Dennis C. Gandy - Page 33

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          the 1988 bank statements from the nursery bank account, yearend             
          summary, yearend balance sheet, and profit and loss statements.             
          The financial statements were reports generated from the                    
          nursery's computer.  Davidson was not aware of any cash                     
          expenditures by the nursery.                                                
               Dozier was the nursery employee who served as Davidson's               
          contact.  Dozier supplied Davidson with a handwritten list of the           
          deposits into the nursery bank account and the supporting deposit           
          slips.  Both Mr. Gandy and Dozier told Davidson that the deposits           
          that were identified as being from Burnice Gandy were loans;                
          these deposits totaled $217,500.  They also identified other                
          purportedly nontaxable amounts, such as loans from PCA or                   
          insurance proceeds.                                                         
               The 1988 bank statements from the nursery bank account were            
          used by Davidson to compute the gross receipts of the nursery for           
          1988.  Davidson compared the book amount of gross receipts to the           
          amount of the bank deposits, excluding those deposits that were             
          identified as loans or other nontaxable amounts, and used the net           
          deposits, which was the higher amount.  Davidson was not aware of           
          any deposits of nursery receipts being made into any bank                   
          accounts other than the nursery bank account, nor was he aware of           
          any checks to the nursery being cashed.                                     
               Mr. Gandy represented to Davidson that Mrs. Gandy had                  
          received the mortgage notes in the divorce property settlement              

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Last modified: May 25, 2011