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Credit Line With Barnett Bank and Certified Financial Statements
In 1989, petitioner obtained a $1.5 million line of credit
with Barnett Bank. A security interest in petitioner's accounts
receivable and inventory and a guaranty by Mr. Campos, Sr., were
given as collateral for this line of credit. Mr. Campos, Sr.'s
guaranty was secured by a first mortgage on his residence.
To maintain the line of credit, petitioner was required to
deliver to the bank certified financial statements. Barnett Bank's
credit department analyzed the certified financial statements
prepared for petitioner. On a quarterly basis, Barnett Bank sent
a group of its own auditors to conduct a review of petitioner's
accounts receivable, accounts payable, and inventory in order to
verify the correctness of the certified financial statements as
well as petitioner's books and records. From 1989 through 1994,
there were no disparities among these various documents.
Petitioner hired Verdeja, Iriondo & Gravier (VIG), certified
public accountants, to perform the audit and prepare the certified
financial statements for Barnett Bank. Oscar Rosales performed the
initial audit for VIG. Petitioner later hired Mr. Rosales as its
comptroller. (Before Mr. Rosales was hired, petitioner never had
a comptroller.) Mr. Rosales worked for petitioner through 1992.
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Last modified: May 25, 2011