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however, was recorded by a journal entry.
The total cash paid by the investors under the subscription
agreements in 1985 was $334,096.80, plus $16,255 interest. Of
this amount, BBPA was to retain some 20 percent as a promoter's
fee from Machise. The balance apparently went to Machise,
although some amounts that BBPA credited to Machise were in the
form of setoffs.21 This "promoter's fee" arrangement for BBPA
was new; it replaced the line-of-credit arrangement whereby
BBPA--and, through it, Machise--had divided the cash invested by
the partners in the earlier partnerships.
Machise again made weekly transfers to the payroll accounts
to cover the Machise payroll. During 1985, these totaled a net
amount of $3,508,786. The employees and independent contractors
were paid with MIT 85 checks drawn on this account and signed by
Bucci.
In addition to the payroll costs, on December 24, 1985, MIT
85 issued a check to MITA, in the amount of $400,000, as the
total management fee due under the management contract. This
amount was recommended by Fred. As with the MIT 84 check for the
same amount, the MIT 85 check passed around in a circle to MIT
85, its maker.
21Fred testified that, because all the investors’ cash was
to go from MIT 85 to Machise it was not necessary for BBPA to
forward all of the investors’ cash to Machise. Fred recalled
that BBPA merely reduced an obligation that Machise had to BBPA
in lieu of forwarding some of the investors’ cash to Machise.
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