Investment Research Associates - Page 86




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              On August 2, 1989, IRA issued checks in the amount of                   
         $22,618.80 each to Ballard and Lisle.  After the checks were                 
         issued to Ballard and Lisle, IRA records reflected a transfer of             
         $45,237 to "KWJ Company" on August 8, 1989.  Also on August 8,               
         1989, ledger entries reflected that the check to Lisle for                   
         $22,618.80 was "void".  Another ledger entry, on August 15, 1989,            
         reflected that the check to Ballard for $22,618.80 was "void".               
         Despite the fact that IRA's ledger entries stated that these                 
         checks were void, Lisle's 1989 return reflected that he received             
         this money and that the check was not "voided." Lisle reported               
         the $22,619 on his return as income from the "KJW [sic] Company."            
         3.   Disposition of Funds out of Carlco, TMT, and BWK to Kanter              
         a.   Creation of Carlco, TMT, and BWK, Inc.                                  
              The certificates of incorporation of Carlco, TMT, and BWK,              
         Inc., authorized each corporation to issue 1,000 shares of 10-               
         cent par value common stock.  Certificates of amendment for each             
         corporation were filed in December 1983.  The amended                        
         certificates authorized the corporations to issue 11,000 shares              
         of stock comprised of 10,000 shares of 1-cent par value preferred            
         stock and 1,000 shares of 10-cent par value common stock.  The               
         amended certificates granted each corporation's  board of                    
         directors authority to fix the dividend rights, dividend rate,               
         conversion rights, voting rights, the rights and terms of                    
         redemption (including sinking fund provisions), the redemption               






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