Evelyn M. Martin - Page 6




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               Initially, petitioner maintained the Martin family’s                   
          household finances, but after the business growth, Mr. Martin’s             
          personal business secretary began maintaining the Martin                    
          household and family finances.  For example, petitioner                     
          maintained a checking account to pay routine bills for doctors,             
          groceries, etc., but Mr. Martin’s personal secretary paid, out of           
          Mr. Martin’s corporate shareholder accounts, a majority of                  
          household bills, such as those concerning the mortgage, credit              
          cards, installment loan payments, etc.                                      
               In 1984, Mr. Martin hired Louis J. Hevey, a certified public           
          accountant, and he became the chief financial officer for all of            
          Mr. Martin’s businesses.  Mr. Hevey ensured that there was                  
          sufficient cash in the shareholder advance accounts to pay the              
          Martins’ expenses.  Petitioner did not exercise any control or              
          direction over Mr. Hevey, and she did not review his records or             
          discuss finances with him.  The amount of money used by Mr. Hevey           
          to cover the Martins’ lifestyle remained relatively constant                
          during 1984-1991, the period Mr. Hevey worked for Mr. Martin.               
               During the period under consideration, Life advanced                   
          substantial funds to FSCA.  In 1986, the North Carolina Insurance           
          Department (NCID) regulators became concerned about the financial           
          stability of Life and the large volume of loans to FSCA, which              
          the regulators did not consider to be assets for statutory                  
          accounting purposes.  Without considering the promissory notes              






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