Don C. and Judy Montgomery - Page 5

                                        - 5 -                                         

                  H&B's bookkeeping system involved the use of a                      
             "pegboard ledger", a sheet of checks held in place over                  
             a permanent ledger by means of pegs along the left side of               
             a board.  Information written on a check was transferred to              
             the ledger by means of carbon paper attached to the back of              
             the check.  The ledger contained a column in which to enter              
             deposits, a column in which to enter the current balance                 
             in the account, and a column in which Ms. MacKall or                     
             petitioner would sometimes enter comments about the                      
             purposes for which checks were issued.                                   
                  During the period in issue, the dollar amounts of                   
             checks drawn on the First Interstate account are often                   
             greater than the current balance shown in the ledger.                    
             In addition, there is no current balance shown for some                  
             periods.  Thus, checks would often be drawn despite an                   
             apparent balance of zero in the account, only to have a                  
             sufficient balance entered later without explanation.                    
             Approximately once every month, Mr. Petty or his mother,                 
             Ms. Melba Petty, would travel to Oklahoma City to collect                
             the bank statements and canceled checks.                                 
                  H&B's drivers sometimes obtained fuel for their                     
             tractors from a tank located on the site where the tractors              
             were parked.  On other occasions, the drivers would                      
             purchase fuel from unrelated third parties using cash                    





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Last modified: May 25, 2011