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period July 1, 1983, through July 1, 1984. Additionally, in
1983, Bucci, as president of "MIT" (which we are calling
"Machise") verified the employment of one of its drivers to a
mortgage company. MIT 83 was, however, listed as the employer on
workmen's compensation claim forms. Machise's controller did not
remove Machise from the workmen's compensation policy; he just
added the name of the new lessor partnerships to the policy. He
did not, however, remove the previous partnership names for
several years, “just to be sure”.
MIT 83 paid $2,528,416 to employees and independent
contractors and taxing authorities. It paid out additional
professional and bank fees, pension expenses and workmen's
compensation, health, and group life insurance premiums. In
addition, on December 22, 1983, MIT 83 issued a check to MITA, in
the amount of $363,000, as the total management fee due under the
management contract.16 The total paid by MIT 83 during 1983 was
$3,080,528.
Under its cash method of accounting, MIT 83 claimed a net
loss of $3,066,626, which was the excess of the $3,080,528
16The check was drawn on the Guaranty Bank account and
signed by Bucci. The amount was recommended by Fred. The
balance in the MIT 83 account when this check was written was
$86,327.79. Fred intended this check to circle back into the MIT
83 account. On the day this check was issued, MITA endorsed it
to Machise as payment of an alleged guaranty fee and the advance
by Bucci to Machise to reduce his account. Machise endorsed the
check back to MIT 83 as part of the advances required under the
employee leasing agreement. On the day the check was drawn, it
was deposited into the account upon which it was drawn. The
check, in effect, funded itself.
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