- 25 -
of $443,415. This note was a partial payment of the compensation
fee and 10-percent late charges due under the employee leasing
agreement. Like earlier similar notes from Machise, this note
bore endorsements reflecting that it had been deemed distributed
to the MIT 80 partners and then credited to their obligations on
their notes to Intercoastal.
The following illustration depicts the purported
transactions and flows of funds to which MIT 80 was a party.
Purported Transactions--MIT 80
A. Investment Phase
1. Partners execute 10-percent notes aggregating $2.4
million to Intercoastal.
2. Intercoastal draws checks aggregating $2.4 million to
investors.
3. Investors endorse the checks to MIT 80 as capital
investment in MIT 80.
4. Bookkeeping entries indicate the $2.4 million in
Intercoastal checks endorsed to Intercoastal, although
checks are neither endorsed nor otherwise enter banking
channels.
B. Payroll Phase
5. During 1980, Machise makes weekly transfers totaling
$2,243,495.73 to MIT 80 payroll account.
6. Employees and independent contractors are paid from the
amounts transferred to the MIT 80 payroll account with
checks signed by officers of Machise.
C. Repayment Phase
7. In 1984, repayment begins. Repayments take the form of
Machise demand notes of $443,415 in compensation fees
and late charges issued to MIT 80. (Although the 1984
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011