Leo N. Levitt and Ruth G. Levitt - Page 29

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               diverted from Resyn to the Chemical Traders' bank                      
               account which was under the sole control of Leo Levitt.                
               The said receipts were not entered as income on the                    
               books of Resyn and not reported on Resyn's income tax                  
                    The Chemical Traders' bank account was also used                  
               in certain transactions involving the Witco Chemical                   
               Company.  During the course of the operation of its                    
               business, Resyn would purchase chemicals from the Witco                
               Chemical Company and would be allowed discounts on bulk                
               purchases made.  The discounts received were then                      
               deposited not in the Resyn bank accounts but in the                    
               Chemical Traders' bank account.  The total amount of                   
               deposits into the Chemical Traders' bank account which                 
               resulted from bulk purchase discounts were as follows:                 
                                        Deposits Resulting from                       
               Year                     Bulk Purchase Discounts                       
                    1963                     $ 3,600.00                               
                    1965                     92,588.80                                
                    1966                     37,240.00                                
          Total   $133,428.80                                                         
               This diversion of the bulk purchase discounts resulted                 
               in the overstatement of the cost of goods sold and the                 
               understatement of income and income tax due on the                     
               Resyn tax returns for 1963, 1965 and 1966.                             
                    Another graphic example of the diversion of income                
               from Resyn to Chemical Traders is found in the                         
               transactions involving Spencer-Kellogg.  Resyn would                   
               purchase oil from Spencer-Kellogg and upon resale of                   
               same, the bill or invoice was sent to Chemical Traders                 
               and not Resyn.                                                         
                    On June 19, 1967 Spencer-Kellogg shipped 31,000                   
               pounds of raw linseed oil to the Atlas Paint Company.                  
               The Spencer-Kellogg invoice indicates that this                        
               shipment was sold to Resyn.  However, it is a Chemical                 
               Traders' invoice dated, June 19, 1967, that bills Atlas                
               for 31,020 pounds of linseed oil.                                      
                    Similarly, a Spencer-Kellogg invoice charges Resyn                
               for 4,000 pounds of 2-2 linseed oil which was sold to                  
               Resyn but shipped to the Atlas Paint Company on                        
               September 1, 1967.  Resyn paid for this shipment by                    
               Check No. 6135 but Atlas Paint Company was billed not                  
               by Resyn, but, by Chemical Traders on a Chemical                       
               Traders' invoice dated, inter alia, September 1, 1967.                 

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