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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
return.
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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