Bob J. & Ernestene Sams, et al. - Page 4




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          bond was written.  Premiums were paid by cash, by check, in                 
          person, or by mail.  Each premium payment received was recorded             
          in an accounts receivable ledger that was maintained by client              
          name and included the date and amount of the payment and the                
          client’s account balance.  A receipt was issued to each client              
          who made a bond premium payment.  To assure payment, Carter                 
          Bonding sought cosigners for the bonds and pursued litigation to            
          recover the unpaid fees.                                                    
               Sams terminated Sullivan’s employment with Carter Bonding in           
          1996.  On January 3, 1997, Sams sent a letter to Sullivan                   
          demanding the return of Carter Bonding’s books and records.                 
          Sullivan’s employment with Carter Bonding resumed in the middle             
          of 1999.                                                                    
               Carter Bonding filed Monthly Professional Bondsman Reports             
          with the Oklahoma Insurance Department in 1994 and 1995,                    
          reflecting the total amount of the bond premiums that Carter                
          Bonding charged to its clients during each monthly reporting                
          period.  On the reports filed with the Oklahoma Insurance                   
          Department, Carter Bonding reported total premiums of $140,520 in           
          1994 and $164,885 in 1995.                                                  
               Carter Bonding employed an accountant to prepare its Federal           
          income tax returns.  The accountant reported gross receipts based           
          on the bank deposits of Carter Bonding.  Carter Bonding reported            
          gross receipts of $75,565 on its 1994 Federal income tax return.            






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