have failed to establish specific facts

demonstrating that Mr. Kauffman or Ms. Miller perpetrated any

fraud on the Court.   In particular, petitioners have failed to

show that Mr. Kauffman lacked authority to consent to the entry of

the decisions in these cases or that Ms. Miller, at the time the

settlement agreement was reported to the Court or the stipulated

decision documents were submitted, had reason to believe he lacked

such authority.   The mere fact that Ms. Miller previously had

filed documents with the Court stating that Mr. Kauffman was no

longer authorized to act on petitioners’ behalf, does not suggest

that Ms. Miller sought to perpetrate a fraud on the Court by

entering into the settlement agreement.   To the contrary, we

believe that Ms. Miller acted reasonably and in good faith by

bringing the issue to the Court’s attention and discussing it with

the Court, Mr. Kauffman, Mr. Kell, and Mr. Gazi.   We find that by


     13
      (...continued)
distracted and preoccupied with his wife’s health. We do not
believe, however, that this circumstance explains why Mr. Gazi
would have been wholly inattentive to lining up new counsel,
making trial preparations, or seeking further continuances, if he
actually believed that the trials had been continued until June
30, 2003, as he told Mr. Kell. Indeed, Mr. Gazi had been keenly
focused on petitioners’ Tax Court cases at least since May 2,
2003, when he received respondent’s settlement offers, through
the period that culminated with his June 15, 2003, meeting with
Mr. Kauffman in Baltimore. We do not find credible petitioners’
suggestion, which is supported by no credible evidence, that Mr.
Gazi had ceased to attend to these cases because he was under the
impression that the trials had been continued until some
indefinite future date.
                                  -26-

the time of the settlement agreement, Ms. Miller reasonably

believed (as did the Court) that those issues had been

satisfactorily clarified and resolved.

     Ultimately, it appears to us that Mr. Gazi, having authorized

Mr. Kauffman to settle these cases, now wishes to repudiate the

settlement agreement.   It may well be that Mr. Gazi authorized the

settlement agreement only to avoid the worse predicament of

proceeding to trial not merely unprepared but also severely

disadvantaged by deemed admissions and Court-ordered sanctions

resulting from petitioners’ repeated failures to comply with the

Court’s Rules and Orders.     Nevertheless, such a circumstance

affords no basis for setting aside this Court’s final decisions in

these cases.   Accordingly,


                                           Appropriate orders

                                      will be issued denying

                                      petitioners’ motions for leave

                                      to file motions to vacate the

                                      final decisions of this Court.
