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Mr. Marzullo established the bifurcated salary arrangement
sometime after he joined the College in 1980. It was approved by
the College president, Sister Kathleen Feeley; at that time, she
did not realize that tax consequences were involved.
In 1989, Mr. Marzullo's staff accountant at the College, Susan
Carapico, confronted him about the need to issue a Form 1099 for
the benefits Mr. Marzullo had received. He described his attitude
toward this salary arrangement in a conversation he had with her as
follows:
she came in and she said, "I looked down and I saw this
other benefits." She said, "I'm going to have to give
you a 1099 on these other benefits." I said, "Susan, I
really don't think that's right, you know. I don't know
why I have to be paying tax on the money, you know, that
I'm using for tuition and health insurance. It just
doesn't make any sense to me." We talked about it for a
couple of minutes and I said, "How come people that are
here that are getting free tuition, how come they are not
being taxed?"
Mr. Marzullo obtained check requisition forms from Sister
Feeley that she had signed in blank. Mr. Marzullo used the forms
to obtain payments through the accounts payable account, listing
the purpose of the payments as "car allowance". Other forms he
signed himself and listed such things as "payment of benefit
reimbursement", "expense allowance", or "tuition reimbursement" as
reasons for issuance of checks.
In 1987, Mr. Marzullo received an automobile from the College
as a bonus. He knew that it constituted taxable income but
intentionally omitted the value of the automobile from his tax
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